At last, the SEC shows more respect to Markopolos (terrific name, right?) than to Bernie Madoff

Seven SEC employees disciplined on failure to stop Madoff fraud
By David S. Hilzenrath
November 11, 2011

The Securities and Exchange Commission, which failed to stop Bernard Madoff’s long-running investment fraud despite repeated warnings, has disciplined seven agency employees over their handling of the matter but did not fire anyone, a person familiar with the actions said.

An eighth employee resigned before disciplinary action was taken, the person said.

The SEC’s head of human resources had recommended that SEC Chairman Mary L. Schapiro fire one individual, according to a second person, an official involved in the process. The human resources head took that position after a law firm hired by the SEC to advise it on the disciplinary actions also recommended that the employee be fired, the official said.

The law firm, Fortney & Scott, “recommended formal disciplinary action, including removal from service,” for an assistant regional director at the SEC, the agency’s inspector general said in an August report.

The punishments given the employees varied and included suspensions, pay cuts and demotions, according to the first person familiar with the matter. An employee who received one of the most severe sanctions got a 30-day suspension and a demotion. Another was given a pay cut of about 6 percent. At the low end, one employee was suspended for seven days, another for three days and yet another was issued a “counseling memo,” which is a step below a reprimand.

The SEC’s disciplinary process with respect to the Madoff matter was concluded months ago, SEC spokesman John Nester said Friday. He had no other immediate comment.

When the law firm advising the SEC recommended that an employee be fired, it included a qualifier, the second person familiar with the matter said. If the SEC thought it was important to avoid losing that individual’s services, it could consider a different punishment.

The people who spoke about the disciplinary process did so on condition of anonymity. One cited the sensitivity of the information and the other was not authorized to discuss it.

Madoff’s fraud cost investors billions of dollars, shattered lives, and became perhaps the biggest embarrassment in the SEC’s history. After Madoff’s house of cards collapsed in 2008, a financial sleuth named Harry Markopolos became famous for having tried in vain to get SEC employees to see through the scam...

Bernard Madoff tries to squirrel away some valuable assets

Bid to Revoke Madoff’s Bail Cites His Gifts
By ALEX BERENSON
January 5, 2009

Contending that Bernard L. Madoff sent at least a million dollars worth of jewelry as gifts to family members and friends last month, federal prosecutors asked a judge on Monday to revoke his bail and send him to jail.


Mr. Madoff, who has been free after posting bail of $10 million when he was charged last month with securities fraud, remained free after the hearing pending a ruling by the magistrate judge, Ronald L. Ellis of United States District Court in Manhattan...

United States Attorney Marc O. Litt asked for revocation of Mr. Madoff’s bail, arguing that the gifts violated conditions that barred him from disposing of any of his assets.

The newly aggressive stance by prosecutors appeared to represent a serious deterioration in relations between the government and Mr. Madoff, who is said to have confessed to a huge Ponzi scheme last month and had seemed to be cooperating with investigators trying to unravel the fraud. In an interview on Monday evening, a lawyer for Mr. Madoff backed away from earlier statements that Mr. Madoff was helping investigators.

While Mr. Madoff faced the potential loss of his freedom in New York, the Securities and Exchange Commission came under heavy criticism from lawmakers in Washington.

At a hearing Monday afternoon, members of a House committee questioned why the agency had not uncovered Mr. Madoff’s fraud long before early December, when he is said to have confessed it to F.B.I. agents. The S.E.C.’s inspector general, H. David Kotz, promised a full investigation.

At the court hearing in New York, Mr. Litt told Judge Ellis that Mr. Madoff and his wife, Ruth, had mailed packages of valuables in late December to his sons, his brother and friends. Since mid-December, Mr. Madoff has been under house arrest at his luxury apartment on the Upper East Side of Manhattan, guarded by private security guards paid for by his wife.

By sending the packages, Mr. Madoff violated the terms of his bail agreement with the government, Mr. Litt said...