The SECFriend or Foe

SEC – Investor’s Advocate The SEC Protects Investor, Maintains Market Integrity,

and Faci l itates Capital Formation

The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation

The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. Here the SEC is concerned primarily with promotion the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud.

SOURCE: SEC website: SEC.GOV

Why Wasn’t Bernie Caught?The Crime went on for almost 4 decades

Bernie confessed; he was never discovered by authorities

Wall Street closed their eyes to one of their own, ignoring red flags, protecting the banks at the expense of the customers

BLMIS successfully passed SIX SEC investigations and one IRS approval process for handling pensions and IRAs (as a non-bank IRA custodian)

Whistleblowers were available and providing much more than a “smoking gun” (Journalists, ex-employees and outside competitors ALL provided information to the SEC

SEC Opportunities to Discover the Madoff Fraud

US SEC Office of Investigation(457 Pages)

Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme

Public Version

August 31, 2009

Report No. OIG-509

Executive Summary (Pages 20-41)

Conclusion: No Collusion by SEC Staff

The OIG investigation did not find evidence that any SEC personnel who worked on an SEC examination or investigation of Bernard L. Madoff Investment Securities, LLC (BLMIS) had any financial or other inappropriate connection with Bernard Madoff or the Madoff family that influenced the conduct of their examination or investigatory work.

Regulatory Capture: How detailed would an examination be of your future employer:

Executive Summary (Pages 20-41) Conclusion: SEC senior officials did not block the investigators. A possible influence by Eric Swanson to

terminate an investigation did not occur.

The OIG also did not find that former SEC Assistant Director Eric Swanson’s romantic relationship with Bernard Madoff’s niece, Shana Madoff, influcend the conduct of the SEC examinations of Madoff and his firm.

We also did not find that senior officials at the SEC directly attempted to influence examinations or investigations of Madoff or the Madoff firm, nor was there evidence any senior SEC oficial interfered with the staff’s ability to perform its work.

Executive Summary (Pages 20-41)

Conclusion: No collusion, no undue influence or blocking of investigations

So, one must conclude that the SEC must be just incompetent The OIG investigation did find, however, that the SEC received

more than ample information in the form of detailed and substantive complaints over the years to warrant a thorough and comprehensive examination and/or investigation of Bernard Madoff and BLMIS for operating a Ponzi scheme, and that despite three examinations and two investigations being conducted, a thorough and competent investigation or examination was never performed.

MISSED OPPORTUNITIESThe OIG found that between June 1992 and December

2008 when Madoff confessed, the SEC received six substantive complaints that raised significant red flags concerning Madoff’s hedge fund operations and should have led to questions about whether Madoff was actually engaged in trading.

SO, THE SEC IS INCOMPETENT AND NEGLIGENT RELATIVE TO REPEATED EXAMINATIONS OF THE MADOFF INVESTMENT ADVISORY BUSINESS

THE RESPONSIBILITY OF THE INDIVIDUAL VS THAT OF THE SEC

The individual American investor should not be expected to do the job of the SEC

Not only “shouldn’t they,”, the individual simply “cannot do the job.”

SEC Investigations

The SEC is NOT the Only Organization Charged with Regulating Wall Street

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. FINRA’s mission is to protect America’s investors by making sure the securities industry operates fairly and honestly.

FINRA oversees roughly 4,300 brokerage firms, 162,000branch offices and over 625,000 registered securities representatives.

FINRAMission Statement

FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry.

When the rules are broken, FINRA takes action. Our strong and vigorous enforcement program brings discipline where investors have been harmed

Source: FINRA website: FINRA.ORG

Family Affiliation with the SEC and FINRA (BERNIE TELLS US HE DID IT ALL BY HIMSELF – THE

OTHERS TELL US THEY KNEW NOTHING)

Bernard Madoff Self described “frequent consultant to the SEC”

Peter Madoff (brother) Director of SIFMA Member of the Board of Governors and Executive Committee of the National

Stock Exchange Vice Chairman of FINRA Director of the National Securities Clearing Corp.

