Markopolos Blasts SEC for 'Financial Illiteracy'
February 4, 2009 | By Michael R. Crittenden
WASHINGTON -- Fraud investigator Harry Markopolos blamed the Securities and Exchange Commission's "financial illiteracy" for failing to heed his warnings about money manager Bernard Madoff.
Mr. Markopolos had warned the SEC for nearly a decade that Mr. Madoff was operating a Ponzi scheme. Mr. Markopolos is set to testify before a House committee Wednesday, and 311 pages of his written testimony became public Tuesday evening.
"There was an abject failure by the regulatory agencies we entrust as our watchdog," Mr. Markopolos said in remarks prepared for the meeting.
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His experience blowing the whistle to the SEC led him to conclude "that the SEC securities' lawyers if only through their ineptitude and financial illiteracy colluded to maintain large frauds such as the one to which Madoff later confessed."
Mr. Markopolos acknowledged that his team didn't go through official channels beyond the SEC to expose their suspicions. He said he didn't think the Federal Bureau of Investigation would take him seriously because of the SEC's decision not to pursue the case. His group didn't contact the Financial Industry Regulatory Authority because of the Madoff family's connections to Finra.
Mr. Markopolos said he and his team were worried for their safety because of Mr. Madoff's position as a powerful Street investor. This led them to submit some documents anonymously.
VERY instructive is Madoff "investors" whining that they have been screwed-over.......yet they made a lot of money over the years.......and took out a heckava lot more than they put in. Clearly, some of the "pigeons" were in on the scam.
Some investors gave Madoff AN ASTOUNDING $100-500 million to "invest" for years and years. Some investors even wrote PERSONAL checks to Madoff's subrosa spinoff vehicle that was not listed on the Securities Exchange (tax evasion modus?).
NOT EVEN ONE INVESTOR blew the whistle on Madoff.....all accusations of fraud were made by objective analysts outside the scam operation. And when fraud raised it's ugly head, Madoff and his investors scared off accusers. As Laura Goldman wrote---whistle-blowers were accused of being anti-Semitic---a very scary charge.
The now-famous 2005 Markopolis Report to the SEC raised fraud issues and yet the SEC "turned a blind eye."
It must be considered that the SEC backed-off investigating Madoff NOT because they are incompetent, but because SEC investigators risked losing their jobs if they zeroed in on Madoff. CAREER KILLER In the ranks of L/E, it is NOT advisable to imply people of Jewish heritage are doing something illegal---even moreso, it is a career killer to suggest it. FBI agents have been lacerated and condemned----even losing their jobs. Madoff's concentrating
Madoff seemed to know L/E dared not suggest he was doing something illegal and he may have colluded to use scary charges of anti-Semitism to forestall investigations into his operation.
Madoff had a lot to lose if he was investigated. He knew he was operating a fraud----a fraud that subsidized his lavish lifestyle; posh homes all over the world, several yachts, private planes, country club memberships, and purchases that included pricey watches and jewelry.
This article has little digs at Markopolous that he did not go to FINRA or the FBI. It is the SEC job. The SEC can call the FBI or the U.S. Attorney for help. FINRA would have been useless because Madoff was in bed with FINRA aka Mary Shapiro.
People do not realize that Markpolous was in the financial industry and news travels fast. Every knows somebody who knows somebody. If he was not careful, he could have been sued or blackballed in the industry.
Bernie had a lot of power. Someone I know who is not Jewish almost invested in Madoff through a bundler. People throughout the U.S. thought he was a miracle worker.