Madoff scandal, SEC role under scrutiny
By MARCY GORDON
Associated Press
January 6, 2009
Page 2 of 2
If he were to find evidence of collaboration between SEC staff and Madoff's firm, Kotz told the hearing, he would call for the strictest measures against those involved, including dismissal and possible referral to the Justice Department for criminal prosecution.
To Rep. David Scott, D-Ga., such collaboration was self-evident. Madoff "could not have done it without some complicity," he insisted, and for SEC staff involved, "Their heads have got to roll."
"Clearly, our regulatory system ... failed miserably and we must rebuild it now," said Rep. Paul Kanjorski, D-Pa., who presided over the first congressional airing of the Madoff scandal.
In the Senate, Banking Committee Chairman Chris Dodd, D-Conn., and Sen. Richard Shelby of Alabama, the panel's senior Republican, announced that they have opened an investigation of the Madoff affair.
In a New York City courtroom, meanwhile, a federal prosecutor asked that Madoff be jailed pending trial, saying the disgraced financier violated an agreement with the court by mailing watches, jewelry, cufflinks and mittens worth more than $1 million to relatives and friends.
The Securities Investor Protection Corp. and the trustee handling the liquidation of Madoff's firm announced that they mailed more than 8,000 claim forms to customers on Friday.
SIPC's president, Stephen Harbeck, faced pointed questioning at the hearing as lawmakers spelled out the math: an estimated $50 billion in losses from Madoff, but just $1.6 billion available to SIPC. The industry-funded organization, created by Congress to protect investors when a brokerage firm fails, can provide funds up to a maximum of $500,000 for each customer.
Lawmakers, many of whom had received calls from constituents and charities in their districts that lost money, jumped on the opportunity to show concern. The hearing was held on the final day of the current Congress.
Republicans warned against rushing to new regulation as a response to the SEC breakdown.
"What we may have in the Madoff case is not necessarily a lack of enforcement and oversight tools, but a failure to use them," said Rep. Spencer Bachus of Alabama, the panel's senior Republican.
------
Associated Press writer Pete Yost contributed to this report.
>> Back -- Page 1 2
Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
++ Discuss this topic in The Forum
Current rating:  5.0 out of 5.0 (1 total votes)
| 
