November 11, Washington Post – (National) Eight SEC employees disciplined over failures in Madoff fraud case; none are fired. The Securities and Exchange Commission (SEC), which failed to stop a long-running investment fraud despite repeated warnings, has disciplined eight agency employees over their handling of the matter but did not fire anyone, reported the Washington Post. The SEC’s head of human resources and a law firm hired to advise the agency had recommended the chairman fire one person, whom the SEC described as a manager in the office that inspects investment firms. But the chairman did not fire the worker because doing so "would harm the agency’s work," a SEC spokesman said.
The Washington Post reported November 11 seven SEC employees had been disciplined, based on details provided by a person familiar with the actions. A second source, an official involved in the process, told the Post the chairman had received recommendations to fire an employee over the mishandling of the case. Later November 11, the SEC spokesman confirmed details and added that an eighth employee also received disciplinary action. A ninth employee, who was facing a 7-day suspension, resigned before disciplinary action was taken, the spokesman said.
The punishments given the SEC employees varied and included suspensions, pay cuts, and demotions. Although the SEC conducted five examinations and inspections of the hedge fund manager based on complaints, agency personnel "never took the necessary and basic steps to determine if [he] was misrepresenting his trading," the inspector general reported. "While examiners and investigators discovered suspicious information and evidence and caught [the manager] in contradictions and inconsistencies, they either disregarded these concerns or relied inappropriately upon [his] representations and documentation in dismissing them," the inspector general added.
Source: Washington Post via Homeland Security Daily Open Source Infrastructure Report
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