The top US financial regulatory body has ordered an in-house investigation into why it did not detect the $50bn (£33bn) Madoff fraud case sooner.
The Securities and Exchange Commission (SEC) head, Christopher Cox, launched an inquiry into what he called a serious agency breakdown.
It has been revealed the SEC received warnings about Wall St figure Bernard Madoff almost 10 years ago, in 1999.
Mr Madoff has been charged with fraud in one of the biggest-ever such cases.
Investors, banks and charities across the world fear they may have lost billions of dollars since Mr Madoff's arrest.
It is thought that Mr Madoff was running what was essentially the world's largest pyramid scheme, the BBC's Andy Gallacher reports from Washington.
Now serious questions are being asked about the SEC's role in not preventing it in the first place, our correspondent says.
'Credible and specific'
The SEC chairman said he was "gravely concerned by the apparent multiple failures" of SEC staff to look into claims about Mr Madoff.
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