|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
S.E.C. Knew Him as Foe and Friend
Stephen Labaton
The New York Times. December 18, 2008
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EXCERPT: As the Securities and Exchange Commission begins an internal examination into how it missed the red flags of one of the largest frauds in history, it will inevitably discover that Bernard L. Madoff was a Wall Street pioneer who over the last 20 years alternately impressed and infuriated the agency’s top policy makers. […] But the same officials who came to admire his efforts at making markets faster and less costly also challenged him when they thought Mr. Madoff pushed the boundaries too far. Those conflicting approaches toward Mr. Madoff were perhaps most evident during the tenure of Arthur Levitt Jr., the longest-serving chairman of the commission, who oversaw a significant transition of the stock markets. In a speech in 1999 in Boca Raton, Fla., before the Securities Industry Association, Wall Street’s largest trade group, Mr. Levitt sharply criticized a practice of Mr. Madoff’s firm of compensating financial institutions for directing trades toward the firm, a practice known as payment for order flow. Mr. Madoff also fought unsuccessfully against Mr. Levitt’s initiative to change the system of pricing stocks from one using fractions of a dollar to one using decimals, a change that wound up significantly reducing commissions and saving investors billions of dollars, but reduced profitability for firms like Mr. Madoff’s. But Mr. Levitt, who served as chairman for all eight years of the Clinton administration, also occasionally turned to Mr. Madoff for advice about how the markets worked, and appointed him as a member of a large advisory commission that included a wide range of industry representatives that explored the rapidly changing structure of the financial markets. “From my point of view, he understood the markets and we could ask him a question of how this worked and that worked and get a credible answer,” Mr. Levitt said […] |
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