OIG

Late last week, while the Securities and Exchange Commission was getting ready to go after Goldman, it released a report by the SEC Office of the Inspector General that was highly critical of the SEC's actions in connection with R. Allen Stanford's alleged Ponzi scheme – a report highly reminiscent of the criticisms the SEC faced following its failure to find the Madoff fraud on a timely basis. 

The Office of Inspector General (OIG) is an independent office within the U.S. Securities and Exchange Commission that conducts audits of programs and operations of the Commission and investigations into allegations of misconduct by staff or contractors. The mission of the OIG is to detect fraud, waste and abuse, and to promote integrity, economy, efficiency and effectiveness, in the Commission’s programs and operations.

The SEC made the OIG report public last evening. All 477 pages (the table of contents alone is 19 pages) are avaialble at http://sec.gov/news/studies/2009/oig-509.pdf.

The summary of the OIG report released today by the SEC concludes with this damning paragraph:

Since Bernard Madoff's fraud came to light last year, the Securities and Exchange Commission's Office of Inspector General has been investigating why the agency failed to detect it. The OIG report now makes it clear that the SEC missed numerous opportunities to discover the fraud.