No wonder SEC could not find $50B fraud of Madoff. In the internal investigation report released to public in December found following things.

•  Personal trading while working at the SEC or surfing for porn. This was a calculated effort to bypass the filters on blocked Web sites after getting numerous denials, according to the April-through-September report.
• Some staff members violated commission rules governing employee securities transactions.
• One of the staff member ran the photography business with the use of government resources
• Some SEC employees used their positions to bully people, like the time a worker called a family member’s broker to make sure the broker was aware he worked for the SEC

Several of the employees, according to the report, hadn’t been punished even after the Inspector General recommended doing so. You can find the Inspector General’s report right here.