If only the SEC did their job...

The more we learn about the facts surfacing from the Madoff fraud the more depressing it gets. Yesterday we learned about everyone, especially the celebrities, who lost money in the scheme. The consequences are heartbreaking, such as the news about the investor who committed suicide or the foundations that had to shed jobs and close doors.

The fact that anyone could so be cold as to ruin people's lives like Mr. Madoff is revolting, but the thing that angers me the most is that those who are hired by taxpayers to avoid this very type of fraud had plenty of warning and chose to ignore it. From CNN:

Markopolos began contacting the SEC at the beginning of the decade to warn that Madoff was a fraud. He sent detailed memos, listing dozens of red flags, laying out a road map of instructions for SEC investigators to follow, even listing contacts and phone numbers of Wall Street experts whom he said would confirm his findings. But, Markopolos' whistle-blowing effort got nowhere.

"I gift wrapped and delivered the largest Ponzi scheme in history to them and some how they couldn't be bothered to conduct a thorough and proper investigation [...]"

It's not that nobody saw it coming. Is that the regulators just chose to ignore it. While I don't discount sheer stupidity and incompetence, I wouldn't be surprised if the warnings were ignored deliberately. I hope investigators get to the bottom of this.

PS: The people who put all their money into Madoff's funds were obviously stupid to ignore the cardinal rule about diversifying your investments. They're not to blame for what happened to them, but we all should know better. Just a few years before, workers at Enron lost everything because all their investments were tied to the company. It seems many didn't learn that lesson. Many more will ignore this latest one too.