SEC Disciplines Employees For Not Stopping Madoff Fraud: Report
The Securities and Exchange Commission disciplined seven employees over their failure to stop Bernard Madoff's Fraud, according to The Washington Post.
The agency didn't fire anyone, the WaPo reports, but another employee resigned before the SEC took disciplinary action. The punishments included pay cuts, demotions and, in one case, a 30-day suspension.
Critics have alleged that the SEC bumbled the Madoff investigation by ignoring early tips and leads. The agency only caught Madoff after his sons turned him in 2008. Madoff is currently serving a 150-year sentence in prison for a Ponzi scheme that cost financial professionals, charities and ordinary Americans billions.
A 2009 report by the SEC's inspector general found that investigators were duped multiple times by Madoff and failed to follow up on obvious tips indicating that Madoff was involved in a slew of illegal activities, according to The New York Times. Following the release of the report, SEC chairman Mary Schapiro released a statement saying the Madoff incident was "a failure that we continue to regret."
After the SEC botched the investigation, the agency was subject to a torrent of criticisms from Congress, many of whom used the failed investigation as a reason to increase the SEC's budget, according to the Hill. An independent investigator Harry Markopolos wrote a book outlining his failed attempts to get the SEC to investigate Maddoff years before the scam came to light.
Madoff was arrested in 2008 after his sons turned him in to investigators for running a $65 billion dollar Ponzi scheme. He admitted to cheating thousands who invested with him based on the belief that he was running a legitimate business.
A federal judge threw out most of a $19.9 billion lawsuit against JPMorgan Chase filed by Irving Picard, the trustee seeking money for Madoff's victims. Picard said he plans to file an appeal to the suit.