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Mary Schapiro heads the Financial Industry Regulatory Authority and has been nominated to lead the SEC.

(CNN) - President-elect Barack Obama's choice to head the Securities and Exchange Commission is expected to face questions at her confirmation hearing Thursday about Bernard Madoff - the alleged mastermind of the largest Ponzi scheme in history.

Mary Schapiro heads the Financial Industry Regulatory Authority (FINRA), which has examined portions of Madoff's firm for decades.

Now, questions are being raised about Schapiro's role in the failure to discover Madoff's alleged scheme. The SEC last week was criticized by Congress for missing red flags that alerted regulators to Madoff.

"The SEC never bothered to read the financial statements, not even for half an hour. Neither did FINRA," said U.S. Rep Brad Sherman, a Democrat from California who is also a certified public accountant.

"Clearly, Madoff's filings should have set off alarm bells, but there's a tendency in the regulatory agencies, both FINRA and the SEC, to basically say, we're dealing with gentlemen," Sherman said.

Sherman said it appears the authority missed several chances to catch Madoff.

"Then the question is - is this a systemic problem?" he said.

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