The Journal is besting its rivals on the Madoff story. Today it has a super page-one story that reveals that the SEC had investigated the fraudster in 2006, found that he lied to them, but still did nothing.

The Journal has done some good reporting on Christopher Cox’s tenure at the SEC before, and it’s still not clear to me why the guy isn’t in the public stocks (of the medieval variety, though forcing him to buy in the stock market these days might be punishment enough).

Among other things, the SEC found that Mr. Madoff personally “misled the examination staff about the nature of the strategy” used by the Fairfield funds and other hedge-fund accounts, and also “withheld from the examination staff information about certain of these customers’ accounts,” the SEC documents say.

I also like that the WSJ names some of the staffers at the SEC who let the case slip through their hands (Meaghan Chung and Jonathan Sokobin).

The paper neatly folds that scoop into a narrative about Harry Markopolos, the money manager who has been calling Madoff a fraud for a decade. This is terrific color:

Mr. Markopolos, a native of Erie, Pa., who had trained in “unconventional warfare,” including intelligence gathering, as a reservist in the Army, says he came to “consider Madoff a domestic enemy.”

Alas, our hero wasn’t able to convince the SEC to get off its hind end despite showing them how it was virtually impossible that Madoff’s supposed strategy could work.

A key part of Mr. Madoff’s strategy relied on buying and selling options on the Standard & Poor’s 100-stock index. But Mr. Markopolos said his research showed there weren’t enough S&P-100 options in existence at the time to support Mr. Madoff’s stated strategy, given all the money he seemed to be managing. So something else must be going on.

It’s sickening to see the missed opportunities, especially when Markopolos handed gift-wrapped them for the SEC. A couple of years after he started pounding on the issue, he sent the SEC documents warning that Madoff’s assets under management had grown to $12 billion. Of course, we now know he’s lost more than $50 billion.

The Journal is good not to overheat Markopolos, though. It notes that his allegations were far from perfect, which could have made him sound like a raving kook to the SEC:

Mr. Markopolos’s allegations against Mr. Madoff were far from bulletproof. Mr. Markopolos provided no definitive evidence of a crime. His reports were laden with frothy opinions.

In his lists of “red flags,” he occasionally got things wrong. Sometimes he even misstated the starting date of his own campaign against Mr. Madoff…

He sent an email adding more evidence — noting that he might be eligible for the SEC’s bounty program if it turned out that Mr. Madoff was, in fact, front running.

Still, the guy was right and was a persistent gadfly.

Solid reporting by the Journal.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.