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SEC issues $3.8M whistleblower award
- kyleee 6y agoNo meaty details, anyone have more info?
- godzillabrennus 6y agoThat’s the beauty of this program. No one will know who was responsible. Whistleblowers can now safely report crimes without repercussions. You can now get rich sniffing out Madoff type scams before they blow up to billions raised.
- bluejekyll 6y agoShouldn’t the caught party be identified and what the illegal scheme was? It feels like the public should at least know that, if not the whistleblower.
- deleted 6y ago[deleted]
- Scoundreller 6y agoSometimes those details are enough to identify the informant, or for someone with enough sleuthing skills. For funsies, I once figured out a confidential informant in a DoJ investigation. There was enough info because they were running a business in a niche field in a state not known for it. Didn't act on it in anyway.
- thephyber 6y agoDepending on the definition of "informant", that would have been illegal[1] (according to this source). [1] https://www.robertreeveslaw.com/blog/doxing-arrested/ https://www.robertreeveslaw.com/blog/doxing-arrested/
- Scoundreller 6y agoWas wondering that myself, but didn't see any benefit to telling anyone even if it were legal. Based on your link, it seems like publishing their ID would be illegal. But if a reporter called them up and interviewed them without publishing identity, no law would be broken. Not legal advice.
- thephyber 6y agoYes, I was unclear. > that would have been I meant to say "publishing would have been" illegal.
- andykx 6y agoI think there's some nuance here. It's not illegal to know that someone is an informant, you just can't publish their information.
- korethr 6y agoThis was my initial thought too, but reflecting, I think at least part of the reason they aren't naming the guilty party here is to protect the identity of the whistle blower. If you could reason from knowledge of the guilty party whom the whistle blower is, knowing they just got an $8.3 million payout, it just might be worth your time to go after said whistle blower. I don't think it's unreasonable that someone could figure that out.
- vmception 6y agoThe SEC reaches out to the company to let them know they are considering an investigation (Wells Notice) and then decides if they want to do an investigation after they confirm issues. Then they settle with the companies. If settlement is large enough, whistleblower gets paid some too. As the whistleblower is not the accuser in the civil charge, the company doesn't get to know who it was.
- wmf 6y agoThe SEC talks about their enforcement actions all the time: https://www.sec.gov/news/pressreleases https://www.sec.gov/news/pressreleases Pretty much every week there's a "$COMPANY pays $MILLIONS to settle charges" announcement, so these aren't being swept under the rug. The important point is that there's no way to link which whistleblower award comes from which enforcement. The public doesn't need to know this.
- mistermann 6y agoHow often are criminal charges laid and and disclosed, or is this more of a cost of doing business type of thing?
- wmf 6y agoNote that the SEC cannot press criminal charges, but they can send evidence to a federal prosecutor (e.g. the United States Attorney for the Southern District of New York) who can initiate criminal cases. They also like to advertise their cases: https://www.justice.gov/usao-sdny/pr?f%5B0%5D=field_pr_topic%3A3926 https://www.justice.gov/usao-sdny/pr?f%5B0%5D=field_pr_topic...
- hairytrog 6y agoI wonder what goes through the whistleblowers head in terms of timing and how much they should help the crime. If you wait a little longer or help the crime, the payout increases. Maybe there are already people designing schemes in which they can do the crime, whistleblow, and get a legal payday.
- frandroid 6y agoYou risk getting beaten to the punch by someone else...
- thaumasiotes 6y ago> You can now get rich sniffing out Madoff type scams before they blow up to billions raised. Madoff was non-anonymously reported to the SEC several times for running an obvious scam. Why would anonymous reporting make a difference?
- arthurcolle 6y agoI think this is a new program set up in the aftermath of those widely publicized scandals during (or shortly previous) to the financial crisis in the late 2000s
- vxNsr 6y agoA whistleblower is someone with inside knowledge, often enough on it's own to convict, those non-anonymous reports didn't contain that info.
- thaumasiotes 6y agoA person meeting that description would not be "sniffing out" anything.
- chongli 6y agoWhat happens if the whistleblower turns out to be one of the accomplices in the fraud who decides to turn against his co-conspirators?
- ip26 6y agoSounds like it depends on how early/quickly you turn coat.
- boomboomsubban 6y agoThey can not face retaliation for the whistleblowing, but can be held accountable for their crimes.
- floatingatoll 6y agoIt would be highly unethical report any such details if we did know them, as it would lead to retaliation against a protected witness.
- VWWHFSfQ 6y agoThat's the whole point of the program.
- staticautomatic 6y agoI haven’t worked on an SEC case but your typical Federal whistleblower suit prosecuted by the DOJ remains under seal until the government decides whether to intervene (in the legal sense, meaning becoming a party to the case). I doubt a pre-intervention settlement would automatically unseal it, particularly if the settlement is confidential.
- dave_4_bagels 6y agoThis is encouraging, but I wonder how whistleblowers or BBB backed complaints haven't resulted in more federal / class-action suits against get-rich-quick scammers like Grant Cardone and Thai Lopez common on YouTube?
