Senate Banking Committee Seeks SEC Records For Madoff Probe
By Daniel at 6 January, 2009, 4:17 pm
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WASHINGTON (Dow Jones)–As the House Financial Services Committee conducted its
first hearing Monday into the failures of the Securities and Exchange Commission
to uncover Bernard Madoff’s alleged Ponzi scheme, the U.S. Senate Banking
Committee began its own probe into the matter.
In a three-page letter sent to the SEC chairman, Senate Banking Committee
Chairman Christopher Dodd, D-Conn., and Ranking Member Richard Shelby, R-Ala.,
requested a list of documents that they hope will help the committee examine the
“regulatory performance” of the SEC and the Financial Industry Regulatory
Authority, or FINRA. FINRA is a non-governmental regulator for securities firms
that do business in the U.S.
“The Banking Committee is examining this case to determine how so many people
could have been deceived and how such a massive fraud could have gone undetected
for so long,” said Dodd in a statement. “American investors deserve an
explanation and the responsible parties must be held accountable.”
Among the documents requested include any complaint letters that market
participants may have submitted regarding Madoff and his business practices and
all documents pertaining to the various FINRA and SEC examinations of the Madoff
firm over the years.
The committee also wants internal e-mails from the SEC and FINRA that pertain to
Madoff, e-mails between SEC staff and Madoff’s firm and a list of positions that
Madoff employees held on SEC or FINRA-appointed advisory boards, among other
things.
The SEC came under withering criticism Monday as House Financial Services
Committee members sat through a five-hour hearing and blasted the agency for
failing to uncover the alleged fraud.
The agency’s inspector general, H. David Kotz, told lawmakers he is investigating
why the agency never uncovered the truth about Madoff, and hopes to issue reports
on his findings on a rolling basis to keep them informed. He also said he had
broadened his investigation by looking at whether or not the agency’s enforcement
and examination divisions are effective.
The kinds of documents Kotz said he is reviewing as part of his internal
investigation are the same types of documents requested Monday by the Senate
Banking Committee.
The committee asked the SEC to provide the documents by Jan. 22.
“It is critical that the Banking Committee fully understand what happened in the
Madoff affair,” Shelby said in a statement.
“Why was this not caught sooner? Who is responsible? Could the massive harm that
investors suffered have been prevented? The documents we are requesting will help
us get to the bottom of this and inform our efforts at regulatory restructuring
going forward. The American people expect accountability, and that is exactly
what they should get,” he said.
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