Why didn't the SEC catch Madoff early on?
- Anonymous1 decade agoFavorite Answer
Arthur Levitt, Jr. was the longest serving head of the SEC. Do a Google search on him, see what pops up.
He was appointed by Clinton in 1993 and again in 1998. He left in 2001, so he covered the entire Clinton administration.
Levitt gave Madoff a free pass because they were both members of the Harmonie Club, a social club for the ultra wealthy in NYC.
Madoff was first reported to the SEC in 1992:
Report: Regulator was tipped off about Madoff fraud as early as 1992
"a suspicion of trouble at Madoff Investment Securities arose as early as 1992 when customers of Avellino & Bienes, a fund that invested all its money with Madoff, complained about documents making a seemingly impossible promise of "100%" safe investments. Although the SEC shut down Avellino & Bienes, the agency only made a "brief and very limited" examination of Madoff."
Avellino & Bienes was shut down by the SEC in 1993, the year Levitt took charge.
Levitt also gave a special exemption to Enron, exempting it from accounting rules. This special exemption led directly to the Enron scam and the subsequent meltdown of the company, which took down a major chunk of the economy with it. It also led to the discovery of similar fraud at many other companies, fraud that got its start in the Clinton years.
BTW, this fraud was busted on Bush's watch. So if Bush was buddies with Kenny Boy, he wasn't a very good friend. Not as good as Levitt and Madoff.
If I was going to pick one individual who was most responsible for the rampant fraud of the Clinton years, it would have to be Art Levitt.
BTW, did I mention that Clinton appointed him TWICE? That's unprecedented. Most SEC chairs had a tenure of two or three years. The second longest was five years for Manuel Cohen under JFK.
Levitt stayed as the chair for Clinton's ENTIRE EIGHT YEARS.
- BigBubbaLoveLv 61 decade ago
Despite what Obi Con says, the SEC is non-partisan. They let Madoff slide because they have been corrupted by big business. Corporations pay off SEC agents to look the other way. Madoff was even on tape in a phone conversation explaining this very fact. This evidence was presented in his trial.
The SEC, and the entire government, is ineffective and inefficient because of corporations corrupting the system. Predatory capitalism, greed, and corporations have destroyed our country and our constitution. Our lawmakers, government officials, and law enforcement entities are on the take. They are up for sale, and the corporations are buying.
If you want to fix government, then get corporations out of our government. The problem is not government, the problem is private corporations corrupting our system.
- MikeGolfLv 71 decade ago
Because the SEC typically only responds to complaints. Sadly the SEC typically operates in a reactive role instead of proactive.
The people who really should have been paying attention were Maddoff's investors. These people were all professionals who _knew_ that there was something wrong but did not look closer as long as they were making above-market returns. They then put on the 'victim' hat when the fantasy ended.
- 1 decade ago
Why would the SEC investigate one of their biggest Democratic Donors???
Money made them turn the other way......
$25,000 each year for the past four years to the Democratic Senatorial Campaign Committee during the time it was run by Sen. Schumer.
The Democratic Senatorial Campaign Committee, which received $100,000.
Senate Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd, Connecticut Democrat, received $1,500 from the Madoffs
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- MattLv 41 decade ago
Good Question. Why didn't his smart institutional investors demand some type of evidence he was actually investing the money? A lot of good questions could be asked with that one.
- Anonymous1 decade ago
One would think that in a market where a 3% return was a home run, people would tend to notice a 50% return as something worth investigating.
- Anonymous1 decade ago
Incompetence, and how many got fired more incompetence.So let see if they do better at health care.It's bigger they would have a big cluster f$$k than.
- Anonymous1 decade ago
Because they were on orders to let him do it. He was laundering money for Goldman Sacks and when the economy blew up he was the patsie.
- da.yooper57Lv 61 decade ago
Republicans gutted the SEC's budget and removed any real oversight.
- good guyLv 71 decade ago
they were certainly warned about him early enough, but since boy george had cut the SEC staff and budget, they had fewer resources (money and manpower) in which to investigate.