Page last updated at 06:01 GMT, Thursday, 5 February 2009

Madoff whistle-blower attacks SEC

Fraud investigator Harry Markopolos says his pleas to the SEC fell on deaf ears

An investment manager has attacked US regulators for failing to act on his tip-off about Bernard Madoff's alleged $50bn (33bn) fraud.

Harry Markopolos told a Congressional hearing that the Securities and Exchange Commission (SEC) had not been willing or able to uncover the fraud.

US lawmakers then accused SEC officials of blocking their investigation by failing to answer questions.

One official said she could not comment in detail due to an ongoing probe.

SEC enforcement director Linda Thomsen said there were confidential areas related to the investigation that could not be publicly discussed.

Mr Markopolos, who said he had tried to get regulators to probe Mr Madoff from 2000, called SEC officials "too slow, too young and too under-educated" to catch the alleged fraud.

"They looked at the size of Madoff and said he's a big firm and we don't attack big firms," he said.

He also said he was planning to turn over the names of "feeder" funds that helped Mr Madoff raise money, to prove that he had not acted alone.

The testimony sparked angry questions from lawmakers, and frustration when they were not answered.

"We thought the enemy was Mr Madoff, I think it was you. You were the shield," said New York Democrat Gary Ackerman.

SEC officials did, however, say that there would be changes following the Madoff case, including how often investment advisers were examined.

No plea

Earlier, the liquidator of Mr Madoff's investment firm said almost $950m (657m) had so far been recovered.

This figure is less than 2% of the total amount Mr Madoff is accused of defrauding from his investors.

Mr Madoff, 70, a former chairman of the Nasdaq stock market, is accused of running a Ponzi scheme - a system whereby early investors are paid off with the money of new clients.

If convicted, he faces up to 20 years in prison and millions of dollars in fines.

Mr Madoff was arrested on 11 December. He was released on bail while police investigations continue and has not yet entered a plea or responded to the charges.

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