At the Securities and Exchange Commission, it seems that totally dropping the ball on Bernard Madoff's massive is not a fire-able offense. The Wall Street Journal reports, "Eight Securities and Exchange Commission employees have been disciplined over their handling of the $50 billion Bernard Madoff Ponzi scheme, but none were fired, an agency spokesman said Friday. A ninth individual left the agency after receiving notice of a proposed disciplinary action, according to the spokesman." more ›

According to an analysis by the Times, 51 violations of the SEC's anti-fraud statutes committed over the last 15 years can be traced back to the same 19 banks. In each case, the bank usually pays a nominal fine and promises that it will never happen again, only to be caught breaking the same laws. Basically, these Wall Street banks SWEAR that they'll stop cheating, but the SEC keeps catching them taking showers at 3 a.m. and working "really late tonight." more ›

Just as his criminal trial was set to begin, a former commodities broker pleaded guilty today to making threats to kill more than 40 current or former members of the SEC and other regulators. Vincent P. McCrudden, who last December posted a so-called "execution list" to the website of the management company for a commodities fund he controlled, faces up to ten years in prison for the two counts he copped to. more ›

You may remember the "Fabulous" Fabrice Tourre, the mid-level Goldman Sachs trader who the SEC cherry-picked last year to make an example of. Goldman scrounged around in their manatee-leather couches and found $500 million to settle charges of fraud and gee they were really sorry. An article in today's Times seems to confirm what most people knew all along: Tourre was a scapegoat and his superiors should have been targeted for investigation, but weren't. more ›

As if Saturday's Wall Street Journal article about how the feds are readying insider trading charges (which "could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation") wasn't warning enough! Today, the FBI raided three hedge funds—the Connecticut offices of Diamondback Capital Management LLC and Level Global Investors LP and Boston-based Loch Capital Management LLC. The FBI simply said, "The FBI is executing court-authorized search warrants in an ongoing investigation." more ›

Wall Street is worried about the federal authorities' three-year probe that could result in widespread insider trading charge that, according to the Wall Street Journal, "could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders, and analysts across the nation." The probes, "which authorities say could eclipse the impact on the financial industry of any previous such investigation...have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say." more ›

The Garden State has made history again: The Securities and Exchange Commission says it sued New Jersey for "securities fraud for misrepresenting and failing to disclose to investors in billions of dollars worth of municipal bond offerings that it was underfunding the state's two largest pension plans." The problem: NJ allegedly sold over $26 billion of municipal bonds, but the offering plans "created the false impression that the Teachers' Pension and Annuity Fund (TPAF) and the Public Employees' Retirement System (PERS) were being adequately funded, masking the fact that New Jersey was unable to make contributions to TPAF and PERS without raising taxes, cutting other services or otherwise affecting its budget." NJ settled the charges without admitting wrongdoing. more ›

In what Stephen Colbert is calling a "devastating setback in sandwich exploration," the Securities and Exchange Commission is trying to keep visionary Travis L. Wright from stuffing sandwiches in cans. The SEC filed a civil complaint against Wright, claiming he promised investors 24% returns on real estate investments, but put the $145 million he collected into "Candwich" technology instead. As if that was bad enough, Wright was planning on canning french toast too! more ›

Yesterday's stock market plunge—the Dow was down nearly 1,000 points and some stock traded at nearly 100% below their usual level—is now being investigated by the SEC. Bloomberg News reports, "U.S. regulators plan to examine whether securities professionals triggered yesterday’s stock- market plunge or exploited the turmoil to profit illegally." Securities professionals trying to exploit turmoil for profit? Shocking. more ›

Everyone's favorite target these days is now under criminal investigation. Federal prosecutors are now looking to whether Goldman Sachs' employees in mortgage trading operation committed securities fraud. The investigation apparently stems from the SEC's civil fraud lawsuit against Goldman regarding mortgage trading. The Wall Street Journal reports it's unclear whether charges will be brought, adding, "Many criminal investigations are launched that never result in any charges." more ›

