SEC Ignored Red Flags In Westridge Fraud: IG Report

Law360, New York (February 14, 2011, 5:25 PM EST) -- Analysts at the U.S. Securities and Exchange Commission’s Los Angeles office failed to follow up on numerous red flags during a 2005 investigation of a company later implicated in a $670 million Ponzi scheme, the agency’s inspector general has said.

Large portions of that 2005 investigation of Westridge Capital Management Inc. were assigned to inexperienced investigators who failed to appreciate the significance of red flags that they spotted, according to the SEC inspector general’s report issued in October and publicly released in recent days.

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