David Kotz, the Securities and Exchange Commission's Inspector General, told Congress January 5 that his office has been "working at a rapid pace" since December 17 to investigate why the SEC failed to shutter the Bernie Madoff ponzi scheme.
This matter, he told members of the House Financial Services Committee, "requires immediate attention," and he promised to issue "rolling reports on various issues" over the next several months to explain why the SEC failed to act. "We will look at situations and rules and policies we can recommend regarding red flags that are out there," Kotz said. "My focus will be why the SEC didn't take action."
Besides meeting with the SEC's Division of Enforcement and the Office of Compliance Inspections and Examinations (OCIE) to ensure their cooperation on gaining access to their files and records, Kotz told the House Financial Services Committee that his office on December 24, 2008, asked both of these divisions to supply documents and records for the investigation. "We requested that all responsive documents be provided to our Office by January 16, 2009," Kotz said. "In addition, we made several formal expedited requests to the SEC's Office of Information Technology for searches of the e-mails of former and current employees and contractors for information relevant to the investigation, both at headquarters and the New York and Boston Regional Offices, and have already received and are in the process of reviewing these e-mails."
The SEC's Inspector General office has also "already begun efforts to obtain additional resources to assist the Office in undertaking this investigation," Kotz said. "We are securing additional office space and administrative assistance and hope to add four new investigators to our Office's current investigative team."