Proven systems already in use by the US Internal Revenue Service (IRS) should be adopted by the Securities and Exchange Commission (SEC) to deter and detect Ponzi schemes of the sort perpetrated by Bernard Madoff, according to a new white paper by NERA Senior Vice President Marcia Kramer Mayer.

"While the reforms proposed by the Obama administration are an excellent start, they don't go far enough in ensuring that we won't see another Madoff-type fraud in the future," said Dr. Mayer, a financial economist. "A common feature of Ponzi schemes is that investment advisers overstate the account assets that they report to clients. The IRS's simple, proven approach of routinely cross-checking reported data would be ideal for the SEC to adopt in its regulation of investment advisers, and such a system could be implemented at no cost to taxpayers."

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