Today Netflix released a docuseries titled “Madoff: The Monster of Wall Street,” which is a stark reminder of the SEC’s failure to act on detailed and highly credible disclosures from Harry Markopolos about Madoff’s unprecedented $50 billion Ponzi scheme. Indeed, an SEC Inspector General report found that the SEC received several detailed and substantive complaints about whether Madoff was actually trading securities yet never performed a thorough and competent investigation.
Spurred in part by the SEC’s failure to detect and halt Madoff’s fraud, Congress included in the Dodd-Frank Act an SEC Whistleblower Program, which provides awards to whistleblowers that voluntarily provide original information leading to successful enforcement actions with total monetary sanctions in excess of $1 million. A whistleblower may receive an award of between 10% and 30% of the total collected monetary sanctions. If represented by counsel, a whistleblower may submit a tip anonymously to the SEC. The SEC Whistleblower Program has proven to be highly successful in generating high-quality information regarding securities law violations that have enabled the SEC to halt fraud schemes (including Ponzi schemes) and protect investors.
According to the SEC Whistleblower Program’s report for FY 2022, “[e]nforcement actions brought using information from meritorious whistleblowers [since the inception of the program] have resulted in orders for more than $6.3 billion in total monetary sanctions,...
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