Whistleblowers: SEC Ignored Us
Flawed process allowed Ponzi schemes to go undetected
By Rob Quinn,  Newser Staff
Posted Jan 21, 2010 5:26 AM CST
The SEC has asked Congress to give it the ability to offer rewards to informants.   (AP File Photo)

(Newser) – The SEC's haphazard method of dealing with whistleblowers means violations go unpunished and frauds left uncovered for years, insiders say. Many informants—including one whose information could have exposed Bernie Madoff's Ponzi scheme—say they were ignored, misunderstood, or sidelined after approaching the regulator with tip-offs, the Washington Post reports.

The SEC, unlike the IRS and other federal agencies, lacks a centralized system for dealing with hundreds of thousands of tips the agency receives and has no uniform guidelines detailing what should be done with information from whistleblowers. SEC Chairman Mary Schapiro promised to make fixing the process a priority when she was appointed last year, and the agency aims to finish the overhaul by the end of this year.