SEC glorified Madoff

(Wall Street Journal): "Mr. Madoff had a long reputation on Wall Street that helped him evade suspicion. His market-making business serving institutional investors went back to 1960, and he was a former chairman of Nasdaq.

• The SEC itself tapped his expertise, naming him to a 25-member advisory committee on market structure in 2000 and frequently calling him as a commentator at agency roundtable discussions.

He even got his name on an SEC rule. The "Madoff exception" allowed market makers such as Mr. Madoff to sell stock short to facilitate a customer buy order, even if the stock in question was ticking downward. Under a rule that was in place until last year, short sales on a downward-ticking stock were normally prohibited. In a short sale, investors borrow stock and sell it."

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