In testimony prepared for a Senate hearing, the heads of the SEC’s enforcement division and inspections office say they “deeply regret” the agency’s failure in the Madoff affair and promised changes to avoid future breakdowns. Two top Securities and Exchange Commission officials are pledging to fix the problems that led to the agency’s failure to detect the multibillion-dollar fraud conducted by Bernard Madoff.

I guess all we can do now is wait and see if anything like this happens again.

Lawmakers are seeking answers from the agency’s inspector general and potential lessons as they craft a new system of financial regulation.

Common now guys don't be so hard on yourself. It was only a few billion dollars stolen, by the way, from right under your nose.

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The watchdog of the Securities and Exchange Commission has found the agency consistently mishandled its five investigations of Bernard Madoff’s business, despite ample complaints over 16 years about the multibillion-dollar fraud.

But SEC inspector general David Kotz’s report found no evidence of any improper ties between agency officials and Madoff.

Despite speculation that senior SEC officials may have tried to influence the probes, a summary of Kotz’s 450-page report released Wednesday also found no evidence of that.

Read the SEC report’s executive summary.

New amendments to securities-arbitration rules are changing the criteria for determining the types of arbitrators who hear disputes involving brokerages and brokers the WSJ Reports.

The Securities and Exchange Commission has approved amendments proposed by the Financial Industry Regulatory Authority, or Finra, requiring that panels hearing claims between brokers and brokerages include a majority of public arbitrators. Employment-discrimination claims, which require a specialized panel comprised only of public arbitrators, are exempt from the amended rule.

The amendments become effective on August 31, according to a notice posted Friday on Finra’s Web site.

The SEC approved the amendments on June 5.

Bank of America Corp. dropped a rule that forced customers into arbitration to settle disputes, representing the latest development in a shake-out of one of the banking industry’s most controversial practices.

The move by the giant Charlotte, N.C., bank means consumers can now go to court to resolve disagreements over credit-card charges, auto and boat loans and bank accounts.

“We think arbitration is a very fair way to resolve the issue. A lot of our customers did not feel the same way, so we decided to make a change,” said a Bank of America spokeswoman.

The future of the mandatory arbitration process remains up in the air. Citigroup Inc., another big credit-card issuer, said it is “continuing to monitor events relating to the use of arbitration of consumer disputes.” The bank doesn’t typically use arbitration for debt collection.

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Qualcomm Inc. said Tuesday that a California court has granted its motion to dismiss a consumer class-action lawsuit that accused the chip maker of antitrust violations and unfair competition.

Judge William Q. Hayes of the U.S. District Court for the Southern District of California rejected plaintiff Christopher Lorenzo's arguments in his amended complaint, standing by his previous ruling that Lorenzo lacked standing on the antitrust allegations.

The court also manintained that Lorenzo's claims did not give him the right to be compensated by Qualcomm under California's unfair competition law.

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Citigroup Inc. on Wednesday launched a series of public exchange offers that will effectively give the government a 34 percent stake in the troubled bank.

Citigroup expects to convert into common stock a total of $58 billion of preferred stock and trust preferred securities, assuming full participation in the swaps.

Citigroup said in late February that it wanted to offer investors the option of exchanging preferred stock into common stock as a way to boost its capital reserves. As such, the government agreed to convert about $25 billion of its $45 billion preferred investment in the bank to common stock, which will give it a 34 percent stake in the New York bank.

The deal boosts Citi's common equity — a benchmark the government is using to measure a bank's ability to absorb losses.

Citigroup has been one of the most troubled banks throughout the financial crisis. Investors have long criticized its board and management for allowing the bank to make big investments in the risky housing market — actions that led to Citigroup reporting billions in losses.

New York Securities Lawyers Blog.

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A Lancaster man already facing federal prison time is facing additional charges of defrauding investors in Texas and Florida of $55 million.

Jeffrey Bruteyn was sentenced Wednesday to 13 months in prison for making a false statement in a passport application.

The 38-year-old man’s sentencing Wednesday in Philadelphia comes a day after he was indicted in federal court in Texas on securities fraud charges.

