Wow. It’s going to be hard to pull out of the mudpit left by the artillery barrage Markopolos just adjusted onto their heads, but the SEC is going to try, damnit.
Written statements (which are almost universally useless) are read into the record.
These consist of:
Four descriptions of what the SEC does. (None compelling)
- One description of the location of the SEC offices in Washington.
- One hint that the SEC party line is going to be that the “Investment Adviser” part of the
- Madoff organization was regulated separately and therefore any regular oversight was bound to miss the massive Ponzi scheme.
It seems to us like this organization is toast.
- Recess Ends -
Chairman: Ok, the SEC better not be laying down any limitations on what we can hear from SEC employees. There seems to be a misunderstand as to who created whom and who is responsible to whom under the Constitution.
Wow. Apparently of one of the SEC witnesses tried to claim he was exempt and the Chairman of the Committee is NOT amused. A call was placed to the grand poobah at the SEC and the witness was delivered, threatened subpoenas not issued. Just… wow.
They aren’t just incompetent with respect to investigating fraud, they are optics challenged.
What a fiasco.
Chairman: Apparently, if there is a snowstorm in Washington, the SEC cannot help. When are you going to be able to testify about this issue?
Witness: I don’t know.
EP here: I find when trying to liveblog the SEC testimony, I have two choices-
1. Quote verbatim.
2. Sit with a puzzled look on my face, and a squint trying to read the lips of the witness in addition to listening desperately trying to understand what language she is talking in and why I am having a hard time finding any meaningful signal in the midst of the sea of financial enforcement white-noise.
If we wanted any answer at all as to why Madoff skated past these people, that is it. It’s not that they are incompetent, it is that they exude a deadly cloud of negative competence that sucks any progress, organization, or intelligence right out from everything it touches- and it is apparently pressurized so when issued it expands to engulf the entire room.
Prediction #1: There are 4 more Madoffs out there, of lesser but still staggering size.
Prediction #2: The showing of the SEC is so poor here that the successor organization will be so doggedly aggressive that in ten years time we will be having a replay of the IRS abuse investigations that were all the rage in the ’80s.
Fireworks from the Committee: You just took the preamble of your mission statement and broke it up into five segments. With all your agents and resources, one guy with a few friends and some helpers. You couldn’t find your backside with two hands with the lights off. You have totally, totally failed in your mission. Don’t you get it? You forfeited your right to investigate by not doing it, and now you are trying to tell us that because other people are looking into it you can’t talk about it? Like hell you won’t. So what the hell went on? That’s a question.
Witness: Let me start with enforcement….
Committee: You keep say alleged, alleged, this guy confessed on national television you might have noticed. If anyone made the case better than Mr, Markopolos that you people are totally inept, it is you. Now, Mr. Vollmer, you are the one who tried to avoid testifying, are you citing Executive Branch privilege?
Vollmer (Deputy General Counsel): I would like to answer your question
Chairman: It’s a yes or no question.
Vollmer: No it is not.
Committee: It’s a yes or no question. Are you asserting privilege or not?
Vollmer: Well, sort of. In part.
Committee: So is that the position of the executive?
Vollmer: Hum, haw, hum haw.
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
does this testimony mean that we won’t have to listen to dennis kneale today?
unleash the fury!
they could have shut this thing down in 92 when they failed to audit Avellino and Bienes, who were selling 450M in unregistered notes and funneling it to Madoff.
they slapped them with a small fine and when Avellino told the SEC to fuck off, they did precisely that
Erin Callan has nervous breakdown, leaves CS,see bloomberg
@4 what makes you think it’s nervous breakdown? could be to have a baby, take care of a sick relative, travel through europe, peace corps, etc… ?
I wish they had Markopolos and the SEC testify concurrently…
@AJ
that really wouldve brought the Lulz.
#5 ask at CS
The joke on Congress is that the Senate just confirmed Schapiro to head the S.E.C. Did ANYONE think to bring up her (abysmal) record of “enforcement” at FINRA or question whether she is the right person to head the S.E.C. at this time in history? HELL NO!
At the end of the day, Congress will whine and complain and, just like kids on milk cartons and CB radios, the fad of giving a shit about enforcement in financial markets will be forgotten and never thought of again.
The S.E.C. will bring a few enforcement actions against people most of us have never heard of, be careful not to ruffle and feathers of politically connected individuals, claim the problem to have been solved and then continue to ignore the scams that are brought to their attention. Look back at Sarbanes-Oxley. Congress claimed they solved the problem, the S.E.C. put on a show trial against Scrushy and since Scrushy, nothing.
