The whistleblower who detected the alleged Bernard Madoff fraud nine years ago yesterday subjected the US Securities and Exchange Commission (SEC) to a devastating public attack.
Testifying to Congress, Harry Markopolos accused the US regulator of being scared of confronting big Wall Street investors and of being crippled by internal squabbling and incompetence. Mr Markopolos said that many banks and funds on Wall Street knew about Mr Madoff’s fraud before it was exposed but “those in glass houses don’t throw stones”.
The former Boston fund manager, who began his quest in 2000 to uncover what was to become the world’s biggest scam, said that the Madoff debacle was part of a pattern of incompetence by the SEC, which had allowed rating agencies to fuel the sub-prime crisis. He said that the SEC was so useless in policing Wall Street that “they roar like a mouse and fight like a flea”.
The whistleblower insisted that Mr Madoff did not act alone in constructing the alleged $50 billion (£35 billion) fraud, but that he had been aided by an army of colleagues within his investment business in Manhattan.
The SEC was asked to investigate Mr Madoff, but the regulators “could not be bothered because they had higher priorities”.
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Suzy Jagger in New York.