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A: Madoff exploited the opportunity to act as both investment adviser and custodian of his clients’ assets. That meant there was no one to verify whether the assets existed, or whether he was making the trades he claimed.

The SEC proposed a new rule that would require third-party verification of the assets, effectively closing that loophole.

But closing loopholes doesn’t prevent future abuses, warns Laura Unger, a former commissioner and acting chairman of the SEC.

“Disclosure and rules are always changed after the crisis,” she says. “You’re hard-pressed to prevent the next thing before it happens because it’s always going to be something different.”

Q: With so many attempts at reform going on all at once, how can we be sure the SEC even understands where the problems were?

A: SEC Inspector General David Kotz is expected to release a long-awaited investigation of the breakdowns that allowed Madoff to pull off his scam undetected. It will examine information sharing between the examination and enforcement divisions, and attempt to explain why a tipster with information on Madoff’s fraud was unable to attract the agency’s attention for over a decade.

Even before the formal recommendations come out, Ms. Schapiro has said she will address any weaknesses that come to her attention.

Q: Now that the SEC is stepping up its game, can investors rest easy?

A: Never.

Investors who want to feel safe misunderstand the agency’s role, says Ms. Unger, the former SEC commissioner. As more people have investments, “there’s this increasing sense that there’s no longer any risk in investing, that it’s like putting money in a bank,” she says.

But investments earn higher returns than savings accounts precisely because they carry risks — and fraud is one of those risks, Ms. Unger explains.

“We can’t end fraud because we can’t end greed and stupidity,” she says. “But you can make an impact in reducing it and make other people sensitive and thoughtful about it.”