Independent financial fraud investigator Harry Markopolos testified before the U.S. Congress yesterday and chronicled the over eight years he spent attempting to inform the Securities and Exchange Commission and other regulators that Bernie Madoff was a fraud. Mr. Markopolos said that he was retained by a client in 1999 to “reverse-engineer” Madoff’s investment portfolio and concluded within four hours that Madoff’s reported returns were mathematically impossible and that Madoff was a fraud. Mr. Markopolos sent repeated written warnings to the SEC explaining why Madoff had to be a fraud, but none served to awaken the sleeping regulatory giant to Madoff’s Ponzi scheme.
Mr. Markopolos had no problem telling Congress what he really thinks of the regulators. In his February 4, 2009 testimony Mr. Markopolos, when asked to compare the SEC with FINRA (Financial Industry Regulatory Authority) said, “I never thought the SEC was corrupt … FINRA is definitely in bed with the industry.” Markopolos later elaborated, “I’d give the SEC an A+ for incompetence and FINRA an A+ for corruption.”
Here is link to Mr. Markopolos’ prepared testimony (all 65 pages of it).