The Senate investigations subcommittee will hear from Goldman Sachs executives today, including CEO Lloyd Blankfein and executive director Fabrice "Fab" Tourrre. Tourre was singled out in the SEC's fraud charges against the firm, but the 31-year-old will "categorically" deny the SEC's claims, adding that the deal he drafted was "not designed to fail." (The SEC claims Tourre created a mortgage securities product that would allow hedge fund dealer John Paulson to make a killing by betting against them.) Tourre infamously emailed a friend in 2007, "Only potential survivor, the fabulous Fab[rice Tourre] ... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implication of those monstruosities [sic]" Watch the testimony here. more ›

Ahead of Goldman Sachs CEO Lloyd Blankfein's visit to the Congress next week, the Senate Permanent Subcommittee on Investigations released emails (PDF) that suggest the firm was making money while the mortgage markets collapsed, which would then contradict the firm's claims it lost money during that period. A November 2007 email from Blankfein said, "Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts." more ›

Goldman Sachs announced that its first quarter profit was $3.46 billino—91% higher than last year—but the big numbers didn't boost its stock, which fell 12% last week after the SEC accused the firm of purposefully duping clients. Goldman's general counsel told analysts today, "We would never intentionally mislead anyone, certainly not our clients or counterparties. We certainly had no incentive to design a transaction that was designed to lose money," and Goldman CEO Lloyd Blankfein said in a statement, "In light of recent events involving the firm, we appreciate the support of our clients and shareholders, and the dedication and commitment of our people." more ›

In January 2007, Fabrice Tourre, the French trader accused of defrauding Goldman Sachs' investors by selling them mortgage-backed bonds he believed would fail, wrote the following in an email to a friend: "The whole building is about to collapse anytime now... Only potential survivor, the fabulous Fab... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!" Fab's investors lost a billion dollars during the housing market collapse, but Goldman Sachs and client John Paulson, a hedge fund manager who helped package the bad bonds, cashed in. Now, in an apparent attempt to trademark the word "hubris," the bank intends to pay $5 billion in bonuses, on par with what they paid back in 2007. more ›

Could it be that Goldman Sachs, the "great vampire squid wrapped around the face of humanity," is sustaining damage to one of its tentacles? This morning the S.E.C. filed a civil suit accusing the firm of securities fraud, sending Goldman's stock plunging. "The product was new and complex, but the deception and conflicts are old and simple," Robert Khuzami, the director of the S.E.C.’s division of enforcement, said in a statement. "Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party." more ›

Harry Markopolos, who told the SEC that Bernard Madoff was a fraud in 2000 only to be ignored, is the subject of a NY Times Magazine Q&A—and he really hates the SEC. He calls them a "bunch of idiots," says their changes are really a "redisorganization," and points out, "The five commissioners of the S.E.C. are securities lawyers. Securities lawyers never understand finance. They don’t have the math background. If you can’t do math and if you can’t take apart the investment products of the 21st century backward and forward and put them together in your sleep, you’ll never find the frauds on Wall Street." In his new book, he also reveals he was prepared for a standoff if the SEC came to his Boston-area home. more ›

Now that Bank of America has agreed to a $150 million settlement with the Securities and Exchange Commission, NY Attorney General Andrew Cuomo has filed a lawsuit against the bank and its former CEO and CFO, accusing it of misleading the government and investors in its purchase of Merrill Lynch. Cuomo said, "This merger is a classic example of how the actions of our nation’s largest financial institutions led to the near-collapse of our financial system. Bank of America, through its top management, engaged in a concerted effort to deceive shareholders and American taxpayers at large..." more ›

In what's become an SEC tradition, the government agency decided to reveal details of its botched Bernard Madoff investigations late Friday afternoon. The SEC offered up a jailhouse interview with Madoff; the NY Times reports he "said that the young investigators who pestered him over incidentals like e-mail messages should have just checked basics like his account with Wall Street’s central clearinghouse and his dealings with the firms that were supposedly handling his trades," adding, "If you’re looking at a Ponzi scheme, it’s the first thing you do." more ›

