House delves deeper into Madoff case
The House Financial Services Committee will hear today about Bernie Madoff's company and $50 billion pyramid scheme. Lawmakers want to figure out why the SEC didn't catch the fraud. Janet Babin reports.
The U.S. Securities and Exchange Commission seal hangs on the facade of its building in Washington, D.C. (Chip Somodevilla/Getty Images)
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Steve Chiotakis: Today, Congress will delve deeper into the financial forays of Bernard Madoff. He's accused of a massive $50 billion pyramid scheme fraud. Lawmakers want to know how he did it and why the Securities and Exchange Commission didn't catch it. From North Carolina Public Radio, here's Marketplace's Janet Babin.
Janet Babin: The House Financial Services Committee will hear from the SEC and others today about Bernie Madoff's company.
Boston University professor Mark Williams says some of Madoff's business practices should have set off regulatory red flags:
Mark Williams: It didn't have what we call checks and balances, which you'd typically see in a broker dealer.
Tips about Madoff's alleged scheme have trickled into the SEC since 1999, but apparently the agency failed to follow up.
UNC law professor Tom Hazen says Madoff was running an investment advisory business, but he told the SEC otherwise:
Tom Hazen: His claim was he was just executing trades, and not actually giving advice. Had he been regulated as an investment advisor, then there would have been a lot closer SEC scrutiny.
SEC Chairman Christopher Cox has already acknowledged multiple failures in investigating allegations about Madoff. Madoff's clients lost an estimated $50 billion.
I'm Janet Babin for Marketplace.
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