- deleted 6y ago[deleted]
- darkstar999 6y ago> BBB The Better Business Bureau is non-governmental and has no authority to do anything.
- timavr 6y agoWell, I don't think Grant and Thai are scammers from SEC point of view. They run marketing companies, selling books, lectures, online courses. They also have investment vehicles on the side, but they are pretty straight forward. SEC mostly will be fine if principals disclose the risks to investors in prospectus and do correct accounting. Companies mostly run intro trouble with SEC for issuing securities illegally, not complying with market reporting procedures, cooking books. We can open the company that teaches people how to live longer, based on some BS that we cooked up and charge 10k an hour. As long as in our prospectus we are clear, that there is no scientific evidence that our product does anything and we believe that our BS teachings help people to live longer, we should be good in SEC eyes.It will help to lawyer up when we are doing those prospectus, but I am pretty sure Grant and Thai lawyered up to their ears.
- stevespang 6y agoWell, the SEC is not the ultimate authority. In America, the accused has the right to confront their accuser(s). Any good defense lawyer would file a motion for discovery which would include a demand to reveal all regarding the snitch. The court decides how this information is handled - - not the SEC.
- ds 6y agoJust a FYI- You arent going to find any info on what case/fraud this has to do with. IIRC, the SEC announces these payments up to 24 (!) months from the original enforcement action, so that there is no real way to figure out which company was blown. I suppose if you want to, you could go back 2 years in time for every SEC enforcement and find all of them above 38m in penalties.
- deleted 6y ago[deleted]
- thinkloop 6y ago87% of Americans can be identified with just a birthdate, zip code and gender [1] - finding the company seems easy. [1] https://www.johndcook.com/blog/2018/12/07/simulating-zipcode-sex-birthdate/ https://www.johndcook.com/blog/2018/12/07/simulating-zipcode...
- deleted 6y ago[deleted]
- saagarjha 6y agoGood luck finding the company’s birthdate, ZIP code and gender.
- deleted 6y ago[deleted]
- TheSpiceIsLife 6y agoI'd imagine a private detective who specialises in securities fraud could probably work this out in a few hours if not minutes?
- tgb 6y agoReminds me of the whistleblower over academic fraud at Duke that received $33 million as a reward. I want these to be more widely publicized! https://www.npr.org/2019/03/25/706604033/duke-whistleblower-gets-more-than-33-million-in-research-fraud-settlement https://www.npr.org/2019/03/25/706604033/duke-whistleblower-...
- frandroid 6y ago> Thomas, a former Duke lab analyst, sued the university on behalf of the federal government You can do that?!?
- molsongolden 6y ago> “[...] a whistleblower who exposes fraud on the government may bring a qui tam lawsuit on behalf of the government and potentially receive a share of the recovery recovered by the government as a reward for bringing that action.” https://en.m.wikipedia.org/wiki/Qui_tam https://en.m.wikipedia.org/wiki/Qui_tam
- rahimnathwani 6y agoNot only that, the article says that he actually took it across the finish line: '"In many meritorious cases, the government decides to 'intervene' at that stage of the proceedings, basically taking over the lead of the case," lawyers for Thomas said. "But here, that never happened. This left Mr. Thomas and his lawyers at the point of the spear – going against a venerated academic institution with enormous resources." Thomas' attorneys, from the law firms Gentry Locke; Healy Hafemann Magee & Thomas; and Brooks Pierce, said that in the fallout from the case, Joseph Thomas was "vilified and suffered substantial personal hardships as he found himself out of work for over a year."'
- ColanR 6y ago> Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Interesting. I wonder if the whistleblower can be a third party that decided to investigate.
- thephyber 6y agobug bounties s/bug/fraud/
- dlgeek 6y agoAs Matt Levine likes to say, everything is Securities Fraud. Didn't disclose a risk factor in your SEC filings that your computer systems are potentially hackable? Well, a discovered vulnerability is Securities Fraud! (Though, usually that's for a shareholder lawsuit instead of an SEC enforcement action)
- RandomBacon 6y agoThe IRS has a Whistleblower Office that pays out rewards to those who blow the whistle on others who aren't paying taxes. Back in 2017 during the last crypto bubble, people were posting on reddit about cashing out and not paying taxes. Some of the accounts practiced zero opsec while claiming (and posting screenshots) of $500k+ sums. I imagine there will be more similar opportunities during the next crypto bubble if anyone is interested.
- nodesocket 6y agoI am a believer in karma and avoid mccarthyism style snitching on people. People who lie, cheat, and steal will get what’s coming to them. Mind your own world of influence.
- ves 6y agoWhy not be the agent of karma? Someone’s gotta do it, most likely.
- brutal_chaos_ 6y ago-most-likely- Apologies, how does one strike through?
- mkl 6y agoM̶a̶g̶i̶c̶ With a tool that inserts Unicode strike overlay characters (like U+0336, "combining long stroke overlay"). E.g. http://adamvarga.com/strike/ http://adamvarga.com/strike/ or https://yaytext.com/strike/ https://yaytext.com/strike/.
- RandomBacon 6y agoThe people who aren't paying their taxes are lying, cheating, and stealing. If they get reported on, then they got their karma. (I believe in a version of karma: crappy people are more likely to have crappy things happen to them because they put themselves in that position.)
