The U.S. Securities and Exchange Commission named Carlo di Florio, a partner at audit firm PricewaterhouseCoopers LLP, to oversee inspections of money managers and brokers, the unit faulted for missing Bernard Madoff’s Ponzi scheme.
Di Florio, 42, who was in PricewaterhouseCoopers’ financial services regulatory practice, will take over the Office of Compliance Inspections and Examinations within the next month, the agency said today. Lori Richards (above), the unit’s head for 14 years, left in August after lawmakers said the SEC missed “red flags” pointing to Madoff’s $65 billion fraud.
SEC Chairman Mary Schapiro, who took over a year ago, has replaced senior staff as she seeks to restore confidence in the agency. The SEC announced in October a “top-to-bottom” review of investment-firm examinations after Inspector General H. David Kotz said the regulator missed at least six opportunities to spot Madoff’s fraud.
Di Florio “brings the energy, insight and experience necessary to ensure that we keep pace with the rapid changes in the industry and continue to build upon the reforms of the past year,” Schapiro said in a statement.
The Office of Compliance Inspections and Examinations reviews firms for evidence of fraud and other violations. It shares indications of wrongdoing with the SEC Enforcement Division, which investigates companies and can bring lawsuits. The inspections office has more than 800 employees nationwide.
Madoff Reviews
The inspections unit in 2004 and 2005 reviewed Madoff’s firm, which at the time registered only as a brokerage. Kotz, in a November report, faulted examiners for less-than-thorough searches of SEC databases for information about investigations, examinations and filings that would have shown Madoff’s firm was “high risk” and needed regular reviews.
The division never conducted an inspection of the money- management side of Madoff’s business after he registered with the SEC in 2006. The firm collapsed two years later.
Di Florio, who received law degrees from Georgetown University and Penn State University, will oversee the agency’s inspections of investment advisers, brokers, mutual funds and credit-rating firms. At PricewaterhouseCoopers, he led independent reviews and investigated corporate fraud, corruption, conflicts of interest and money laundering, according to the release.
Di Florio will take over from John Walsh, who became acting director when Richards left on Aug. 7.
Joshua Gallu, Bloomberg, January 4, 2010
