A good government group is slamming the Securities and Exchange Commission for ignoring or delaying on hundreds of recommendations made by the agency’s internal watchdog. Many of these recommendations were made in the wake of the SEC’s failure to detect Bernie Madoff’s massive Ponzi scheme, a misstep for which the agency was widely derided earlier this year.
Two documents obtained through a FOIA by the Project on Government Oversight show that hundreds of recommendations made since December 2007 by the SEC’s Office of the Inspector General have gone unimplemented.
The first document (pdf) reveals that the SEC has taken “no action” on 27 of the 52 recommendations — including some of the most serious — made in the IG’s reports of investigation during that period. The second document (pdf) shows that of the 312 recommendations made in the IG’s audits, 197 — including some from the Madoff case — are still listed as “pending.”
“For an agency that’s recovering from the worst failure in its history, the SEC’s decision to ignore so many of the Inspector General’s recommendations is simply astonishing,” POGO Executive Director Danielle Brian said in a press release.
In a letter to SEC chair Mary Schapiro, Brian listed some of the recommendations from Kotz that have not yet been completed, which appear to come directly out of the Madoff fiasco:
Enforcement should require tips and complaints to be reviewed by at least two individuals experienced in the subject matter prior to deciding not to take further action.
And:
Enforcement should put in place procedures to ensure that investigations are assigned to teams where at least one individual on the team has specific and sufficient knowledge of the subject matter (e.g. Ponzi schemes) and the team has access to at least one additional individual who also has such expertise or knowledge.
Brian added:
It is simply unacceptable for a federal agency to ignore so many of the findings and recommendations made by its OIG. Based on the SEC’s poor track record as revealed in these documents, the public has every reason to question the agency’s commitment to implementing the sorely needed post-Madoff reforms.
Many of the victims of Madoff’s Ponzi scheme blamed the SEC as much as Madoff. Whistleblower Harry Markopolos famously told Congress in February:
If you flew the entire SEC staff to Boston, and sat them in Fenway Park, they wouldn’t be able to find first base.
Of course, it’s not realistic to think that the SEC could necessarily have implemented all of the recommendations by now. (They had a lot to improve, after all.) But given the agency’s historic recent failure, that’s no reason not to keep the pressure on.