Ponzi Schemes and the SEC Whistleblower Program
More than ten years have passed since the collapse of Bernard Madoff’s multibillion-dollar Ponzi scheme, which played a major role in prompting Congress to enact a whistleblower program at the Securities and Exchange Commission (SEC). Specifically, a whistleblower named Harry Markopolos had attempted to report the Ponzi scheme to the SEC for nearly a decade, however, his warnings were largely ignored.
In order to avoid this misstep in the future, the Dodd-Frank Act created the SEC Whistleblower Program to incentivize future whistleblowers with specific, timely, and credible information about federal securities laws violations (e.g., multibillion-dollar Ponzi schemes) to report to the SEC. Since the inception of the program, the SEC Whistleblower Office has received more than 52,400 whistleblower tips, some of which led to successful enforcement actions resulting in more than $4.8 billion in monetary sanctions from wrongdoers.
Whistleblower tips will continue to be among the most powerful weapons in the SEC’s law enforcement arsenal and recently there has been a significant increase in Ponzi schemes. This article provides an overview of the SEC Whistleblower Program and examines how whistleblowers can identify Ponzi schemes, report to the SEC, and earn an SEC whistleblower award.
SEC Whistleblower Program
Under the SEC Whistleblower Program, the SEC will issue awards to whistleblowers who provide original…
