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The Fateful February 4 Madoff Hearing

Bruce Carton | July 14, 2009

Today's House Financial Services Committee hearing ("SEC Oversight: Current State and Agenda") featured prepared testimony by SEC Chairman Mary Schapiro, as well as a lengthy question and answer session. Among the most interesting parts was a statement by Rep. Gary Ackerman of New York, who lambasted the SEC back in February 2009 at an early hearing in the Madoff matter. Ackerman became particularly enraged back in February when nobody present from the SEC would answer Congress' question: How did the SEC miss the Madoff scam when there were clear red flags and the details of the fraud had been essentially delivered to the SEC by Harry Markopolos? Here is the beat-down that Ackerman administered when he was told one-too-many times by the SEC witnesses that they could not answer that question because of the ongoing Inspector General investigation:

Today, however, Ackerman had some praise for the SEC's Mary Schapiro, and said he wanted to compliment Schapiro for her accountability. He said words to the effect that "after the rather bombastic initial hearing we had with people from the agency which got an awful lot of attention ... the chairman called me and said she was aghast at some of the things she'd heard during the testimony, and by the end of that week two of those people were gone from the agency." Ackerman stated that this was a type of accountability that he had never seen in his 14 years in Congress. (View today's hearing here).

Ackerman did not identify the two people, but assuming he was referring to the "bombastic" February 4, 2009 hearing in the video above, the SEC witnesses at that hearing were:

* Ms. Linda Thomsen, Director, Division of Enforcement;
* Mr. Andrew J. Donohue, Director, Division of Investment Management;
* Mr. Erik Sirri, Director, Division of Trading and Markets;
* Mr. Andy Vollmer, Acting General Counsel, U.S. Securities and Exchange Commission; and
* Ms. Lori A. Richards, Director, Office of Compliance Inspections and Examinations

In fact, in the two weeks following the February 4 hearing, the SEC announced Linda Thomsen's departure (February 9) and Andrew Vollmer's departure (February 18). The SEC subsequently announced Erik Sirri's departure on March 31, 2009, and Lori Richards' departure on July 8, 2009. Only Donohue remains with the SEC, as Director of Investment Management.