SEC Suspended Employees and Cut Pay for Oversight Related to Madoff

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The U.S. Securities and Exchange Commission (SEC) disciplined eight employees for agency’s oversight related to Bernard Madoff’s Ponzi scheme.    The punishments are ranging from suspensions to written reprimands.

The sanctions were based on Inspector General H. David Kotz’s 2009 report on the agency’s dealings with Madoff.   According to the report, the SEC could have uncovered the Ponzi scheme well before Madoff confessed in 2008.   The report further detailed the agency’s failure to act on tips about Madoff’s multibillion-dollar fraud.   However, the internal investigation didn’t find misconduct or inappropriate influence from senior officials in reviews of Madoff.   The report urged the SEC to act on an employee-by-employee basis to prevent a recurrence of mistakes that kept the agency from halting the fraud.

Of the 21 people disciplined by the agency, 10 weren’t subject to review because they already left the SEC.    Of those remaining, 9 were recommended for discipline, and 1 of them left the agency before the matter was resolved.

An official who was recommended for firing was given a 30- day suspension and a pay reduction after it was determined that the firing would hurt agency operations.   Several others were given suspensions ranging from 3 to 30 days, with some reduced in pay grade. Two people received counseling memos, the mildest level of agency discipline.

The SEC hiredWashingtonlaw firm Fortney & Scott LLC to make disciplinary recommendations with SEC Chairman Mary Schapiro making the final decisions.   The identify the employees or the offices where they worked remain undisclosed


Anna Timone (195 Posts)

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