Case #1950.0

Preventing Another Madoff: Reengineering the SEC’s Investigation Process

Publication Date: July 22, 2015
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Bernard Madoff perpetrated a $60 billion fraud that lasted for more than a decade. The fallout ruined the lives of many of his investors and significantly damaged the reputation of the Securities and Exchange Commission (SEC). How did the federal agency entrusted to protect investors fail to discover the Ponzi scheme? The question is more salient because a financial expert alerted the SEC to the likely fraud and was ignored, not just once, but many times over a multiyear period. The case provides the context to explore questions such as: What was the SEC's investigation process? Why did it fail to uncover the fraud? What was the role of organizational structure and culture in the debacle? How could the SEC re-engineer its processes to prevent such schemes?

Learning Objective:
The goals of this case are for students to understand process failure and the organizational challenges that must be overcome to prevent failure. An associated goal is for the students to re-engineer the process and use the Madoff example to stress test their proposal.


Other Details

Case Author:
Mark Fagan
Faculty Lead:
Mark Fagan
Pages (incl. exhibits):
United States