Madoff and Galleon—the two scandals are unrelated. But together, they raise an important question: Who stole the security from the Securities and Exchange Commission?
According to The New York Times, the feds linked Galleon’s founder to inside trading more than a decade ago. Here’s the quote:
As far back as 1998, before he rose to prominence in the rarefied world of hedge funds, Mr. Rajaratnam was passed confidential information from an Intel employee who, the authorities now say, went on to play a crucial role in a vast insider-trading scheme involving some of the nation’s largest technology companies. That source, Roomy Khan, is a central government witness in the case against Mr. Rajaratnam, who maintains his innocence.
Where’s the government’s sense of urgency?
Prosecutors suggest they have a strong case against Galleon, touting witnesses and wiretaps. And all of Hedgistan wonders which fund will fall next to heightened electronic surveillance. But come on—it’s been over ten years since the 1998 tip on Intel.
There’s also that $65 billion fiasco. Madoff evaded the SEC for decades. He dodged them even after Harry Markopolis gift wrapped a law suit. The title of Markopolis’ 2005 presentation said it all: The World’s Largest Hedge Fund is a Fraud.
I’m struggling to find answers—explanations for why illegal behavior can endure so long under the noses of our investigators. In today’s litigious society, does it take decades to build lawsuits that can be won? Do SEC lawyers leave for private practice—far more lucrative—before they develop the skills to become effective? Is the financial industry too complicated to oversee?
Fixing whatever ails the SEC won’t be simple. Perhaps the agency should do something symbolic and change its name. The Securities and Exchange Commission sounds way too much like the Securities Exchange Company, founded by none other than Charles Ponzi (a fact I discovered while writing Top Producer).
The New York Times describes my novels as “money porn,” “a red-hot franchise,” and “glittery thrillers about fiscal malfeasance.” Through fiction I explore the dark side of money and the motivations of those who have it, want more, and will steamroll anybody who gets in their way.