Harry Markopolos

Barry Ritholtz has been following the story of Harry Markopolos, and it's kinda awesome. Markopolis is the accountant who independently figured out that Bernie Madoff's hedge fund was a huge Ponzi scheme, and wrote a lengthy memo telling the SEC all about it in 2005.

It's a great story both because the protagonist seems to fit exactly what you would expect from a movie version of events (he's a semi-paranoid Rain Man with pit bull tenacity) and because it strips the the SEC of any remaining fig leaf of credibility. I mean jeebus. How do they prevent anything whatsoever if they got a 19-page memo about Bernie Madoff entitled "The World's Largest Hedge Fund is a Fraud" and he still had to turn himself in three years later?

I had assumed that Markopolis was just dismissed by the SEC as some crank who maybe lost money or something, but apparently he had a regular contact there named Ed Manion, who the Globe story says "encouraged" him to pursue Madoff. The story does not specify why Manion himself did not also pursue Madoff, being, between the two of them, the one who works (still!) for the SEC.

It's too bad Markopolos seems so publicity-shy, because he should really get a little something for the effort. A fat book deal or high-paid consulting gig or something. He started putting the case together in 1999. It wasn't his fault the regulators are morons or don't care. He did what he could, and it was an awful lot. You don't even need to speak financial jargon to understand a lot of his memo. It's a pretty amazing document if you ask me.