Bernard Madoff And The SEC Case: Political And Bureaucratic Environment Perspective

Rossyovi Mercedes

PAD 758 – Professor Robin Kempf

November 4th, 2014

Madoff and the SEC Case: Political and Bureaucratic Environment Perspective

The Bernard Madoff case is considered the largest Ponzi scheme in the United States’ history. Madoff defrauded clients from the 1980’s through 2008 acting as an investment adviser for Bernard L. Madoff Investment Securities Inc. He created a false infrastructure at the BLMIS to fool investors into believing that it was a legitimate investment advisory business. He then used false pretenses to solicit billions of dollars of funds from them by promising to achieve high rates of return with limited risks, however, he failed to invest the funds and instead converted them to his own use. He not only took money

Investigations of the case later discovered that over 4,800 account holders were defrauded with balances of nearly 64.8 billion dollars, from which Madoff’s firm owed a “small” fraction. Ultimately, Madoff pleaded guilty to several criminal and regulatory charges and was sentenced to 150 years in jail.

The political and bureaucratic environment in which the case took place was a complex one. It is obvious that there wasn’t sufficient oversight and regulation from the SEC. The agency not only failed to detect the fraud, but also perpetuated it in some forms. Reports show that the SEC received more than ample information and substantive complaints to warrant a thorough investigation of Madoff and his operations. However, even after conducting three examinations and two investigations, the SEC did not find sufficient evidence to raise a case against him. It was only after his own son testified that Madoff was convicted. Additionally, Madoff knew the policies and politics involved in his defrauding, which only made it easier for him to fool the