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[Updates] Riveting Testimony by a Great American, Harry Markopolos!!!

By Larry Doyle on February 5, 2009 at 12:16 AM in American Consumers, Bernie Madoff, Current Affairs, Economy

(bumped up from early Wednesday morning . UPDATED with 3 videos)

UPDATE: FULL TESTIMONY via YouTube

BELOW: 1) MSNBC REPORT, 2) A.P. Video Report — both for quick summaries if you can’t watch the full testimony above — and 3) my original story on the testimony:


UPDATE: MSNBC REPORT:


Visit msnbc.com for Breaking News, World News, and News about the Economy

UPDATE: A.P.’s VIDEO REPORT:

Harry Markopolos says the Securities and Exchange Commission ignored his warnings about financier Bernard Madoff for years. Markopolos says he warned SEC staffers in Boston, New York and Washington. (Feb. 4)

This morning I have been witnessing the Congressional testimony of a great American, Harry Markopolos, in regard to the specifics of the Bernie Madoff debacle and the state of the regulatory world at large. His service and commitment are truly heroic. I hold him in the highest regard. America needs more men like Harry Markopolos!!

Mr. Markopolos and three of his colleagues dedicated thousands of hours to investigating the Madoff fraud over the course of more than ten years. His comments and condemnations are riveting. NOTES: You can watch the hearing online live via C-Span and live via CNN:

ponzi-testimony-image

I am going to report in bullet point form a number of his remarks:

Great American hero, Harry Markopolos

Great American hero, Harry Markopolos

1. The SEC has been totally incompetent and neglectful throughout this entire process. He provided the SEC with reams of evidence and tips for them to pursue. They never fully investigated.

2. There were significant turf battles between the SEC Offices in Boston, New York and Washington D.C..

3. Markopolos claims it took him a mere 5 minutes in reviewing Madoff’s reported returns to know they were suspect. It took him approximately 4 hours to confirm his suspicions based on reviewing options trading volume.

4. He recommends one governmental financial regulator to oversee all of the other regulators so that all information is shared and tips are pursued.

5. He provided 29 separate red flags on the Madoff fraud!!

6. The largest feeder fund to Madoff was Greenwich Fairfield. This entity utilized three separate auditors for 2004, 2005, 2006. Red Flag!!

7. Markopolos was obsessed with his pursuit in order to rid the system of a criminal fraud. He received no compensation for his work!!

8. Every money manager and investment advisor MUST have separate custodians to handle investor funds.

9. He maintains that Madoff had to have had a “lot” of help in perpetrating this fraud both inside and outside of his office.

10. He maintains that there are 12 other fund of funds in Europe that have provided a significant flow of funds into Madoff. He is going to release those names to the SEC tomorrow.

11. The SEC does not have the degree of professional expertise to detect, investigate, and pursue cases. The SEC should hire seasoned financial professionals and pay them on an “incentive basis” to unearth and process financial frauds.

12. In Mr. Markopolos’ opinion, while the SEC is incompetent, the NASD and its offspring FINRA are CORRUPT!!! FINRA is in bed with the industry. He recommends that FINRA read his report. He references that the regulators missed a number of failed and fraudulent practices including the Auction Rate Preferred market. Perhaps Mr. Markopolos also read FINRA’s 2007 Annual Report which highlights that FINRA had investments in Auction Rate Securities. When Mr. Markopolos remarks that FINRA is in bed with the industry, is he referencing that they are invested in hedge funds, fund of funds, and private equity? Our new SEC chair, former FINRA chair Mary Schapiro, should be compelled to answer these questions!!!

13. Mr. Markopolos will reveal another $1 billion fraud to the SEC tomorrow.

14. Mr. Markopolos offered to go undercover for the SEC to fully reveal the Bernie Madoff fraud.

15. Mr. Madoff attracted a LOT of dirty money, including funds from the Russian mob and Latin American drug cartels!! There were times when Mr. Markopolos feared for his life.

I can not speak highly enough of Mr. Markopolos and the character, integrity, and patriotism he has displayed throughout this process. His country, in the form of the SEC, failed him and failed all of us.

The question I ask is how and why did that failure occur? To think that these failures occurred merely due to incompetence and negligence is naive. Follow the money!!

