The recent revelation by Chairman Cox that the SEC failed to follow up on credible, specific tips that Bernard Madoff was running an alleged Ponzi scheme has reportedly “put the agency into a state of complete panic,” according to a “current long-serving member of the commission’s enforcement division” who spoke with the publication TPMMuckraker. According to the article,
The source also stated that an “associate director in the enforcement division had in recent days ordered junior staff to review every case that’s been closed over the last few years, to ensure that violations weren’t missed — as they appear to have been in the 2006 investigation of Madoff. “There’s a real paranoia around here,” the source added.
That paranoia — or at least extreme concern — apparently extends to commission officials in Washington. The source said that since the Madoff allegations came to light last week, SEC brass had sent out numerous emails warning staffers not to destroy documents relating to the case — which is being investigated both by SEC enforcement and by the FBI. There have also been several warnings not to speak with the press, the source added.