Word: sec
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...fairness, Coffee says, Cox and his enforcement officers "were hobbled by commissioners" who wanted pre-approval before SEC enforcement officers could seek penalties. "Nobody wants to get fired for being too aggressive in their investigations," he says. "The agency is demoralized and this could explain the Madoff case...
...Former SEC enforcer Carton also sees this 2006 "Pre-Authorization" policy as being deadly for enforcement morale. "It put a complete chill on enforcement," Carton says. His "Day One" advice for Schapiro: kill this program...
...Schapiro apparently agrees. In her hearing, she said the SEC pre-approval program was among the first things she would examine...
...chill that came with this program may have turned to a deep freeze in regard to Madoff. The same year the pre-authorization policy was enacted, SEC examiners gave Madoff's organization, after registering as an investment adviser, a clean bill of health. Just months earlier hedge fund whistle-blower Harry Markopoulos had given SEC enforcement officials 29 red flags about Madoff's $50 billion fund, presciently calling it the world's biggest Ponzi scheme. Nobody cared. (See pictures of the demise of Bernard Madoff...
...having the tools to stop new Madoffs, Schapiro at her hearing said, "One has to conclude that the [SEC's] tools were not up to the task." She added that the agency may "need a significant bolstering." As for better hedge fund transparency and disclosure, she said, "corporate disclosure has to be complete and accessible; with hedge funds I would like to see disclosure...