September 02,2009

Grassley Comment on SEC IG report about the SEC and Madoff

Senator Chuck Grassley today issued a comment regarding a new report of the Inspector General for the Securities and Exchange Commission about the regulator’s handling of information about Bernard Madoff before his arrest last year.

Senator Grassley’s comment:

“This report details a half-dozen serious complaints provided to the SEC, citing dozens of red flags since 1992. The SEC’s utter failure to follow-up aggressively on detailed and specific information about Madoff’s fraud is further evidence of a culture of deference toward the Wall Street elite at the SEC. Until that culture is transformed, the SEC will not be the tough cop-on- the-beat that the public needs.”

A copy of the new report is posted with this memo at http://finance.senate.gov and http://grassley.senate.gov. Senator Grassley asked the Inspector General in December to focus on how the massive frauds went on despite SEC regulatory and investigative activity regarding Mr. Madoff. The text of Grassley’s letter of request is at the bottom of this memo.

Senator Grassley has conducted oversight of the Securities and Exchange Commission and sought reforms to better protect the free marketplace. In 2007, Grassley and Senator Arlen Specter issued an extensive report about the SEC’s failure to aggressively pursue insider trading allegations involving a major Wall Street hedge fund and the head of one of the country’s five largest investment banks. That report is posted at http://finance.senate.gov. To find it, visit legislation and search for the August 3, 2007 document titled “The Firing of an SEC Attorney and The Investigation of Pequot Capital Management.”

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