Harry Markopolos: Still a Finance Superman

Remember Harry Markopolos? The Boston-based Madoff whistleblower? Well, he’s kind of a financial world superhero these days. A fascinating story in the Wall Street Journal talks about Markopolos taking on banks that overcharge public pension funds by tens of millions of dollars on their foreign-exchange transactions. (State Street is one of the alleged defrauders.) The plundering itself is difficult to comprehend — but that’s why there’s Harry! He understands this stuff. He understands it so well that he’s set up shell companies whose sole purpose seem to be suing the gilded pants off of State Street and the rest (i.e. mostly Bank of New York Mellon Corp). And why does Harry want to set up these shell companies? Because if the banks settle with the state governments in which the alleged fraud transpired, Harry gets up to a 30 percent cut of the proceeds.

Illustration by Elaina Natario

Illustration by Elaina Natario

See, this is what Harry does now. This is, in fact, all he does. He is not otherwise employed, according to his friends. What the Madoff case taught Harry, and the government, too, is that the Feds don’t understand the finance industry. Even the people charged with regulating it — and sometimes especially those people. So Harry now hears out groups like the D.C.-based Taxpayers Against Fraud, “hunting,” as its spokesman, Patrick Burns, tells me. TAF and Markopolos each look for irregularities deep within the recesses of the financial sector, and on occasion offer each other suggestions as to what might be causing such blips and how they might be further investigated*. Harry tries to make sense of the strangeness. But if he can’t, well, he does what he did with State Street and creates a company that attempts to fight injustice, profiting in the process. He’s an independent operative of a sort, a kind in an increasingly complex world of which the government finds itself in need. Harry wouldn’t talk with me for this post, but he did recently tell Fortune that to do what he does now, one needs to be “crazy-brave.” Brave enough to take the banks on, brave enough to know you’re right, and brave enough to put your payday on the line to prove it. Literally only a handful of people in the country want to make that bet, Burns says. And Harry just happens to be the best at it.

It’s for these reasons that, “I love Harry,” Burns says. He is Burns’s Batman.

*This post initially said that TAF and Markopolos formally collaborate, and that TAF kicks cases Markopolos’ way. Their ties are a bit more informal than that, TAF’s Patrick Burns says.