The watchdog of the Securities and Exchange Commission has found that the agency consistently mishandled its investigations of Bernard Madoff's business, despite ample warnings of the multibillion-dollar fraud.
But SEC inspector general David Kotz's report found no evidence of any improper ties between agency officials and Madoff.
Despite speculation that senior SEC officials may have tried to influence the probes, a summary of Kotz's report released Wednesday also found no evidence of that.
The SEC enforcement staff, conducting investigations of Madoff's business, "almost immediately caught (him) in lies and misrepresentations, but failed to follow up on inconsistencies" and rejected whistleblowers' offers to provide additional evidence, the report says.
Revelations in December of the agency's failure to uncover Madoff's massive Ponzi scheme over a decade touched off one of the most painful scandals in the agency's 75-year history.
Between June 1992 and last December, when Madoff confessed, the SEC received six "substantive complaints that raised significant red flags" regarding Madoff's operations. But "a thorough and competent investigation or examination was never performed," the report says.
Many of the SEC staff who conducted the investigations were "inexperienced," according to the report.
It cites examinations of Madoff's business done in 2004 and 2005 by the agency's inspections office. In both exams, the staff "made the surprising discovery" that Madoff's mysterious investment business was making far more money than his well-known wholesale brokerage operation. "However, no one identified this revelation as a cause for concern," the report says.
Even more surprising, the two exams were being conducted at the same time in different SEC offices without either location being aware of the other's action. It was Madoff himself who told one of the inspection teams that he'd already given the information they sought to the other team, according to the report.
Madoff pleaded guilty in March. He is serving 150 years in federal prison in North Carolina for a pyramid scheme that destroyed thousands of people's life savings, wrecked charities and gave already-rattled confidence in the financial system another jolt. The legions of investors who lost money included ordinary people, Hollywood celebrities and scores of famous names in business and sports -- as well as big hedge funds, international banks and charitable foundations in the U.S., Europe and Asia.
But SEC inspector general David Kotz's report found no evidence of any improper ties between agency officials and Madoff.
Despite speculation that senior SEC officials may have tried to influence the probes, a summary of Kotz's report released Wednesday also found no evidence of that.
The SEC enforcement staff, conducting investigations of Madoff's business, "almost immediately caught (him) in lies and misrepresentations, but failed to follow up on inconsistencies" and rejected whistleblowers' offers to provide additional evidence, the report says.
Revelations in December of the agency's failure to uncover Madoff's massive Ponzi scheme over a decade touched off one of the most painful scandals in the agency's 75-year history.
Between June 1992 and last December, when Madoff confessed, the SEC received six "substantive complaints that raised significant red flags" regarding Madoff's operations. But "a thorough and competent investigation or examination was never performed," the report says.
Many of the SEC staff who conducted the investigations were "inexperienced," according to the report.
It cites examinations of Madoff's business done in 2004 and 2005 by the agency's inspections office. In both exams, the staff "made the surprising discovery" that Madoff's mysterious investment business was making far more money than his well-known wholesale brokerage operation. "However, no one identified this revelation as a cause for concern," the report says.
Even more surprising, the two exams were being conducted at the same time in different SEC offices without either location being aware of the other's action. It was Madoff himself who told one of the inspection teams that he'd already given the information they sought to the other team, according to the report.
Madoff pleaded guilty in March. He is serving 150 years in federal prison in North Carolina for a pyramid scheme that destroyed thousands of people's life savings, wrecked charities and gave already-rattled confidence in the financial system another jolt. The legions of investors who lost money included ordinary people, Hollywood celebrities and scores of famous names in business and sports -- as well as big hedge funds, international banks and charitable foundations in the U.S., Europe and Asia.
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