As expected, H. David Kotz, Inspector General of the Securities and Exchange Commission (SEC), has delivered a scathing report on the agency’s mishandling of the Bernie Madoff scandal. The much-anticipated report is 450 pages in length, and blasts the SEC for never conducting “a thorough and competent investigation or examination” of Madoff and his investment advisory businesses. The inspector general goes on to reveal how the agency’s “inexperienced” attorneys remained oblivious to Madoff’s $65 billion Ponzi scam, accepting Madoff’s answers to their questions even when the responses were “seemingly implausible.”
The report also notes that during the course of several examinations by SEC staff members into Madoff, the financier made overt efforts to “impress and even intimidate the junior examiners from the SEC.” According to the report, Madoff emphasized his role in the securities industry, emphasizing his ties with high-ranking members at the agency. One of the examiners characterized Madoff as “a wonderful storyteller” and “very captivating speaker” and noted that he had “an incredible background of knowledge in the industry.”
In March, Madoff was sentenced to 150 years in a North Carolina federal prison for his role in masterminding what is considered the biggest Ponzi scheme in history. Investors, including ordinary citizens, hedge funds, charities, famous names in the entertainment world and others, lost more than $65 billion to Madoff’s scheme.