The inspector general of the Securities and Exchange Commission delivered what's expected to be a stinging report late Monday on the agency’s failure to prevent or detect Bernard Madoff’s $65 billion Ponzi scheme.

SEC inspector general H. David Kotz launched an investigation into the agency’s Madoff dealings in December, shortly after federal agents arrested Madoff. Madoff, who turned himself in to the authorities, pleaded guilty in the case and is now serving a 150-year prison sentence.

In a statement issued Monday, Kotz said, “The Securities and Exchange Commission Office of Inspector General [OIG] has issued today a Report of Investigation entitled, ‘Investigation of Failure of the SEC to Uncover Bernard Madoff’s Ponzi Scheme.’ The Report of Investigation is an exhaustive summary of the investigative work that the SEC OIG has conducted over the past 8 months and has been issued directly to the Chairman of the SEC. It is a comprehensive review of the complaints issued to the SEC regarding Madoff, and the investigations and examinations that the SEC conducted of the Madoff firm. The Report is 450 pages long, and contains over 500 exhibits.”

Then-SEC Chairman Christopher Cox requested the probe. Among other things, Cox asked Kotz to investigate why the SEC found allegations about Madoff over the years “not credible.”  

Kotz sent his finished report to the current SEC chairman, Mary Schapiro, on Monday. He had previously told FOX Business that he will leave it to agency officials to decide how and when to release it to the public. But its release is expected sometime this week, after Schapiro and her team review it.

"The Commission looks forward to reviewing the report and authorizing its release in the coming days. While we have already taken many steps since the Madoff fraud was revealed late last year to better protect investor assets and improve our surveillance, the public deserves a full accounting of why the agency did not detect the Madoff scheme," SEC spokesman John Nestor said.

Kotz would not comment on his findings. But in testimony to a House committee in January, Kotz promised lawmakers a tough review.  

“I can assure you that our investigation and review will be independent and as hard-hitting as necessary,” Kotz testified. “The matters that have been brought to our attention require careful scrutiny and review… If we find that criticism of the SEC is warranted and supported by the facts, we will not hesitate to report the facts and conclusions as we find them.”

In separate testimony before another House committee in July, Kotz indicated his eight-month investigation has focused on the SEC’s Office of Compliance, Inspections and Examinations and its Division of Enforcement.

Legal proceedings revealed Madoff and his co-conspirators successfully misled SEC examiners and investigators numerous times, by lying to them and providing phony records. But the proceedings, along with numerous media reports, also suggest that in some instances, SEC staff members made mistakes in their dealings with Madoff.  

Kotz told lawmakers in July that his review would include “all the examinations and investigations that the SEC conducted of Madoff or Madoff-related entities from 1992 until the present” and would analyze “the reasons why the SEC did not uncover the Madoff Ponzi scheme, notwithstanding these examinations and investigations.”

“We also plan to issue two additional reports providing specific and detailed recommendations for improvement of both the SEC’s Division of Enforcement and the Office of Compliance, Inspections and Examinations, which will incorporate the findings from our investigative report,” Kotz testified.

He told committee members that his team had interviewed more than 100 witnesses and had reviewed millions of emails and documents in its investigation.

Former SEC Chairman Cox also asked Kotz to investigate agency staff contacts and relationships with the Madoff family and firm and “any impact such relationships had on staff decisions regarding the firm.” 

Cox’s request came after media reports about former SEC compliance lawyer Eric Swanson. Swanson was dating Shana Madoff, Bernard Madoff’s niece, in 2006, when the SEC was investigating the Madoff operations. Shana Madoff was a compliance lawyer in her uncle’s firm. She and Swanson married in 2007, after Swanson had left the SEC. Neither he nor his wife has been implicated in the Ponzi scheme. 

The inspector general’s report may also discuss Madoff investigations by the Wall Street’s self-regulatory body, the Financial Industry Regulatory Authority, or FINRA. Like the SEC, FINRA failed to detect and prevent Madoff’s scheme.

Before President Obama nominated Schapiro as SEC chairman, she was FINRA’s chairman and chief executive officer. 

Since the Madoff scandal surfaced, the SEC has announced a number of proposals and steps it says will help it detect and shut down future financial con artists. They include surprise examinations of investment firms, more third-party reviews of investment managers and hiring more experienced staff at the agency. 

Schapiro told FOX Business on Friday that "while we waited for this review, that we have not waited for this review in order to make some pretty fundamental changes in the SEC as a result of what we understand to have happened with respect to Madoff."

See our SEC page for the latest news and videos on the commission.