Wednesday, February 11, 2009
Linda Thomsen, Fool or Knave?
"Lawmakers expressed frustration at regulators' explanations for failing to catch Bernard L. Madoff's alleged multibillion-dollar fraud but drew little blood because officials declined to discuss details of the case. Linda Thomsen, chief of the [SEC's] enforcement division, suggested in Tuesday's hearing at the Senate Banking Committee that federal prosecutors may pursue charges against Mr. Madoff over what they believe were his past lies to SEC officials during past examinations. ... 'We want to be sure to preserve the integrity of any criminal investigation,' she told the committee. ... An SEC spokesman declined to comment beyond Ms. Thomsen's testimony. The US. attorney's office decline to comment. ... SEC officials said they were understaffed to deal with the fast-growing investment-advisory business and tried to conduct examinations are frequently as they could", my emphasis, Kara Scannell at the WSJ, 28 January 2009.
"Government and industry regulators were put sharply on the defensive Tuesday at a Senate hearing over their failure to uncover the multibillion-dollar fraud scheme that Bernard Madoff allegedly carried out under their noses. ... SEC Enforcement Director Linda Thomsen said the SEC is committed to finding ways to bolster fraud detection after its breakdown in the Madoff case", Marcy Gordon at the Houston Chronicle, 28 January 2009.
If you read carefully, Thomsen said: the SEC didn't corroborate anything Madoff said. Now should the US attorney's office investigate Madoff, or the SEC as a securities fraud co-conspirator? Should the US attorney's office dust off the "ostrich instruction" and inform some SEC personnel, they will be indicted and were at best "wilfully blind" to the obvious. The SEC chose not to corroborate Madoff's statements. Why? The SEC is always understaffed. For what?
How will the SEC "bolster fraud detection"? Will it corroborate statements made by future Madoffs?