September 4, 2009 / 12:13 AM / 10 years ago

Congress to probe SEC's lapse on Madoff

WASHINGTON (Reuters) - An investigative panel in the U.S. Congress will hold hearings on the failure of the U.S. Securities and Exchange Commission to follow clues that could have uncovered Bernard Madoff’s $65 billion Ponzi scheme.

Rep. Edolphus Towns, chairman of the House Oversight and Government Reform Committee, said on Thursday he will soon convene hearings, citing an SEC inspector general report which this week faulted the agency for failing to catch Madoff.

“These repeated failures raise serious questions about SEC’s internal culture and monitoring, the possibility of regulatory capture and the wisdom of the self-correcting market paradigm,” Towns said in a letter dated Thursday.

The Senate Banking Committee is holding a hearing on September 10 to examine the inspector general report, which found key SEC personnel assigned to the Madoff case were at times too inexperienced and resisted whistleblowers.

Towns, a New York Democrat, asked SEC chairman Mary Schapiro for information on staffing qualifications, and whether a 2002 effort by Congress to reverse turnover and experience problems at the agency has had any impact.

He asked about the role of senior managers in overseeing cases and which officials were involved with the Madoff matter.

The lawmaker seeks answers by Friday, September 11.

Reporting by Kim Dixon, editing by Matthew Lewis.

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