Harry Markopoulos Accuses SEC Of Colluding In Madoff Scheme

Earlier today Harry Markopoulos, a Boston based money manager, stood before the congressional panel charged with investigating the scheme and directed a series of scathing critiques to the U.S. Securities and Exchange Commission (SEC). Markopoulos became famous as the whistle-blower who helped unveil the scheme at Madoff Investment Securities but it allegedly took him almost 10 years to do it.

In early 2000 Markopoulos wrote a, now infamous, letter to the SEC warning them of a possible scheme taking place in Madoff’s company. The letter went unheeded. In 2005 the Bostonian went so far as send the organization an 18 page letter listing 29 “red flags” that were indicative of corruption at the Investment Securities company; still the SEC was slow to act.

Finally, as time proved Markopoulos’ conjectures true, the cases key whistle-blower aimed his guns at the SEC itself. At the congressional panel the money manager accused the organization of being guilty of “investigational ineptitude”.

According to Trading Markets, Harry Markopoulos went on to state that: "My experiences with other SEC officials proved to be a systemic disappointment and lead me to conclude that the SEC securities lawyers, if only through their investigative ineptitude and financial illiteracy, colluded to maintain large frauds such as the one to which Madoff later confessed."

According to the SEC an internal investigation is underway to determine how the scheme could have gone unnoticed despite warnings from as far back as 1999.

Madoff, an investment banker, former chairman of the NASGAQ stock market, and perpetrator of the Ponzi scheme, was arrested on December 11 on security fraud charges.

Ponzi schemes are a business model in which existing investors are paid not by making a profit but by getting money from new investors. No real liquidity exists; money is simply reorganized within the organization.

By: Alberto Ramos Cordero