I can only hope that Congress has the courage to reengage Ms. Schapiro and pursue the line of questioning that Mr. Markopolos has proposed for a thorough investigation of FINRA and which we highlighted here at NQ!! “Let’s Really Question Ms. Schapiro…”

Harry….YOU ARE THE MAN!!!

LD

  • cathnealon

    I as an American citizen and one who has worked hard all of my life to take care of my family was blown away this morning by a man with this kind of integrity, selflessness, humility and determination to bring to light the evil generated by Madoff. He stated that he did all of this work “for the flag, for his country.” Wow, thank you sir.

    • wodiej

      WHOA….well said, couldn’t agree more.

  • Doc99

    Follow the money …

  • obamastolemyboyfriend

    Harry Markopolos for President 2012!

  • alibe

    What is even more insane is how Markopolis talked about how corrupt FINRA is. And who did 0bama appoint to head SEC? None other than Mary L. Shapiro, who was the head of FINRA. I guess we can expect an incompetent SEC to be incompetent AND corrupt!!!!!

    Let’s make Harry Markopolos as head of the SEC!!!

    The hearing was terrific. Thanks for highlighting this. I called my Senators about this matter.

    • http://firefox AnnieCollier

      What is even more insane is how Markopolis talked about how corrupt FINRA is. And who did 0bama appoint to head SEC? None other than Mary L. Shapiro, who was the head of FINRA.

      I don’t suppose she was vetted was she? How do we get her into the sunlight?

      • LD

        If she was vetted they should have also thoroughly vetted Finra as well.

        She needs to take the seat again and go under the bright lights. In fact, I’d love to see Harry vs Mary!!

        • http://firefox AnnieCollier

          Now that would be a movie! I’m guessing Harry would have Mary taking the 5th.

  • http://www.rabblerouserruminations.blogspot.com/ Rabble Rouser Reverend Amy

    Thank heavens there are still people with this kind of caliber in government. If only most of them were like this, our gov’t would be so much better off.

    My hat is off to Makropolis for his courage, his conviction, and his hard work.

    • LD

      Amy….Mr. Markopolos is a private citizen and works independently. Your point is well taken and I concur that our government needs men and women like Harry Markopolos.

      Where are they?? Who are they??

      • Anna

        For one: Patrick Fitzgerald – US District Attorney – Chicago office. Went after Former IL governor George Ryan & all his boys and they are in jail. Scooter Libby (Valerie Plame CIA scandal) – got him and most recently Former IL governor Rod Blagovich.

        • hazeleyes

          Did Fitzgerald also go after Plame’s husband who was the person who ‘outed’ his wife who by the time she was ‘outed’ had long been out of the agency?

  • Linda C.

    This economy is never going to get out of the tank unless people go to jail and ethics and ethical people are put in charge of oversight. We have been having this problem since Enron and everything has been pushed under the rug with more corruption, negligence and contempt.

    Private money will not flow into the system until the system is cleaned up. I don’t care how many trillions of tax payer money we want to throw at this to “encourage” private investment. If the private sector investor cannot trust the private sector system, they will sit on the sidelines with their money. We will waste our taxpayer money and the economy will continue to go down the tubes.

  • avwrobel

    This is all great after the fact, but all that’s happened financially was the direct result of Alan Greenspan’s fairy tale-market philosophy tht people always do the right thing and that the market will weed out crooks. Now we’ll go through a process of protecting ordinary American’s money and interest for a while (I give it 2 years) before the crooks’ lobbyists poke holes in regulatory oversight with the help of the Dems and Repubs, if they haven’t started already.

  • http://ladyboomernyc.wordpress.com LadyBoomerNYC

    LD — You did a wonderful job of recapping, and indeed Mr. Markopolos’ testimony was riveting. I didn’t catch that he’d be revealing part deux tomorrow. Phew, he is brave and dedicated. He did all this based on integrity, because it’s right.