Hindsight is 20/20: The NY Times reports the country's "largest independent securities regulator found that its staff members had missed numerous red flags that would have uncovered frauds run by Bernard L. Madoff and the Texas billionaire R. Allen Stanford." Apparently the Financial Industry Regulatory Authority’s "predecessor, NASD, did not act from 2003 to 2005 on 'credible information from at least five different sources claiming that the Stanford C.D.’s were a potential fraud.'" While no whistleblowers specifically contacted Finra about Madoff (the SEC was warned), Finra did find " several facts worthy of inquiry...that, with the benefit of hindsight, should have been pursued." more ›

For your listening pleasure: The Massachusetts Secretary of State's office released audio (after the jump) of Bernard Madoff telling hedge fund Fairfield Greenwich chief risk officer Amit Vijayvergiya in 2005 how to deal with the SEC when they might come snooping around, "You know, you don't have to be too brilliant with these guys, because you don't have to be." First rule of Bernie's Ponzi Club: You do not know about the Ponzi Club. Madoff said Fairfield Greenwich shouldn't worry about how he operated, "You don't want to have that information because ... the commission, when they ask questions, they try and draw out information. The less that you know how we execute ... the better you are." He recommended saying that since he's been around for 45 years, he's essentially totally trustworthy! Madoff added, "They ask you a zillion different questions and we look at them sometimes and we laugh, and we say, 'Are you guys writing a book?'" And he says of needing to deal with another phone call, "I'm sorry. If I get any more solicitations for charity, I'm going to kill myself." more ›

After offering a summary of how it bungled six warnings about Bernard Madoff's amazing investment firm, the Securities and Exchange Commission released the full 477 opus on its failings (PDF) last night. The Wall Street Journal reports on one glaring misstep, when in May 2003, an unnamed hedge-fund manager basically told an SEC examiner "that Mr. Madoff's self-described trading strategy didn't add up. The manager said the strategy wasn't duplicated by anyone else in the market, Mr. Madoff's accounts were in cash at month end, and there was 'always replacement capital,'" even saying, "These could be 'indicia of a Ponzi scheme" When the SEC investigated months later, it only focused on front-running and not on things like why there wasn't enough market volume for Madoff's trading strategy—and it didn't verify Madoff's trades through a third party either. Also, another hedge fund, Renaissance, was skeptical of Madoff's finances, but didn't tell the SEC because it assumed the SEC was keeping tabs on Bernie! A Renaissance portfolio manager wrote in 2003 internal e-mail, "Throw in that his brother-in-law is his auditor and his son is also high up in the organization and you have the risk of some nasty allegations." more ›

The Inspector General for the Securities and Exchange Commission said the agency failed to conduct "competent and thorough" investigations about Ponzi schemer Bernard Madoff, even after at least six warnings. IG David Kotz wrote in his report, "Despite numerous credible and detailed complaints, the SEC never properly examined or investigated Madoff’s trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme," adding that even Madoff himself was "shocked" that the SEC didn't check his trading records, which would have revealed the $65 billion fraud. more ›

Merrill Lynch's decision to hand out extravagant bonuses last year— as it was about to lose $15 billion in the final quarter—continues to cause problems for Bank of America, which acquired Merrill. Even though the Securities and Exchange Commission (you know, the agency that was supposed to keep tabs on Madoff) settled a lawsuit against BoA for the bonuses, to the tune of BoA paying $33 million, a federal judge has refused to approve the settlement! The SEC complaint said that BoA lied about letting Merrill pay as much as $5.8 billion in bonuses (Merill paid out $3.6 billIon), leading Rakoff to point out that if BoA did in fact break the law, then there's "something strangely askew in a fine of $33 million." He added that both companies "effectively lied to their shareholders... Do Wall Street people expect to be paid large bonuses in years when their company lost $27 billion?"—$27 billion is the amount that Merrill lost. And when a BoA lawyer pointed out that much of the bonus money was shared by people making an average of $91,000/year, Rakoff said, "I’m glad you think that $91,000 is not a lot of money. I wish the average American was making $91,000." more ›