Mary Schapiro was not brought in to be tough on enforcement. She was brought in to make sure S.E.C. enforcement mirrored that of FINRA (and, lets not forget that FINRA still doesn’t know for sure whether Madoff ever really even executed a single trade).
who would you rather party with– David Einhorn or Harry Markopolous?
@8– why? did the breakdown happen in public?
Long scamming the proles, short SEC and other toothless enforcement bodies (FDA, UN, etc). Same as it ever was.
Why don’t they drag in Schapiro & make her say how she’s going to clean up Dodge?
Oops, I guess they were supposed to do that at the confirmation hearing.
Oh, well. She can’t be worse than Cox, who was an actual participant in the First Pension ponzi scam in California back in the day.
How does someone decide, I know what I want to do, I want to work at FINRA?
Can one of the brokers present please tell me something? Why didn’t Markopolous call Madoff’s clients and tell them about his suspicions? Let them perform their own due diligence and, if his suspicions proved founded, possibly win their business. That would have helped, and earned a commission.
15-
Because he would have been sued for slander and/or libel. His own records show he contacted the authorities. The authorities, having full details of Markopolis’ claims, decided there was nothing there to act upon. What else would Madoff have had to explain to a civil jury?
Do you REALLY explain civil jurors to understand a split strike conversion and to give a crap after the SEC, FBI, FINRA, etc, etc all listened and took no action?
Defense costs for Markoplois’ civil trial would have crushed him.
@15
I think he suspected that some of Madoff’s clients weren’t quite who they claimed to be; i.e. some were Russian.
Its pretty well known that it gets really cold in Russia, and thus no one wants to live there unless they are drunk or have some sort of “coat” to protect them. I’m not implying that all Russians are drunk or that all Madoff investors are Lycans, I’m just saying that you can’t be dependent on Chris Cox or Kate Beckinsale to protect you if they are (because one is an innefective co-opted eunich, and the other isn’t doing vampire/warewolf movies anymore).
In any case, it seems pretty clear why you wouldn’t want to leave any fingerprints and/or your scent on documents, and you certainly wouldn’t want to contact the clients and risk being devoured.
-Equities in Dallas back office
@15
Walter, is that you? I see you’re still in the horse racing biz.
Take care and don’t forget the oats.
nice teeth. super white from all the ammonia in maddoff’s spew.
@15
Why is it Markopolis’ fault that enough wasn’t done to uncover what Madoff was up to? Heck, Barron’s printed a story about Madoff in 2001 and no one saw fit to “do their own due diligence.”
@15
Why is it Markopolis’ fault that enough wasn’t done to uncover what Madoff was up to? Heck, Barron’s printed a story about Madoff in 2001 and no one saw fit to “do their own due diligence.”
What is a Lycan?
Wow, if the chairman’s intro is any preview, these guys are gonna get abused…
This just in:
Kanjorski “I like oatmeal.”
Who are these people ?
Could it be that the Russian Mob infiltrated the SEC? Markoupolos could have been a Marked Man a long time ago!
I predict that Chris Cox is going to get indicted for something.
What do you mean, “tried to claim he was exempt?” Do you mean he tried to raise some kind of claim of privilege? Keep in mind most current bureaucrats are still in Bush/Cheney “It’s not illegal if the President says I can’t talk about” mode. They were wrong then and they’re wrong now, but these things do not reverse themselves immediately, even upon the Second Coming.
Oh look, Lewis Black was elected to congress and gained a lisp
They should just make the SEC report to the office of the Vice President. Then they can do whatever the fck they want.
Warrantless board-room wiretaps ftw!
92! 92! 92!
Ask these guys what happened back in 92 before Markopolous started blowing whistles. They could have shut it down then when they sanctioned Avellino and Bienes! They could have shut it down when AUM was around 500M!!!
This is the best TV since Matlock!
Some of these people will be pleading the 5th before too long
I would give EVERYTHING I OWN if the Chair said, “I give up. You’re in contempt of Congress. Sergeant-at-Arms, arrest this man and put him in the broom closet until he’s ready to answer a god-damned question.”
@ 22 its a type of wearwolf that rises, but I think it also refers to derivates
where is this being shown?
If this wont cause a run on the broker dealers, i don’t know what will
Damn, i wouldnt even trust Chuck Schwab or Fidelity anymore!
WAKE UP PEOPLE, NOBODY”S GOT YOUR BACK
Who was that last congresswoman?
where is this being shown?
CSPAN 3
Fireworks.
WOW!
The SEC Compliance director was a guest of Peter and Bernie Madoff at Shana’s wedding?!?!?
I wonder if she hung out at the Ice Sculpture downing shots of Goose and inhaling caviar while our widows, orphans, pensions and charities were STOLEN
Rep Maloney
“Why is it that the SEC does not employ undercover agents ?”
Mmm… mmmmm….
… successful ratios !
