SEC Inspector General H. David Kotz told a congressional panel that the Securities and Exchange Commission is ramping up its investigation of Bernard Madoff and his $50 billion Ponzi scheme.
"Early on Dec. 17, 2008, we opened an official investigation into the Madoff matter," he told a hearing of the House Financial Services Committee. "Since then, we have been working at a rapid pace to begin this important work."
Kotz (pictured) noted that the SEC is investigating its response to early complaints about Madoff, as well as allegations of conflicts of interest with SEC officials, "including examining the role a former SEC official who allegedly had a personal relationship with a Madoff family member may have played in the examination or other work conducted by the SEC with respect to Bernard Madoff or related entities, and whether such role or such relationship in any way affected the manner in which the SEC conducted its regulatory oversight of Bernard Madoff and any related entities."
Rep. Gary Ackerman, D-N.Y., criticized the SEC's efforts during the hearing. He called Kotz the "Jacques Cousteau of the Keystone Cops," according to New York Magazine's Web site. "Whose job is it to protect investors?" he asked. "Because I wanna tell them that they suck at it."
One of Madoff's defrauded investors also testified. "I sit before you today a broken man," said retiree Allan Goldstein in his prepared testimony. "Throughout my life I have always believed that the American system of capitalism was the best-regulated in the world and could be safely relied upon by investors like myself. But the Madoff scandal and the SEC's inability to detect it despite repeated written and other warnings have taught me that this is not the case. I believe my government has failed us and we have suffered tragically as a result."
He has retained a law firm, Seeger Weiss, which is representing a group of former Madoff investors.
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