Friday, November 20, 2009

Madoff on the SEC

"Bernard Madoff was dismissive of a compliance examiner involved in a [SEC] inspection into his firm, calling the man a 'blowhard' who talked tough, but didn't look at anything. ... [David Kotz's] report found that the SEC received six substantive tips over 16 years, but still failed to detect the fraud because of inexperienced staff, delays and a lack of communcation. ... 'It's very easy to do a third-party check. It's an absolute must,' Mr. Madoff said of how one investigates a Ponzi scheme. 'It's accounting 101.' ... Mr. Madoff said he thought he might get caught during another enforcement investigation when officials asked for his DTC number. He credited them with 'asking all the right questions' and was later shocked to learn the investigation would be closed", Sarah Lynch at the WSJ, 31 October 2009, link:

Blame the SEC staff, not SEC management. Why? Bernie, it's auditing 301, not accounting 101. But it's pretty basic. Who is the compliance examiner? He might make an excellent Big 87654 partner. Bernie, write him a reference letter.