The Inspector General's report on the SEC investigations (yes, plural) of Madoff is out. In the tradition of defendant pleads not guilty news reports, the IG found that the SEC's investigations were incompetent. It is interesting that no internal discipline seems to be involved, or recommended (although have only seen summaries of the report). How could it be that there is no penalty of SEC incompetence? The private professionals - lawyers and accountants - are likely facing loss of license and severe financial penalties, so why shouldn't the people whose job it is to ferret out exactly such fraud, and who investigated the ponzi scheme several times without noticing it made no sense, face some sort of discipline? That, I think, would be an important step in the SEC recovering some credibility. It would be especially galling for an accounting firm facing SEC inquiries just now to listen to castigation for possible negligence when the agency managed to bungle so badly and apparently does nothing in the way of discipline.
One irony of the report is that one of the attorney's who conducted the incompetent investigation received high ratings for exactly that work.
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