The Securities and Exchange has switched into damage control mode with SEC chairman Christopher Cox announcing an in-house investigation into why it did not detect the $50 billion fraud case sooner.

Cox has admitted has the SEC screwed up badly. "The Commission has learned that credible and specific allegations regarding Mr. Madoff's financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff, but were never recommended to the Commission for action. I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them. Moreover, a consequence of the failure to seek a formal order of investigation from the Commission is that subpoena power was not used to obtain information, but rather the staff relied upon information voluntarily produced by Mr. Madoff and his firm. In response, after consultation with the Commission, I have directed a full and immediate review of the past allegations regarding Mr. Madoff and his firm and the reasons they were not found credible, to be led by the SEC's Inspector General. The review will also cover the internal policies at the SEC governing when allegations such as those in this case should be raised to the Commission level, whether those policies were followed, and whether improvements to those policies are necessary. The investigation should also include all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm. The Commission believes strongly that it is vital that SEC investigators, examiners, and enforcement staff be above reproach while conducting their duties, in order to ensure the integrity and effectiveness of the SEC."

You can't say that the growing list of Madoff's victims would regard the SEC as having much integrity or effectiveness. The SEC was getting warnings about Madoff as far back as 1999, so it's remarkable that the regulator avoided doing anything about it.

As TPM Muckraker points out, there was a bunch of cozy family ties that allowed Madoff to get away with his scam, family ties that included his niece, Shana Madoff Swanson, who's married to the former SEC official, Eric Swanson.

But then, the victims which include charities, Spain's largest bank, Santander, Japanese financial giant Nomura which says it could lose up to $303m and members of the Palm Beach country club, where many of Mr Madoff's wealthy clients were recruited, have no-one to blame but themselves.

As the BBC's Kevin Connolly says, Madoff relied on "irrational euphoria" and creating the illusion around the oldest trick in the book: that there is an inside track to investment. If it was that easy, everyone would be rich.

"What made Mr Madoff unusual was the manner in which he recruited his investors. For that he relied on a powerful but elementary piece of human psychology: the more someone tells you that you cannot have something, the more you want it. Membership of the Madoff fund was very strictly by invitation only - merely being rich was not enough in itself."