SEC inspections head resigns

The head of the SEC inspections office, which has been blighted by the Madoff fraud, has quit

WASHINGTON, DC - The head of inspections at the Securities and Exchange Commission (SEC) has resigned from her role at the US regulator.

Lori Richards led the Office of Compliance Inspections and Examinations (OCIE) at the regulator that conducted at least three ineffectual investigations between 1999 and 2006 into Bernard Madoff's $65 billion Ponzi scheme, which masqueraded as an elite hedge fund.

Richards' departure is the Madoff investment scandal's latest scalp, after the fraudster himself was sentenced to 150 years in prison on June 29 for scamming thousands of investor victims - ranging from banks, private investors and hedge funds, to charities - out of $64.8 billion, according to prosecutors.

Her departure marks one of the final departures of the old guard leading the regulator under former SEC chairman Christopher Cox, replaced with Mary Schapiro on January 22 by the incoming administration of president Barack Obama.

The SEC has come under intense pressure for its failings over the Madoff scandal, including speculation that last month's regulatory reformation could have signalled its dissolution - something the Obama administration has baulked at doing - while the SEC has positioned itself as the responsible supervisor for the US debate on reform of financial compensation structures.

An SEC statement credits Richards with reforming a range of compliance issues, including abusive exchange trading, insider trading, credit rating agencies practices and disclosures, pension consultants' conflicts of interest, asset valuation problems and abusive practices.

"Lori is known widely for her passionate and tireless service to the agency," said Schapiro. "I've had the honour and privilege of knowing and working with Lori for many years, and have always appreciated her dedication, leadership and integrity. I respect her decision to leave the SEC and am grateful for her many years of public service."

Richards will depart her role as director officially on August 7, with OCIE associate director-chief counsel John Walsh taking the helm as acting director.