AUGUST 05, 2011
In a remarkable development, the beleaguered Securities and Exchange Commission (SEC) actually awarded the employee who botched the investigation of the largest Ponzi scheme in history with a cash bonus for a great job performance.It marks the latest of many scandals for the famously inept federal agency charged with policing the nation’s financial industry. An SEC Inspector General probe discovered that the agency rewarded an incompetent investigator who missed Bernie Madoff’s illegal, $50 billion Ponzi scheme with a cash bonus for good work.Released this week, the IG report doesn’t name the SEC investigator but confirms that he (or she) was one of the “key participants” looking into Madoff’s corrupt operation. It gets better. SEC supervisors nominated the unnamed employee for the award shortly after the agency’s IG issued a scathing report detailing how the agency failed miserably to catch Madoff. In fact, in that 2009 report the IG singles out the employee and assistant regional director for “numerous performance issues” and possible disciplinary action.Once a prominent investment manager, Madoff for years operated a massive scheme that defrauded thousands of investors out of billions of dollars and in 2009 he pleaded guilty to 11 federal felonies. The SEC got blasted for failing to do its job, ignoring or missing repeated warnings about Madoff’s operation. In fact, the SEC’s watchdog determined that it had received “more than ample information in the form of detailed and substantive complaints over the years” but failed to act.That could be because a big chunk of the SEC workforce was preoccupied gawking at pornography websitesduring work hours. While the economy slowly crumbled and Madoff defrauded investors, high-ranking SEC officials—including senior officers with lucrative six-figure salaries—and lower-level workers spent a large portion of their day viewing porn on government computers.About a month ago the SEC came under fire for dropping nearly $557 million on luxurious office space it will never use and lying to cover up the wrongdoing. The agency used a rather innovative system to determine how big its new fancy headquarters should be, according to an official at the agency. It’s called WAG, which stands for “wild-ass guess.” A federal audit blasted the deal, determining that a “deeply flawed and unsound process” that likely violated federal law was used to award the lease.A few years ago the Department of Justice investigated two high-ranking SEC enforcement officials—both of them attorneys—for illegal insider trading. In the course of that probe, authorities discovered that the SEC has no compliance system in place to ensure that employees with tremendous amount of nonpublic information don’t engage in insider trading.
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