The press, politicians and reformers are devoting extraordinary attention to a Ponzi scheme whose only peculiarities are scale and duration. Compared to ongoing global financial devastation, this is trivial. Yet this attention may lead politicians to distract focus from their role in the deeper problems that matter far more.
Recriminations against the Securities and Exchange Commission arise from allegations it has made (complaint here) that Mr. Madoff operated a large-scale Ponzi scheme involving tens of billions of dollars over perhaps decades and bilking scores of sophisticated parties. SEC critics include prominent securities law professors Jim Cox (Duke) (SEC may “have a hell of a lot to answer for”) and Joel Seligman (Rochester) (“a debacle for the SEC”).
Critics express concern that the SEC may have failed to investigate investor tips (see Wall Street Journal story here); failed to regulate sufficiently Madoff’s investment advisory services or fund vehicles; or failed to enforce existing regulations. Calls are for both investigation and greater regulation, many pinning hope on the incoming Obama administration to institute such searching and effect requisite change.