Securities and Exchange Commission Inspector General H. David Kotz plans to release at least three reports in connection with the Madoff Ponzi scheme.
Mr. Kotz revealed that information in a letter sent on Monday to House Capital Markets Subcommittee Chairman Paul Kanjorski, D-Pa. Earlier on Monday, Mr. Kanjorski wrote the inspector general asking him to provide a public update about his investigation into the failure of the SEC to detect Bernard Madoffs giant scheme.
First will be a comprehensive investigative report that will be released no later than Aug. 31 detailing all the examinations and investigations the SEC has conducted on Bernard L. Madoff Investment Securities LLC of New York from 1992 until the present. The firm conducted a $65 billion Ponzi scheme over many years that was uncovered only late last year after Mr. Madoff confessed to his family about it.
The inspector generals office has interviewed more than 100 witnesses and reviewed millions of e-mails and documents in connection with the investigation, Mr. Kotz said in the letter to Mr. Kanjorski.
The inspector generals office has engaged a consulting firm with expertise in the examination of broker-dealers to assist in determining whether SEC examiners missed red flags that should have alerted them to the Madoff Ponzi scheme, Mr. Kotz wrote. Also, the inspector generals office retained an outside expert in electronic-data restoration to help recover e-mails that may have been deleted, Mr. Kotz wrote.
The inspector generals office will issue two more reports providing specific, detailed recommendations for improving the SECs Division of Enforcement and Office of Compliance Inspections and Examinations. Those reports, which will incorporate the findings of the investigative report, will be issued no later than Sept. 30.
Six months have now passed since you began your investigations into the $65 billion Madoff Ponzi scheme, Mr. Kanjorski wrote in an earlier letter to Mr. Kotz.
The only information that your office has made public during these time frames is a one-page summary of your Madoff investigations, Mr. Kanjorski wrote. I found it an inadequate response to my earlier requests and your prior public commitments.
The time has come for you to act, Mr. Kanjorski wrote. He asked for a response by June 30.
In his response, Mr. Kotz wrote: We have been working as quickly as possible over the past several months. He also pledged to honor the commitment he made in January to issue a comprehensive report with specific recommendations expeditiously.
Sara Hansard is a reporter at InvestmentNews, a sister publication of Pensions & Investments