More details on what the SEC has uncovered in its current investigation of Madoff (not the first investigation, mind you, when it would’ve mattered — that uncovered nothing). It seems client lists are now likely into the thousands. Remember, the SIPC may end up paying $500,000 to each victim, so this number may be significant. If it’s only about a 1000, then the total payout would be $500 million, which the SIPC can handle.
There’s also evidence, that one of Madoff’s top lieutenants, Frank DiPascali (apparently one of the only non-family members with any access) has acted “evasively” towards the SEC:
WSJ: The investigation began Dec. 11 after a lawyer for Mr. Madoff’s sons alerted the SEC to a possible fraud. SEC examiners quickly questioned Frank DiPascali, a Madoff lieutenant. According to the memo, Messrs. DiPascali and Madoff “controlled access” to the 17th floor where the investment advisory business was run “separately and very secretively” from the firm’s market-trading business for institutional customers.
Mr. DiPascali “responded evasively” to the SEC’s questions, according to the memo. He told the SEC he didn’t know who was responsible for the clearance and settlement parts of the business. Mr. DiPascali hasn’t been charged with any wrongdoing.
It isn’t clear whether Mr. DiPascali is cooperating with prosecutors. Marc Mukasey, a lawyer for Mr. DiPascali, declined to comment on that point and said, “We’re trying to sort through the facts like everybody else.”