From the WaPO:
The nation's chief securities regulator [Chris Cox] said yesterday it was "deeply troubling" that his agency had failed to catch perhaps the largest Ponzi scheme in history despite "credible and specific allegations . . . repeatedly brought to the attention of SEC staff" regarding the activities of Bernard L. Madoff.
Cox offered the beginnings of answers. He said the agency inappropriately discounted allegations, that staff did not relay concerns to the agency's leadership and that examiners relied on documents volunteered by Madoff rather than seeking subpoenas to obtain critical information. And Cox said the agency's inspector general would investigate whether personal relationships between Madoff's family and SEC staff played a role in the failed oversight.
It seems no one was paying attention in the era of easy-money.
We need effective, honest 'cops'. If the cops are corrupt, then criminals (who will always be with us) will have a field day.