The Securities and Exchange Commission (SEC) said yesterday it would immediately open an internal investigation to find out why it failed to follow through on repeated warning signs over at least nine years about what has been described as Wall Street's biggest fraud ever.

Christopher Cox, SEC chairman, said the commission's initial findings were 'deeply troubling' because SEC had received 'credible and specific allegations' regarding Madoff's financial wrongdoing, but failed to respond aggressively.

'I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them,' he said.

In addition, the commission will investigate 'all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm.'

Further reading:

Madoff's $50bn fraud sends shockwaves worldwide