Fraud Investigator Blasts SEC

Sec Scam Harry Markopolos says he warned the Securities and Exchange Commission about Bernie Madoff for years.

by CBS News/Associated Press

Published: Thu, February 05, 2009 - 5:19 am CST Last Updated: Thu, February 05, 2009 - 5:46 am CST

The man who for a decade tried to warn regulators about problems in the operations of money manager Bernie Madoff is putting the much of the blame on the Securities and Exchange Commission (SEC) for how big the scandal became.

Harry Markopolos says he warned the SEC multiple times about Madoff but to no avail. “My team and I tried our best to get the SEC to investigate and shut down the Madoff ponzi scheme with repeated and credible warnings to the SEC that started in May 2000 when the Madoff ponzi scheme was a three to seven billion dollar fraud.”

Markopolos, an independent fraud investigator, says when he began looking to Madoff’s dealing that it took him “about five minutes to figure out he was a fraud.

He told lawmakers that he and his staff had enough information on Madoff to shut him down but that the SEC didn’t understand and did nothing to shut the operation down back in 2000. “Unfortunately the SEC staff lacks the financial expertise and is incapable of understanding the complex financial instruments being traded in the 21st century.” “The SEC is overlawyered and has few too staff with relevant industry experience and professional credentials to find fraud even when a multi-billion dollar case is handed to them on a silver platter.”

Markopolos continued to hammer the SEC, saying at one point that commission, even today, “continues to roar like a mouse and bite like a flea.” “I’m suggesting that if you flew the entire SEC staff to Boston, sat them in Fenway park for an afternoon, that they would not be able to find first base.”

WASHINGTON (AP) - Lawmakers are accusing the Securities and
Exchange Commission of impeding their probe into how the agency
failed to uncover Bernard Madoff's alleged $50 billion Ponzi
scheme.
The clash between lawmakers and high-ranking SEC officials came
at a hearing Wednesday after whistleblower Harry Markopolos said he
would turn over new evidence to the agency showing the mastermind
of the alleged swindle had not acted alone.
He says he's discovered a dozen additional funds that funneled
money to Madoff, "hiding in the weeds" in Europe, as he put it.
Markopolos plans to turn over his findings to the SEC's
inspector general on Thursday.
In loud, angry exchanges during Wednesday's session, lawmakers
threatened to issue subpoenas to SEC officials to compel their
testimony. Five SEC commissioners had voted earlier to assert a
privilege in not having officials answer questions from Congress
because the case is under investigation.

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