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SEC chairman cites multiple failures by his agency to pursue fraud allegations against Madoff
WASHINGTON (AP) -- In a stunning rebuke, the Securities and Exchange Commission chairman blames his career regulators for a decade-long failure to investigate Wall Street money manager Bernard L. Madoff, now accused of running one of the largest Ponzi schemes ever.
On Tuesday night, SEC Chairman Christopher Cox ordered an internal investigation of what went wrong and offered a scathing critique of the conduct of his staff attorneys. He said they never bothered to seek a formal commission-approved investigation that would have forced Madoff to surrender vital information under subpoena. Instead, the staff relied on information voluntarily produced by Madoff and his firm.
Credible and specific allegations regarding Madoff's financial wrongdoing going back to at least 1999 were repeatedly brought to the attention of SEC staff, said Cox.
Shock waves from the Madoff affair have radiated around the globe as a growing number of prestigious charitable foundations, big international banks and individual investors acknowledge falling victim to an unprecedented fraud. Madoff remains free on $10 million bail.
"I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them," Cox said in a written statement.
The SEC chairman said Madoff kept several sets of books and false documents, and provided false information involving his investment advisory activities to investors and to regulators.
Separately, Stephen Harbeck, chief executive of the Securities Investor Protection Corporation, said one set of Madoff's books kept track of the losses at his investment advisory arm, while the other is what investors were shown.
SIPC, created by Congress and funded by the securities industry, can give customers up to $500,000 if it is determined their money was stolen. SIPC has about $1.6 billion to make payouts, which means that amount could quickly be depleted in the Madoff case where losses could reach $50 billion. That figure comes from the SEC's court complaint, which quotes Madoff admitting to losses in that amount to two senior employees of his firm before his arrest last Thursday.
Cox's harsh assessment may have the effect of shifting questions away from the politically appointed five-member commission and placing blame squarely -- if not solely -- on the agency's staff for failing to aggressively pursue a massive fraud.
Cox's statement is sure to fuel a new criticism of the SEC, an agency increasingly seen in Congress and elsewhere as incapable of carrying out its basic mission: to ensure a basic level of honesty on Wall Street.
Cox spelled out the taint produced by the previous failure to aggressively pursue Madoff: The SEC commission chairman ordered removal from the Madoff criminal investigation of any SEC staff members who have had contact with the prominent Wall Street figure or his family.
Cox's strong statement came as at least two senators signaled they have lost patience with the SEC.
"They were asleep at the switch," Sen. Charles Grassley, R-Iowa, said of the SEC's failure to uncover Madoff's alleged fraud.
As Grassley had urged, Cox ordered the SEC's inspector general to conduct the internal probe of his agency's inaction.
Sen. Jack Reed, D-R.I., said the problems go much deeper.
The Madoff affair "illustrates the lack of credible enforcement over several years by the SEC," said Reed, who chairs the Senate banking panel that oversees the SEC. He criticized the agency's "lack of a strong commitment to be vigilant."
Shortly before Cox denounced his own staff, a widely respected former SEC chief accountant, Lynn Turner, aired her own skepticism. "I can't comprehend how a well-run investigation would have missed a fraud of this magnitude," Turner said.
The Madoff scandal is just the latest instance in which SEC regulators have overlooked clear warning signs of possible fraud.
An earlier review by the SEC inspector general determined that the agency's monitoring of the five biggest Wall Street firms, which included Bear Stearns, was lacking.
Cox himself has come in for strong criticism.
In March, a few days before Bear Stearns nearly collapsed into bankruptcy, Cox told reporters the agency was closely monitoring the five investment firms and had "a good deal of comfort" in their capital levels. Then, as federal officials orchestrated the rescue, Bear Stearns was bought by rival JPMorgan Chase with a $29 billion government backstop.
As for Madoff, the SEC's enforcement division looked into Madoff's business last year. Until Tuesday night, the SEC had refused to criticize the inaction that followed last year's probe.
Damaging the SEC's credibility in the Madoff case was the fact that a securities executive, Harry Markopolos, complained to the SEC's Boston office in May 1999. Markopolos told the SEC staff they should investigate Madoff because Markopolos felt it was impossible for the kind of profit he was reporting to have been gained legally.
But the SEC's Boston office has itself been accused in the past of brushing off a whistle-blower's legitimate complaints, in a case that led the head of that office to resign in 2003. The whistle-blower, Peter Scannell, eventually persuaded state regulators and the SEC to act against mutual fund giant Putnam Investments, where Scannell worked.
"It's flabbergasting that nobody can nail the bums in the SEC who turn their back on and/or aid and abet people who defraud investors," Scannell said in a telephone interview Monday
Stock futures fall as rate cut enthusiasm wanes
Wednesday December 17, 6:58 am ET
Wall Street heads for lower open as persistent economic worries dampen rate cut enthusiasm
NEW YORK (AP) -- Wall Street headed for a lower open Wednesday after its big jump a day earlier, as investors' enthusiasm over historically low interest rates gave way to concerns about the nation's weak economy and struggling companies.
The Federal Reserve has cut its federal funds rate target to a range of zero to 0.25 percent -- an unprecedented move aimed at boosting borrowing and lending. The central bank said Tuesday it anticipates the weak economy will keep the target rate low for "some time," and said it is mulling the possibility of buying Treasurys -- in effect, printing new money.
In early trading Wednesday, yields on 10-year Treasury notes and 30-year Treasury bonds fell yet again to record lows.
