Democratic lawmakers charged that the Securities and Exchange Commission had "failed miserably" in ignoring warnings that could have uncovered wrongdoing years ago.
But as CBS News investigative correspondent Sharyl Attkisson reports on the CBS Evening News, a crucial witness in helping determine how Madoff's scheme evaded regulators was a no-show: whistleblower Harry Markopolos.
He agreed to testify at first, but ended up telling Congress he was too physically worn down and needs more time.
Markopolos, A derivatives expert, first alerted officials nearly 10 years ago about what he saw as Madoff's scam. In 2005 he sent this 19-page report to the SEC titled "the World's Largest Hedge Fund is a Fraud..." concluding it was "highly likely" that "Madoff Securities is the world's largest Ponzi scheme." Using mathematical models and charts, Markopolos outlined 29 "Red Flags" in a virtual blueprint of how to investigate Madoff, calling his returns "too good to be true" and saying he worried about his "personal safety."
But where Markopolos saw Red Flags, professional regulators apparently found no problems, Attkisson reports.
"There were plenty of indications of problems going on, but somebody just didn't do their job," said Rep. Donald Manzullo, R-Ill.
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