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"When I was in financial software (06-07) they were basically a joke" I spent a few weeks causally reading testimony transcripts from the Madoff investigation

"When I was in financial software (06-07) they were basically a joke" I spent a few weeks causally reading testimony transcripts from the Madoff investigation when these were published by the SEC. The SEC was far worse than a joke. The SEC was an enabler. Years and years of Potemkin audits blessing Madoff and his Ponzi scheme as a worthy investment allowed hundreds of individuals and investors to rationalize their participation in the fiction. Complaints were filed, absurdities were pointed out and the SEC turned a blind eye to it all. By the time the gears finally stripped the SEC had had its nose rubbed in it multiple times.

bitumen 9y ago
I recently read a book called The Chickenshit Club that shined a fairly unflattering light on the rationale behind SEC and DOJ cowardice/enabling. I'm not sure that the SEC could have changed overnight, or if they're still going after slam-dunks, and these popular examples just fit the bill.
conistonwater 9y ago
> The SEC was an enabler. Years and years of Potemkin audits blessing Madoff and his Ponzi scheme as a worthy investment allowed hundreds of individuals and investors to rationalize their participation in the fiction. This doesn't sound right at all, the SEC doesn't conduct audits. See, for example, [1]. [1] Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme - Public Version https://www.sec.gov/files/oig-509.pdf https://www.sec.gov/files/oig-509.pdf
- topspin 9y ago
  "the SEC doesn't conduct audits" Poor terminology on my part I believe. The term used in the report is "examination." SEC staff, including Sollazzo, Lamore, Ostrow, Nee (mentioned in the report you cite) conducted on-site examinations of Madoff's operations. Similar events occurred with Madoff at least four times with over a period of about 20 years. I'm having trouble locating the actual transcripts now[1]; they appear to have disappeared into the memory hole. At one time the mass of raw PDF files were available from the SEC website. I recall very specific testimony from these examiners including details such as the type and locations of the offices provided for examiners by Madoff, recollections of in person meetings in Madoff's office and details about the physical files involved. The results of these 'examinations' were cited by Madoff to establish credibility with investors. [1] Here they are: https://www.sec.gov/news/studies/2009/oig-509/oig-509_exhibits.htm https://www.sec.gov/news/studies/2009/oig-509/oig-509_exhibi... Here is an SEC staff accountant discussing documents received from Madoff: https://www.sec.gov/news/studies/2009/oig-509/exhibit-0262.pdf https://www.sec.gov/news/studies/2009/oig-509/exhibit-0262.p...

bitumen 9y ago

I recently read a book called The Chickenshit Club that shined a fairly unflattering light on the rationale behind SEC and DOJ cowardice/enabling. I'm not sure that the SEC could have changed overnight, or if they're still going after slam-dunks, and these popular examples just fit the bill.

conistonwater 9y ago

> The SEC was an enabler. Years and years of Potemkin audits blessing Madoff and his Ponzi scheme as a worthy investment allowed hundreds of individuals and investors to rationalize their participation in the fiction. This doesn't sound right at all, the SEC doesn't conduct audits. See, for example, [1]. [1] Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme - Public Version https://www.sec.gov/files/oig-509.pdf https://www.sec.gov/files/oig-509.pdf

topspin 9y ago
"the SEC doesn't conduct audits" Poor terminology on my part I believe. The term used in the report is "examination." SEC staff, including Sollazzo, Lamore, Ostrow, Nee (mentioned in the report you cite) conducted on-site examinations of Madoff's operations. Similar events occurred with Madoff at least four times with over a period of about 20 years. I'm having trouble locating the actual transcripts now[1]; they appear to have disappeared into the memory hole. At one time the mass of raw PDF files were available from the SEC website. I recall very specific testimony from these examiners including details such as the type and locations of the offices provided for examiners by Madoff, recollections of in person meetings in Madoff's office and details about the physical files involved. The results of these 'examinations' were cited by Madoff to establish credibility with investors. [1] Here they are: https://www.sec.gov/news/studies/2009/oig-509/oig-509_exhibits.htm https://www.sec.gov/news/studies/2009/oig-509/oig-509_exhibi... Here is an SEC staff accountant discussing documents received from Madoff: https://www.sec.gov/news/studies/2009/oig-509/exhibit-0262.pdf https://www.sec.gov/news/studies/2009/oig-509/exhibit-0262.p...