Markopolos to testify at Madoff hearing Wednesday
WASHINGTON Feb 2 (Reuters) - Harry Markopolos, a former financial executive who tried to blow the whistle on accused swindler Bernard Madoff, is scheduled to tell Congress on Wednesday about his unsuccessful attempts in the past to get U.S. securities regulators to thoroughly investigate Madoff.
The alleged $50 billion fraud at Bernard Madoff Investment Securities was not uncovered until Madoff's sons went to authorities and told them he confessed to the fraud.
The U.S. Securities and Exchange Commission has been criticized by lawmakers and investors for a lapse in oversight. The agency's inspector general, or internal watchdog, is probing the SEC's conduct in the case.
Markopolos is scheduled to testify at a hearing held by a House Financial Services subcommittee, which is examining how to reform U.S. financial services regulation and better police the markets.
It is the second time Markopolos has been called to testify at a House hearing on the Madoff case. In early January, he bowed out of a House Financial Services Committee hearing due to illness.
Markopolos and Madoff were Wall Street competitors when Markopolos was the former chief investment officer of Rampart Investment Management.
Markopolos said he began looking at Madoff in 1996 after his boss at Rampart asked him to figure out how to match the returns of Madoff's firm. Markopolos' analysis convinced him it was impossible for Madoff to consistently outperform the markets.
Markopolos took his findings to the SEC's Boston office and then the SEC's New York office, eventually alleging that Madoff was running a Ponzi scheme in which early investors were paid with money from later investors.
The SEC's head of enforcement, Linda Chatman Thomsen, has said that the SEC started a probe of Madoff's business in 2006 but closed it early in 2008 without recommending enforcement action.
Thomsen and the SEC's top examiner, Lori Richards, are also scheduled to testify at the Wednesday hearing. Other witnesses include the SEC's director of trading and markets, Erik Sirri; the agency's director of investment management, Andrew Donohue; and acting general counsel, Andrew Vollmer. Stephen Luparello, the interim CEO for broker-dealer watchdog the Financial Industry Regulatory Authority, is also expected to testify.
(Reporting by Rachelle Younglai; Editing by Bernard Orr)
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