James Forsyth

The SEC was tipped off that Madoff was a fraud in 2000 but did nothing

The SEC was tipped off that Madoff was a fraud in 2000 but did nothing
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An article in Mother Jones highlights out one of the most scandalous aspects of the Madoff case, the SEC's refusal to act on information it was given about Madoff: 

“Among those that did learn of Madoff's money management business was Boston-based Rampart Investment Management Company, Inc. In late 1999, Frank Casey, then a senior vice president at the firm, had surreptitiously obtained the Madoff fund's financials. He directed Markopolos and Chelo, who worked under him at Rampart, to reverse engineer Madoff's results with an eye toward creating a similar fund for Rampart's investors. What they discovered instead were discrepancies so obvious that Markopolos noticed them within minutes and "in less than four hours…proved mathematically that [Madoff] was a fraud," he told Congress. Markopolos took the team's findings to the SEC in 2000, but federal regulators refused to pursue the case”

Apart from the remarkable laziness of the SEC, this illustrates an important point: the problem was not a lack of regulation but how the it was applied, or not in this case. It is also worth noting that the SEC was equally useless under both a Democratic and Republican president.

Hat Tip: Andrew Sullivan

Written byJames Forsyth

James Forsyth is Political Editor of the Spectator. He is also a columnist in The Sun.

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