After dismissing complaints that might have uncovered investor Bernard Madoff's $65 billion fraud, experienced U.S. Securities and Exchange Commission staffers must have a procedure in place to review tips and complaints, the SEC's internal watchdog said on Tuesday.
SEC Inspector General David Kotz said the SEC's enforcement division should establish formal guidance for staff to evaluate various types of complaints.
In a report, Kotz also said the agency needed to establish protocol that explains how to identify red flags for potential securities fraud and that the SEC should assign investigations to staff who have specific knowledge of the subject matter.
Earlier in September, Kotz issued a report that found the agency missed numerous red flags, did not properly follow up on leads and disregarded tips that might have uncovered Madoff's Ponzi scheme.
(Reporting by Rachelle Younglai; editing by Andre Grenon)