Harry Markopolos, who once worked in a trading firm that competed with Bernard Madoff's, for nine years has been trying to persuade staffer after staffer at the Securities and Exchange Commission that Mr. Madoff's operation was a fraud. The agency never brought charges.
A week after Mr. Madoff was arrested in an alleged $50 billion Ponzi scheme, Mr. Markopolos was vindicated. Internal SEC documents show how the agency, prompted in 2006 to investigate by Mr. Markopolos's complaints, found serious violations at Mr. Madoff's firm, but took no public action. These documents show the SEC found some violations at Mr. Madoff's firm in 2006-07, but didn't take action on allegations that it was a Ponzi scheme.