SEC's top enforcer to testify at Madoff hearing

WASHINGTON (Reuters) - Several top securities enforcement officials will testify at a Congressional hearing into Bernard Madoff's alleged $50 billion fraud, the Senate Banking Committee said on Monday.

The committee has called for testimony by the U.S. Securities and Exchange Commission's director of enforcement, Linda Thomsen, and the SEC's director of compliance, inspections and examinations, Lori Richards.

It has also asked Stephen Luparello, the interim CEO of broker-dealer watchdog the Financial Industry Regulatory Authority, to testify.

Both regulators have been criticized for missing one of the largest investment frauds in history. Incoming SEC chairman, Mary Schapiro, who was previously FINRA's chief executive, has said FINRA did not have the authority to inspect Madoff's investment advisory services, where the fraud allegedly took place.

Tuesday's hearing will be first time Congress will have a chance to directly question key regulators.

The Senate Banking Committee has asked the SEC to hand over streams of documents, including agency e-mails, complaint letters and other reports related to Madoff.

The House Financial Services Committee already held a hearing to explore why the SEC missed red flags and why it did not follow up on tips from one of Madoff's competitors.

FINRA is asking broker-dealers whether it referred any of its customers to Madoff's brokerage or any investment or service offered by the firm he managed, according to a document obtained by Reuters.

In a five-page letter, FINRA asked broker-dealers to provide all correspondence with Madoff employees. It also requested proof that the firms conducted due diligence on Madoff's business.

The SEC's internal watchdog is investigating whether that agency acted appropriately in the matter.

Stephen Harbeck, president of Securities Investor Protection Corp, has been invited to testify at Tuesday's hearing. SIPC is a nonprofit agency set up by Congress to help clients of failed brokerages.

(Reporting by Rachelle Younglai in Washington and Jonathan Stempel in New York; Editing by Lisa Von Ahn)