The SEC Officials Who Missed Madoff Are Living Large



[image url="http://static.businessinsider.com/image/4ad739600000000000a6f1c2/image.jpg" link="http://www.businessinsider.com.au/no-accountability-for-sec-staffers-who-missed-madoff-2009-10/richard-walker-1" caption="" source="" alt="mark schonfeld" align="left" size="xlarge" nocrop="true" clear="true"]
Right after having nasty thoughts about Bernie Madoff, it’s common to fume about regulators blowing the biggest Ponzi scheme in history.The SEC missed Madoff for nearly two decades, despite credible, detailed warnings and multiple investigations. Even Bernie was surprised at the Commission’s awful oversight.

The responsibility falls, of course, to individuals, but despite a lashing from Congress and the SEC’s own inspector general, few have been held accountable. Two resigned over the scandal, but no one was fired and most decision makers were never sanctioned.

Thanks to CNN and Talking Points Memo Muckraker, we get a round-up of what they’re doing. Far from disgraced or demoted, most are in positions of power in finance or law and another is in a supervisory role at the SEC. Here are TPM’s excellent summaries of who’s who, plus a couple more.

SEE THE IMPORTANT JOBS THOSE WHO MISSED MADOFF HAVE>>>

[slideshow]
[slide
permalink=”richard-walker-1″
title=”Richard Walker”
content=”Misstep [TPM]: In 1992, Walker, at the time the director of the SEC’s New York office, led a probe of an investment pool run by two Florida accountants, Frank Avellino and Michael Bienes, which offered suspiciously high returns, and for which Madoff served as money manager.

Despite what the New York Times described this year as ‘numerous red flags,’ the inquiry petered out after Avellino was assessed a small fine.

Avellino continued to send money to Madoff, whose role in the operation appears never to have been looked into.

Now: Since 2001, Walker has served as general counsel to Deutsche Bank.

Read the whole thing at Talking Points Memo. Image: CNN.com
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[slide
permalink=”demetrios-vasilakis-2″
title=”Demetrios Vasilakis”
content=”Misstep [TPM]: Vasilakis, who joined the SEC out of college in 1990, was a member of the examination team that investigated the Madoff, Avellino, and Bienes operation — and was left in awe.

He told investigators for the SEC inspector general’s report (pdf) on the Madoff fiasco, released last month:

‘My personal conclusions [from the examination] were that [Madoff] was a pioneer in the industry… when I walked out of there it was more along the lines of wow, this guy is a third-market guy that does X per cent of the volume on the exchange.’

Now: Vasilakis is now chief compliance officer for the hedge fund Atticus Capital.

Read the whole thing at Talking Points Memo.
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[slide
permalink=”gary-ward-3″
title=”Gary Ward”
content=”Misstep [TPM]: In May of 2000, Ward, an enforcement official in the SEC’s Boston office, met with Harry Markopolos to discuss a formal complaint that the whistle-blower had filed, questioning the legitimacy of Madoff’s returns.

Markopolos concluded that Ward ‘didn’t even have a basic understanding of finance,’ as he put it to the IG investigators.

According to that report, Ward told a colleague that he would refer the complaint to the North East regional office, but never did.

Now: Ward is now senior counsel for MetLife Group.

Read the whole thing at Talking Points Memo.
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[slide
permalink=”arthur-levitt-4″
title=”Arthur Levitt”
content=”Misstep [TPM]: As chair of the SEC from 1993 until 2001, Levitt met with Madoff ‘on an infrequent basis,’ he told the IG’s office.

‘It never occurred to me or anyone on my staff that Madoff was anything except a market maker,’ he said to CNN.

Now: Since 2001, Levitt has been a senior adviser at the Carlyle Group, a politically connected private equity firm.

Read the whole thing at Talking Points Memo. Image kepplerspeakers.com

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[slide
permalink=”linda-thomsen-5″
title=”Linda Thomsen”
content=”Misstep [TPM]: Thomsen, who ran the SEC’s Enforcement Division from 2005 until February 2009, told the IG’s office that she was ‘generally aware of Madoff’s firm but did not recall being aware that the Enforcement Division had received any tips or complaints about Bernard Madoff or Madoff’s firm prior to December 2008.’

That account ignored, of course, Markopolos’s famed November 2005 memo entitled ‘The World’s Largest Hedge Fund is a Fraud.’

Now: Thomsen is now a partner at Davis Polk.

Read the whole thing at Talking Points Memo.
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[slide
permalink=”simona-suh-6″
title=”Simona Suh”
content=”Misstep [TPM]: Suh was the staff attorney assigned to the 2006 Madoff inquiry, after joining the SEC out of law school in 2004.

After a deeply flawed investigation, as detailed by the IG’s report, Suh recommended closing the case, finding no serious wrongdoing by Madoff.

She subsequently received the highest possible performance rating.

(Suh’s recommendation to close the case was reviewed and signed by Doria Bachenheimer, assistant regional director in the New York office, and Meaghan Cheung, branch chief of the New York Enforcement Division, both of whom resigned in 2008.)

Now: Suh replaced Cheung as branch chief of the New York Enforcement Division.

Read the whole thing at Talking Points Memo. Image: CNN.com

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[slide
permalink=”eric-swanson-7″
title=”Eric Swanson”
content=”Misstep: Swanson is the former SEC investigator who married Madoff’s niece, Shana (shown together here).

The SEC inspector general found no interference in the investigations, but said Swanson’s actions created the ‘appearance of a potential conflict of interest.’

Now: General counsel of stock trading firm BATS Exchange

Image: newyorksocialdiary.com
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[slide
permalink=”mark-schonfeld-8″
title=”Mark Schonfeld”
content=”Misstep: Schonfeld was the SEC New York regional office director who approved the closing of a Madoff investigation last year.

Now: Schonfeld is a litigation partner in the New York office of Gibson, Dunn & Crutcher and Co-Chair of the firm’s Securities Enforcement Practice Group.

Image: gibsondunn.com
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[slide
permalink=”see-also-9″
title=”See Also”
content=”There are plenty of other frauds out there. Here’s the SEC is all over: fake U.S. government bonds.
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[/slideshow]

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