Does the Bernie Madoff Fun Never End?!

On Wednesday, February 4, 2009, Harry Markopolos, a former financial executive from Boston, testified before the U.S. House of Representatives Committee on Financial Services on his efforts to have the Securities and Exchange Commission (SEC) investigate Bernie Madoff as early as 1999.

In 300 pages of testimony, Mr. Markopolos meticulously outlines his seven-year effort to investigate Bernie Madoff. He then offers a substantive critique of the SEC, along with detailed points on how the agency may be improved. Interestingly, Mr. Markopolos states:

This begs the question, where do SEC staffers actually go to research an investment strategy, find out which formulas to use to determine investment performance, or figure out what a CDO squared is? Apparently all the SEC staff uses is Google and Wikipedia because both are free. Lots of luck figuring out today’s complex financial instruments using free web resources.

See Testimony Before the H. Comm. on Fin. Svc., 111th Cong. 37 (2009) (statement of Harry Markopolos, CFA, CFE) (emphasis added), prepared testimony available at,

Mr. Markopolos recommends that the SEC provides its staffers with a library of professional publications, like the Journal of Accounting, the Financial Analysts Journal, and the Journal of Financial Economics. See id.

In related news: Congress is certainly preparing to change the way financial institutions are regulated by agencies like the SEC. For more on the issue of financial regulation, see a detailed report by the Government Accounting Office (GAO) to congressional addressees: Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System.

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