QOTD: Updated

Filed in National by on June 29, 2009

Who is more at fault: Bernie Madoff or the SEC?

Update 11:47 AM: Madoff was sentenced to 150 years in prison.

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Comments (14)

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  1. Unstable Isotope says:
    June 29, 2009 at 10:03 am

    Of course Madoff is responsible for being a crook. The SEC was very negligent, but not responsible for Madoff’s crimes.

  2. John Young says:
    June 29, 2009 at 10:06 am

    UI nailed, but the SEC was worse than negligent and they did contribute to his ability to commit the crime in my opinion.

  3. PBaumbach says:
    June 29, 2009 at 10:11 am

    As a professional investment advisor, I would suggest that you have an apples:oranges issue.

    The SEC’s failure is broader, as it affects more people (perhaps every investor), it removes (or at least lessens) the confidence that investors had, that the SEC was fulfilling their regulatory duties appropriately, that they took their watch-dog responsibilities very seriously.

    My concern is that the Obama administration (which I typically cheerlead) named Mary Shapiro as the head of the SEC, and her background has been all on the brokerage side (similar to naming an ex-Exxon lobbyist to lead the EPA).

    We need the SEC to accept the ‘consumer-first’ approach that it had under past chairs Leavitt and Donaldson.

    On the positive side, the Treasury Departments recent release of a proposed change to the regulator system does appear to call the SEC as a better watchdog than it has in the recent past.

  4. John Young says:
    June 29, 2009 at 10:20 am

    Under Donaldson????

    This is the most instructive feature on this meltdown, period and methinks Donaldson does not have a consumer first approach: http://www.nytimes.com/interactive/2008/09/28/business/20080928-SEC-multimedia/index.html#

    Watch it.

  5. PBaumbach says:
    June 29, 2009 at 10:57 am

    I’ll give you that (Donaldson was no ideal SEC chair). I didn’t have any details one way or another on Donaldson, but I did on Leavitt (good stuff), and Cox (a waste of time–did nothing useful that I could find), and on Shapiro (bad stuff). I had given Donaldson the benefit of the doubt–perhaps much too lightly.

  6. John Young says:
    June 29, 2009 at 11:05 am

    I just think the SEC abrogated its responsibility to actually act as a regulator/watchdog. Never mind the repeated ignoring of this guy: http://www.businessweek.com/investor/content/jun2009/pi2009065_888396.htm

    the SEC was just a flat out mess from 1994-PRESENT. Not holding my breath on Shapiro fixing it either……money always talks, let’s see who walks.

  7. John Young says:
    June 29, 2009 at 11:49 am

    150 big ones: http://online.wsj.com/article/SB124604151653862301.html

  8. MJ says:
    June 29, 2009 at 11:50 am

    He should rot in hell. G-D will refuse to hear him on Yom Kippur.

  9. John Young says:
    June 29, 2009 at 11:54 am

    DV, I beat you…….

  10. PBaumbach says:
    June 29, 2009 at 12:02 pm

    Note that the WSJ article notes that Madoff victims were left ‘near destitute.’ The writer failed to mention that the SIPC covers Madoff’s victims, restoring up to $500,000 (over nine times the median net worth of Americans) per investor.

    http://www.bloomberg.com/apps/news?sid=apRaDdrKEoAc&pid=20601103

    Granted, the SIPC will need to go to the brokerage firms and Congress to shore this up, but I continue to be amazed at how this little tidbit keeps being ignored by the tabloid headlines.

  11. liberalgeek says:
    June 29, 2009 at 12:06 pm

    Actually, most were not directly invested, but invested through some other fund. Also, there were a number of charities that were invested for millions that have already or soon will cease operations due to the loss.

  12. John Young says:
    June 29, 2009 at 12:06 pm

    Those who invested with Madoff through his investment advisory firm, which he allegedly used to run the Ponzi scheme, won’t be covered by SIPC, said Stuart Meissner, a former securities regulator who is now an investor lawyer based in New York. Only direct investors in Madoff’s brokerage firm will be covered, he said.

    ‘Gray Area’

    If the securities appearing on statements were fictitious and not in customers’ accounts, “coverage becomes a gray area,” said Meissner.

    If SIPC makes an insurance payout, it may take up to two years for investors to get the distribution, Meissner said.

    http://www.bloomberg.com/apps/news?pid=20601213&sid=a6SuIr.sfbv4&refer=home

  13. G Rex says:
    June 29, 2009 at 5:38 pm

    I don’t think the SEC failed as an institution, but rather that individuals within the SEC were negligent, perhaps to the point of criminality. Remember, they all knew Madoff personally – he had been on the NASD Board of Governors – and he was a big Democrat donor. Senator Schumer (banking committee, helloooo?) had to return $30 grand in contributions. Oh, and his neice married somebody in SEC compliance.

    Whatever happened to that one guy who called the SEC a bunch of times to point the finger at Madoff? I don’t remember his name, but he got pretty worked up in a Senate subcommittee hearing. His bosses had been asking why he wasn’t making big returns like Madoff, and his gut reaction was that Madoff must have been cooking his numbers.

  14. John Young says:
    June 29, 2009 at 6:14 pm

    This guy: http://www.businessweek.com/investor/content/jun2009/pi2009065_888396.htm

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