Madoff’s simple truth
The SEC posted some interesting material on its website, including transcripts of interviews with Madoff. Given his recent comments on life behind bars, Madoff is probably glad to have a ‘prison break’ and talk to friendly FBI, SEC or whatever investigators. Madoff expressed his surprise that SEC investigators did not detect the Ponzi scheme during their audits. Madoff figured they were too focused on front running, expenses and independent contractors. If only the SEC auditors would have checked some basics with DTC or counterparties, according to Madoff, the game would have ended much earlier. A reconciliation of stocks that were presented in Madoff’s books with the stocks actually held by Madoff would be the end game. Did the SEC dismiss a ponzi scenario altogether during these audits? It seems so.
According to the NY Times :
“The paperwork gathered from the agency’s files also tell a tale of unseasoned, poorly managed people who were uncertain about what to do and unwilling to ask for help. In numerous instances, employees would share their doubts about Mr. Madoff in notes or e-mail messages, but then never take steps to press for more information
..The exhibits are certain to be carefully scrutinized by lawyers for several Madoff victims who are suing the commission for negligence. Those lawsuits argue that their losses could have been reduced or prevented if the commission had competently investigated the Madoff firm and pursued warnings about his mysteriously consistent profits.”
The total exhibits posted (follow link) consist of over 6,000 pages; for a rainy Sunday morning?
http://www.sec.gov/news/studies/2009/oig-509/exhibit-0104.pdf
http://www.nytimes.com/2009/10/31/business/31sec.html?_r=1&hp
http://www.sec.gov/news/studies/2009/oig-509/oig-509_exhibits.htm
