Tuesday, February 03, 2009
The SEC Is a Paper Tiger
The Wall Street Journal today posted the testimony of one Harry Markopolos who testified in front of Congress today regarding the Bernie Madoff Ponzi scheme. He is a CFA and CFE(Certified Fraud Examiner in the private sector of the financial services industry. Over the past decade he and three similarly credentialed colleagues accumulated a file of evidence that proved Bernie Madoff was a fraud as far back as 2000. They repeatedly went to the SEC with it and even as they gathered more and more evidence, they were repeatedly blown off by the SEC. Even when pointed straight at it, the SEC couldn't comprehend one of the biggest frauds in history. Meanwhile they are investigating Steve Jobs on the basis he isn't sharing the most intimate details of his health problems with the entire world.
This report is quite damning. Four private citizens could have stopped this a long time ago, if only the staff of the SEC had had the good sense to listen to them.
A good summary of why the markets remain so thoroughly paralyzed is on page 28 (printed page) or 35 in the pdf on line. The full report is 65 pages but reads very well. It's worth the time if you are interested in this kind of thing.