Madoff Was Magnet For Some, Not All, Investors
Professor Joseph A. Grundfest is interviewed by Jim Zarolli on National Public Radio's All Things Considered in a segment regarding the arrest of Bernie Madoff:
The FBI says it has set up a hotline for investors who believe they were cheated by money manager Bernie Madoff. Officials are hoping to collect any documents or other evidence that might shed light on how the scandal unfolded.
The arrest of Madoff, a revered figure on Wall Street, has sent shock waves throughout the financial industry. But there were also those who tried to warn regulators about Madoff, and they say authorities failed to act against him until it was much too late.
At some point Madoff also began attracting money and lots of it — some $17 billion for an array of distinguished clients. The SEC is supposed to inspect registered investment advisers on a regular basis. And they have the authority to look at their books anytime. But Joseph Grundfest, a professor of law and business at Stanford University, says the commission doesn't pursue such firms very aggressively.
"There are thousands of these firms out there and the SEC's inspection schedule doesn't allow it to get to them on a frequent basis," says Grundfest. Why is that? Grundfest says it is a question of resources and money.