    What’s sad is that Markopolos recommended that in order to keep things in check and honest, whistle blowers and examiners must be well-compensated to spot and come forward with irregularities. Is it just me, or isn’t that what we pay them for in the first place? I don’t doubt that he’s right, but in the end, we’re reinforcing that being honest is tied to a bonus. I don’t know, perhaps I’m wrong. I’m not against bonuses and believe that people should be compensated for what they do. It just seems odd that we’ve come to coupling ethics and regulations with money in order to have honesty in government.

  • wodiej

    This is a true American, what our country used to stand for, integrity, guts, honesty.

  • alibe

    Harry Markopolos for head of the SEC!!!

  • foxx

    Folks, Schapiro’s appointment is not an accident. Wall St. paid for Obama and she is part of their payback. The corruption continues at the highest (sic) level.

    It is time for a citizen revolt.

    • LD

      Foxx….I have the same questions which is why I am compelling Congress to requestion her.

    • FranSC

      foxx and others: Why was/is the SEC so afraid of Madoff when they were over HIM?? How is it that he was that powerful? Who are they afraid of now causing them to claim the privilege of not answering the congressional questions. Please explain.

      • Anna

        The SEC is understaffed and over-lawyered – Harry had this on the money. Also they have little or no jurisdiction over hedge funds, basically just to make sure they’re registered as IA’s (pay the fee, take the exams, etc) but they don’t look at the books or “approve” investments – they just respond to complaints. They are incredibly arrogant in their dealings with the industry which is laughable as they don’t understand alot of the complex products they are “overseeing”. The general public thinks they are a watchdog but they are far from it – more like a rubber stamping agency.

    • NoBamaNoWay

      word, foxx; wash dc is rotten to the core with corruption, as are most of the largest companies and financial institutions. they are taking us poor working folks for a ride, and telling us we’d better like it.

  • Peggy Sue

    Reading through that list of 15 remarks is just sickening, Larry. Thanks for the article. And there’s more coming from Markopolos tomorrow, another 1 billion dollar fraud? The corruption is just mindboggling. And treasonous. Funds from the Russian mafia and drug lords!

    These guys need to be hung up by their thumbs. Or other extremities. The fact this is so widespread and deeply embedded is really scary. We’ve been living with a serious cancer and many of us didn’t know it. But it’s time to cut it out, scrape it clean. And then, hope the patient lives.

    I tip my hat to Mr. Markopolos. The man has real guts and integrity.

  • Patience

    If Madoff ripped off the Russian mob and Latin American drug cartel, I can’t imagine he’s long for this world. On the other hand, I wonder if those investors received a different kind of return on investment — didn’t Madoff have a lot of clients in Florida? Could one or more of them have been in a position to look the other way while drugs flowed more easily into the US via FL?

  • LD

    Patience….follow the money!!!

    • bachnan

      Larry, great report, and great idea about following the money. Do you mean the money going to the politicans, or something else? Help!!!

      • Larry Doyle

        Bachnan…I think we should follow the money going to the politicians, the crooks connected to this Madoff fraud, the abusive and egregious payouts to CEOs on and off Wall Street, and wherever else it takes us. If you want answers, “follow the money.”

  • Judy L. NC

    Somebody needs to watch his back overnight.

    • Peggy Sue

      You know, Judy, I was thinking the same thing. I hope he has a security guard.

  • Alicia

    Outstanding post. Thanks for the summary. Thus far our strategy has been to hand over more money. One can only hope that some actual cleaning occurs.

  • bert

    Great post with great info. I appreciate the bullet notes. Short, concise, full of information. Thank you. And a hat tip to Harry Markopolos – a true American hero.

  • oowawa

    This is going to make a great movie. The roles of Madoff & Markopolos will be to die for.

    But please–no Tom Cruise!

    • Judy L. NC

      Tom Hanks

      • FranSC

        I would prefer an independent, not an Obamabot.

  • Pingback: Markopolos

  • ChooChooMagoo

    Awesome post LD. Was able to catch the tail end of the hearing. Wow. Has Schapiro all ready been confirmed and sworn in? Daschle may very soon start looking like one Obama’s minor appointment mistake.

  • Patience

    Anyone have any ideas how an average person can follow the money? Are there any detailed reports or lists of Madoff’s clientele? Reports of any campaign contributions he may have made?

  • Patience
    • beebop

      Some of the people who ultimately lost money were investors in the funds that invested and didn’t even know that they had money with Madoff.

