The failure to catch and stop Madoff is defacto intentional when you -- the government's then highly respected regulator and watchdog, the SEC -- suck people into investing or remaining in Madoff by announcing through the Wall Street Journal in 1992 -- by announcing as you otherwise never do -- that you have found no evidence of fraud -- by making a public announcement (based on a thoroughly negligent investigation) that inevitably would and did cause people to leave money in Madoff, to add money to Madoff, or to invest with Madoff for the first time.
The failure to catch and stop Madoff is defacto intentional when an anonymous person, who obviously has some kind of inside knowledge judging by what he says, sends you a letter saying that Madoff has commingled Norman Levy's money with Madoff's, and tells you that Madoff keeps two sets of books, the more important of which are on his personal computer which is always on his person, but you almost wholly dismiss the tip from the obvious insider by doing no more than asking Madoff if he is an investment adviser for Levy and then fully accept his counsel's false negative answer to the question without any further inquiries even Madoff is known to have lied to your agency previously about important matters. (In one of the recent books on Madoff, one of the Madoff company's chauffeurs in effect verifies the commingling by discussing the multimillion dollar checks he regularly took to Levy (every day if I remember correctly). As for the computer, no doubt it was one that Madoff retained access to for many months after he was indicted -- and which he no doubt attempted (successfully?) to wipe clean, thereby impairing the search for funds to repay defrauded victims).
The failure to catch and stop Madoff is defacto intentional when you require him to register as an investment advisor because you learn that, contrary to years of lies to you, he is acting as an investment advisor for more than 15 people, and newly registered investment advisors are supposed to be inspected within a short period of time but the SEC never undertakes the required inspections.
The foregoing list does not exhaust the items discussed in Kotz's report which show that the SEC acted in a way that can and should be described as defacto intentional: i.e., the SEC did things it would have done if it didn't want Madoff to be caught and stopped and if it wanted to destroy the antifraud policy of its statutes. Nor does the list give chapter and verse of each of the items on the list, giving only capsule summaries of them instead. But the list does make clear why the SEC's misconduct was so horrid, its degree of negligence was so high, that it has to considered defacto intentional, has to be considered to be exactly the same as what the SEC would have done had it wanted Madoff to continue succeeding with his Ponzi scheme and wanted to destroy the antifraud policy of its own statute.
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