Post-Madoff, SEC Successfully Partnering with Whistleblowers to Combat Ponzi Schemes – Lexology

In our experience helping whistleblowers disclose Ponzi schemes to the SEC, we have found that the SEC usually prioritizes tips about Ponzi schemes and in some cases, our courageous clients’ TCR submissions and assistance with SEC investigations have enabled the SEC to promptly halt Ponzi schemes, obtain emergency asset freezes, and appoint receivers to recover funds for harmed investors.  As there are significant risks entailed in reporting offering frauds, the prospect of potentially obtaining an SEC whistleblower award has been a significant impetus for our clients to come forward.

Subsequent to the Madoff fraud, the SEC has implemented many reforms to reduce the chances that similar frauds would be undetected in the future.  Recent enforcement data suggests that these reforms have proven successful and that whistleblowers are helping the SEC halt Ponzi schemes and return funds to harmed investors.  Indeed, 2022 appears to have been a record year for SEC enforcement actions combating Ponzi schemes, including the cases summarized below.

Source: Post-Madoff, SEC Successfully Partnering with Whistleblowers to Combat Ponzi Schemes – Lexology