SEC looking for whistleblowers to help stop fraud

Reeling from the embarrassments of the Madoff and Stanford scandals, new SEC Chairman Mary Schapiro wants to enlist private-sector third parties to help the SEC expose fraud. Not that she has a choice. The SEC has only 400 staff to examine more than 11,000 investment advisers, meaning only about 10 percent of registered advisers get looked at every three years. She also wants to push for a strong whistle-blower law to help expose fraud.

Shapiro told the Financial Times, "We need to find some way to increase staffing, but beyond that, leverage third parties without abdicating our responsibility." She cites self-regulatory agencies as examples worth imitating -- a topic she knows well given she's the first person to have headed both the Commodity Futures Trading Commission and the Financial Industry Regulatory Authority.