Last Thursday, House Oversight and Government Reform Committee Chairman Edolphus Towns (D-NY) wrote to SEC Chairman Mary Schapiro requesting additional specific information about the experience and capacity of the SEC's enforcement personnel, whom the SEC Inspector General (IG) H. David Kotz most recently blamed in an IG report published late last month, for failing to uncover the Bernard Madoff Ponzi scheme. In response to the IG report, and pursuant to authority "under House Rule X to investigate any matter," the Committee is "reviewing policies and practices related to recruitment and retention of experienced professional staff at [the] SEC." Specifically, the Committee seeks a briefing from the SEC by September 11, 2009 on:
- The level of experience of the SEC's professional staff;
- How the SEC staffs investigations to ensure that professionals with the appropriate level of experience are adequately assigned;
- The role of senior managers in supervising investigations, and what particular training, advice and guidance was given to "frontline" staff on the Madoff case;
- The effect of the 2002 pay reforms on retention of experienced SEC employees; and
- The SEC's plan for strategic human resources management.
Chairman Towns further stated that "in light of the alarming findings related to the Bernard Madoff matter," the Committee expects to convene hearings on this topic in the near future. During the first few months of 2009, Congress held several hearings on the Madoff Ponzi scheme and the related regulatory system failures in detecting the fraud.