How Markopolos knew Madoff was a fraud

CBS News interview excerpts

“I’ve taken all the calculus courses, from integral calculus through differential calculus, as well as linear algebra. And statistics, both normal and non-normal,” Markopolos said.

Asked how long it took him to figure out something was wrong, Markopolos said, “It took me five minutes to know that it was a fraud. It took me another almost four hours of mathematical modeling to prove that it was a fraud.”

Markopolos repeatedly went to the SEC, with stronger evidence each time, and as we all know by now, the SEC ignored him. Even though many others had come to the same conclusion

“If you had executives at the biggest investment houses on Wall Street that knew something was wrong, why do you think they didn’t go to the SEC?” Kroft asked.

“Because people in glass houses don’t throw stones. And self regulation on Wall Street doesn’t work,” Markopolos said.

Hopefully we’ve now seen the end of that now-discredited belief that markets will regulate themselves if only the damn government would get off their backs. Rather, left to their own devices, markets will instead turn into a bunch of thieving jackals.

Markopolos says the real problem with SEC is the investigators are lawyers with no finance experience. Whether this was due to incompetence or by design will be left as an exercise to the reader.


  1. It took EIGHT YEARS!? The mind boggles.

  2. It is not credible that the entire problems at SEC were incompetence and anti-regulatory zeal. IMO, the financial records of all there who were involved with Madoff / Stanford investigations need to be examined closely.

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