The SEC failed to uncover Bernard Madoff's decades-long Ponzi scheme despite receiving multiple substantive complaints that should have led them to question his purported trading and exposed the fraud. An investigation found SEC examiners were incompetent and negligent in their repeated examinations of Madoff's business. While no direct evidence was found of improper influence on the SEC's work, the agency clearly had ample opportunities to discover the fraud but failed to conduct a thorough and competent investigation. As a result, Madoff was able to steal an estimated $65 billion from victims and distribute substantial sums to family members as salaries, loans, and profits over nearly four decades before his arrest.

1. The SEC
Friend or Foe

2. SEC – Investor’s Advocate
 The SEC Protects Investor, Maintains Market Integrity,
and Facilitates Capital Formation
 The mission of the U.S. Securities and Exchange Commission is to
protect investors, maintain fair, orderly, and efficient markets, and
facilitate capital formation
 The SEC oversees the key participants in the securities world,
including securities exchanges, securities brokers and dealers,
investment advisors, and mutual funds. Here the SEC is concerned
primarily with promotion the disclosure of important market-related
information, maintaining fair dealing, and protecting against
fraud.
 SOURCE: SEC website: SEC.GOV

3. Why Wasn’t Bernie Caught?
The Crime went on for almost 4 decades
 Bernie confessed; he was never discovered by authorities
Wall Street closed their eyes to one of their own, ignoring red
flags, protecting the banks at the expense of the customers
BLMIS successfully passed SIX SEC investigations and one IRS
approval process for handling pensions and IRAs (as a non-
bank IRA custodian)
Whistleblowers were available and providing much more than
a “smoking gun” (Journalists, ex-employees and outside
competitors ALL provided information to the SEC

4. SEC Opportunities to Discover the
Madoff Fraud
US SEC Office of Investigation
(457 Pages)
Investigation of Failure of the SEC to
Uncover Bernard Madoff’s Ponzi Scheme
Public Version
August 31, 2009
Report No. OIG-509

5. Executive Summary (Pages 20-41)
Conclusion: No Collusion by SEC Staff
The OIG investigation did not find evidence that any
SEC personnel who worked on an SEC examination or
investigation of Bernard L. Madoff Investment
Securities, LLC (BLMIS) had any financial or other
inappropriate connection with Bernard Madoff or the
Madoff family that influenced the conduct of their
examination or investigatory work.
Regulatory Capture: How detailed would an examination be of your future employer:

6. Executive Summary (Pages 20-41)
 Conclusion: SEC senior officials did not block the
investigators. A possible influence by Eric Swanson to
terminate an investigation did not occur.
The OIG also did not find that former SEC Assistant
Director Eric Swanson’s romantic relationship with
Bernard Madoff’s niece, Shana Madoff, influcend the
conduct of the SEC examinations of Madoff and his firm.
We also did not find that senior officials at the SEC
directly attempted to influence examinations or
investigations of Madoff or the Madoff firm, nor was
there evidence any senior SEC oficial interfered with the
staff’s ability to perform its work.

7. Executive Summary (Pages 20-41)
 Conclusion: No collusion, no undue influence or blocking
of investigations
 So, one must conclude that the SEC must be just incompetent
 The OIG investigation did find, however, that the SEC received
more than ample information in the form of detailed and
substantive complaints over the years to warrant a
thorough and comprehensive examination and/or
investigation of Bernard Madoff and BLMIS for operating a Ponzi
scheme, and that despite three examinations and two investigations
being conducted, a thorough and competent investigation or
examination was never performed.

8. MISSED OPPORTUNITIES
The OIG found that between June 1992 and December
2008 when Madoff confessed, the SEC received six
substantive complaints that raised significant
red flags concerning Madoff’s hedge fund operations
and should have led to questions about whether Madoff
was actually engaged in trading.
SO, THE SEC IS INCOMPETENT AND NEGLIGENT
RELATIVE TO REPEATED EXAMINATIONS OF THE
MADOFF INVESTMENT ADVISORY BUSINESS

9. THE RESPONSIBILITY OF THE INDIVIDUAL
VS THAT OF THE SEC
The individual American investor should not be expected
to do the job of the SEC
Not only “shouldn’t they,”, the individual simply “cannot
do the job.”

10. SEC Investigations

11. The SEC is NOT the Only Organization
Charged with Regulating Wall Street
The Financial Industry Regulatory Authority (FINRA) is
the largest independent regulator for all securities firms
doing business in the United States. FINRA’s mission is to
protect America’s investors by making sure the securities
industry operates fairly and honestly.
FINRA oversees roughly 4,300 brokerage firms,
162,000branch offices and over 625,000 registered
securities representatives.

