Catching Up to Fraud

I have to admit, I’ve never really thought about what steps go into catching the masterminds behind financial crime.  I’ve heard all about firms upping their compliance and updating their strategies to catch suspicious activity internally, but I have never taken into account the role that the SEC plays in tracking the tips and complaints they receive.  That’s until I recently read about the SEC’s new “tip machine” also referred to as the TCR Database (for Tips, Complaints and Referrals).  I guess I always assumed the SEC had a well thought out system where they tracked financial crime and had teams hard at work tracking down these Wall Street criminals… but I guess I was wrong.  Before this TCR Database the SEC was working off an extremely unreliable system of monitoring tips and complaints via emails, faxes and handwritten letters!

If a complaint was filed in one city it might not be known in another.  So, if someone gave a tip about a firm’s suspicious activity in NYC and then later someone else complained in Chicago about the same firm, the multiple tips might not merit a red flag.  No wonder Madoff got away with what he did!

But it seems the SEC has finally got their act together and Madoff wouldn’t be so lucky these days.  Now once a complaint is filed it is put in the TCR Database for all SEC staff to see.  This obviously makes it much easier for them to connect dots if needed.  So gone are the days when an attorney would need to call other SEC offices to see if there were any connections or related tips to a complaint they were working on.

So my main question is… SEC, what took you so long? Welcome to 2011, didn’t you realize updated technology was needed to efficiently monitor financial crime!?

This entry was posted in Compliance, Financial Crime, Financial Technology and tagged , , . Bookmark the permalink.

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