The Bigger Con Is SEC Officials Pretending To Work

Yesterday, Chris Cox, the chairman of the SEC threw his mercy on the court.

The Commission has learned that credible and specific allegations regarding Mr. Madoff's financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff, but were never recommended to the Commission for action.

Cox is authorizing an Inspector General probe. Someone honorable might resign in disgrace. Apparently, the investigations of Madoff it finally got around to relied on VOLUNTARY information from Madoff himself. Madoff's niece married an SEC official who was involved in oversight of Madoff's brokerage business. The amount of obvious, credible warning signs that the SEC missed in this case are growing. I would simply have looked at the fact that Madoff's own sons' foundations invested elsewhere is a pretty decent sign in its own right. The reason that nobody at the SEC went after Madoff is that he was a "master of the universe."

Fusfeld added that during the 90's he had used Madoff as a witness in a securities case to which Madoff was tangentially connected. "The man had charisma," said Fusfeld."He was one of those people that, when he walked into a room, everyone stopped what they were doing and watched him."

Had the SEC watched him a little closer, however, numerous investors might have been saved some crippling losses.

Unbelievable.

Today, President-elect Obama introduced Mary Schapiro, a longtime regulator, to replace Chris Cox at the SEC. It's impossible for her to do worse, and I hope she wields the Madoff scandal as an impetus to do rigorous and effective oversight over these clowns, and I hope she is provided new regulatory tools to conduct that oversight.

Other regulatory appointments are profiled here.