On November 11, the Washington Post reported that the Securities and Exchange Commission (the "SEC") disciplined eight SEC employees for their failure to discover the Ponzi scheme perpetrated by Bernard Madoff. In 2009, the SEC published a report from the Inspector General that questioned the actions of 21 SEC employees in connection with the SEC's handling of the Madoff investigation. Following the publication of the report, the SEC hired an outside law firm to provide recommendations for disciplinary actions. According to SEC spokesman John Nestor, the employees received varying disciplinary actions, which began shortly after the 2009 report was published and concluded months ago. While initial reports stated that seven persons had been disciplined, Nestor clarified on Friday that, in fact, eight SEC employees had been disciplined in relation to the Madoff matter.

According to the Wall Street Journal, following the 2009 report, ten of the 21 employees discussed in the report had left the SEC. Additionally, one employee facing a seven-day suspension resigned prior to receiving any disciplinary action. Eight of the remaining employees were disciplined to varying degrees, ranging from suspensions to pay cuts, demotions, and "counseling memos." The outside law firm hired by the SEC to recommend disciplinary actions had advised the SEC to fire one of the employees involved in the Madoff investigations. However, the SEC ultimately determined that firing the employee would adversely impact the SEC's work and decided against terminating such person's employment. The employee, a manager in the New York office that inspects investment firms, was suspended for 30 days without pay and demoted. One employee who was disciplined has appealed the disciplinary action.

Former SEC Chairman Arthur Levitt noted that these disciplinary actions could impair such employees' careers and prevent their advancement. Additionally, former Chairman Levitt remarked that many critics would find these disciplinary actions inadequate. One of those critics is the U.S. Congress, which has used the SEC's mishandling of the Madoff investigation as a reason not to expand the funding provided to the SEC. SEC Disciplines Employees; SEC Disciplinary Actions.