Former SEC Chairman Bernard Madoff could not have accomplished his massive financial fraud without the active assistance, reckless behavior and/or complicity of numerous accountants, attorneys, bankers, financial analysts, and others individuals. It is not a matter of improving “ethical conduct” among such persons. Congress must enact financial crime statutes with real teeth, which will both punish and deter such illegal conduct. So-called “white collar” crime causes greater harm to society than almost all forms of violent crime. We urgently need improved investigative and enforcement capability at the national and international levels. Finally, query whether the large size of the institutions under which the aforementioned “professionals” practice their trades is a contributing factor to Mr. Madoff’s multibillion dollar fraud — the larger the entity the more difficult it is to ensure regulatory compliance and detect improper actions of colleagues. Unfortunately, we have learned little from the Arthur Andersen/Enron affair.
March 2, 2009 at 4:13 am |
don’t think there was a lot of complicity by those you mention, because complicity assumes knowledge. The real culprit in the Madoff scandal is the same culprit operating in all ponzi schemes since the beginning of time, i.e., gullibility, stupidity, lack of sophistication on the part of investors, and the fear of being left out or behind. Running ponzi schemes and such already carry harsh penalties. The SEC, FNRA, and a host of other govt regulators missed 30 years of Madoff. We don’t need even more govt regulation. What we need is a change in the high school curriculum. Students are routinely offered Shop and Gym, but not economics, investing, or markets courses. If they leave high school knowing that “if something seems too good to be true, it probably is,” then they have gained a huge lesson to take with them through life, long after they have forgotten how to factor polynomials.