      The media has made a big issue of the fact that most of the investors were big shots — as if in a class system wealthy people can afford to lose money so no big deal. The truth of the matter is that not everyone who lost money was wealthy independent of what was in the scam Bernie was running. There was a story here (Ohio) locally about a woman whose inheritance from her father was in the Bernie fund. It was going to be her retirment and education for her children. She has nothing left. And. I am terribly disturbed by the attituded that just because it was wealthy people that somehow that makes it less horrific. Next thing you know, people will be lighting torches and marching on the castles. Whatever happened to the “with hard work and perseverence, you can do anything in America” attitude?

  • CG

    Markopolos stated he was concerned for his safety… scary…

    • cynic

      As he well should have been. His investigation threatened a multi-billion dollar criminal enterprise. He’d passed information on to the proper regulatory authorites, but nothing was happening. That thought may have crossed his mind every time he walked to his car in a dimly lit parking garage, got in, and turned the ignition key.

      Markopolos is a stand-up guy.

      • cynic

        And what is it about those “off” names, anyway? Bernie Madoff, Jack Abramoff, Boris Badenoff…

        • Larry Doyle

          Cynic….IMO, an unnecessary and uncalled for generalization.

          • cynic

            Yeah, totally I agree with you, and nothing serious was meant by it. Strike that! I spent too many childhood hours watching Rocky and Bullwinkle. (I always secretly admired Boris, to tell the truth, and had a thing for Natasha.)

  • Jerry

    Who is going to play Harry Markopolos in the movie? Madoff?

    • Always Learning

      My picks would be Dustin Hoffman as Madoff and Sean Penn as Markopolos.

      • http://firefox AnnieCollier

        I’ll take Paul Giamatti as Harry. I’ll have to think about Madoff. Who could be slimy and wormy enough?

        • tango

          Blago? Gosh knows, he’ll need the work if he doesn’t end up doing prison time.

          • AlexisM

            Maybe Blago will sing, save himself some jail time, and save us from the biggest joke “President” in history.

        • leslie

          Frank Langella as Madoff … He is as nasty as they come [in the movies, at least (see "Dave")]

  • Patience

    The list I posted a link to of Madoff’s investors wasn’t particularly enlightening as far as following the money. It only reports possible losses and exposure, not profits.

    What we need is a list of investors who ultimately made money — but more importantly — at what rate of return they profited. Madoff reportedly offered unreasonably steady rates of return in order to lure investors into his scheme, but I’ve read articles that’ve hinted some of his investors may have made killings. No names named as far as I’ve learned. This is what we need to know.

  • TeakWoodKite

    Thanks for the highlights LD. For the life of me I can’t figure out how with all the “red flags” how this scam was not nipped in the bud.

    Madoff HAD to have had other people involved to pull this off.

    • LD

      No doubt. Additionally I have to believe others were being paid to keep quiet.

      This story is a LONG way from being complete.

  • mountainaires

    Markopolous is a man of great integrity, and I cannot applaud him enough for his courage and determination in the face of some extremely frightening investors who could have easily snuffed him, if they’d thought it would help them.

    How was this not nipped in the bud, indeed. Well, Chris Cox should be able to answer that question, the pathetic piece of waste product was the one who was supposed to be held accountable for the SEC.

    No one is ever “held accountable” anymore. It’s why the country has little confidence anymore in the banking system, the federal regulators who oversee it, or the market. That doesn’t bode well for our economy.

  • http://! stodgie

    speaking of informers, rezko has been moved out of jail in chicago. i wonder where fitz put him. he was singing and said he didn’t care for his crib in the jail very much. he must be singing on tune.

    WE NEED AND DEMAND REFORM. can every high level flunky at the sec. start over.

  • http://! stodgie

    thinking about this, i feel madoff might or should be fearing for his safety considering whose money he took.

    • http://firefox AnnieCollier

      Maybe that’s who got the million dollar jewelry shipments…supposedly went to “relatives”.

  • LD

    Stodgie….Given that he was taking “dirty” money he was most likely protecting them in the process. Birds of a feather.

