THE United States finance watchdog expressed concern at how repeated warnings about Bernard Madoff were ignored, ahead of the Wall Street investment baron's first court appearance yesterday over a US$50 billion (S$73 billion) fraud.

Mr Christopher Cox, chairman of the Securities and Exchange Commission (SEC), said he was 'gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations' against Madoff.

As banks and investment funds around the world counted the cost of their links to Madoff, the 70-year-old former head of the Nasdaq share market was to make his first court appearance since his arrest last Thursday.

Currently free on a US$10 million bond, Madoff is due in a Manhattan court to establish whether he has met bail conditions, which include having to surrender his passport.

His US$7 million Manhattan apartment has been used to secure the bond.

The US authorities allege Madoff used money from new investors to pay interest to other investors, in a fraud scheme known as a Ponzi pyramid.

Madoff has allegedly confessed to the scam, which collapsed after clients demanded their money back as the global financial crisis hit.

Mr Cox on Tuesday announced a probe into how SEC failed to detect the scheme.

He said the SEC 'has learnt that credible and specific allegations regarding Mr Madoff's financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff - but were never recommended to the commission for action'.

Mr Cox said he has directed a full and immediate review of the past allegations regarding Madoff and his firm, and why the allegations were not found to be credible.

The probe will also include all staff contact and relationships with the Madoff family and firm, said Mr Cox.

Mr Jean-Pierre Jouyet, France's former European affairs minister who this week took over at France's financial markets watchdog, the AMF, said: 'For the fourth time, American regulation is in question.'

He cited three previous crises: the 1998 collapse of US hedgefund managers LTCM; the 2001 false-accounting scandal involving energy giant Enron; and the collapse in September of Lehman Brothers.