SEC Inspector General H. David Kotz, who reviewed the agency’s Madoff probes for eight months, said he might propose that staff be required to verify random samples of trading data to ensure money managers are conducting transactions. SEC managers also should assign employees with “appropriate skills and expertise” to exams, Kotz said today in testimony for the Senate Banking Committee.
Tragically, this is not biting satire. It should be. After all, random sampling of data is a standard accounting audit practice. And assigning people with the proper skills to do the job should be a given. But apparently such practices were never implemented at the SEC, who now views them as being cutting edge and bold. Which is just pathetic.
Here’s what I’d like to see. Everyone involved with the SEC investigation of Madoff has their financial records and bank accounts examined to see if any of them profited personally from their stupendous and studied incompetence in investigating Madoff. This would include where they went to work after the SEC, if they changed jobs.
For Inspector Klutz to propose the obvious as a cure for what should have been done in the first place only demonstrates that he too is incompetent.
Sadly, even the IRS does not always send “employees with ‘appropriate skills and expertise’ to exams.” Often in that case, the taxpayer who suffers when the inexperienced auditors throw out valid deductions and assess inappropriate taxes and penalties. In this case, it seems to have worked the other way.
I agree with the author of this article, and would like to suggest that maybe, Harry Markopolos, the “master of the metaphor” be offered a high level position at the SEC. His no-nonsense, upfront, non-apologetic approaches to dealing with incompetetence and negligence, using the “pink slip,” instead of promotions (like Mary Schapiro heading FINRA then the SEC), is just what the SEC and this country needs.
And then there are the “nearly forgotten” tens of thousands of investors who made the tragic mistake of believing that one can rely on the integrity of half a dozen thorough investigations conducted by the agency created during the Great Depression, now causing their “great depression.” If nobody is going to take some responsibility for them, then there is no hope that this situation will ever be corrected. With taking responsibility, there can be incentinve to change and improve. The mistakes made in the Madoff case will continue and so will the destruction of people’s lives.