The failure, though, was part of larger systemic problems at the S.E.C., which critics say Cox, a former longtime Republican congressman from California, failed to address, and in some respects worsened.

As Condé Nast Portfolio magazine reported in its October issue, Cox took steps to weaken and hamstring the enforcement division.

He slowed down and delayed approval when staff members did ask for formal authority to investigate, and pressed the agency to focus more on penny-stock scams, boiler-room operations, and other relatively petty crimes. S.E.C. veterans said this detracted from efforts to pursue major Wall Street frauds.

(Cox strongly denied he did anything to weaken enforcement, maintaining that enforcement was his top priority.)

Interviews with agency staff members, though, showed that he distanced himself from the enforcement division, rarely consulting with its director, Linda Thomsen. The two chairmen who preceded him had worked closely with their enforcement directors, usually conferring with them daily.

As chairman, Cox also had responsibility for allocating staff within the agency. The group responsible for examining investment advisers like Madoff has had only a handful of examiners to monitor thousands of investment advisers.

Cox also didn't resolve an organizational problem that hampered the sharing of information within the S.E.C. Katz pointed out, for example, Madoff was required to tell one S.E.C. office how much money he managed as an investment adviser, but was required to report his actual trading positions to another office.

Katz said if the two had been compared, investigators may well have discovered a big discrepancy that would have triggered a focused investigation.

Edwin Nordlinger, a veteran S.E.C. enforcement supervisor in the New York office, said the staff did fail to uncover massive wrongdoing. But he says Cox hadn't taken steps during his tenure to beef up enforcement.

Instead, he slowed down approval of enforcement cases, and took "steps to disable the S.E.C.," said Nordlinger, who retired in early 2005, before Cox took over.

As chairman, Cox devoted less time than his predecessors did on enforcement and domestic securities regulation, focusing on international regulation and efforts to harmonize U.S. securities laws with those of other countries.

The Madoff case is only the latest in a series of recent major failures by the S.E.C. to police the firms it oversees.

It failed to detect the capital shortages at Bear Stearns and Lehman Brothers until it was too late. (Three days before the government had to arrange an emergency sale of Bear Stearns, Cox had publicly pronounced it in satisfactory health.)

Under Cox, the S.E.C. has also substantially weakened a rule limiting short sales—a type of trading widely blamed for helping put banks and Wall Street firms in crisis—until the commission was forced to take emergency action to rein it in.

During the presidential campaign, John McCain called for Cox to be fired.

In nominating Mary Schapiro to succeed Cox, President-elect Barack Obama is charting a new course.

Schapiro has extensive experience in securities law enforcement—just the kind of background needed to whip the S.E.C. back into shape as a potent police force for the investment world.