Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, March 5, 2009

SEC Announces Review of Whistleblower Tips

In the wake of criticism that the agency failed to heed repeated warnings that Bernard Madoff was engaged in securities fraud, SEC Chairman Mary L. Schapiro announced today that the agency is moving to improve the handling of whistleblower complaints and enforcement tips in order to better protect investors.  The SEC has enlisted the services of the Center for Enterprise Modernization, a federally funded research and development center operated by The MITRE Corporation, to begin immediately working with the SEC to conduct a comprehensive review of internal procedures used to evaluate tips, complaints, and referrals. The agency is seeking to establish a more centralized process that will more effectively identify valuable leads for potential enforcement action as well as areas of high risk for compliance examinations.

The SEC's review will scrutinize the agency's processes for receiving, tracking, analyzing, and acting upon the tips, complaints, and referrals from these outside sources. The goal of the review is to improve the efficiency, effectiveness, and overall management of how the agency addresses tips, complaints, and referrals, and how SEC staff utilizes the information received to protect investors.

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