The SEC just came out with their report regarding Allen Stanford’s Ponzi Scheme. And guess what, it mirrors that of Bernard Madoff’s encounters with the SEC. In each case, the SEC acted like blundering idiots. It makes one wonder if the SEC didn’t order their investigative license from an online diploma university for the price of $14.95. Because what has surfaced over the past couple of years reveals, the SEC has been incompetent on some of these matters!
As reported by the Wall Street Journal, The report (The SEC releashed a report on Friday) lays out a series of missteps by the SEC ignoring red flags being raised by the examiners in its Fort Worth office, who were “aware since 1997 that [Stanford] was likely operating a Ponzi scheme.” In four separate instances in 1997, 1998, 2002 and 2004, examiners concluded that Stanford’s businesses were either a Ponzi scheme “or a similar fraudulent scheme.” “The only significant difference in the Examination group’s findings over the years was that the potential fraud grew exponentially, from $250 million to $1.5 billion,” the report said.
In my entry, Blinded By A Dim Light earlier this year regarding Bernard Madoff, I state, How long does it take to catch a Ponzi scheme operator? Well, according to the report released yesterday titled “Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme,” 16 years!!! And that’s 16years from from the date the first red flags were raised about Bernard Madoff. During those 16 years, the SEC opened five inquiries, and hundreds of red flags were raised.
The truth around stories like Madoff, Stanford and others scare me. And they should scare you too. They reveal that broad swaths of government are likely totally incompetent. Rules and regulations don’t matter. The leadership of these institutions are suspect. And most important, we, the American citizens and the US Economy is taking a hit due to these lapses. Ponzi schemes will always exist, how and when we shut them down determines the true cost of them. Here, we have failed. Madoff and Stanford were allowed to exist for years after the first signs of Ponzi started to surface.
Yes, these were silent problems that resulted into Without Warning events of immense magnitude.
