SEC Starts Internal Review of Enforcement Procedure

The Securities and Exchange Commission announced today that it’s beginning an internal review of its process of recognizing valuable whistleblower complaints and tips for potential enforcement actions
 
“This comprehensive review will help us identify and improve areas within the agency where gaps or lack of communication may cause breakdowns that prevent us from ensuring swift and vigorous enforcement,” said Chairman Mary Schapiro in a statement.
 
The agency is bringing on the Center for Enterprise Modernization, a federally funded research organization, to help conduct the review. The SEC says it wants to set up a more centralized process for filtering through the hundreds of thousands of tips it gets each year about potential corporate wrongdoing. Under the current system, tips and complaints can be reported to several different offices within the SEC’s D.C. headquarters, or to the agency’s 11 regional offices around the country.
 
The SEC says the review will focus on the process of receiving, tracking, analyzing, and acting upon tips and complaints.
 
Since being sworn in earlier this year, Schapiro has made reinvigorating enforcement a top priority as she deals with intense criticism of the agency for failing to catch Bernard Madoff’s alleged $50 billion Ponzi scheme. Whistleblower Harry Markopolos first reported that he suspected Madoff’s investment fund was fraudulent to the SEC’s Boston office in 2000. The SEC didn’t charge Madoff until he confessed last December.