Jan. 26 (Bloomberg) -- U.S. brokerage regulators are investigating firms that referred clients to Bernard Madoff, the money manager accused by federal prosecutors of running a $50 billion Ponzi scheme.

The Financial Industry Regulatory Authority sent brokerages a letter Jan. 15 asking for lists of customers they recommended to Madoff in the past three years, and an accounting of fees generated on the referrals, according to a copy of the document obtained today by Bloomberg News. Finra sought all materials that brokerages used to market Madoff and internal files “concerning due diligence” firms conducted of his money- management business, the letter said.

“What this really highlights is that this is an all hands on deck investigative and enforcement effort,” said Jacob Frenkel, a former attorney at the U.S. Securities and Exchange Commission now at Shulman Rogers Gandal Pordy & Ecker in Rockville, Maryland. “If there’s a regulatory agency that has jurisdiction, it’s looking and it will act.”

Madoff received money from hedge funds, money managers and banks including Spain’s Banco Santander SA, France’s BNP Paribas SA and Switzerland’s UBS AG. His investors have disclosed about $41 billion in losses so far, according to a Bloomberg News tally of disclosures and press reports.

It couldn’t be determined how many of the almost 5,000 brokerages Finra oversees received the request, which was made by the regulator’s enforcement division. Firms were given until Feb. 6 to respond. Finra spokesman Herb Perone declined to comment.

SEC Faulted

The U.S. Securities and Exchange Commission has been criticized by lawmakers and investors for missing the alleged fraud for at least a decade even though press reports and tipsters questioned his investment returns. The Senate Banking Committee is examining SEC and Finra oversight of his firm and will hold a hearing in Washington tomorrow.

Bernard L. Madoff Investment Securities LLC was registered with regulators as both a brokerage and a money manager. Washington-based Finra, an industry self-regulator, has no authority over investment advisers.

Finra, in its letter, also sought referrals that brokerages made to hedge funds that invested with Madoff. Money managers including Fairfield Greenwich Group, Tremont Group Holdings Inc. and Austria’s Bank Medici AG charged investors fees for funneling money into his advisory business.

All Referrals Sought

Finra also asked brokerages about client referrals they made that didn’t involve Madoff. The regulator requested a list of all money managers that were involved in customer referrals from Jan. 1, 2006, through Dec. 31, 2008.

SEC Enforcement Director Linda Thomsen will be among the witnesses at tomorrow’s Senate hearing along with Lori Richards, who heads the SEC office that examines brokerages and investment advisers. SEC Chairman Christopher Cox said on Dec. 16 the agency failed to act on “credible and specific allegations” of wrongdoing by Madoff. Cox left the agency last week.

Finra interim Chief Executive Officer Stephen Luparello also will testify.

The Senate on Jan. 22 confirmed Mary Schapiro, Luparello’s predecessor at Finra, as SEC chairman.

To contact the reporter on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net.

Last Updated: January 26, 2009 14:02 EST