Here comes the excuses. You may find yourself wondering, how did all these rich, sophisticated investors with millions of dollars and access to the best financial advisors, end up falling for an old fashioned Ponzi Scheme to the tune of $50 billion? A former SEC official has the answer (via CNBC):
Madoff Was a 'Smooth Operater,' Former SEC OfficialForgive me for having doubts, but this analysis seems a tad self-serving. A simpler explanation is that the SEC and Madoff's victims were lazy and incompetent. The SEC relied on the man's reputation alone to judge his business, despite years of warnings. The victims allowed greed to trump good judgment and due-diligence.
In the wake of the Madoff scandal, former SEC commissioner Laura Unger called for SEC reform on Monday.
"The market has just gotten far too complex, far too fast moving and far too sophisticated for the agency to keep up," she said on "Squawk Box."
While the commission needs to embrace technology as a regulatory tool, said Unger, she cautioned investors that they must do their due diligence.
"The government will help but they’re not going to protect you from losing all of your money," she said.
Unger also said Madoff ingratiated himself with both the SEC and Congress.
"They took great pains to make sure that all the people who had authority of their universe were known to them," she said. "He was a smooth operator; it's a brilliant, criminal mind."
There is far less here than meets the eye.