Markopolos on Madoff

..SEC lawyers if only through their investigative ineptitude and financial illiteracy colluded to maintain large frauds such as the one to which Madoff later confessed...

..with Ponzi schemes, you never want the victims to understand how the sausage is made...

...Bernie Madodd's math never made sense, his performance charts were clearly deceiving and his return stream never resembled any known financial instrument...

...returns had only a 6% correlation to the S&P....

...what were the managers of the feeder funds thinking as they performed their due diligence or even if they were thinking while they performed due diligence...

...I was incredulous as to how any fund would invest in such an obvious fraud....

(About Grant Ward, Boston's Regional Director of Enforcement) I was shocked by his financial illiteracy and his inability to understand any of the concepts presented in that submission....

..financial illiteracy among the SEC's securities lawyers was pretty much universal....

...in June of 2005, Madoff was trying to borrow funds from an European bank...

(About New York Branch Chief Meaghan Cheung) ...also never grasped any of the concepts in my report, nor was she ambitious enough or courteous enough to ask questions of me. Her arrogance was highly unprofessional....she was unresponsive and uncommunicative when I did call....

...How the SEC could look at the same data we did and not arrive at the same conclusions that we did is hard to fathom...

...I do not know whether the cause was political interference or incompetence but the result was a refusal to look and an unwillingness to grasp even the simplest explanation of red flags...

(Regarding Greenwich Sentry L.P.) ..used three different auditors over that three year period...their financial statements were nothing but a giant red flag....

(Regarding Fairfied Sentry)...was not asking any questions one would expect of a firm purporting to conduct due-diligence...

Read all of it here. It will be the news of the day.
http://online.wsj.com/public/resources/documents/MarkopolosTestimony20090203.pdf