Bruteyn ran Dallas-based Amerifirst Funding Inc., a finance company linked to used-car dealerships.

The Securities and Exchange Commission alleges Amerifirst sold $55 million of risky investments to senior citizens in Texas and Florida. The SEC says Bruteyn and others used the money on a private jet, trips, mansions and sports cars.

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Some Supreme Court prospects have extensive corporate holdings, including shares in Fortune 500 companies such as General Electric and Microsoft and stock in a manufacturer that recalled lead-paint-coated "Flush & Sounds Potty" toilet seats.

Since businesses often land in court, a case involving a company in which a justice has financial ties could be trouble. If chosen for the high court, some potential nominees might have to step aside from certain cases or unload stocks to avoid ethical conflicts between their official duties and personal financial interests.

Among stocks held by people mentioned as President Barack Obama's possible picks to succeed retiring Justice David Souter:

_ Appellate Judges Diane Wood and Kim Wardlaw have reported they have stakes in Whole Foods Market Inc. The upscale grocer won permission from a federal appeals court in Washington in 2007 to buy rival organic grocer Wild Oats Markets despite the Federal Trade Commission's argument that the deal would stifle competition. To settle the commission's claims, Whole Foods agreed this year to sell several stores.

_ At least five Supreme Court prospects have disclosed stock in Zimmer Holdings Inc., a maker of artificial hips and knees that was investigated by federal prosecutors over allegations it paid doctors who used the products. Charges were dropped after Zimmer agreed to pay a fine and undergo monitoring.

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This just in: Alleged Ponzi-schemer Bernie Madoff has waived his indictment.

“We’ve waived indictment and the case will proceed by information,” said Daniel Horwitz, a securities attorney for Madoff, to the WSJ. Horwitz refused to elaborate.

The waiver could presage a plea deal for Madoff. Often, prior to a plea, a defendant will waive his or her right to a grand-jury indictment. In such a case, the prosecutors’ “charging document” — the document which lays out the case against the defendant — is called an “information.”

Earlier today, federal prosecutors in the Bernie Madoff filed a document indicating that were Madoff to waive his indictment, a criminal information would follow. The filing, made Friday morning, is called a Notice of Intent to file an Information and says, in full:

    Please take notice that the United States Attorney’s Office will file an information upon the defendant’s waiver of indictment, pursuant to Rule 7(b) of the Federal Rules of Criminal Procedure.

Update: According to the WSJ’s Amir Efrati, citing a person familiar with the matter, no plea agreement is expected imminently between prosecutors and Madoff. At a hearing next Thursday, the government is expected to file the information, which will lay out allegations against Mr. Madoff and list numerous criminal charges against him. At that point, Madoff may well plead guilty. However, if that happens, it’s not expected to be as part of a deal for a lenient recommendation or a lesser charge from the U.S. attorney’s office for the Southern District of New York, according to the person familiar with the matter.

Efrati reports that it’s unclear how cooperative Madoff has been during the criminal investigation. He has told prosecutors he acted alone in committing the fraud, but the government believes other individuals were likely involved, according to a person familiar with the matter.

A hearing on Tuesday before U.S. District Judge Denny Chin will first address potential conflicts of interest for Madoff’s lawyer, Ira Sorkin, whose family had an account at the Madoff firm. Madoff is expected to tell the court he understands the potential conflicts but will waive them.

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A federal judge in New York says a hedge-fund cheat is well enough to stand trial – or plead guilty – for skipping out on prison.

Judge Kenneth Karas, relying on a medical report from the Bureau of Prisons, said Friday there's no reason to think that 49-year-old Samuel Israel "is suffering from mental disease."

Israel's NY Securities lawyer, Barry Bohrer, says Israel may plead guilty, but no commitment has been made.

Israel, of Armonk, went on the lam in June instead of surrendering for a 20-year prison sentence for bilking investors in the Stamford, Conn.-based Bayou funds. Israel faked his suicide and absconded for nearly a month before surrendering in Massachusetts.

Israel tried to plead guilty last year, but Karas ordered a medical evaluation instead.

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