How did Bernie Madoff get away with it?
Somehow, even though everyone agreed that this was the sort of thing the SEC should be aggressively rooting out, and the SEC has perfectly adequate resources to investigate high-profile fraud at a 20-person operation, the SEC dropped the ball so hard it's probably even now still falling through the Earth's mantle towards China.I'd be willing to bet his kids go to jail as well, we will see in the next few weeks. At least we can be sure there will be some great show trials in 2009 with all this financial fraud and drama in the world.
The market failed as badly as the government. The people he bilked weren't unsophisticated consumers of the sort that we assume need regulatory protection. They were extremely rich people, many of them with backgrounds in finance.
The market failed. The government failed. Leaving us with a big WTF? We cannot fix this either by new rules--the SEC hardly needs new rules to make it clearer that you shouldn't fake financial statements while paying current investors out of the funds invested by new ones. Nor by better reliance on private institutions--it's hard to argue that super rich people with considerable financial savvy were somehow blinded by some badly designed government intervention. Everyone just screwed up.
