Who is protecting investors?

The Securities and Exchange Commission is charged with protecting investors, investigating allegations of wrongdoing on Wall Street, and generally policing public companies. Yet recent failures lead investors to question how effective the SEC is.

It is being reported that the SEC had several chances to uncover the massive Ponzi scheme allegedly perpetrated by Bernard Madoff. And we're not talking about some insignificant shreds of information that were presented to them. We're talking about credible information presented to the SEC on numerous occasions over the last ten years or more.

In 2000, Harry Markopolos approached the SEC with solid evidence that Madoff's purported trading strategy couldn't possibly be as he said it was. Madoff said he was generating consistent double digit returns (even when the markets were down) by buying and selling options on the S&P 100 stock index. Yet Markopolos proved that there weren't even enough options available on the S&P 100 to support this strategy. The SEC appears to have done nothing related to this, and Markopolos continued to report his concerns to the SEC over the next several years.