Regulators should pay whistleblowers for information about frauds, according to an official investigating the US Securities and Exchange Commission’s failure to uncover Bernard Madoff’s $65bn scam.

Wall St’s white-collar criminals

Bernard Madoff’s sentencing on Monday June 29 was the latest in a series of high-profile Wall Street criminal cases such as Bernie Ebbers and WorldCom, as an FT gallery shows

David Kotz, SEC inspector-general, said “bounty” schemes would provide “necessary incentives” for individuals to bring complaints about possible illegal activity. There was evidence that similar programmes by the Department of Justice and the Internal Revenue Service had been effective, he said.