The more we hear, the more shocked we become: I responded to the initial revelations that the SEC had failed to properly check out Bernie Madoff based on the following:

• SEC is told that Bernie’s numbers are too good to be true
• SEC’s response: “come on, Bernie? Bernie’s been around for years. He’s a stand up guy. Anyone but Bernie! With limited resources we can only focus on serious, legitimate complaints. Why waste our time!”

I can see how this scenario might have occurred. Bernie had been around so long, had held such lofty positions in the industry, had earned the respect of so many, that it wouldn’t have been a shock to think that the SEC might respond in such a manner. However…

As the WSJ reported today, “The Securities and Exchange Commission botched numerous opportunities to uncover Bernard Madoff’s Ponzi scheme, in part because of an inexperienced staff and delays in examinations, said an SEC inspector general report.” In other words, there was NO excuse for the SEC’s failure to properly investigate what had been reported.

Sad but probably true, had it not been for last year’s shock to the market, Bernie would probably still be at work stealing his clients’ money.