The failure of the SEC to effectively investigate Bernard Madoff’s brokerage/investment firm is shaping up as a major piece of the Madoff story.
And today Politico reports that Madoff’s niece, Shana Madoff Swanson, who works as a compliance attorney at his firm, is married to a former top SEC official, Eric Swanson.
Madoff himself wasn’t above bragging about his family connections to the regulatory authority that should have been watch-dogging him. ABCNews.com reports:
At a business roundtable meeting last year, Madoff boasted of his “very close” relationship with a SEC regulator, chuckling as he said, “in fact, my niece even married one.”
Politico make clear that Swanson was in a key post relating to SEC’s enforcement of securities law :
Swanson was the assistant director in the SEC’s Office of Compliance Inspections and Examinations’ market oversight unit in Washington. According to his biography, Swanson “supervised and conducted inspections and examinations that involved a wide range of issues including best execution, order handling, insider trading [and] market manipulation.”
But there are some mitigating factors here. The SEC’s director of compliance and examinations told Politico that Swanson participated in two investigations of Madoff’s broker-dealer operation — in 1999 and 2004 — but not the 2005 probe*.
Swanson left the SEC in 2006, and the couple were married the following year. So were they dating when Swanson helped out on the 2004 investigation?
A spokesman for Swanson’s current employer, BATS, which describes itself as the third largest stock exchange in New York, says no:
Eric Swanson worked at the SEC for 10 years and did not participate in any inquiry of Bernard Madoff Securities or its affiliates while involved in a relationship with Shana, whom he met through her trade association work in the industry.
It’s impossible to know right now whether Madoff’s family connection allowed him to exert any improper influence on the SEC. But something tells us we’re going to hear more on this…
* A spokesman for Eric Swanson’s firm tells TPMmuckraker in an email that Politico was wrong on one detail: “Eric Swanson joined the group in question at the SEC in 2000 and thus was not part of the 1999 investigation of Madoff.”