I don't see what any of that has to do with my point.
To reiterate, the Madoff scandal was a decades-long failure of government regulation. Regulation eventually prevailed, but only after thousands of investors were defrauded. The fact that Madoff was ostensibly regulated lowered the perceived risk of investment, thereby increasing the harm that was ultimately done.
Had the SEC not been in essence vouching for Madoff, many of his victims may have been more cautious and therefore avoided becoming his victims.
To reiterate, the Madoff scandal was a decades-long failure of government regulation. Regulation eventually prevailed, but only after thousands of investors were defrauded. The fact that Madoff was ostensibly regulated lowered the perceived risk of investment, thereby increasing the harm that was ultimately done.
Had the SEC not been in essence vouching for Madoff, many of his victims may have been more cautious and therefore avoided becoming his victims.