March 29, 2024

S.E.C. Punishes 8 Workers in Mistakes Related to Madoff

The sanctions stem from Inspector General H. David Kotz’s 2009 report on the agency’s dealings with Mr. Madoff, according to John Nester, an S.E.C. spokesman. Mr. Kotz had urged the S.E.C. to act on an “employee-by-employee basis” to prevent a recurrence of mistakes that kept the agency from halting the fraud.

Of the 21 people “whose performance or conduct were called into question” by Mr. Kotz, 10 were not subject to review because they had already left the S.E.C., Mr. Nester said. Of those remaining, nine were recommended for discipline, and one of them left the agency before the matter was resolved, he said.

“We thoroughly examined all factors relevant to the imposition of discipline, including employees’ performance history — both before and since the Madoff events,” he said.

An official who was recommended for firing was given a 30-day suspension and a pay reduction after it was determined that the firing would hurt agency operations, Mr. Nester said. Several others were given suspensions ranging from three to 30 days, with some reduced in pay grade. Two people received “counseling memos,” the mildest level of agency discipline.

“The S.E.C. could have uncovered the Ponzi scheme well before Madoff confessed” in 2008, according to Mr. Kotz’s report, which detailed the agency’s failure to act on tips about Mr. Madoff’s multibillion-dollar fraud. The internal investigation didn’t find misconduct or “inappropriate influence” from senior officials in reviews of Mr. Madoff, who is serving a 125-year prison term after he pleaded guilty in 2009 to defrauding clients.

The S.E.C. hired a Washington law firm, Fortney Scott, to make disciplinary recommendations, with the S.E.C. chairwoman, Mary L. Schapiro, making the final decisions, Mr. Nester said. He declined to identify employees or the offices where they worked.

Article source: http://feeds.nytimes.com/click.phdo?i=d1d863d9488bbdf464c4058590b5f5b3

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