Another Madoff victm: future whistle blowers

The fallout from Bernie Madoff's Ponzi scheme is enormous already in dollar terms, not just because of the defrauded investors and evaporated $50B, but also for all the work sponsored by charitable foundations that had invested with Madoff that will now lose its funding. Today, it turns out Madoff's brokerage arm never traded a penny. http://www.reuters.com/article/topNews/idUSTRE50F0BY20090116?pageNumber=1&virtualBrandChannel=0
Madoff might have traded through third parties, so we can't completely judge that yet, but it would be extremely surprising. Given the decidedly fake data on investors' monthly statements (trades in a Fidelity fund that was renamed years ago, trades at prices that were not hit on a given day, etc..), I'll assume not a penny got traded.
My concern is for future whistle blowers everywhere. In this case, the SEC had extensive warnings from Harry Markopolos. It chose to ignore them, probably because of Bernie's stature as a Nasdaq chairman, pro trader (what irony!), and superbly connected glitterati. Apparently, newspapers & the SEC receive a stream of unsolicited warnings every day, & they have to prioritize. So, if you're part of the old boy network, you're off the priority list. I don't know of any effective way to keep this dynamic in check, so we'll leave it for another day.
What about future whistleblowers? To some extent, Harry Markopolos had it easy: he was not endangering his job by submitting these warnings. On the contrary, his colleagues were rooting for him. This is not like the smoking industry whistle blower case. Nobody was threatening Markopolos. What if in a few years, there's a whistle blower in, say, the defense industry, who wants to alert us to huge financial mismanagement there. (Where would I ever get such an idea?!) He or she has to weigh the real risk to their livelihood, reputation, ability to get another job, and stress on the family, with doing the right thing and being a whistle blower. The Madoff scandal might make them think it's useless to be a whistle blower. The government won't act, anyway. That's the huge, invisible cost of the SEC's inaction in the Madoff case.