We have talked many times about the way the Securities and Exchange Commission had looked the other way and allowed Bernard Madoff to get away with his fraud.
Now, the New York Post reports that bankers thought Madoff was a shyster but kept shtum. "Leon Gross, the former managing director in charge of worldwide equity derivatives research for Citigroup, told friends and colleagues on Wall Street in 2005 that he thought Madoff was being less than honest about the returns he could make for investors but did nothing to prevent the fraud. Likewise, Joanne Hill, Goldman Sachs' global head of equity derivatives research, believed there was something wrong with Madoff's investment scheme because the returns he boasted in marketing materials seemed too good to be true. Like Gross, Hill did not alert her superiors or regulatory authorities. She did, however, tell friends and colleagues about her suspicions."
This is potentially alarming because it shows the code of "omerta" running through the financial mafia. If they had the guts to come forward, it might have forced the SEC to act sooner. People needn't have lost their savings and investment had they done that. People like former British army major William Foxton who killed himself after losing his life savings.
And while we are on the subject of Madoff, it's worth noting the report that SEC enforcement director Linda Thomsen, whose unit sat on its hands and allowed Madoff to get away with fraud, is stepping down. Apparently, it's part of a shake-up under new SEC chairman Mary Schapiro. Thomsen will return to private practice. It's a bit like closing the gate after the horse has bolted.
no comment untill now