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US financial regulator under fire in Madoff scandal

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US financial regulator under fire in Madoff scandal

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He was still smiling as he headed home after attending a federal court in Manhattan but Bernard Madoff was jostled and pushed as he made his way through a throng of photographers. The disgraced Wall Street investment manager has effectively been placed under house arrest and ordered to wear an electronic tag. But Madoff is not the only one under fire as the scandal intensifies. One key question persists. Why wasn’t his alleged multi-billion euro fraud discovered earlier? All eyes, and the finger of blame, have turned to the leading US financial regulator and its boss. Why did the Securities and Exchange Commission miss warnings? Its head insists there is no evidence his staff did anything wrong.

“I was very concerned to learn this week that credible allegations about Mr Madoff had been made over nearly a decade and yet never referred to the Commission for action,” said SEC Chairman Christopher Cox. “We have requested an investigation of this by the Inspector General because we want to learn whether there are any systemic reasons such information would not have given law enforcement a better opportunity to interdict this at an earlier date.” Amid the fallout on Wall Street, media reports say US President-elect Barack Obama will today name a new head of the agency to work with his administration.