Madoff scandal: Did regulators look the other way?

One question still outstanding in the Bernie Madoff scandal is, where were the regulators?

Madoff was turned in by his own sons. There's no indication that Finra or the SEC uncovered any problems from their exams of Madoff's broker-dealer.

“People who examined the [broker-dealer] have to look at the trading ... to make sure no front running and other things” are going on with the related hedge fund, said Peter Chepucavage general counsel at Plexus Consulting LLC in Washington and a former SEC staffer. “There's a real question about how long this went on.”

Is it possible regulators may have trusted Madoff too much?

Chepcavage thinks so.

Madoff was instrumental in developing the OTC market and was a “major force at the NASD,” now known as Finra, Mr. Chepcavage said.

“He was the go-to guy at the SEC” for issues related to market making, he said.

Was Bill Miller just lucky?

The WSJ says Bill Miller's Value Trust lost 58% over the past year, 20 percentage points worse than the S&P 500: "These losses have wiped away Value Trust's years of market-beating performance. The fund is now among the worst-performing in its class for the last one-, three-, five- and 10-year periods, according to Morningstar."

Efficient market guru's are no doubt saying something on the order of "I told you so:"