House holds hearing today on Madoff scam and SEC’s role
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The Securities and Exchange Commission’s reputation is up for another battering today at a House Financial Services Committee hearing on the Bernie Madoff scandal.
SEC Inspector General H. David Kotz will lead off the hearing at 11 a.m. PST with the outline for his investigation into the mess.
From Bloomberg News:
An SEC investigation into its failure to stop Bernard Madoff’s alleged $50-billion Ponzi scheme will seek to determine whether his clout and relationships with regulators let his activities remain undetected for at least a decade. The probe will examine the extent to which Madoff’s reputation, developed while on SEC advisory committees, leading Securities Industry Assn. panels and serving as chairman of the Nasdaq Stock Market, ‘may have affected commission decisions regarding investigations, examinations and inspections of his firm,’ SEC Inspector General H. David Kotz said. Investigators will seek documents, interview agency officials and review e-mails from current and former staff members, Kotz said in testimony prepared for a congressional meeting today. Kotz has set Jan. 16 for SEC enforcement and examinations units to deliver relevant records.
SEC Chairman Christopher Cox ordered the internal review last month after conceding that the agency had opportunities to stop Madoff since 1999 but failed to act.
Madoff’s firm was examined at least eight times in 16 years by the SEC and other regulators, yet his scam continued undetected, the Wall Street Journal reported.
Cox won’t be testifying today. Other witnesses scheduled include Allan Goldstein, a retiree who invested in Madoff’s funds, and Stephen P. Harbeck, head of the Securities Investor Protection Corp.
Meanwhile, Madoff is scheduled to appear today in Manhattan federal court for a bail hearing.
-- Tom Petruno