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Specifically, we found that Enforcement staff lacked adequate guidance on how to appropriately analyze complaints. As a result, Enforcement staff did not conduct a thorough review of a complaint brought to their attention in 2001regarding Madoff.
In addition, we found that Enforcement staff assigned to investigate Madoff were inexperienced and the investigation suffered from a lackof supervision which had consequences for the investigation.
We also found that Enforcement staff did not always exercise due diligence in their handling of critical information regarding Madoff.
As a result, we found that Enforcementstaff did not sufficiently review a complaint that included approximately 30 red flags indicating that Madoff was operating a Ponzi scheme.
Further, Enforcement staff investigating Madoff did not always seek assistance from other offices and divisions as needed during its investigation.
As a result, Enforcement staff had difficulty understanding key aspects of Madoff’s operations, including his purported trading overseas.
Additionally, Enforcement staff working on the Madoff investigation failed to verify information provided by Madoff with independent third-party sources, a critical step in order to determine whether Madoff was actually engaged in trading. Furthermore, Enforcement staff did not adequately evaluate information received by the SEC while the Madoff investigation was inactive pending closure.
Additionally, we found there were delays in completing administrative tasks related to opening a matter under inquiry on Madoff, as well as closing the investigation.
Imagine if this was oh, say, something like a fire department. Or say, an independent agency of the United States government which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets.
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