o The Need for Independent Auditors

Here is a sure way that no further Bernie Madoff ponzi scheme will not exist. And it doesn't rely on the under funded, under staffed, under educated SEC.

If a company or individual wants invest $1m or more in a hedge fund or private investment, they must first get an independent audit from one of a list of government approved accounts. No accountant can be used twice unless all other auditors are cycled through. The cap on how much the audit costs is $10k. Consider it a one time payout of $10k for insurance.

Lets take the case of Bernie Madoff. Assume he had 100 investors that put in over $1m to his fund. Assuming this rule were in place, his fund would have gone through several independent audits from several different accounting firms. Any red flags would have been raised years ago.