Speculation has been high in the months following disgraced financier Bernard Madoff’s arrest, that the Securities and Exchange Commission (SEC) may have dropped the ball in stemming what may be the largest Ponzi scheme in history. The SEC has come under fire for apparently missing warnings that something was amiss with Madoff’s investment advisory business.

In response to the accusations, scandals, resignations, and bad press, the SEC is considering the development of a so-called “fraud college” to teach staff how to locate market abuses, according to Chairman, Mary Schapiro, reported Bloomberg.com. “The fraud college concept is a great one,” said Schapiro at a joint meeting with the Commodity Futures Trading Commission (CFTC) in Washington. Schapiro added that collaborating fraud-detection training with the CFTC “would be particularly valuable,” quoted Bloomberg.com. (more…)

Last month we wrote that after months of investigations, Federal prosecutors finally seemed to have been going after members of Bernard Madoff’s family. Meanwhile, victims of what is believed to be the largest Ponzi scam in history, have been long wondering what’s taking so long.

Now, reported Daily Finance, the court-appointed trustee—Irving Picard—in charge of liquidating Madoff’s finances, is preparing to file civil complaints against some members of Madoff’s family. Picard will be going after, said Daily Finance, Madoff’s sons—Mark and Andrew—and his brother, Peter. The complaint will seek $50 million from the family and cited $30 million Bernard loaned his sons and a home purchased in cash by one of the sons for $6.5 million, said Daily Finance. (more…)

A partial settlement has been reached in a lawsuit filed on behalf of about 100 policyholders of companies that invested with disgraced financier, Bernard Madoff. Bloomberg.com reported that the partial settlement was reached by Insurers Argus Group Holdings Lts. and Tremont International Insurance Ltd., citing court records.

According to the lawsuit, insurers Argus Group Holds and Tremont International Insurance are, in fact, liable to its policyholders who have specific annuities or life insurance policies, said Bloomberg.com. Because the insurers invested with bogus Madoff feeder funds, there is potential liability for fraud and breach of duty. Citing the accord, Bloomberg.com reported that Argus International Life Bermuda Ltd. will be providing low-interest loans to those policyholders whose policies could lapse and whose policies relied on Madoff investments for premium payments—low-interest loans. (more…)

Irving Picard, the court-appointed trustee charged with liquidating Bernard Madoff’s investment business—Bernard L. Madoff Investment Securities LLC—said he may go after charities to collect “profits” they made from their investments with the admitted scammer. Madoff, 71, was recently sentenced to 150 years in prison for running a massive Ponzi scheme that is estimated to be the largest in history cost investors some $65 billion.

Bloomberg.com reported that Picard could sue those charities that received more money than they invested with Madoff. Picard is legally required to file clawback lawsuits against those investors who profited from the Ponzi fraud, whether or not those investors were aware of the scheme, said Picard, who added that charities are not excused from the “avoidance actions,” according to Bloomberg.com. (more…)

Issues surrounding the Securities and Exchange Commission’s (SEC) oversight of Bernard Madoff—now spending 150 years in prison for orchestrating an historic Ponzi scam—have raised serious questions for months now. According to FOX Business, the SEC’s inspector general, H. David Kotz, will be delivering a scathing report to the agency discussing its part in failing to notice or prevent Madoff’s Ponzi scheme estimated to have cost duped investors an incomprehensible $65 billion.

In December, following the now-famous arrest of the disgraced financier, Kotz initiated an investigation into how the SEC handled its dealings with Madoff, said FOX Business. Christopher Cox, former SEC chairman, requested the investigation, asking, for example, why the agency believed allegations made through the years about Madoff to be “not credible,” reported FOX Business. The SEC has come under fire for apparently missing warnings that something was amiss with Madoff’s investment advisory business. (more…)

Frank DiPascali, 52, the finance head at Bernard Madoff’s investment advisory firm—Bernard L. Madoff Investment Securities LLC—agreed to plead guilty and could also assist the prosecution in creating criminal cases against others involved in the historic Madoff Ponzi scheme, Bloomberg.com is reporting. DiPascali is schedule to enter his plea in Manhattan’s federal court this week.

DiPascali is scheduled to waive indictment in addition to his guilty plea, a sign, said Bloomberg.com that indicates he is cooperating in order to receive a lesser sentence. “I believe he’s cooperating,” according to John J. Fahy, quoted Bloomberg.com, which noted that Fahy, a former federal prosecutor, is not involved in the case. “He would be very valuable to the government because he has been close to Madoff for so many years and had to have seen some of the fraudulent transactions that went on. From what we know of Madoff, he trusted very few people,” Fahy added. (more…)

As part of the ongoing Bernard Madoff financial scandal, federal marshals are inventorying possessions from Ruth and Bernard Madoff’s $7.5 million Manhattan penthouse and $3.5 million Montauk home in anticipation of an auction. Newsday reports that the contents at both well-appointed properties are being listed in detail, citing officials.

According to Newsday, contents include a Steinway piano and silverware and that the properties and tens of millions of dollars in assets were turned over to the government when Madoff was sentenced to 150 years in prison last month. Madoff was sentenced for running a Ponzi scheme estimated to have cost investors as much as $65 billion. (more…)

In the continuing investigation into Bernard Madoff’s financial activities, Madoff’s accountant for nearly two decades—David Friehling—was charged with securities fraud, reports USA Today, citing a federal prosecutor. Friehling, who pleaded not guilty, was Madoff’s accountant for 17 years. Madoff was recently sentenced to 150 years in a North Carolina prison for running a Ponzi scheme that is estimated to have cost investors as much as $65 billion.

The charges against Friehling included aiding and abetting investment adviser fraud and four counts of filing false audit reports with the Securities and Exchange Commission (SEC) the New York’s southern district acting U.S. attorney, Lev Dassin said, according to USA Today. Citing the criminal information, USA Today reported that Friehling allegedly “falsely certified” he prepared and audited Madoff’s investment company’s—Bernard L. Madoff Investment Securities LLC—financial statements. Such information would include, said USA Today, cash flows, income statements, and balance sheets, to name a few. (more…)

Citigroup has reached an agreement with the state of Pennsylvania over auction rate securities. Under the settlement, Citigroup will pay the Pennsylvania Securities Commission $2.31 million, and offer to buy back auction rate securities from 1,200 retail investors in Pennsylvania who held the securities from Citigroup as of Jan. 21, 2008.

Auction rate securities are long-term corporate bonds, municipal bonds and preferred stock on which the interest rates are reset periodically based on bids submitted through securities firms. Generally, rates are reset every seven, 14, 28 or 35 days. Because they can be sold during weekly or monthly auctions, banks and brokerages often touted auction rate securities as short-term investments or cash equivalents. Unfortunately, because of the credit crises, the market for auction rate securities crashed earlier in 2008 Thousands of investors were bewildered to find out that the investments they were sold as cash equivalents were illiquid. (more…)

The Bernard Madoff scandal may have played a role in the coming departure of a key Securities and Exchange Commission (SEC) official. According to Bloomberg.com, Lori Richards, director of the SEC’s Office of Compliance Inspections and Examinations, was widely criticized for missing warning signals about Madoff. Richards will be leaving her post – which she has held since 1995 – on August 7.

Madoff was recently sentenced to 150 years in prison for running a Ponzi scheme that is estimated to have cost investors as much as $65 billion. The SEC has come under fire for apparently missing warnings that something was amiss with Madoff’s investment advisory business. Richards’ department was responsible for overseeing money managers like Madoff. (more…)