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Thursday, July 9, 2009
Did Madoff miss force SEC top cop out?

The Securities and Exchange Commission gave no real reason for compliance chief Lori A. Richards' resignation yesterday that ended her 20-year career (she was earlier the head of SEC's LA office, and an adviser to Clinton SEC chief Arthur Levitt). But Joe Morris, writing in Financial Times' www.ignites.com, says SEC's failure under Richards' watch to stop the $65 billion Bernard Madoff fraud, despite warnings, inspections and signs, "tainted" Richards' reputation, beyond repair.

Writes Morris, "Richards was among several SEC officials criticized by lawmakers earlier this year over the agency's failure to spot Madoff's $65 billion Ponzi scheme despite carrying out reviews in 2004 and 2005. Former enforcement chief Linda Thomsen stepped down soon after a Capitol Hill grilling.

"A Washington Post report last week revealed that (an SEC compliance) investigator had raised suspicions about Madoff's firm as far back as 2004 but was reassigned to inspect the mutual fund industry.

"The departure gives the agency a clean slate on the Madoff scandal, allowing Schapiro to say that all of those involved are now gone.. ..Richards's exit may also pave the way for a reorganization or even dismantling" of the Office of Compliance, Inspections and Examinations, which Richards headed. "Several former SEC chiefs have considered doing away with the office but backed down amid opposition from Richards," Morris added, citing the Post. 

Can SEC fix itself?

Posted by Joseph N. DiStefano @ 8:46 AM  Permalink | Post a comment
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About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column, which is printed in the business pages of The Philadelphia Inquirer every Sunday, Tuesday, Wednesday, Thursday and Friday. Joe has worked at the Inquirer, mostly, since 1988. He has also written for Bloomberg and Gannett, authored the book Comcasted, majored in economics at Penn, and fathered six children. Reach Joe at 215-854-5194 and JoeD@phillynews.com

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