Abstract

The Madoffs scheme, the biggest Ponzi scheme ever seen, has brought several questions about how this scheme can have for so long remained. However, the most important issue which has to be responding is why the Security Exchange Commission (SEC) never uncovered Madoff or has performed an inspection or analysis more accurate about the transactions made by him. Also, understand the reasons why Henry Markopolos, derivatives portfolio manager in Boston, trying to show that Madoff was a scam and tried to warn the SEC more than one time, but all attempts were unsuccessful. The Commission just looked the detailed documents provided by him and did not take any action to end the scheme eight years before Madoff admitted the scheme. In the report submitted by SEC regarding their failures, they tried to explain why nothing was done about Madoff and documents provided by Harry Markopolos. These explanations will be explored in three sections that can be divided into: Resource Constraints, Conflict of Interest, and Ignorance and Indifference. This article will show the information by the SEC that fit this division and provide some improvements that can be made in the improvement of this commission.