An SEC whistleblower program designed to prevent another Bernie Madoff-type scandal often ignores its own rules, shields much of its work from the public, and has been a financial boon for law firms that hired former agency officials, a Bloomberg Law investigation has found.
Written into the Dodd-Frank financial reform law of 2010 and championed by Sens. Elizabeth Warren (D-Mass) and Chuck Grassley (R-Iowa), it was created to make sure tips about financial wrongdoing aren’t ignored as they were before Madoff’s $64.8 billion Ponzi scheme.
By that measure, it’s been successful: the Securities and Exchange Commission has gotten roughly 60,000 tips since 2012, and paid out more than $1.3 billion in awards.
But the review of all 561 SEC final orders revealed a program operating in secrecy far beyond its legislative mandate to protect whistleblowers’ identities. The agency won’t disclose names of companies involved in fraud, hasn’t identified all of the law firms that received money for their clients, and won’t even report the office’s annual budget.
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