U.S. Securities and Exchange Commission Chairman Christopher Cox said the agency failed to act for almost a decade on "credible and specific allegations" of wrongdoing by Bernard Madoff.

Allegations dating back until at least 1999 "were repeatedly brought to the attention of SEC staff, but were never recommended to the commission for action," Cox, said in a statement yesterday. He announced an internal probe to review the "deeply troubling" revelations.

The SEC, already faulted in connection with the collapse of Bears Stearns Cos. and Lehman Brothers Holdings Inc., now faces criticism for failing to detect what Madoff termed a giant Ponzi scheme. Senate Banking Committee Chairman Christopher Dodd yesterday called on the agency to explain how the â??massive fraudâ?� went undetected.

Mr. Cox ordered an internal review that will include all staff contact and relationships with the Madoff family and firm and mandate the recusal any SEC employee with more than an "insubstantial personal" contact with Madoff and his family.

Eric Swanson, a former assistant director of compliance and examinations at the SEC, is married to Madoffâ??s niece, Shana, who was a compliance lawyer at the Madoff firm. Swanson left the SEC in August 2006 and is now the general counsel of Bats Trading Inc., the third-largest U.S. equity exchange by trading volume.