U.S. acknowledges could uncover fraud 17 years ago Madoff

The biggest financial scam in history would not have been so if the Securities and Exchange Commission of USA (the SEC, for its acronym in English) had acted with diligence. That's the conclusion of the report of the agency's own inspector general, David Kotz, noting that the SEC failed to investigate six credible allegations pointing to Madoff. Kotz recognizes that with the first complaint of 1992, the supervisor "lost the opportunity to uncover Madoff Ponzi scheme 16 years before he confessed," last December. Supervisors wasted five more times before the confession of the infamous fund manager. Worse, Madoff exhibited successive-and unsuccessful-SEC investigations to its customers to overcome the doubts that might arise.

"The fact that the SEC had conducted inspections and investigations to detect fraud without giving credibility to their operations and had the effect of encouraging more individuals and entities to invest with him," says the report's summary, 450 pages, whose content Full be made public within days.

The SEC staff is back and half in the devastating document, which states that the regulator up to three inspections conducted two investigations and business Madoff, "but none so thorough and diligent." The agency, according to Kotz, "received detailed information for years to justify a broad and deep investigation to Bernard Madoff.

In 1992 the defendant was illegal intermediary Avellino & Property, which marketed investment Madoff. The research team from the SEC, which was "inexperienced," the report said, did not follow the money trail and settled close to the intermediary. As the inspector general, the SEC faced this and five other complaints in a way superfluous, without paying due attention.

The second was presented in three versions in May 2000, March 2001 and October 2005. The first two were discarded and only paid attention to the third version, which (under the title "The biggest hedge fund world is a fraud") Details 30 warning signs suggesting that Madoff executing a pyramid scam.

But neither that nor the May 2003 of a fund manager, the April 2004 of another financial firm, the October 2005 of an anonymous informant, or the December 2006 of a "concerned citizen" was used to discover the scam.

As if that were not enough, the inspector's report cites two reports published in the press in 2001, which challenged the returns promised that Madoff, described as "unrealistic" because they were adversely affected by market turmoil which swept over the collapse of the bubble.

Although more than perhaps Kotz draws attention to is the fact that in the following tests on all these claims, researchers overlooked details that were clearly "suspicious" and not to ask about aspects Madoff "contradictory" and " inconsistent "detected in hedge fund operations.

Then-SEC Chairman Christopher Cox was recognized after uncovering the plot that the agency had committed "multiple failures" to reliably detect which it says is the biggest fraud in the history of Wall Street, valued at 65,000 million dollars (about 45,000 million euros).

Cox had no alternative but to instruct Kotz, one of the most critical work in the SEC, to investigate what happened at the agency and why they were ignored numerous warnings activated. Without wasting a minute, the inspector general launched an internal investigation, which included the personal relationship he had with the Madoff family. Should clarify to what extent the fact that Shana Madoff-niece of the fraudster, had an affair with a former inspector was able to influence the SEC. Kotz's report starts by mentioning the relationship, but reiterates that it has evidence that could have "interfered with the ability of staff to do their job."

Mary Shapiro, the current chairman of the SEC, he lamented the failures and made clear that compel us to reform oversight. "We have tightened our procedures and put more skilled personnel in the line of fire", hammered, in an attempt to reconstruct the image of the agency.