Madoff tipster faults SEC, says feared for safety

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Unheeded whistleblower on Madoff operation assailing SEC before Congress

Marcy Gordon, AP Business Writer
Wednesday February 4, 2009, 12:43 am EST

His repeated warnings to SEC staff that Madoff was running a giant pyramid scheme have cast Harry Markopolos as an unheeded prophet in the scandal. Madoff, a prominent Wall Street figure and money manager, was arrested in December after confessing to his sons that he had lost more than $50 billion of investors' money in a Ponzi scheme, according to federal authorities.

Markopolos, a securities industry executive and fraud investigator, brought his allegations to the SEC about improprieties in Madoff's business starting in 2000 or earlier. He fruitlessly pursued the quest through this decade with agency staff from Boston to New York to Washington, but the regulators never acted.

Now thousands of victims who lost money investing in Madoff's fund, which was separate from his securities brokerage business, have been identified. Among them are ordinary people and Hollywood celebrities -- as well as big hedge funds, international banks and charities in the U.S., Europe and Asia. Life savings have evaporated, foundations have been wiped out and at least one investor apparently was pushed to commit suicide.

And the SEC has been sustaining volleys of criticism from lawmakers and investor advocates over its failure to discover Madoff's alleged fraud, which could be the biggest Ponzi scheme ever, despite the credible allegations brought to it over years.

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Madoff tipster faults SEC, says feared for safety - Yahoo! Finance