I’ve spent most of the morning reading Harry Markopolos’s testimony to the House committee on financial services: if you have some time, I’d highly recommend you do likewise. Markopolos isn’t shy about hyperbole: he talks at one point of his "army special operations background" and how he and his team "feared for our lives" while investigating Madoff.
But Markopolos’s indictment of the SEC is utterly compelling, especially the fact that it is staffed with far too many lawyers and far too few professionals with any financial-industry experience. Markopolos also has some choice words for the Wall Street Journal, to whom he gave the Madoff story on a plate: Gary Weiss has the details, but suffice to say that the WSJ never published anything. (Interestingly, there’s very little vitriol for Madoff himself; Markopolos’s attitude to Madoff is pretty much that he simply did what Ponzi operators do.)
I’ll be fascinated to see how the SEC responds to this testimony. My guess is they’ll be quite defensive, but my hope is that they will accept a lot of Markopolos’s criticism. If they dont, then it’s high time the SEC is simply abolished, and replaced with a much more powerful and effective regulatory body.