S.E.C. Buries the Lead on Madoff Story

The Times did the best they could to rush a Saturday Madoff story out of last Friday’s massive S.E.C. dump.

It’s not uncommon for companies to ruin the Friday nights of financial reporters with a few hundred pages of earnings reports, but for the S.E.C. to do it with 6,100 pages related to the Madoff scandal was a little unusual. Or, maybe not, given what was in there.

In the interview, Mr. Madoff said that the young investigators who pestered him over incidentals like e-mail messages should have just checked basics like his account with Wall Street’s central clearinghouse and his dealings with the firms that were supposedly handling his trades.

“If you’re looking at a Ponzi scheme, it’s the first thing you do,” he said.

Those simple steps, he added, could have revealed years earlier that he was running the largest Ponzi scheme ever, a crime that has now dragged the S.E.C. into the worst scandal in its 75-year history. “It would have been easy for them to see,” he added.

The worst of it, as Footnoted.org notes, is that the S.E.C. barely described the 536 exhibits, which could lead companies to do the same thing.

[B]y dumping this kind of thing on a Friday night and providing no description next to the 536 exhibits, the SEC is essentially green-lighting companies to do the same thing with their filings. Right now, the overwhelming majority of companies provide some sort of description of what’s in the exhibits that they file, so that you can figure out whether a particular exhibit is worth reading. It’s the difference between stating “material contract” and “employment agreement with John Doe”.

Footnoted followed up and says the S.E.C. blames the Office of the Inspector General, which blames the S.E.C. “”To be honest, I’m surprised that they did this on a regular Friday, instead of waiting for a holiday Friday to put this out,” said Inspector General H. David Kotz.


  S.E.C. Buries the Lead on Madoff Story