It's another report of how Bernard Madoff is doing behind bars! This time, instead of an inmate, we hear from a lawyer representing some of the victims in Madoff's $65 billion Ponzi scheme. Attorney Joseph Cotchett says he and an associate met with the scammer for four and a half hours at Butner Federal Correction Complex in North Carolina. And Madoff told them, "There were several times that I met with the SEC and thought 'they got me'" Of course, the SEC didn't! more ›

David Friehling, the accountant who helped Bernard Madoff perpetuate his $65 billion Ponzi scheme by filing fake audit reports, has pleaded not guilty to fraud charges. However, he may be pleading guilty later down the road. Federal prosecutors and Friehling, who waived his right to a grand jury, are discussing a "possible disposition." Bloomberg News says Friehling's moves today are a "likely a prelude" to a guilty plea. A lawyer not associated with the case said, "There is nothing to be gained for Mr. Friehling to waive indictment except to placate prosecutors who are no doubt pressing him to plead guilty and cooperate with them in their investigation. It is the accountant who knows where the bodies are buried." Friehling, who is free on $2.5 million bail, and his family had accounts with Madoff (an SEC violation) and withdrew millions since 2000. more ›

Well, well, well, look how the times have changed. Senator Charles Schumer, who famously championed Wall Street business to the point of protecting the industry, as the NY Times put it last winter, "from government oversight and tougher rules" (saving Wall Street ), now thinks the financial services industry, um, needs regulating. This morning at a Crain's Business event, Schumer explained that, per Crain's, "more aggressive regulation is needed in order to ensure New York maintains its standing as the world’s capital of finance... because jittery investors around the world are looking for places where they can trust that tough regulators will protect their interests." He also said that a regulatory reform bill will be sent to President Obama by April. more ›

While Boston-based accountant Harry Markopolos was a notable outspoken skeptic of Bernard Madoff's supposed investing prowess, it turns out there were others who had questions about the Ponzi schemer's proposition. But, the Post reports, they did nothing. Documents filed with the SEC reveal that three senior executives from Citigroup, Goldman Sachs and Write Capital had their suspicions but never contacted their superiors or the SEC. The Post writes, "The silence by the executives is disturbing to some, who claim a second alarm bell could have forced the SEC's hand and brought Madoff's alleged scam to an end sooner." However, "A source close to Citi said [former employee Leon] Gross should not be singled out, as his views about Madoff were commonplace on Wall Street, adding that Gross did not spend much time analyzing Madoff's investment strategies." The director of the SEC's enforcement division, Linda Thomsen, announced her resignation last week. more ›

Hilarious: After not doing anything about Bernard Madoff when warned about him years ago, the Securities and Exchange Commission has reportedly agreed to a civil case settlement with Ponzi schemester Madoff. The AP reports the agreement "could eventually force [Madoff] to pay a civil fine and return money raised from investors." Money raised from investors—wait, the money that no one can seem to find? (Fine, they found $950 million of an estimated tens of billions.) Don't worry, there's still that criminal case against Madoff. The AP adds, "The partial judgment must be approved by the judge overseeing the Madoff case in federal court in Manhattan." more ›

Earlier this week, the scamming investor Bernard Madoff's housekeeper reported that a $10,000 statue was stolen from his Palm Beach estate. Yesterday, the Palm Beach police found it—near the Palm Beach Country Club, where Madoff reportedly wooed many investors to join his Ponzi scheme—and the statue had a note attached. more ›

Republican presidential candidate John McCain was on 60 Minutes last night and showed bipartisan leanings, when it comes to someone who could head the Securities and Exchange Commission. McCain, who previously blasted SEC chair Christopher Cox, said, "This may sound a little unusual, but I’ve admired Andrew Cuomo. I think he is somebody who could restore some credibility, lend some bipartisanship to this effort.” The candidate said Cuomo "did a good job" as HUD secretary under Clinton, “And he has respect, and he has prestige.” In other NY state of mind McCain news, the state's Independence Party endorsed him, noting his independent thinking. more ›