The US Securities and Exchange Commission came under harsh scrutiny Wednesday as a fraud investigator told Congress that he had tried for years to get the US financial regulator to investigate Bernard Madoff's alleged 50-billion-dollar Ponzi scheme.
Harry Markopolos, a former financial industry executive who investigates fraud for institutional investors, told the House of Representative's Financial Services Committee that he had worked to bring the case to the SEC's attention for nine years, beginning in 2000 when the alleged scheme was "only" a 3-billion to 7-billion- dollar fraud, dpa reported.
"I gift-wrapped and delivered the largest Ponzi scheme in history to them, and somehow, they couldn't be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority," he said.
"If a 50-billion-dollar Ponzi scheme doesn't make the SEC's priority list, then I want to know who sets their priorities."
He said the agency lacked the expertise to investigate such a case and was afraid of bringing cases against powerful Wall Street firms.
"Mr Madoff was one of the most powerful men on Wall Street. He owned a prestigious brokerage firm. He and his brother held numerous top-level positions on the most influential industry association board. Clearly, the SEC was afraid of Mr Madoff," Markopolos said.
Madoff, 70, was placed under house arrest in December for allegedly running a 50-billion-dollar Ponzi scheme - a pyramid racket where people paid into fake investments. Instead, the money from new investors was used to pay handsome dividends to earlier investors.
Madoff, a former Nasdaq chairman who was a leading trader on the New York exchange for 50 years, operated his firm, Bernard L Madoff Investment Securities LLC, as an international market broker with brokers, banks and financial firms and had a separate investment advisory business for private clients.
Markopolos said he had feared for his life during his investigation, believing that mobsters or drug cartels could be among Madoff's clients.
He is to speak with regulators on Thursday and said he would tell them about another, smaller apparent Ponzi scheme.