In the SEC Inspector General’s Semiannual Report to Congress released yesterday, H. David Kotz provided an update on his office’s (OIG) high-profile inquiry into why the SEC failed to uncover the Madoff Ponzi Scheme. He provided the following new information:
- Since January 2009, the OIG has ordered the production of the e-mails of at least 27 SEC employees who had involvement with Madoff examinations or investigations and has requested a search of all headquarters and New York and Boston Regional Office e-mails referencing Madoff.
- The SEC’s Office of Information Technology has been producing e-mails on a rolling basis and has provided the OIG with over 1.3 million e-mails to date. OIG investigators have substantially reviewed the e-mails produced. Additional document requests are underway.
- At the request of the OIG, the OCIE produced all available work papers from the SEC’s examinations of Madoff ‘s firm. Specifically, the OCIE produced documents from seven examinations performed over 11years.
- The OIG also engaged a forensic and litigation consultancy firm with expertise in forensic accounting and the examination of broker dealers to assist in the review of the OCIE work papers, and to determine whether examiners missed red flags that should have alerted them to Madoff ‘s Ponzi scheme. The consultancy firm has completed a thorough review and analysis of all examination work papers produced to the OIG.
- As of the end of the reporting period, the OIG had conducted 44 witness interviews with numerous additional interviews scheduled for April and May 2009.
- The OIG hopes to conclude its investigation and issue a report of its findings prior to the end of the next semiannual reporting period.