NEWS

SEC Failed to Act on Whistleblower's Warnings in Madoff Case

Sherry Harowitz

Harry Markopolos, an investment expert, repeatedly warned the Securities and Exchange Commission about concerns he had with Bernard Madoff's investments, but the SEC ignored the warnings for a decade, Markopolos told a congressional committee today.

Markopolos detailed his concerns about the Madoff investments as well as his failure to get SEC to act in 375 pages of testimony. Among his allegations are that on its face Madoff's approach could not work because it would have required almost all of the stocks in his portfolio to be consistently up. He details other flaws with the approach, which he said could only have generated high returns illegally or as a ponzi scheme. He notes that while the SEC would have him talk to staff, they were ultimately unresponsive.

He attributes the SEC's problems primarily to lack of real financial expertise within the organization and infighting among SEC regional offices.

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