Cox: SEC Lax on Madoff Oversight, Seeks Probe of His Own Agency’s Work

In a situation he describes as "deeply troubling," the head of the Securities and Exchange Commission says the federal securities watchdog failed to pursue aggressively "credible and specific allegations" going back at least as far as 1999 that the now-notorious hedge fund run by Bernard Madoff was not what it claimed to be.

In a written statement, SEC Chairman Christopher Cox faults his own agency for relying only on information voluntarily disclosed by Madoff in the SEC's response to questions raised about his hedge fund. Thus, Cox at least implies, the SEC failed to discover earlier that Madoff—as Cox says has now been determined—maintained false documents and several sets of books and provided false information to investors and regulators, reports the Wall Street Journal (sub. req.).

"Mr. Cox asked the agency's inspector general to investigate the SEC's handling of complaints about Mr. Madoff, including contacts between the SEC staff and Mr. Madoff and his family," the newspaper reports.