The regulator overseeing America's financial markets was tipped off six times in 16 years of suspicions surrounding Bernard Madoff's fraudulent $150bn (£92bn) investment empire but investigators ignored red flags and mishandled five separate inquiries into the biggest Ponzi scheme in Wall Street history.

A highly critical 450-page official report into the conduct of the US Securities and Exchange Commission has revealed that the agency was alerted to suspicions surrounding Madoff as early as 1992. But although enforcement staff caught Madoff in "lies and misrepresentations‚" they failed to follow up on inconsistencies, allowing the corrupt fund manager to continue embezzling money until his confession in December 2008.

"Despite numerous credible and detailed complaints, the SEC never properly examined or investigated Madoff's trading and never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme," concluded David Kotz, the SEC's inspector general.

The findings shed new light on how Madoff succeeded in staying under the radar of law enforcement authorities for so long. The 71-year-old fund manager is serving a 150-year sentence for fraud, theft and money laundering at a federal prison in North Carolina. The report follows an admission by the SEC in December that its oversight of Madoff had been inadequate.

The SEC's newly appointed chair Mary Schapiro, who was installed by the Obama administration, reiterated the agency's apology: "It is a failure that we continue to regret, and one that has led us to reform in many ways how we regulate markets and protect investors."

Kotz found no evidence to support allegations that personal ties helped Madoff to evade detection. Madoff's niece, Shana, was married to a former SEC assistant director, Eric Swanson, but the inspector general said there was nothing to suggest any improper interference with the agency's work.

But Kotz revealed that a suspicion of trouble at Madoff Investment Securities arose as early as 1992 when customers of Avellino & Bienes, a fund that invested all its money with Madoff, complained about documents making a seemingly impossible promise of "100%" safe investments. Although the SEC shut down Avellino & Bienes, the agency only made a "brief and very limited" examination of Madoff.

Similarly inadequate probes took place in response to warnings in 2000, 2003, 2004 and 2005. Tip-offs included a detailed dossier of information assembled by a whistleblower, Harry Markopolos, who bluntly entitled his correspondence: "The world's largest hedge fund is a fraud."

In a final attempt to prompt action, an anonymous correspondent identified only as a "concerned citizen" wrote to the SEC in December 2006, warning of a "scandal of major proportion" at Madoff's firm. The tipster repeated this warning in March 2008, adding: "It may be of interest to you that Mr Bernard Madoff keeps two sets of records. The most interesting of which is on his computer which is always on his person."

Madoff finally confessed when the financial crisis caused investors to withdraw large sums from his firm - withdrawals that he was unable to meet. Victims who lost investments in Madoff's fraud include a large number of elderly clients, Jewish charities and Hollywood names including Kevin Bacon and Steven Spielberg.