President Trump was elected with a mandate to reduce government waste and fraud. The Elon Musk–led Department of Government Efficiency has already made progress on this front, but the administration should waste no time turning its attention to a glaring problem at the Securities and Exchange Commission (SEC).
In particular, the agency’s whistleblower programs—originally designed to detect and prevent financial fraud—have morphed into a billion-dollar whistleblower-industrial complex. A new class of opportunists now flood the SEC with 20,000 tips a year, hoping for big paydays and drowning out legitimate whistleblowers in the process. The Trump administration should act quickly and implement rigorous new protocols to quickly vet and dismiss fraudulent “whistleblower” claims. Penalties should also be attached—perhaps closely mirroring the well-known Rule 11 sanctions that punish lawyers who file frivolous lawsuits in federal court.
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Whistleblower programs partly emerged in response to the Bernie Madoff investment fraud. For years, would-be whistleblowers had tried to alert the SEC, urging it to scrutinize what many analysts believe should have been an easily detectable Ponzi scheme. The SEC’s catastrophic failures allowed Madoff’s scam to continue checked for years, raising serious concerns about financial regulation and underscoring the need to strengthen whistleblower protections in the...
The U.S. Department of Justice (DOJ) has announced a nearly $2 million settlement with Virginia-based contractor Intelligent Waves LLC, resolving claims that the company knowingly sold unauthorize...