[HappyTypist]

In Madoff's case, he passed SEC audits, licensing requirements, etc with flying colours.

Licensing primarily works by raising the barrier to entry, discouraging 'bad actors' from signing up because society-wise, 'bad actors' are more distributed among poorer demographics and are unable to afford licensing.

[FireBeyond]

Not overly so. He did in some cases. In others, the SEC had plenty of warnings, concerns, but chose not to act on them (which is a different issue entirely - 'why not?').

[s73v3r]

Lack of resources.

[meatysnapper]

Nearly everybody thought Madoff had a serious insider trading scam going on, but everybody wanted to get in on it so they ignored the red flags.