  • haris bisias

    Members of obama’s economic team were part of the same greed and selfshiness he now criticizes.
    The veting process for this administration has been horrendous. Many of these people shouldn’t be appointed, they should be indicted. I guess
    honest and decent people like Harry Markopoulos don’t have a place in today’s governments.
    Obama promised change, but he has filled his administration with corrupt and incompetent Washington insiders. This is extremely dissapointing;

  • socalannie

    This story blows me away. My God, how can our govt be so freaking lazy and/or corrupt? Thanks LD for this story; loved the way you outlined it, and got right to the main points.

  • MBC

    Thanks LD for this post. I am hoping as the engineer of this train you will continue to help us follow the money? I have called Sen. Arlen Spector’s office so many times these past few weeks, I have it on speed dial. I don’t call Bob Casey or Jason Altmire because they listen to their kids and Nancy Pelosi too much. What else can we do?

    • http://firefox AnnieCollier

      We in CA have no choice. Pelosi, Feinstein and Boxer. My congressperson, Sam Farr is strictly a rubber stamper for the Dims. However, I will bug Senator McCain especially about the SEC appointment. Truly disgusting.

  • LD

    I commend you for your persistence. Keep fighting for our country.

    I encourage you to e-mail your reps relentlessly. I also encourage you to have your family, friends, and colleagues read the material here at NQ and then do the same. Remember, for evil to propser it merely takes good people to remain silent. (or words to that effect..)

    Thanks for your support.

    • wodiej

      “Evil prevails when good men do nothing”
      Edward Burke

      • Winston

        That is one of my favorites and highly appropriate for this thread.

  • AlexisM

    I can tell you first hand that the problem is America doesn’t see White Collar Crime as that bad. My ex is in jail for it. He was young and stupid, and Americans were gullible. It was the SAME exact thing as what Madoff did. When my ex got busted, they thought that maybe I had something to do with it. Which was untrue, as I thought my ex was a “financial planner.” I had no idea. I got yanked into the US Attorney’s office and interrogated for two days by the IRS Criminal Division, the FBI, etc. It was horrible. But when I saw how lax they were about my ex and his friends and what they did…I said what the hell is going on? The FBI told me that White Collar Crime is considered “victimless crime.” In other words, if you didn’t get raped, murdered, etc. then it isn’t the same thing. We need to change the laws with respect to this stuff. It’s soooooooo easy to con people. If you knew how easy it is, you would die.

  • fiscalliberal

    LD – I just finished watching the whole session on C-Span. It should be interesing to see how CNBC treats this tomorrow morning.

    I would suspect that the integrety of the SEC in the industry is open to question, just as the ratings from the ratings agencies should be from the RMBS AAA ratings debacle.

    One could tell that the SEC people were there to stone wall. Now it is up to the media to pick this up for the public. It should be interesting to see if Obama or his press secratary comments on this.

    • LD

      I am SHOCKED at how little coverage this story has received and is receiving.

      • Gary McGowan

        LD, Thank you for bringing this to our attention and writing an excellent report here!

        Nancy Pelosi runs the House of Representatives. One would think she can get this story whatever degree of coverage her little heart desires.

        She, aided by her friends in the “financial community” are also in a position to steer this in the direction of a “limited hangout” and scapegoating direction.

        So far, we (the few who know these hearings are taking place) are seeing the tip of the iceberg. Laundering of hundreds of billions of dollars of drug syndicate money is an area yet to be explored more thoroughly, to mention but one facet. The relationship between the biggest financial houses and the dismantling of industries essential to U.S. national security is another. It goes on and on…

        • Gary McGowan

          Heres a little background and perspective…

          February 3, 2009 (LPAC)–In a Jan. 30 letter to Senate Majority Leader Harry Reid and other Senate leaders, Sen. Bernie Sanders (I-Vt.) demanded an investigation into what caused the current financial crisis. “We have an enormous responsibility to explain to the American people what led to this financial crisis, how did we get here, who is responsible, and what we can do to make sure that this never happens again,” wrote Sanders.

          “To accomplish this very important goal we need to examine what responsibility should be borne by individuals, corporations, and institutions for the poor decisions and foolish investments that have in large measure created this monumental crisis.”

