I REFER to the report, 'SEC did not inspect books' (The Straits Times, Dec 16).
The alleged Madoff investment scam laid bare the volatility of the United States' financial system, a lack of stringent regulations for the financial industry and negligence by the Securities and Exchange Commission (SEC).
The failure of the SEC to examine the books of Bernard Madoff's company since he registered it with the commission in September 2006 resulted in thousands of investors worldwide falling victim to the scam.
Due to this incident, people might lose confidence in the securities market and financial system. In Singapore, market sources have been quoted as saying that only a negligible number of financial institutions and individual investors are affected by the scam.
However, is there the possibility that investment scams similar to Madoff's have not yet been exposed?
And would there be further financial casualties in Singapore related to these?
There are lessons to be learnt from the Madoff scandal:
Financial-industry regulators, such as the Singapore Exchange and Monetary Authority of Singapore, should work hand-in-hand to implement stringent and transparent controls, which should be enforced regularly and impartially.
All registered financial organisations' books should be checked and supervised. If any unusual or irregular transactions and activities are detected, they must be thoroughly examined and queried.
If any business, financial organisation or individual is proven guilty of criminal activity, they must be severely dealt with by the law.
The authorities should periodically organise public forums and educational sessions in relation to financial investments, aimed at teaching people how to be prudent when making different types of investments.
This will minimise the impact of exposure to risks that potential investors could be faced with and will, in due course, cut down the probability of investors making losses.
