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SEC's New Database Streamlines Tips and Complaints Process to Better Protect Investors

The SEC's new $21 million "Tips, Complaints, and Referrals" (TCR) Database recently made headlines for its role in a complaint filed against several China Voice executives accused of defrauding investors out of $8.6 million in a Ponzi scheme. (See Reuters: "EXCLUSIVE - SEC builds new tips machine to catch the next Madoff.")

As reported by Reuters, the SEC had been investigating China Voice Holding Corp., a small telecom firm, for more than three years, but had been unable to build a solid case against the company. Last November, a single phone call routed through an initial version of the TCR Database enabled the Commission to file a suit against the China Voice executives within five months.

The Database is widely viewed as the SEC's response to accusations that the Commission flubbed its role in the investigation of the catastrophic fraud perpetrated by Bernie Madoff. As reported in the article, the SEC received early tips about the investment scheme, but mismanaged the information.

Now, SEC Chairman Mary Schapiro hopes the TCR Database will help redeem the Commission's reputation. The Database is designed to allow approximately 2,300 SEC employees to view and add to a tip or complaint once it has been entered into the system.

A "key tool" in enforcing securities violations, the official version of the TCR Database was launched in March. So far, whistleblowers and investor advocates are pleased with the streamlined process. Most tipsters who have submitted tips under the new process report that they received a call back from an SEC attorney within a few days, sometimes sooner.

For more information, read the Reuters article here.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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