Critics of the SEC have long complained about the way the SEC mishandled the Bernie Madoff affair. Missed opportunity is an understatement. Time and time again, whistle blowers warned of problems yet nothing was done. According to the Washington Post, now after several years several employees have been disciplined.
Disciplined. Not fired.
The SEC ultimately hired an outside consultant to review its handling of the Madoff affair and determine if any employees should be disciplined. In the end, the report concluded that the SEC had received six different warnings about Madoff.
The agency now says it disciplined 8 employees for mishandling warnings of Madoff’s crimes. The most serious discipline? Two employees received 30 day suspensions without pay. While hundreds of victims are out hundreds of millions of dollars, two employees will collectively lose several thousand dollars in pay. Unless, of course, they have vacation time on the books.
The SEC tries hard to stop Ponzi schemes but there are simply too many. When they do take action, their preferred remedy is a civil injunction. It sounds good in press releases but in reality, its little more than a court order saying “don’t do it again.”
Before you get angry, in the years since Madoff, the SEC has been much more proactive and prosecutes dozens of Ponzi schemes each year. As to their inability to do much more than seek civil injunctions, you can thank Congress for that. Almost every federal agency has a law enforcement arm. The agency that needs it most – the SEC – is dependent on the SEC for help.
Earlier today I posted a blog about Jerry Aubrey who was sanctioned by the SEC for selling bogus oil and gas investments. Unless one reads the fine print, most don’t realize that Aubrey was out on bail on state securities fraud charges while ripping off investors to the tune of millions of dollars. The SEC also doesn’t emphasize that Aubrey had previously been the subject of a prior SEC enforcement action for selling bogus investments. (Aubrey previously sold interests in a cruise ship that didn’t even exist.)
Update: After this post was first written, the FBI arrested Aubrey
The SEC does what it can with what resources it has. It simply doesn’t have the resources to check every promoter and public company. That is why whistleblowers become so important.
SEC Whistleblower Program
We represent whistleblowers around the world, from promoters to compliance professionals to CFOs. The SEC (and CFTC) whistleblower program covers a wide range of corporate misbehavior. Our SEC and CFTC whistleblower cases cover a wide range of violations including:
- bribery of foreign officials (violations of the Foreign Corrupt Practices Act);
- manipulation of securities:
- money laundering (AML violations):
- cryptocurrency and ICO schemes: and
- phony books and records
We Know the SEC Inside and Out
Anyone can file an SEC whistleblower claim. In fact there are many law firms that advertise whistleblower representation yet it is only an adjunct to their practice. We have the experience and track record of success to get the job done right. anOur experience with the SEC and its whistleblower office gives us valuable insights that benefit our clients.
Our own David Weber spent his career in government service including running enforcement programs for the Office of the Comptroller of the Currency and FDIC and culminating as the SEC’s chief investigator. Of equal importance, David was a successful whistleblower himself.
To learn more, visit our SEC Whistleblower Program information page. (We have separate resources for those wishing to learn about the Foreign Corrupt Practices Act (FCPA). Ready to see if you qualify for a reward? Contact us online, by email brian@mahanylaw or by phone .
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