WASHINGTON — Senators pressed the Securities and Exchange Commission’s chief enforcement official Wednesday to explain why the agency has yet to demote or fire staffers who waited 12 years to bring charges against a major Ponzi scheme.
The SEC inspector general found that the agency had known since 1997 that R. Allen Stanford was likely operating a Ponzi scheme. But it didn’t charge the billionaire until February 2009. The charges came a few months after the massive pyramid scheme of financier Bernard Madoff surfaced.
SEC enforcement officials discouraged cases that couldn’t be resolved quickly, the inspector general found.
Senate Banking Committee chairman Christopher Dodd, D-Conn., asked SEC enforcement director Robert Khu zami why no one at the SEC has been fired or demoted for the excessive delay. Other senators on the panel also wanted an answer during the hearing on the issue.
“We seem to have an instance in which one side of the agency was screaming that there was a fire and the other side said that the fire was too hard to put out,” Dodd said.
Khuzami told the panel that the disciplinary process is underway.
That prompted Sen. Jim Bunning, R-Ky., to say: “It’s been 13 years. Isn’t that enough of a chance?”
Khuzami responded that the details of the SEC’s failure in the case have been known only since the inspector general’s report was issued in April.
Khuzami also said the agency has toughened its efforts to shut down financial misconduct since the past failures.
