Sometimes events catch up with executives who commit too much to print. Here’s a cautionary tale of a senior leader who was hoist by his own petard.

The Madoff Ponzi scheme has led commentators to issue damning indictments of the S.E.C.’s failure to respond to repeated requests they investigate the fraud. Sunday’s New York Times has an excellent article by Michael Lewis and David Eindhorn where they detail the wilful manner in which the S.E.C. chose to ignore repeated red flags about the situation:

“Harry Markopolos sent his report to the S.E.C. on Nov. 7, 2005 — more than three years before Mr. Madoff was finally exposed — but he had been trying to explain the fraud to them since 1999. He had no direct financial interest in exposing Mr. Madoff — he wasn’t an unhappy investor or a disgruntled employee. There was no way to short shares in Madoff Securities, and so Mr. Markopolos could not have made money directly from Mr. Madoff’s failure. To judge from his letter, Harry Markopolos anticipated mainly downsides for himself: he declined to put his name on it for fear of what might happen to him and his family if anyone found out he had written it. And yet the S.E.C.’s cursory investigation of Mr. Madoff pronounced him free of fraud.”

In light of these revelations, it’s fascinating to read an interview with S.E.C. chairman Christopher Cox in the September 2007 SPEAKER magazine published by the National Speakers Association. The Q&A session “Doing the Right Thing” is subtitled “The chairman of the SEC explains his philosophy about ethics and setting the right tone from the top.”

Cox observes that the best practices in any company are set by the senior executives. “Over and over again, commissioners and staff at the SEC observe that the tone at the top is a major factor in determining the effectiveness of internal controls to prevent fraud…”

When asked if ethics violations in financial companies occur on a regular basis, Chairman Cox answers:

“Sadly, yes. The full, five-member commission meets for many hours every week to take an in-depth look at individual cases in which securities laws violations are being investigated or charged.”

While Madoff kept his $50 billion scheme afloat, the S.E.C. was taking action. Cox details that:

“We have (a chief ethics officer) at the SEC, responsible for publishing ethics NewsGrams every two weeks on our internal web site, and e-mailing those to all employees as well.”

Sadly, these NewsGrams must have been absent any notification about Madoff or the other multi-billion dollar disasters brewing in Wall St on Cox’s watch. As he observes at the end of the interview when asked if he’ll transition out of government service at some point:

“I don’t know what the future holds. And despite the time I’ve spent in government, the challenges of the SEC are fresh and exciting.”

Perhaps a little too exciting?