Key senator asks regulators to report

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The head of the Senate Banking Committee on Tuesday asked regulators to report frequently to the panel on their progress to improve fraud detection after their failure to discover the multibillion-dollar pyramid scheme allegedly hatched by disgraced financier Bernard Madoff.

At a hearing, Sen. Christopher Dodd, the Connecticut Democrat who is the committee's chairman, closely questioned the enforcement director of the Securities and Exchange Commission and another SEC official as well as the interim chief executive of the Financial Industry Regulatory Authority, the securities industry's self-policing organization.

"What's happened here?" Dodd asked. He said he wanted action "very quickly in this area." He asked the regulators to report every three months to the committee on improvements they were making.

Linda Thomsen, the SEC's enforcement director, said the agency is committed to finding ways to bolster fraud detection after its breakdown in the Madoff case. While the agency needs to improve its internal processes for pursuing cases, she said the SEC also needs authority to regulate parts of the financial system that escape oversight and more funding to carry out more investigations.

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