Whistleblowing System In The Film Chasing Madoff
“Chasing Madoff”, a documentary released in 2010 portrays the way the whistleblower, Harry Markopolos, uncovered Bernie Madoff’s fraud scheme and his ten-year struggle to get the SEC to investigate. The documentary begins with an introduction to Harry Markopolos and his former coworkers Frank Casey and Neil Chelo. The three men work in finance, with investment portfolios. They were aware that in the finance industry there was much talk about an investment company making their customers high returns. Casey came across some investment information from a client of Madoff and gives the information to Markopolos to look over. Markopolos claims it took him five minutes to determine Madoff’s investment enterprise was a Ponzi scheme. After obtaining …show more content…
The SEC was proactive in the sense that it allows for tips to be sent in, but they did not take fully investigate the tips sent in. One could argue that there was no point in the whistleblowing system if one is not going to investigate the tips sent in. Another thing to note is the psychological effects of being a whistleblower on Harry Markopolos. In order for a whistleblowing system to be effective, the system should contain anonymity, the possibility of reporting to an independent party, provide any means to make the report, and a follow-up. The SEC failed in the follow-up. The anonymity, in Markopolos view, was also failing. He believed that his tips were ignored because someone within the SEC was associated with the fraud, so they were able to sweep the tip under the rug. This also led to Markopolos feeling paranoid that there might be an attempt on his life. An individual will not want to report any fraud or other misconduct if they believe there will be any type of repercussions.
With the extensive media attention, the Madoff fraud received, there was also much attention on the faults of the SEC. Since 2008 the SEC has continued to make reforms and improvements in order to deter another instance like the Madoff fraud. Some of the initiatives that the SEC has taken, are to refurbish how tips are treated, promoting whistleblowing systems, refining fraud detection techniques, and reviving enforcement
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