SEC to investigate in-house flaws to nail Madoff
18 Dec 2008
The US Securities and Exchange Commission chairman Christopher Cox has ordered an internal investigation to find out why his in house lawyers did not force former NASDAQ stock market chairman Bernard L Madoff, currently facing charges of securities fraud to the tune of $50 billion, to give crucial information under subpoena but relied on him to voluntarily give his firm's documents.
The commission also wants to find out why details of Madoff's $50-billion Ponzi scheme were repeatedly sidetracked when the SEC had several opportunities to discover one of the biggest frauds when credible allegations of financial jugglery was made against Madoff to the SEC.
A one-time lifeguard who prospered in the trading trade for four decades, Madoff was arrested on charges of securities fraud, and has been accused by federal agents of running a multibillion-dollar fraud scheme - perhaps the largest in Wall Street's history. (See: Former NASDAQ chairman charged with $50-billion securities fraud)
Madoff's arrest came after he told his two sons and federal investigators that he was using money given by new investors to pay off old ones.
Cox held a meeting with the federal authorities in New York on Tuesday regarding the fraud and issued a statement saying, ''Our initial findings have been deeply troubling, the commission received credible and specific allegations regarding Madoff's financial wrongdoing.''
''I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them,'' he added.
