The Financial Industry Regulatory Authority did not fully probe transactions at Bernard Madoff's firm and repeatedly failed to investigate tips about R. Allen Stanford's alleged $7 billion fraud, an internal report found.

The staff of the U.S. brokerage industry's main regulator is "not adequately trained" on its investigative authority, and the Washington watchdog lacks procedures to escalate matters to senior management or special investigators "based on the gravity and substance of the fraud allegations," according to a report posted on Finra's Web site Friday.

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