MENENDEZ CALLS FOR REFORM OF THE SECURITIES AND EXCHANGE COMMISSION AFTER MADOFF SENTENCING

Washington – U.S. Senator Robert Menendez (D-NJ) today called for accountability and reform at the Securities and Exchange Commission and other financial regulatory agencies in the wake of the Bernard Madoff sentencing.  U.S. District Court Judge Denny Chin sentenced Bernard Madoff to 150 years in prison for his role in orchestrating the massive fraud that cheated investors, pension funds, and foundations of their life savings.  The SEC was repeatedly warned in detail by whistleblower and independent fraud investigator Harry Markopolos that Madoff was running a massive Ponzi scheme, but the SEC ignored the clear warnings and failed to conduct a thorough investigation.        

To stop such frauds from bilking middle class Americans again, Senator Menendez has called for:

• An increased enforcement budget at the SEC, which was inadequately funded during the Bush Administration
• Senate Finance Committee hearings on ways the federal government can help innocent victims of Ponzi schemes to recoup their losses through the Securities Investor Protection Corporation (SIPC) or other means
• Enactment of the Improved Financial and Commodity Markets Oversight and Accountability Act, legislation Senator Menendez introduced on June 25th, 2009 (http://menendez.senate.gov/newsroom/record.cfm?id=315148) to strengthen the Inspectors General at five key financial regulatory agencies:  the Securities and Exchange Commission, the Federal Reserve, the Commodity Futures Trading Commission, the National Credit Union Administration, and the Pension Benefit Guarantee Corporation.  The legislation would require Presidential appointments and Senate confirmation of the Inspectors General, who are currently appointed by the heads of the agencies they are supposed to investigate.  The legislation also clarifies the subpoena powers of the Inspectors General so they can properly oversee the financial regulators and requires regulators to respond to deficiencies identified by the Inspectors General by either taking corrective action or explaining to Congress why they are not taking corrective action.

Earlier this year Senator Menendez also led efforts in the Senate to look into ways the thousands of investors that were victim of this scheme could be helped, and worked with the IRS to establish and issue clear guidance on how they should report their losses to receive proper relief during the taxpaying season. Read a copy of the letter Senator Menendez sent to the Honorable Douglas Shulman, Commissioner of the Internal Revenue Service here: http://menendez.senate.gov/pdf/02202009IRSMadoffLetter.pdf

“The largest fraud in American history extended well beyond Wall Street to devastate families, seniors and charities across the nation. The victims can feel some measure of gratification that Bernard Madoff will spend the rest of his life behind bars for the financial devastation he caused. We must also ensure that the victims of this scheme have adequate remedies.”

"This theft became emblematic of a time in which Wall Street was far too irresponsible with people's money, as well as a time in which the Securities and Exchange Commission repeatedly failed to act as a cop on the beat. The testimony about the SECs incompetence in its failure to catch Madoff was stunning and tremendously concerning. We need financial regulators that are more effective cops on the beat to protect consumers, and we need strong independent inspectors to make sure those regulators are carrying out their duties. In the Banking Committee we will work to pass strong reform legislation that holds regulators’ feet to the fire and enacts reforms quickly so that this incompetence doesn't happen on such a massive scale ever again,” said Menendez.

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