Madoff coached witness vs. SEC (viewed regulators with contempt)

Madoff coached a potential witness on how to fool regulators, according to a '05 phone call made public by Mass. Secy of State William Galvin. Madoff preps his employee, "Obviously, this call never took place." Asked what to say if the SEC asks how shares of a trade are distributed, Madoff says: "You don't have to be too brilliant with these guys; you're not supposed to have that knowledge." Madoff highlighted how investigators develop cozy relationships with firms they are supposed to regulate. "These guys....ask us a zillion questions, and we laugh. "They work five years at the SEC then become compliance managers at a hedge fund."

Madoff, Caught on Tape, Reveals Ways to Dodge SEC - CNBC, 2009 September 10. ..... CNBC obtained the audio tape from the Massachusetts Secretary of State's office under the Massachusetts public records law. On Tuesday, Fairfield Greenwich agreed to pay $8 million to settle a complaint by the Secretary of State that it misrepresented its relationship with Madoff to investors. The firm did not admit nor deny guilt.
After the tape's release, Fairfield Greenwich issued a statement aimed at what it calls "misinterpretations" of the Madoff phone call. "Any implication that the Madoff call affected Fairfield's responses to the SEC is demonstrably false," the statement says.
The statement notes that the firm asked for the SEC's permission to speak with Madoff, then told the agency about the call afterward. The firm says that proves its executives "completely ignored" Madoff's much-quoted line about the conversation never having taken place.
"Rather than take Madoff's suggestion to conceal the call, Fairfield Greenwich executives did the opposite," the statement says.
The conversation occurred in December of 2005, as the SEC was conducting one of nearly half a dozen investigations over the years that the agency botched, according to an internal report released by the agency late last week. .....
Do I understand it correctly, that Fairfield Greenwich asked permission from SEC and taped the conversation with Madoff in 2005, during the audit... and SEC did not think it was worth investigating further? Forgive me for being cynical here, but THAT "incompetent" or "inexperienced"?

Full Transcript of Madoff's Conversation with Fairfield Greenwich Group - PDF file, 4MB, 66 pages.

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