Regarding my last post on whistleblowers and tipsters at the SEC, I wanted to make one more related point.  Many people like to yell at the SEC for not grasping the gravity of Harry Markopolos’s complaints about Bernie Madoff.  After all, he told them flatly it was the biggest Ponzi scheme in history.  How hard could that have been to untangle?

Well, lots of people write to the SEC claiming to be onto the “world’s largest Ponzi scheme.”  They’re not all right.  Some of them plainly misunderstand the rules related to short selling and other aspects of the securities laws.  It probably won’t surprise you to hear that many of these people do not grasp the power of understatement.  This isn’t to minimize the SEC’s failure as to Madoff himself.  That fiasco was epic and multi-faceted.  But suggesting that figuring Madoff out was as simple as reading the title of a 19-page complaint titled “The World’s Largest Hedge Fund is a Fraud” is silly.  There are too many ones just like it, on the surface at least, for it to be a simple exercise.  As I said last time, you have to dig and dig to figure out what is what.