(Corrects the length of Madoff’s sentence in sixth paragraph of story published Nov. 11.)
Nov. 11 (Bloomberg) -- The U.S. Securities and Exchange Commission disciplined eight employees for missteps related to Bernard Madoff’s Ponzi scheme, with punishments ranging from suspensions to written reprimands, an agency spokesman said.
The sanctions stem from Inspector General H. David Kotz’s 2009 report on the agency’s dealings with Madoff, according to John Nester, an SEC spokesman. Kotz had urged the SEC to act on an “employee-by-employee basis” to prevent a recurrence of mistakes that kept the agency from halting the fraud.
Of the 21 people “whose performance or conduct were called into question” by Kotz, 10 weren’t subject to review because they’d already left the SEC, Nester said. Of those remaining, nine were recommended for discipline, and one of them left the agency before the matter was resolved, Nester said.
“We thoroughly examined all factors relevant to the imposition of discipline, including employees’ performance history -- both before and since the Madoff events,” he said.
An official who was recommended for firing was given a 30-day suspension and a pay reduction after it was determined that the firing would hurt agency operations, Nester said. Several others were given suspensions ranging from 3 to 30 days, with some reduced in pay grade. Two people received “counseling memos,” the mildest level of agency discipline.
“The SEC could have uncovered the Ponzi scheme well before Madoff confessed” in 2008, according to Kotz’ report, which detailed the agency’s failure to act on tips about Madoff’s multibillion-dollar fraud. The internal investigation didn’t find misconduct or “inappropriate influence” from senior officials in reviews of Madoff, who is serving a 150-year prison term after he pleaded guilty in 2009 to defrauding clients.
The SEC hired Washington law firm Fortney & Scott LLC to make disciplinary recommendations, with SEC Chairman Mary Schapiro making the final decisions, Nester said. He declined to identify employees or the offices where they worked.
The employee sanctions were reported earlier today by the Washington Post.
To contact the reporter on this story: Jesse Hamilton in Washington at email@example.com.
To contact the editor responsible for this story: Lawrence Roberts at firstname.lastname@example.org.