SEC Dumps Chief Enforcer on Madoff Scandal - Mary Schapiro on hot seat post madoff fraud

SEC Dumps Chief Enforcer on Madoff Scandal
by Paula Schaap, Reporter , February 9, 2009

The Securities and Exchange Commission enforcement chief is out as the agency faces anger over its handling of the Bernie Madoff alleged Ponzi scam.

The SEC said Monday that Linda Thomsen, its director of enforcement, was leaving to return to the private sector.

There have been reports that newly appointed SEC Chairman Mary Schapiro was talking to ex-federal prosecutor Robert Khuzami about replacing Thomsen. Khuzami is currently Deutsche Bank’s chief counsel for the Americas.

“Linda’s achievements have been nothing short of extraordinary, even heroic, in an era of unprecedented challenges in our securities markets,” Schapiro said in a statement.

Despite the kind words, Thomsen’s leave-taking was likely hastened by the SEC’s poor performance in the alleged Ponzi scheme run by broker-dealer Bernie Madoff. Madoff was arrested in December and charged with fraud. He confessed to an FBI agent that his scheme could have cost investors $50 billion, according to court documents.

Thomsen faced a House subcommittee last week that was examining why the SEC didn’t catch Madoff despite frequent tips over a nine-year period from self-appointed Madoff investigator Harry Markopolos.

At the hearing, Thomsen and other SEC officials often refused to answer representative’s questions on the grounds that the SEC’s inspector general was doing its own investigation.

That led Gary Ackerman, (D-N.Y) to the colorful observation that Markopolos led the SEC “to this pile of dung . . . and stuck your nose in it and you couldn’t figure it out.”