New York (HedgeCo.Net) – SEC Chairman Christopher Cox has launched a probe into his own agency after it surfaced that complaints made to employees regarding the possible misconduct of Bernard Madoff were never investigated.
Saying that specific allegations had been made to certain members of the SEC staff since at least 1999, Cox expressed his disdain that nobody had apparently followed up with the complaints of what eventually became a $50 billion Ponzi scheme.
“I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them,” Cox said.
The probe will be headed by Inspector General H. David Kotz and will look into the SEC’s internal policies and focus on areas of improvement, in addition to delving into the agency’s personal contacts with members of the Madoff family and business.
Cox also said that any agency staff members who had close personal contacts with Mr. Madoff will not participate in the SEC’s investigation of his company.
Cox confirmed in his statement what officials said last week following the arrest of Madoff; that he kept false books and other documentation to cover up his scheme to investors.
Madoff used new capital coming into his firm to pay returns to existing clients. He was arrested last week after confessing to his sons that his company, Bernard L. Madoff Investment Securities, was a “one big lie,” and a “giant Ponzi scheme," duping many large and reputable hedge funds and financial institutions.
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