The Fed's rate decision and statement had invigorated the market on Tuesday, lifting the Dow Jones industrial average more than 4 percent and other indexes more than 5 percent. But caution returned to Wall Street on Wednesday, with many investors starting to view the Fed's move as a sign of how dire the global financial situation really is.
The market was also waiting to see how Morgan Stanley fared in the fall. The bank is scheduled to report its fiscal fourth-quarter financial results Wednesday morning, and analysts forecast a loss of 34 cents a share.
Ahead of the market's open, Dow Jones industrial average futures fell 109, or 1.23 percent, to 8,782. Standard & Poor's 500 index futures fell 12.90, or 1.41 percent, to 899.90, while Nasdaq 100 index futures fell 9.00, or 0.73 percent, to 1,232.00.
In economic data Wednesday, the government is scheduled to release its reading on the current account deficit for the third quarter, while the Mortgage Bankers Association will report on weekly mortgage applications.
In other news, Securities and Exchange Commission Chairman Christopher Cox blamed regulators for a decade-long failure to investigate Wall Street money manager Bernard L. Madoff, now accused of running a $50 billion Ponzi scheme. Cox said staff attorneys never bothered to seek a formal commission-approved investigation that would have forced Madoff to surrender vital information under subpoena.
The dollar was mixed against other major currencies, while gold prices rose.
Light, sweet crude rose $1.45 to $45.05 a barrel in electronic premarket trading on the New York Mercantile Exchange.
Markets overseas were mixed. Japan's Nikkei stock average rose 0.52 percent, while Hong Kong's Hang Seng index rose 2.18 percent. In late morning trading, Britain's FTSE 100 rose 0.57 percent, Germany's DAX index fell 0.25 percent, and France's CAC-40 fell 0.16 percent.
New York Stock Exchange: http://www.nyse.com
Nasdaq Stock Market: http://www.nasdaq.com
great thnx for the info
Good morning everyone at lotto
Goodmorning all
thnx good morning too you as well
wow i wonder who does then maybe call the TA
ok see you soon then
check pinksheets.com
let u know if i find out more
thnx will watch them
maybe things will get better now?
ok great
sure why not LOL
thnx will rader it
thnx for the DD
ok thnx let me know if you hear any info and i'll do the same
yep lets hope tom. is better
looks like this may be bottom
agree thnx keep me posted
great pic
thnx for the dd tony
on the rader
thnx for the tip
thnx for the info
up up and away
when do you think it can happen?
chart is looking good thanx stocksurgeon
sounds good to me
wow nice chart thnx
i just got and email from the TheCapitalReport.com on TLLE the got paid 100k i wonder what kind of job there gonna do on on it crzy if you ask me 100k
you got it bud
Hey rick C what DD have you done
Bid 30 ask 40 wonder what the opening brings
lets see what this stock does
TLLE had a nice day as it closed up 207% to $0.40 on 494,151 shares traded, most of which came in the last few hours of the day.
I expect this upward trend to continue and here are a few reasons why:
TLLE began the week trading at a total market capitalization of approximately $6 million at a time when current market data (which is broken down for you on TheCapitalReport.com) suggests its shares easily represent a market value of at least ten times that amount.
TLLE was previously listed on the AMEX and at one time traded at much higher levels.
After some delays with filings, the Company lost its listing status and investors lost interest.
Now, TLLE is working aggressively to complete its prior period audits and bring all of its SEC filings current - the recently filed 10-K providing direct evidence of this. This could pave the way for the possibility of a NASDAQ Small-Cap listing or relisting on the AMEX in the near future.
The recent 10-K showed TLLE had net revenues of $56,244,000 for fiscal 2007! Quite a find for a virtually unknown company on the listed on the Pinksheets!
As the "street" begins to realize what a value play TLLE represents, many new investors will take a good look.
As larger strategic buyers become more aware of the Company's subscriber base and current low valuation, an outright acquisition of the Company may become a very real possibility.
With today's gains and word beginning to spread, this could just be the beginning of the rebirth of TLLE.
I have posted a profile of TLLE on TheCapitalReport.com.
You may also visit Teletouch.com for more information.
Stay tuned for updates, as I will keep you informed with new developments.
Thank you for your valued time, and tell a friend about TheCapitalReport.com!
Visit: TheCapitalReport.com
Sincerely,
WILD BILL
TheCapitalReport.com
This report is for information purposes only, and is neither a solicitation or recommendation to buy nor an offer to sell securities. TheCapitalReport.com is not a registered investment advisor. TheCapitalReport.com is not a broker-dealer. Information, opinions and analysis contained herein are based on sources believed to be reliable, but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. The opinions contained herein reflect our current judgment and are subject to change without notice. TheCapitalReport.com accepts no liability for any losses arising from an investor's reliance on the use of this material. TheCapitalReport.com has been contracted to receive $100,000.00 by a third party (ICG) for coverage of TLLE. TheCapitalReport.com and its affiliates or officers have purchased and sold and will purchase and sell shares of common stock of TLLE, in the open market at any time without notice. TheCapitalReport.com will not update its purchases and sales of TLLE in any future postings on TheCapitalReport.com. Certain information included herein is forward-looking within the context of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning manufacturing, marketing, growth, and expansion. The words "may", "would," "will," "expect," "estimate," "anticipate," "believe," "intend," " project," and similar expressions and variations thereof are intended to identify for ward-looking statements. Such forward- looking information involves important risks and uncertainties that could affect actual results and cause them to differ materially from expectations expressed herein. *TheCapitalReport.com does not set price targets on securities
thnx for the info
i agree with that look at all the people who invsted with B Madoff
yep then you should be able to give out presents (stock tips)
i was thinking of the next Madoff