WOW!
The SEC Compliance director was a guest of Peter and Bernie Madoff at Shana’s wedding?!?!?
I wonder if she hung out at the Ice Sculpture downing shots of Goose and inhaling caviar while our widows, orphans, pensions and charities were STOLEN
(c-span) thank you.
@ 38 cspan.org
Now that Spitzer’s name is in the mix this afternoon it gets very interesting indeed. Apparantly Client # 9 was sticking his dick in Madoff’s fund long before Ashley came along, and it looks like Bernie was tipped on heat that might coming his way…..
Is 1 + 1 = 2, if you cannot deny that, you are as guilty as Madoff for not having discovered this fraud.
YES OR NO !!!!!!!!!!
None of these congress folk seem to get the point: the SEC smurfs are saying they can’t talk about Madoff specifics because it might jeopardise the inspector general’s investigation of whether anybody at the **SEC** is criminally liable.
why the f* won’t somebody say “sec, you asswipes, if someone gives you probable reason, why don’t you subpeona their ass? then you have ALL THE EVIDENCE YOU NEED.”
madoff =0 subpoenas.
The SEC is going down in flames over this. The only question is whether the Administration subsumes the SEC and CFTC into the Department of Treasury or whether they instead wipe the slate clean and start over again.
Who is this Marco Polo fellow ?
Are the Representatives either having trouble reading their cue cards or are they incapable of pronouncing names in general.
I have not heard anything about “Lay-man” in a while …
Someone turn the table on this inept asshats. PLEASE !
What amazes me is that people on this message board seem to just now be in the process of grasping that the S.E.C. and FINRA routinely look the other way at detailed information concerning material violations of law that are brought to their attention.
Unquestionably, Congress has been aware of this for some time. All this is false outrage at a dysfunctional system predicated on willful ignorance on the part of financial industry enforcement.
the fat blonde SEC woman looks like she is about to cry.
thank you for bringing up einhorn!
@52 – You’d cry too if you thought you had finagled your otherwise useless waste-of-oxygen ass into a cushy job at the SEC with a nice pension and a consulting gig for afters, and woke up to this. Up to now, everything was going so well, and if it hadn’t been for this, the SEC would have been looking forward to a big chunk o’ budget increase as Congress spent money looking like they were doing something about the financial crisis in general. They’ll be eating domestic lox on the morning bagels before this is over.
We should all be shocked, SHOCKED, that when tasked with outsmarting and out-trying some very motivated criminal types, a bunch of 2nd rate, under-paid, under-motivated bureaucrats failed to do much of anything
55-
Enforcement at the S.E.C. are a bunch of human potted plants looking to make friends with people on the inside of the federal enforcement structure and to make connections with companies being regulated.
Attorneys working for S.E.C. Enforcement don’t want to offend any potential clients they want to call on when they leave to enter private practice and the great unwashed masses at Enforcement don’t want to piss off any company they hope to go work for as a compliance supervisor.
At the end of the day, there is no reason for anyone at Enforcement to be actually competent at enforcement matters and, to the surprise of no one in the industry, they aren’t any good at enforcement matters.
@55
Smarty Pants,
Was Elliot Ness under-paid? Yes.
Was Elliot Ness under-motivated? No.
Are the troops under-paid? Yes.
Are the troops under-motivated? Better not.
It’s about leadership. The SEC doesn’t have it, and never will. That’s by design.
Now we could say a lot about overpaid douchebags, but you know that story.
“It’s not that they are incompetent, it is that they exude a deadly cloud of negative competence…”
So true. I came to the conclusion that what they’re really good at is defending their own incompetence. Also, I think there must be some universal threshold where if the lawyer/employee ratio exceed some amount, the organization becomes completely dysfunctional and useless.
@9 – All true; appointing Schapiro to chair the SEC was basically appointing Al Capone Attorney General, or, perhaps, Secretary of the Treasury. But we are not far off with Geithner and Holder at the reins!
To wit:
‘The S.E.C. will bring a few enforcement actions against people most of us have never heard of, be careful not to ruffle and feathers of politically connected individuals, claim the problem to have been solved and then continue to ignore the scams that are brought to their attention. Look back at Sarbanes-Oxley. Congress claimed they solved the problem, the S.E.C. put on a show trial against Scrushy and since Scrushy, nothing.
Mary Schapiro was not brought in to be tough on enforcement. She was brought in to make sure S.E.C. enforcement mirrored that of FINRA (and, lets not forget that FINRA still doesn’t know for sure whether Madoff ever really even executed a single trade).’
And, I would add, the S.E.C. will also continue to function as a breeding ground for General Counsel and Compliance Officers to the securities industry…see Gary Lynch and Steve Cutler. Yech!