Madoff accuser tells Congress that SEC 'bites like a flea'
WASHINGTON -- The man who waged a decade-long campaign to alert regulators to problems in the operations of now-disgraced financier Bernard Madoff on Wednesday criticized the Securities and Exchange Commission for ignoring his warnings.
Harry Markopolos, whose repeated warnings to SEC staff that Madoff was running a giant pyramid scheme have cast him as an unheeded prophet in the scandal, said he feared for his physical safety.
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, told a House hearing that "the SEC is ... captive to the industry it regulates and is afraid" to bring big cases against prominent individuals.
He said the agency "roars like a lion and bites like a flea."
Markopolos 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.
Markopolos has said he determined there was no way Madoff could have been making the consistent returns he claimed using the trading strategy he said he used. Markopolos appeared before Congress for the first time on Wednesday at a hearing by a House subcommittee. He had canceled planned appearances at two congressional hearings held last month.
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