The watchdog of the Securities and Exchange Commission has found that the agency consistently mishandled its investigations of Bernard Madoff's business, despite ample warnings of the multibillion-dollar fraud.But SEC inspector general David Kotz's report found no evidence of any improper ties between agency officials and Madoff.
Despite speculation that senior SEC officials may have tried to influence the probes, a summary of Kotz's report released Wednesday also found no evidence of that.
The SEC enforcement staff, conducting investigations of Madoff's business, "almost immediately caught (him) in lies and misrepresentations, but failed to follow up on inconsistencies" and rejected whistleblowers' offers to provide additional evidence, the report says.
Revelations in December of the agency's failure to uncover Madoff's massive Ponzi scheme over a decade touched off one of the most painful scandals in the agency's 75-year history.
Between June 1992 and last December, when Madoff confessed, the SEC received six "substantive complaints that raised significant red flags" regarding Madoff's operations. But "a thorough and competent investigation or examination was never performed," the report says.
Many of the SEC staff who conducted the investigations were "inexperienced," according to the report.