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Statement=20 Regarding Madoff Investigation
FOR IMMEDIATE = RELEASE2008-297Washington, D.C., Dec. = 16, 2008=20 =97 Securities and Exchange Commission Chairman Christopher Cox issued = the=20 following statement today concerning its ongoing investigation in the = case of=20 SEC v. Madoff:
Since the Commission = first took=20 emergency action against Bernard Madoff and his firm, Bernard L. Madoff=20 Investment Securities, LLC on Thursday, December 11, every necessary = resource at=20 the SEC has been dedicated to pursuing the investigation, protecting = customer=20 assets and holding both Mr. Madoff and others who may have been involved = accountable.
SEC investigators are = currently=20 working with the trustee and other law enforcement agencies to review = vast=20 amounts of records and information involving Mr. Madoff and his firm. = Those=20 records are increasingly exposing the complicated steps that Mr. Madoff = took to=20 deceive investors, the public and regulators. Although the information I = can=20 share regarding an ongoing investigation is limited, progress to date = indicates=20 that Mr. Madoff kept several sets of books and false documents, and = provided=20 false information involving his advisory activities to investors and to=20 regulators.
Since Commissioners = were first=20 informed of the Madoff investigation last week, the Commission has met = multiple=20 times on an emergency basis to seek answers to the question of how Mr. = Madoff's=20 vast scheme remained undetected by regulators and law enforcement for so = long.=20 Our initial findings have been deeply troubling. The Commission has = learned that=20 credible and specific allegations regarding Mr. Madoff=92s financial = wrongdoing,=20 going back to at least 1999, were repeatedly brought to the attention of = SEC=20 staff, but were never recommended to the Commission for action. I am = gravely=20 concerned by the apparent multiple failures over at least a decade to = thoroughly=20 investigate these allegations or at any point to seek formal authority = to pursue=20 them. Moreover, a consequence of the failure to seek a formal order of=20 investigation from the Commission is that subpoena power was not used to = obtain=20 information, but rather the staff relied upon information voluntarily = produced=20 by Mr. Madoff and his firm.In response, after = consultation=20 with the Commission, I have directed a full and immediate review of the = past=20 allegations regarding Mr. Madoff and his firm and the reasons they were = not=20 found credible, to be led by the SEC's Inspector General. The review = will also=20 cover the internal policies at the SEC governing when allegations such = as those=20 in this case should be raised to the Commission level, whether those = policies=20 were followed, and whether improvements to those policies are necessary. = The=20 investigation should also include all staff contact and relationships = with the=20 Madoff family and firm, and their impact, if any, on decisions by staff=20 regarding the firm.The Commission = believes strongly=20 that it is vital that SEC investigators, examiners, and enforcement = staff be=20 above reproach while conducting their duties, in order to ensure the = integrity=20 and effectiveness of the SEC. In addition to the foregoing = investigation, I have=20 therefore directed the mandatory recusal from the ongoing investigation = of=20 matters related to SEC v. Madoff of any SEC staff who have had more than = insubstantial personal contacts with Mr. Madoff or his family, under = guidance to=20 be issued by the Office of the Ethics Counsel. These recusals will be in = addition to those currently required by SEC rules and federal=20 law.