Shana Madoff (Peter’s daughter, employed 1995)

SIFMA Compliance and Legal Division Executive Committee FINRA Consultative Committee NASD’s Market Regulation Committee SIFMA Self- Regulatory and SRO Committee SIFMA Continuing Education Committee

Family Affiliation with the SEC and FINRA (BERNIE TELLS US HE DID IT ALL BY HIMSELF – THE

OTHERS TELL US THEY KNEW NOTHING)

Mark Madoff (Son employed in 1986)

Chairman of the FINRA Inter-Market Committee Governor of the Securities Traders Association Co-Chair of the STA Trading Committee Member of FINRA Membership Committee and Mutual Fund Task Force President of the STA of New York Chairman of the FINRA Regulation District Ten Business Conduct Committee Chairman of the SIFMA NASDAQ Committee

Andrew Madoff (Son employed in 1988)

Chairman of the Trading, Trading Issues and Technology, and Decimalization and

Market Data Committees and Subcommittees at SIFMA Member of the FINRA District Ten Committee and NASDAQ’s

Technology Advisory Committee

ALAN STANFORDPRESIDENT OF STANFORD INTERNATIONAL

Julie Pruitt, SEC field investigatorTold Congress at a 2011 hearing that she suspected

Stanford of illegal activity and pushed the issue with her superiors

Her reward: Demoted and Transferred

2009 - As we learned more about how the fraud

continued for decades – Bernie’s arrest now seems

like a rather hollow victory. The antipathy toward the

SEC was visually on displayd in New York City.

FAMILY MEMBERS WHO BENEFITED FROM THE CRIME

Loans

Peter Madoff $9m

Shana Madoff $6m

Madoff Investment Account

Money In

Money Out

Mark Madoff $745,482 $18,105,456

Andrew Madoff $912,062 $17,117,566

Peter Madoff $32,146 $16,252,004

Shana Madoff $1,364,975 $1,666,436

Salaries, bonuses, other disbursements

Amount When

Ruth $44,882,355 2003-2008

Mark Madoff $29,320,830 2001-2008

Andrew Madoff $31,105,505 2001-2008

Peter Madoff $20,067,920 2001-2008

Shana Madoff $3,832,878 2001-2008

THE MORE INCOMPETENT THE SECTHE LONGER THE CRIME GOES ON

AND THE MORE THE “BIGGEST WINNER” MAKES

Loans

Peter Madoff $9m

Shana Madoff $6m

Madoff Investment Account

Money In

Money Out

Mark Madoff $745,482 $18,105,456

Andrew Madoff $912,062 $17,117,566

Peter Madoff $32,146 $16,252,004

Shana Madoff $1,364,975 $1,666,436

The biggest winners – with no risk

IRS $0 ~$15b

States $0 ~$5b

Salaries, bonuses, other disbursements

Amount When

Ruth $44,882,355 2003-2008

Mark Madoff $29,320,830 2001-2008

Andrew Madoff $31,105,505 2001-2008

Peter Madoff $20,067,920 2001-2008

Shana Madoff $3,832,878 2001-2008

THIS CANNOT HAPPEN AGAINPast and Future Speaking Engagements

• May 12, 2009: Radio show for Morning Call• June 2, 2009: Pa. Professional House Licensure Committee (Harrisburg, Pa.)• June 29, 2009: NYC Federal Court• December 2, 2009: Washington D.C. congressional hearing• December 2009 issue of Philadelphia Magazine: “Uncle Sham”• August 26, 2010: Community Meeting, Montgomery County• June 2010: Co-author of the book “The Club No One Wanted To Join”• September 23, 2010: Washington D.C. congressional hearing• October 5, 2010: “Meet The Author”, DelVal College• November 15, 2010: Blue Bell Country Club Women’s Group• February through April, 2011: DelVal CLR Program “Can You Sleep At Night”• April 7, 2011: Radio appearance for “The Story”• May 13, 2011: Washington D.C. congressional hearing• April 20, 2011: Kiwanis Club of Doylestown• October 2011: Class at DelVal CLR Program• April 20, 2012: Temple University School of Business• Multiple Newspaper articles, TV appearances, and talks like this• April 20,2013: Heritage Creek Country Club (120 attendees)• UPCOMING: September 25, 2013, Bucks County Coalition of Senior Communities

Books to ConsiderBoth Available at Amazon.com

“The Club No One Wanted to Join: Madoff Victims in their Own Words”

•“65 Billion Reasons Why You Cannot Trust Wall Street” – The detailed 12 week class taught at DelVall College