Investor Protection Act

Bernie Madoff was arrested in late 2008 after a $65 billion Ponzi Scheme he had been running for decades collapsed in aftermath of the financial crisis. Politicians looked at the scandal and asked themselves, "Wait, how exactly did a guy run a $65 billion Ponzi Scheme for decades without getting noticed by any of the many regulators we have in charge of this stuff?"

The ultimate result of that musing, along with other regulatory soul-searching following the financial crisis, led to the Wall Street Reform and Consumer Protection Act of 2009. It gave regulators (especially the SEC) broader powers to fight Wall Street scams and other white collar crimes.

The reform wave included the Investor Protection Act. It set up a fund that authorities could use to incentivize potential whistleblowers to come forward. It also increased the punishments for people convicted of helping scammers.