A multibillion-dollar pyramid scheme allegedly spawned by disgraced investor Bernard Madoff is being probed by a Senate panel that will, for the first time, question federal regulators responsible for inspecting investment firms and enforcing action against violations.
The Securities and Exchange Commission has faced heavy criticism over its failure to discover the $50 billion Ponzi scheme allegedly run by Madoff, the prominent Wall Street figure and money manager now fallen into disgrace - despite credible allegations against him being brought to the agency over the course of a decade.
Against the backdrop of the worst financial crisis since the 1930s, the SEC also is being accused of contributing to that disaster with lax oversight of Wall Street and the markets, and lawmakers of both parties are calling for a shakeup of the agency to help restore investor confidence.
The Senate Banking Committee was to take testimony at a hearing Tuesday from SEC Enforcement Director Linda Thomsen and the director of the agency's inspections office, Lori Richards. Also to appear before the panel was Stephen Luparello, the interim chief executive of the Financial Industry Regulatory Authority, the securities industry's self-policing organization.