12. FINRA
Mission Statement
FINRA is dedicated to investor protection and market
integrity through effective and efficient regulation of the
securities industry.
When the rules are broken, FINRA takes action. Our
strong and vigorous enforcement program brings
discipline where investors have been harmed
 Source: FINRA website: FINRA.ORG

13. Family Affiliation with the SEC and FINRA
(BERNIE TELLS US HE DID IT ALL BY HIMSELF – THE
OTHERS TELL US THEY KNEW NOTHING)
 Bernard Madoff
 Self described “frequent consultant to the SEC”
 Peter Madoff (brother)
 Director of SIFMA
 Member of the Board of Governors and Executive Committee of the National
Stock Exchange
 Vice Chairman of FINRA
 Director of the National Securities Clearing Corp.
 Shana Madoff (Peter’s daughter, employed 1995)
 SIFMA Compliance and Legal Division Executive Committee
 FINRA Consultative Committee
 NASD’s Market Regulation Committee
 SIFMA Self- Regulatory and SRO Committee
 SIFMA Continuing Education Committee

14. Family Affiliation with the SEC and FINRA
(BERNIE TELLS US HE DID IT ALL BY HIMSELF – THE
OTHERS TELL US THEY KNEW NOTHING)
 Mark Madoff (Son employed in 1986)
 Chairman of the FINRA Inter-Market Committee
 Governor of the Securities Traders Association
 Co-Chair of the STA Trading Committee
 Member of FINRA Membership Committee and Mutual Fund Task Force
 President of the STA of New York
 Chairman of the FINRA Regulation District Ten Business Conduct Committee
 Chairman of the SIFMA NASDAQ Committee
 Andrew Madoff (Son employed in 1988)
 Chairman of the Trading, Trading Issues and Technology, and Decimalization
and
 Market Data Committees and Subcommittees at SIFMA
 Member of the FINRA District Ten Committee and NASDAQ’s
Technology Advisory Committee

15. ALAN STANFORD
PRESIDENT OF STANFORD INTERNATIONAL
Julie Pruitt, SEC field investigator
Told Congress at a 2011 hearing that she suspected
Stanford of illegal activity and pushed the issue with her
superiors
Her reward: Demoted and Transferred

16. 2009 - As we learned more
about how the fraud
continued for decades –
Bernie’s arrest now seems
like a rather hollow victory.
The antipathy toward the
SEC was visually on displayd
in New York City.

17. FAMILY MEMBERS WHO BENEFITED FROM THE CRIME
Loans
Peter Madoff $9m
Shana Madoff $6m
Madoff Investment
Account
Money
In
Money
Out
Mark Madoff $745,482 $18,105,456
Andrew Madoff $912,062 $17,117,566
Peter Madoff $32,146 $16,252,004
Shana Madoff $1,364,975 $1,666,436
Salaries, bonuses,
other disbursements
Amount When
Ruth $44,882,355 2003-
2008
Mark Madoff $29,320,830 2001-
2008
Andrew Madoff $31,105,505 2001-
2008
Peter Madoff $20,067,920 2001-
2008
Shana Madoff $3,832,878 2001-
2008

18. THE MORE INCOMPETENT THE SEC
THE LONGER THE CRIME GOES ON
AND THE MORE THE “BIGGEST WINNER” MAKES
Loans
Peter Madoff $9m
Shana Madoff $6m
Madoff Investment
Account
Money
In
Money
Out
Mark Madoff $745,482 $18,105,456
Andrew Madoff $912,062 $17,117,566
Peter Madoff $32,146 $16,252,004
Shana Madoff $1,364,975 $1,666,436
The biggest winners
– with no risk
IRS $0 ~$15b
States $0 ~$5b
Salaries, bonuses,
other disbursements
Amount When
Ruth $44,882,355 2003-
2008
Mark Madoff $29,320,830 2001-
2008
Andrew Madoff $31,105,505 2001-
2008
Peter Madoff $20,067,920 2001-
2008
Shana Madoff $3,832,878 2001-
2008

19. THIS CANNOT HAPPEN AGAIN
Past and Future Speaking Engagements
• May 12, 2009: Radio show for Morning Call
• June 2, 2009: Pa. Professional House Licensure Committee (Harrisburg, Pa.)
• June 29, 2009: NYC Federal Court
• December 2, 2009: Washington D.C. congressional hearing
• December 2009 issue of Philadelphia Magazine: “Uncle Sham”
• August 26, 2010: Community Meeting, Montgomery County
• June 2010: Co-author of the book “The Club No One Wanted To Join”
• September 23, 2010: Washington D.C. congressional hearing
• October 5, 2010: “Meet The Author”, DelVal College
• November 15, 2010: Blue Bell Country Club Women’s Group
• February through April, 2011: DelVal CLR Program “Can You Sleep At Night”
• April 7, 2011: Radio appearance for “The Story”
• May 13, 2011: Washington D.C. congressional hearing
• April 20, 2011: Kiwanis Club of Doylestown
• October 2011: Class at DelVal CLR Program
• April 20, 2012: Temple University School of Business
• Multiple Newspaper articles, TV appearances, and talks like this
• April 20,2013: Heritage Creek Country Club (120 attendees)
• UPCOMING: September 25, 2013, Bucks County Coalition of Senior Communities

20. Books to Consider
Both Available at Amazon.com
 “The Club No One Wanted
to Join: Madoff Victims in
their Own Words”
•“65 Billion Reasons Why You
Cannot Trust Wall Street” – The
detailed 12 week class taught at
DelVall College