By Congressman Randy Hultgren -
During the fallout of the Madoff Ponzi scheme, the Securities and Exchange Commission’s inspector general issued a scathing report on why the agency failed to detect the massive fraud. One of its most damning findings was that multiple SEC offices simultaneously scrutinized Madoff without even realizing it.
From 1992 to 2008, the SEC received at least six complaints about Madoff’s firm that should have outed his fraud. The agency conducted two investigations and three examinations over the years. But the left hand didn’t know what the right was doing. At one point, according to the inspector general, two examinations “were open at the same time in different offices without either knowing the other one was conducting an identical examination.” Madoff slipped through the cracks, and Americans lost billions of dollars.
This fraudster was able to fool financial regulators because they are still using 1930s pen and paper technology to handle today’s digital challenges. This hurts investors, markets and the regulators’ own missions. And that’s why, along with some 34 other members of the House of Representatives, I am sponsor of the Financial Transparency Act, HR 2477.
For the most part, the major regulators collect information as plain‐text documents, rather than searchable, open data. Many of these documents date back to post-stock market crash compliance regulations passed during the Great Depression…