Did those suspicious of the Madoff organization alert the press?
As quickly as fortunes disappeared in the shock waves of the $50 billion Bernard Madoff fraud case, reports started generating that the Securities and Exchange Commission (S.E.C.) ignored warnings about the alleged deceptive scheme. If the enormous Ponzi structure were not enough of an insult to our collective senses, charges that government regulators failed to heed warnings about crucial warning signs of a systemic problem with the investment advisory business serve as an extra sucker punch right in the face of society.
But perhaps this fortune wrecking affair could have been avoided or mitigated, with aggressive investigative journalism based on alerts and help from investors and analysts.
If those who perceived a problem with the former Nasdaq Chairman’s organization did not get the attention and required scrutiny from the S.E.C., did they go to the press for an investigation? That’s what the Fourth Estate is all about…exposing fraud, corruption, mismanagement and and other societal failings. Old and new media alike are uniquely capable of going where bureaucratic investigators fail to tread…and expose what’s wrong after a process of careful investigative journalism.
In short, the Madoff scandal reminds us, once again…we cannot rely on Washington agencies to take action. We do have, nevertheless, a uniquely patriotic instrument to utilize…the power of the pen and keyboard. The impact of American media is an underutilized tool when we find something wrong. This episode teaches us that without a strong press (print and electronic), we can be caught unaware, to our detriment.
At a time when Washington news bureaus are being closed and cut back by many long-established media outlets, the loss of resources for investigative reporting in the spirit of Watergate should make us all a bit uncomfortable. As the U.S. media itself struggles with its own economic crisis, you and I have a responsibility to alert the press about what we hear, by responsibly providing documented and substantiated information to help bring a story out of the dark and into the national consciousness.
Then, if the S.E.C. or any other arm of the government fails to act, or lacks the resources, we can still use the powers of the morning paper, websites, television news and blogs to try to avoid gut wrenching shock, before it is too late, and society is harmed.
Update: The New York Times reported on December 25 that federal prosecution of stock fraud cases has dropped sharply over the past eight years. According to the report, S.E.C. “agency investigations that led to Justice Department prosecutions for securities fraud dropped from 69 in 2000 to just 9 in 2007, a decline of 87 percent…”
1 response so far ↓
Ellis // December 25, 2008 at 3:41 am
You’re spot on, when it comes to our losing all of our checks and balances!
Unfortunately, the news media have not done a good job of maintaining their reputations for being squeaky clean and unbiased either. They are no longer trusted. Even the most venerated have not been without their shame; e.g., the Irving scandal, Dan Rather’s fall from grace, etc.
I think the bottom line is the need to make education useful again. Education for the sake of credentials—to obtain the minimum requirement to be considered for a job, etc., as it now is practiced and required, will not get the job done.
Financial literacy, the learning of enough of the basics to feed one’s commonsense, and the understanding by the young that competing for a job by virtue of credentials is less important than c0mpeting to know enough to keep a job because of their value to their employers.
And we need to cultivate a society that doesn’t depend upon others to protect them from the scams and scoundrels but which is simply too smart to be fooled.
Until that day comes, it’s every man for himself, I’m afraid! And, to whatever extent it’s possible, look out for each other.
Of course, for starters, it would be a good idea to simply make the point that, if something looks like it’s too good to be true, it probably is just that.
Madoff, of course, played his role perfectly. He didn’t make spectacular gains for his clients. All he did was keep producing “growth” regardless of what the market did. That, in itself, should have been a clue.
In most cases, it’s the greedy that get taken because they think they can get something for nothing and bet on it. Madoff slipped in under that radar.