          Sanders proposed the investigation be conducted by the TARP Oversight Panel, chaired by Harvard law professor Elizabeth Warren.

          In its favorable coverage of Sanders’ call, the Nation magazine headlines its piece “Bernie Sanders: Put Wall Street Under Oath.” Wall Street Under Oath was the title Ferdinand Pecora gave his book on the 1932-34 hearings he conducted, that exposed the criminality of the British-allied Wall Street financiers, and laid the groundwork for FDR reining them in.

          To bolster Sanders’ call, the Nation cited Pecora’s hearings and quoted from FDR’s first inaugural address:

          “Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

          “True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

          “The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.”

        • Gary McGowan

          Here is Pecora’s Preface to his 1939 book Wall Street Under Oath:

          Under the surface of the governmental regulation of the securities market, the same forces that produced the riotous speculative excesses of the “wild bull market” of 1929 still give evidences of their existence and influence. Though repressed for the present, it cannot be doubted that, given a suitable opportunity, they would spring back to pernicious activity.

          Frequently we are told that this regulation is throttling the country’s prosperity. Bitterly hostile was Wall Street to the enactment of the regulatory legislation. It now looks forward to the day when it shall, as it hopes, resume the reins of its former power.

          That its leaders are eminently fitted to guide our nation, and that they would make a much better job of it than any other body of men, Wall Street does not for a moment doubt. Indeed, if you now hearken to the oracles of The Street, you will hear now and then that the money-changers have been much maligned. You will be told that a group of high-minded men, innocent of social or economic wrongdoing, were expelled from the temple because of the excesses of a few. You will be assured they had nothing to do with the misfortunes which overtook the country in 1929-1933; that they were simply scapegoats sacrificed on the altar of unreasoning public opinion to satisfy the wrath of a howling mob blindly seeking victims.

          These disingenuous protestations are, in the crisp of a legal phrase, “without merit.” The case against money-changers does not rest on hearsay or surmise. It is based upon a mass of evidence, given publicly and under oath before the Banking and Currency Committee of the United States Senate between 1933-1934, by The Street’s mightiest and best-informed men. Their testimony is recorded in twelve thousand printed pages. It covers all the ramifications and phases of Wall Street’s manifold operations.

          The public, however, is sometimes forgetful. As its memory of the unhappy market collapse of 1929 becomes blurred, it may lend at least one ear to the voices of The Street subtly pleading for a return “to the good old times.” Forgotten, perhaps, by some are the shattering revelations of the Senate Committee’s investigations, forgotten the practices and ethics that The Street followed and defended when its own sway was undisputed in the good old days.

          After five short years, we may now need to be reminded what Wall Street was like before Uncle Sam stationed a policeman at its corner, lest, in time to come, some attempts be made to abolish that post.

          It is in the hope of rendering this service, especially for the lay reader unfamiliar with the terminology and conduct of The Street, that the author has endeavored, in the following pages, to summarize the essential story of that investigation–an inquiry which cast a vivid light upon the unhabitated mores and methods of Wall Street.

          Ferdinand Pecora
          New York City
          February, 1939

          The original Pecora Commission, an investigation into the financial machinations which led to the Great Depression, was conducted by the Senate Banking and Currency Committee from 1932 to 1934.

          The investigation was run by Ferdinand Pecora, a former prosecutor who hauled some of the most prominent bankers in the nation before the committee. Pecora smashed the myth of public service the bankers and their publicists had so carefully crafted, and helped build the public support President Franklin Roosevelt required to force Congress to pass tough regulatory reforms.

          The situation today is even worse than the one faced by FDR. Then, the U.S. still had a strong agro-industrial base and a citizenry which understood that infrastructure and production were the pillars upon which the economy stood. Today, those pillars have been severely weakened by deindustrialization and globalization, and our people blinded by the myth that economics is based upon finance.

  • wodiej

    The integrity of the SEC is not in question after listening to this guy. They don’t have any. They’re all a bunch of friggin’ crooks and they are helping tank the economy out of pure and simple greed. Billions in bonuses given out by companies bailed out w taxpayer money. Massive Wall St. trading fraud which incidentaly didn’t begin with Maddof.

