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SEC passed on probing Madoff

Posted on: Tuesday, 16 December 2008, 00:10 CST

U.S. regulators passed up opportunities dating back to 1999 to look into claims of fraud by New York trader Bernard Madoff, officials confirm.

Madoff was charged with securities fraud Thursday after his sons notified authorities that he had told them he had taken $50 billion from investors through his company, Bernard L. Madoff Investment Securities. The Securities and Exchange Commission says the case is one of the biggest fraud schemes in U.S. history.

Financial analysts expressed concern about Madoff on several occasions, including 1999, when the SEC was told in a letter that Madoff was running a Ponzi scheme, The Washington Post reported Monday. However, the SEC did not examine the operation until last week, the newspaper said.

Regulators may have overlooked the irregularities because Madoff also operated a legitimate business, the Post said. He was involved in the creation of Nasdaq and was an adviser to the SEC, and was a contributor to political campaigns.

Bernie had a good reputation at the SEC with a lot of highly placed people as an innovator as somebody who speaks his mind and knows what's going on in the industry, said Georgetown University law Professor Donald C. Langevoort, a specialist in securities regulation who served with Madoff on an SEC committee.

Large banks and small non-profits, as well as a number of celebrities, have lost money as a result of the company's practices.

The Securities Investor Protection Corp., which provides some protection against fraud to brokerage customers, said Monday it would liquidate Madoff's company, the Post reported.

Source: United Press International

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