No One Would Listen: A True Financial Thriller by Harry Markopolos (i wanna iguana read aloud .txt) 📕

the crew to be rescued by the tanker Golar Freeze, then about a half hour away. Climbing aboard that massive ship from a small sailboat in high rolling seas without being crushed between the two ships proved as dangerous as the storms. Kevin and the cook had to be hauled the 90 feet to the tanker’s deck by a cargo net held by the crew. But eventually they all made it.

As Frank concluded, “Three months after we abandoned Sennen she was located in the Sargasso Sea ... still attached to a drogue to slow her movement and drifting one-half mile per hour toward Europe. After being battered by the seas and Golar Freeze, her value was dubious and no one would bother salvaging her. She was left to her fate, bobbing in an area of the ocean where few would ever go. I cried when I saw pictures of her. I felt like I had left a great wounded friend out in a storm. Sennen had kept us alive, and now she would die alone.”

While Frank was battling nature, I had begun my career fighting a much more subtle enemy. I had become a full-time fraud investigator—a financial detective. Faith and I were taking a big gamble on my ability to find massive cases of fraud, collect evidence, and prove to the government that a financial crime had taken place. I wasn’t interested in going after any particular person or group. I was living with the fear generated by the Madoff case, and I wasn’t interested in putting my whistleblowers in a similar situation.

Eventually I took all my documents proving 20 cases of market timing and submitted them to the SEC under its bounty program. I was fully aware that the SEC has the option of either accepting a case for further investigation or rejecting it. It receives hundreds of thousands of submissions annually, and it doesn’t even have a system in place to process whistleblower tips. It was a beauty contest to see who uncovers the most evil schemes. My cases were competing against all the other submissions that the SEC received. But I had a great deal of confidence in the quality of the cases that I presented.

Essentially, the SEC turned down all of my cases the same day that I submitted them. I was appalled. I had handed over evidence proving that companies had stolen billions of dollars from investors, and the SEC had responded that it was okay—the companies were not going to do it again. In one instance, one of the nation’s five largest mutual fund companies had monthly turnover percentages in its international equity funds in the 1,100 to 1,300 percent range per month! Now, there is absolutely no way on earth that those were legitimate trades done by honest buy-and-hold long-term investors. But these SEC enforcement attorneys couldn’t have cared less. I was told by a high-ranking enforcement official at the SEC in Washington, D.C., in these words: “We’re done with market timing. The industry has gotten the message.”

Even worse, one of my cases involved a midlevel whistleblower at a bank-owned mutual fund subsidiary that was allowing a few hedge funds to trade its mutual funds after hours, a felony known as late trading. When I told one of the SEC’s top enforcement attorneys about that, he told me that in a few weeks this bank was going to be purchased by a much larger bank, and the Federal Reserve wouldn’t appreciate our starting this case now, because it could gum up the merger. “It doesn’t serve any purpose to go after them now,” he said.

On paper, as well as in reality, I was no longer a rich man.

I was truly incredulous. I asked him, “What about the billions of dollars taken out of mutual fund shareholders’ pockets?” The SEC had no answer for that. While I would have loved to pursue these cases, there was nothing I could do. I had to drop them. Without the support of the SEC it was simply too dangerous for my whistleblowers to blow any whistles. They might very well have lost their jobs and been placed on the industry’s blacklist. It just wasn’t fair to these brave men and women or their families that they would have to suffer severe financial hardship just because the government agency charged with being the industry’s watchdog was deaf, blind, and mute.

It was then that I began to understand that the SEC is a government agency that had been captured by the private industry it was created to regulate. The mission of the agency supposedly was to protect investors from the financial predators in the industry; instead it was protecting those financial predators in the industry from the investors. The people charged with regulating the industry were primarily concerned with their own paychecks. They didn’t care a rat’s ass about protecting investors. And it was then that I realized that I had two opponents, Bernie Madoff and this nonfunctioning agency that seemed to me to be doing everything possible to insulate him.

I have a temper; I just don’t let it out very often. It’s not productive to do so. I had learned years earlier that I got more results with honey than I did with vinegar. I also didn’t get hurt as much. As a kid growing up in a relatively rough area, I used to fight all the time. I’ve never been very big, so I lost some of those fights. I didn’t mind that—you can knock me down and you can beat the hell out of me, but I’m going to be ready to fight you again tomorrow. In this instance I contained my anger; there was nothing to gain by losing my temper. So I took this intellectual beating and I got up the next day to fight again.

I was left with a box of evidence piled up in the middle of my office. This small mountain of cardboard and paper documented a theft