    Unfortunately new and advanced techonology has allowed many opportunities for dishonest people to expose this country and the citizens to financial chaos. The foxes are guarding the henhouse so no one is being held accountable. Oh gee, there’s that word again, it keeps coming up. ACCOUNTABILITY. See this is what many people push. They make victims out of people instead of making them accountable. Everyone, from the poor to the rich, from people in the welfare line to people in our government. “It’s not my fault I had all those kids without being married”, “oh, I didn’t know I couldn’t deduct my kids summer camp on my taxes”, “oh, I don’t know why I didn’t pay taxes on that income even though the IRS told me I owed it years ago”. Who do these people think they’re kidding??

    The SEC needs to all be brought up on Federal charges. Any and all assets of those who are accountable for pursuing these types of cases, should be seized. Any goodies Maddof has socked away should be added to all of it in an attempt to compensate investors. And JAIL TIME.

    As an American, I thank Harry for his deceny and integrity. He gave a good, sensible, to the point statement at the hearing.

  • Arabella Trefoil

    Thank you for an excellent summary, LD!

    I can’t beleive that clients don’t demand safeguards. When I worked for an Investment Management firm, we had to do tons of compliance documentation for clients. We had to submit monthly trading report summaries, brokerage reports, etc. The clients checked everything. (Let me add that the firm I worked for was squeaky clean, and devoted a lot of time to remaining so.) We were not custodians. We had to balance our monthly statements to the custodian bank’s statements to the penny.

    The SEC – Please. They have limited jurisdiction, as many people do NOT know. They were going to start regulating hedge funds, but then the decision was made that they weren’t. I get the impression that the SEC is filled with young people who aren’t motivated to do anything hard. I don’t think they understand how money moves. It would be laughable if it weren’t sad.

    Get better people, and incent them to find fraud.

    I could say a lot more, but I won’t. I have no confidence in the SEC. You know the TV series “The Office”? Enough said.

  • Sassy

    Thanks LD.
    I saw a few minutes of the testimony in the replay before Washington Journal this morning…hope to catch it in it’s entirety.
    The committee was falling all over themselves praising him…now let’s see if they are serious, or merely playing to the cameras.

  • Gary McGowan

    Get Serious

    After every financial crisis there are investigations and prosecutions of high-profile people, designed to persuade the population that the laws are being enforced and the crooks punished. Such investigations tend to occur well after the fact, when the activity being investigated has ceased to be profitable.

    Perhaps the best example of the latter is the prosecution of Martha Stewart for insider trading, in the wake of the stock market crash of 2000. The case garnered huge publicity, allowed for much posturing on the part of regulators, but accomplished little else. It was a classic show trial.

    Another good example is the case of Enron, the energy-trading scam which collapsed in 2001. A number of top Enron officials were sent to prison–and rightly so–but the overall investigation and prosecution into the activities of the company was run as a cover-up.

    This cover-up began with the initial revelations of trouble at the company, through a press campaign which effectively focused public attention on one area of the company’s operations, and continued with a special internal company investigation of just that area; that investigation, in turn, became the basis for the Congressional hearings and the Federal prosecutions of company officials.

    What Enron really was, was a battering ram to force a deregulation of the electric-power industry, to allow for the creation of a spot-market pricing structure similar to the spot market in crude oil. Enron was largely steered in this imperial endeavor by two banks, Lazard and Rothschild, which had also played major roles in the creation of the oil spot market [prior to which oil was sold via long-term--5-10 year contracts--at something like $5 a barrel, if memory serves -gm].

    Rothschild had a man on Enron’s board at the time of the collapse, and one of the two men brought in to handle the company’s internal investigation was a former Lazard banker, while the company [Enron] itself was a long-time Lazard client.

    With the cover-up in place, the allegations of widespread bribery of public officials to grease the skids for deregulation and other crimes were never investigated, and the controllers of the operation walked away. … [By John Hoefle. Edited for brevity - gm]

  • Tricia Spiegel

    My NEW Hero!!!!!!!!!!!

    P. S. Why aen’t the guys he nailed now arrested as criminals? If a cop goes bad, he gets into real trouble–not just fired.

  • Gary McGowan

    I think he moderation monster ate one of my comments (made in addition to my 3 above.)