Topic: Government Regulation
Was Fairfield Greenwich Group Appointed Government Regulator When We Weren't Looking? Today's reports make me wonder what the top Massachusetts regulator was doing while Madoff made away with billions.by Walt Thiessen
(libertarian)
Wednesday, April 1, 2009
Reuters and other news sources are reporting today that the top regulator for the Commonwealth of Massachusetts has charged Madoff feeder fund Fairfield Greenwich Group with lying to investors.
Massachusetts Secretary of State William Gavin apparently told Reuters, "The allegations against Fairfield in this complaint outline a total disregard for such (fiduciary) responsibility which helped the Madoff scheme to stay afloat for so long."
Similarly, the Wall Street Journal quoted Gavin as saying, "Investment advisers have a fiduciary responsibility to their clients under law. The allegations against Fairfield in this complaint outline a total disregard for such responsibility which helped the Madoff scheme to stay afloat for so long."
In other words, Gavin is claiming that while his own office and the SEC failed to detect any wrongdoing by Madoff, even when it had been pointed out previously by whistleblowers, Fairfield Greenwich should have seen through the carefully laid smokescreen that Gavin himself could not penetrate any better than the SEC did.
In other words, Gavin claims that Fairfield Greenwich should have done a better job in its role as a government regulator than the government regulators! What exactly was Fairfield Greenwich supposed to do...audit Madoff's books? And when exactly did Gavin appoint Fairfield Greenwich to the regulatory position?
Of course, the real reason Gavin is making all this noise is because he wants Fairfield Greenwich to pony up investor refunds, because he knows that the pickings are awful slim on the remaining Madoff holdings. It's a clear cut case of trying to look good to the voters of Massachusetts by blaming a middleman who had no more knowledge of what Madoff was doing than Gavin himself had, while hoping the voters don't notice how badly Gavin screwed up in his role as top state regulator.
Let's be clear about this. Government at all levels has claimed for years that they are the front line when it comes to looking out for the investor's interests. So when that same government's incompetence to do just that is exposed for the whole world to see, they blame the private sector instead.
It's classic smoke-and-mirrors.
The sad part is that Gavin will probably get away with it. He may not be as skilled at Madoff when it comes to scamming the public, but the duped investors will probably thank him and vote for him at reelection. Too bad they won't realize they've been duped twice.
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