Looking for an Eph connection to the Bernie Madoff scandal? Me too! Luckily, there does not seem to be one, at least as far as Arthur Levitt ’52 is concerned.

Ex-Securities and Exchange Commission boss Arthur Levitt yesterday fired back at critics trying to lay at his feet some of the blame for the Bernie Madoff scandal, saying he wasn’t asleep at the switch.
“At this point, I don’t see any evidence that the SEC dropped the ball,” Levitt, who’s now an adviser to private-equity shop Carlyle Group, told The Post.

The 78-year-old Levitt also denied allegations that he had a chummy relationship with Madoff, who last week was arrested on charges of having masterminded a $50 billion Ponzi scheme that has touched everything from hedge funds to charities to European banks.

Some have suggested that Levitt and Madoff were close enough during the eight years that Levitt was SEC chairman that it might have skewed his oversight of the company. Additionally, Levitt said he’s never been an investor in Madoff’s advisory business.

“We were not socially friendly,” Levitt said. “I knew Bernie the way I know [former Citigroup CEO] Sandy Weill or [ex-Merrill Lynch chairman Dan] Tully. He received no special breaks from the commission.”

By 2001, while Levitt was still chair of the SEC, Madoff was already running the largest Ponzi scheme in history. If we can’t blame him, who can we blame? More here.

On the heels of the recent lurid discoveries about Bernard Madoff’s multi-billion-dollar fraud, former SEC Chair Arthur Levitt is quoted in the article as saying: “At this point, I don’t see any evidence that the SEC dropped the ball.”

That comment infuriates me—and likely many others who have spent countless hours this past week listening to the devastation brought upon the life savings of many victims of Madoff’s apparent fraud. It is possible that Madoff made off (sorry for the pun) with billions of dollars of other folks’ money. I think the enormity of the theft needs repeating: Billions of dollars. Billions. And this occurred right under the nose of the SEC, which regulates RIAs and b/ds, and FINRA, which regulates the latter only. We will need to see how this story unfolds to know the extent of the regulatory failure and determine where to point the finger.

Still, what kind of evidence does former Chairman Levitt need in order to recognize that the SEC failed the investing public and the industry? What evidence is required to convince this former industry cop that the streets of Wall Street were not being patrolled … that the squad cars were arriving too late while their occupants were munching on donuts and slurping down coffee?


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