How did SEC miss $50 billion fraud?
U.S. Securities and Exchange Commission Chairman Christopher Cox presides over an open meeting of the commission.
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Tess Vigeland: Today alleged Ponzi scheme mastermind Bernie Madoff made a appearance in federal court in Manhattan. Madoff was fitted with an ankle monitor after the judge altered previous requirements that he get four people to co-sign his $10 million bail bond. He could only get two -- his wife and his brother -- to vouch for him.
Meanwhile the head of the Securities and Exchange Commission is now asking the same question so many others have asked over the last several days -- how can you miss a $50 billion fraud? It's just the latest high profile mistake made by the SEC and chairman Christopher Cox launched an internal probe.
Marketplace's Steve Henn tells us there are many more investigations to come.
Steve Henn: Since 1999, would-be whistle blowers have been complaining to the SEC staff about Bernie Madoff, according SEC chairman Christopher Cox.
Christopher Cox: Credible allegations about Mr. Madoff had been made for nearly a decade and it never referred to the commission for action.
Cox called this a grave failure and he's asked the SEC inspector general to investigate what went wrong.
Cox: Law enforcement is at the heart of what the SEC does it's why I have made enforcement a priority during my chairmanship.
But earlier this year Cox turned down greater powers.
James Coffman: I came out of the enforcement division. He did little to support us and much to throw obstacles in our path.
James Coffman is the former assistant director of enforcement at the SEC.
Coffman: You only have to look at his history on the hill to see that he has been a staunch deregulator and a foe of investor rights.
Coffman says under Cox's leadership politically appointed commissioners have made it more difficult to initiate investigations or negotiate settlements -- and that morale at the enforcement division has never been worse.
Arthur Levitt who ran the SEC from 1993 until 2001 says change at the top is long overdue, but...
Arthur Levitt: I think anybody who has been in a leadership position at the commission bears some responsibility.
For what may be the biggest fraud in American history.
In Washington I'm Steve Henn for Marketplace.