With Bernie Madoff avoiding jail and instead getting house arrest in his $7 million apartment, The Wall Street Journal tells us that the Securities and Exchange Commission had him cold on multiple violations back in 2006 but let him off after Madoff agreed to register his investment-advisory business and Fairfield Greenwich, a hedge fund that placed money with Mr. Madoff on behalf of its clients, agreed to disclose information about Madoff to investors. Had they acted at the time, the SEC would have exposed his multi-billion dollar scam and protected investors.

The WSJ recenty ran a 2005 submission to the SEC from Harry Markopolos , who once worked for a Madoff rival, detailing his concerns about Madoff and raising a series of red flags. Trader's Narrative raises more red flags which are amazingly simple. Like for example the fact that Madoff Investment Securities was both the broker dealer and investment advisor, that Madoff traded in the same securities that he recommended to advisory clients and that he actually had custody of the assets! The conflict of interest is so obvious. Why didn't these supposedly sophisticated investors see through it.

And if that's not bad enough, the WSJ now runs a piece saying that Mary Schapiro, Barack Obama's pick to lead the Securities and Exchange Commission has actually crossed paths with the Madoff family.