The level of talent at the Securities and Exchange Commission is “still a significant problem,” according to David Kotz, the agency’s former inspector general.

“When I did the Madoff investigation a couple of years ago, that was a very serious issue,” Kotz told Newsmax TV in an exclusive interview. “Essentially, the people who were examining and investigating Madoff didn’t understand how the trades worked, didn’t understand how a Ponzi scheme is to be investigated.”

Kotz, currently a director at the Berkeley Research Group, went on to outline other elements of the Madoff case that weren’t understood, including the fact that there couldn’t have been consistent returns for 20 years without any drops, “without any bad months.”

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“Because of that, they failed to uncover the scheme,” Kotz said.

He went on to say that the SEC has since tried to bring in better talent, but described the process as difficult.

“It’s hard to compete sometimes with larger salaries on Wall Street,” he said.

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“The SEC has tended to look toward very smart, young lawyers right out of law school with a couple years of experience at a law firm rather than the grizzled trader who maybe hasn’t gone to a fancy school, but knows a lot more about trading than somebody who’s two years out of Harvard Law School.”

Bonuses at the government were described as “nothing” by Kotz, who also said that “they don’t get raises,” making it hard to compete.

“The SEC has made some efforts to bring in some of these people, but it’s really a mindset,” he said.

“The mindset should be, What about a guy that’s been doing it for 20, 40 years, wants to take it easy, doesn’t want to work those kinds of hours, is happy to work government hours? They may be able to give in to that person, to come in or just to do a public service. So there are ways to get these people to come in the door, but the SEC has to change its mindset.”

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