The SEC's Failure Related to Bernie Madoff

by Molly Kruse, Samantha Lewis, and Brett Malone
Faculty advisor: Dr. Sue Cullers

The U.S. Securities and Exchange Commission (SEC) has many rules and regulations in place to protect stockholders and other investors in the financial markets. When investment frauds have occurred in the past, the SEC has adjusted its procedures to prevent further deceit. Then, when it comes to Madoff’s Ponzi scheme, where was the SEC? Bernard L. Madoff Investment Securities, LLC, was investigated by the SEC eight times, and yet it failed to detect the massive fraud within the company. The SEC received several warnings about Madoff, and still it took no action. The SEC’s failure to recognize Madoff’s scheme makes the financial world question the SEC’s purpose and effectiveness. Does the SEC play on effective role in protecting investors and creditors from financial fraud by companies?