The Securities and Exchange Commission, which failed to stop Bernard Madoff’s long-running investment fraud despite repeated warnings, has disciplined eight agency employees over their handling of the matter but did not fire anyone.

The SEC’s head of human resources and a law firm hired to advise the agency had recommended that SEC Chairman Mary L. Schapiro fire one person, whom the SEC described as a manager in the office that inspects investment firms.

But the chairman decided not to fire the employee, because doing so “would harm the agency’s work,” SEC spokesman John Nester said.

The disclosure that no one was terminated comes at a time when street protesters and other critics who blame Wall Street for the country’s economic plight are questioning whether the government is serious about holding powerful wrongdoers accountable. This week, a federal judge excoriated the SEC for letting firms such as Citigroup settle fraud charges without admitting or denying wrongdoing.

Madoff’s fraud cost investors billions of dollars, shattered lives and became perhaps the biggest embarrassment in the SEC’s history. Many clients who had entrusted Madoff with their savings were left struggling to make ends meet.

“After all the talk about ethics and cleaning up the SEC, the entire Madoff scandal continues to place serious doubt on claims of meaningful progress,” Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform, said in a statement.

The Washington Post reported on its Web site Friday that seven SEC employees had been disciplined, based on details provided by a person familiar with the actions. A second source, an official involved in the process, told The Post that Schapiro had received recommendations to fire an employee over the mishandling of the Madoff case.

Later Friday, Nester confirmed details and added that an eighth employee also received disciplinary action. A ninth employee, who was facing a potential seven-day suspension, resigned before disciplinary action was taken, Nester said.

The punishments given the SEC employees varied and included suspensions, pay cuts and demotions.

The employee recommended for termination received one of the more severe penalties, a 30-day suspension along with a reduction in pay and grade. Another was given a pay cut of 5.7 percent. At the low end, one employee was suspended for seven days, another for three days and two others were issued counseling memos, a step below a reprimand.

Before the agency took the actions, it “thoroughly examined all factors relevant to the imposition of discipline, including the employees’ performance before and since the Madoff events,” Nester said.

When the law firm advising the SEC recommended that an employee be fired, it included a qualifier. If the SEC thought the loss of that person would affect the agency adversely, it could consider a different punishment.

The SEC’s disciplinary process with respect to the Madoff matter was concluded months ago, though one of the employees disciplined has appealed the action beyond the agency, Nester said.

Madoff was an admired figure on Wall Street. But the seemingly robust returns he was generating and the growing balances shown on clients’ account statements were illusions. He was actually running a Ponzi scheme, using money from some of his investors to make payouts to others.

In the end, it was Madoff and his sons rather than federal regulators who exposed the fraud. Amid the stock market meltdown of 2008, clients overwhelmed Madoff with requests to withdraw their money. Unable to oblige, Madoff reportedly confessed to his sons, and they alerted the authorities.

When the house of cards collapsed, a financial sleuth named Harry Markopolos became famous for having tried in vain to get SEC employees to see through the scam.

For the past few years, the SEC has been struggling to rebuild its reputation and remedy the weaknesses the Madoff scandal laid bare.

The SEC’s inspector general issued a 477-page report in 2009 concluding that the agency “received numerous substantive complaints since 1992 that raised significant red flags concerning Madoff’s hedge fund operations.”

Although the SEC conducted five examinations and inspections of Madoff based on the complaints, agency personnel “never took the necessary and basic steps to determine if Madoff was misrepresenting his trading,” the inspector general reported.

“While examiners and investigators discovered suspicious information and evidence and caught Madoff in contradictions and inconsistencies, they either disregarded these concerns or relied inappropriately upon Madoff’s representations and documentation in dismissing them,” the inspector general added.

The inspector general’s report mentioned 56 SEC employees and called into question the performance of 21 of them, according to SEC officials. At a March congressional hearing, an SEC official testified that 35 of the 56 had left the SEC voluntarily and that six disciplinary proposals were “working their way through the system.”

A document obtained from the SEC on Friday showed that the employees disciplined included an enforcement manager, a senior officer in the inspections office and staff attorneys.

The enforcement manager received a 5.7 percent pay cut for failing to adequately analyze whistleblower Markopolos’s complaint, the document showed.

The senior officer in the inspections office received a 30-day suspension without pay for failing to ensure that the agency’s examination of Madoff’s business was broad enough and for failing to address issues that remained unresolved at the end of the exam.

One staff attorney was issued a counseling memo for inadequately investigating issues Markopolos had raised. In that case, the SEC cited a mitigating factor: The attorney was acting under the direction of two supervisors. The supervisors have left the agency, the SEC said.

The SEC has no power to discipline people who have left its workforce.

When Schapiro became chairman in early 2009, dealing with the Madoff fallout and addressing the institutional weaknesses the scandal had revealed were among her most pressing challenges.

Madoff continues to cast a long shadow over the SEC. Republican members of Congress have invoked the SEC’s handling of the matter as a reason to oppose its budget request. And lawmakers have inquired from time to time about what the agency was doing to hold employees accountable.

At a February hearing on financial regulation, Schapiro said, “We are concluding the appeals process for the final stages of those employees against who discipline was recommended. That should be completed shortly,” according to transcripts.

At a March hearing on the agency’s budget, Rep. Bill Posey (R-Fla.) complained that “Madoff is in prison and we still can’t slap the wrist of an employee.”

The SEC’s director of enforcement, Robert Khuzami, responded that the agency was focused on the issue.

“I want Congress, the American people to know that we are not turning a blind eye to this,” Khuzami said. “We understand the importance of it, we understand the expectations of the American people, and we’re prepared to address it.”

Inspector General H. David Kotz provided another window into the SEC’s handling of the personnel issues three months ago.

In a report he issued in August about how the agency rewards employees, he said one of the employees cited in his report on the Madoff debacle was later awarded a $1,200 bonus.

The employee was nominated for the award by an assistant regional director who was also criticized for his Madoff-related work. The recipient of the award had played “a critical role” in a botched examination of Madoff in 2005 and was a “key participant” in an investigation of Madoff in 2006, the inspector general said in his more recent report. The bonus was intended in part “to reward the employee’s efforts in 2009 pertaining to a follow-on investigation of Madoff,” the report said.

The SEC held off on paying the award until the law firm advising the SEC completed its disciplinary recommendations, the report said. The firm concluded that the employee chosen for the reward “did not warrant formal disciplinary action,” the report said.