- seebetter 6y agoI knew a libertarian activist who never paid taxes on $1 million+ earned over 5-years. He'd get giant letters from the IRS in the mail. Years later he got involved in crypto and promoted a $750 million scheme. Knowing he had issues with the IRS, he contacted them offering information on international money launderers. He flew to Florida and was arrested by the FBI. He's facing 20+ years.
- cjlars 6y agoA friend briefly held a job keeping the books for a penis pill company. They offered a money back guarantee, didn't honor it, and then, when the credit card companies locked their accounts for chargebacks, used a series of social security numbers from borderline mentally disabled "employees" to continue opening financial accounts to perpetuate the fraud. Her didn't blow the whistle because he "didn't want to be a snitch". Because of that, several additional innocent people had their credit ruined, and gullible consumers were taken for millions or perhaps tens of millions of dollars. I would really encourage anyone thinking of coming forward to do so. And I'd also encourage everyone else to celebrate the people who have come forward as witnesses.
- monksy 6y agoOh man. That's freaking terrible. I really don't like the idea of physical punishments for financial crimes. However, the people running that should be taken behind the shed.
- lxmorj 6y agoFinancial crimes can cause as much - or more harm than physical ones.
- gibolt 6y agoI really wish crimes not causing direct 'physical' harm were weighted appropriately. Execs and doctors driving the bulk of opioid deaths should absolutely be held accountable, especially for continuing after the outcome of their action was clear. Loan sharks, predatory colleges, quick eviction landlords, and so many other bad practices cause physical and mental stresses that destroy countless individuals' entire lives, and repeat.
- minerjoe 6y agoThis. I'm generally of the "it's the system, you can't blame the individuals" type of thinker, but truly, a few CEO's taken out back could truly help the situation. I would nominate the CEO of Merke and Monsanto, to start. Next in line would be the oil compainies such as Halliburton and ETP.
- ChuckMcM 6y agoI wonder if there is an AI application here if you have access to the full transaction log from the exchanges. Basically something that looks for series of trades that align with previously fraudulent trading patterns.
- ahupp 6y agoThe False Claims Act allows citizens to claim 15-30% of damages as a reward. It's a great incentive for tracking down misbehavior: https://en.wikipedia.org/wiki/False_Claims_Act https://en.wikipedia.org/wiki/False_Claims_Act
- WarOnPrivacy 6y agoWhistleblowers who out US Gov wrongdoing, get a different sort of reward from US Gov.
- quickthrower2 6y agoA lifetime of free food and board.
- saagarjha 6y agoDepending on the circumstances, that could be as cheap as a piece of rope or a couple of bullets.
- jmchuster 6y agoThe US govt netted $1.75 billion ($2.5 billion - $750 million returned to investors) from this scheme being exposed. How much money do they make when someone exposes US Govt wrongdoing?
- deleted 6y ago[deleted]
- WarOnPrivacy 6y agoShareholder-style thinking seems at odds with the purpose of government, as it's sole (appropriate) reason for existing is to serve the public.
- cosmodisk 6y agoWe need to pick our fights carefully...
- refurb 6y agoI've posted it before, but it's such a great story, I'm posting it again. If you're a drug company and you provide physicians financial incentives to use your drug that falls under the False Claims Act if Medicare/Medicaid are paying (there are some Safe Harbor areas, but not many). Same thing with charging the gov't the incorrect price (there are a ton of rules around what you can charge - the Medicaid Best Price rules are a good example). So anyways, this pharmacy down in the Florida Keys started to loss a lot of business back in the 80's. So the pharmacist started looking at what was driving that (he has visibility into both the pharmacy cost and the gov't reimbursement). Turns out drug companies were telling Medicaid the price was $X, but they were charging pharmacies $X*10% and the pharmacies pocketed the difference. That's a bit of a simplification as the price differential existed for a long time, but basically drug companies pushed it so far that they got the smack down. Ven-a-care launched a whistleblower lawsuit, the Federal gov't joined and they won, so Ven-a-care got a nice payout. Then they found another example and got another payout, then another and another. By 2011, they had received several hundred million in pay outs.[1] In 2013, they received a $597M payout.[2] Keep in mind this was a team of a few pharmacists and some lawyers. They basically turned whistleblowing into a business. They were even involved in the Epipen settlement in 2017.[3] I've never seen the total payouts they've received but it must be over $1B by now. [1]https://www.cnbc.com/2011/02/10/how-four-men-got-rich-exposing-pharma-fraud.html https://www.cnbc.com/2011/02/10/how-four-men-got-rich-exposi... [2]https://www.bloomberg.com/news/articles/2013-08-13/florida-pharmacists-win-597-million-blowing-whistle-on-scheme https://www.bloomberg.com/news/articles/2013-08-13/florida-p... [3]https://www.cnbc.com/2017/08/17/grassley-says-mylans-465m-epi-pen-settlement-shortchanges-taxpayers.html https://www.cnbc.com/2017/08/17/grassley-says-mylans-465m-ep...
- fermienrico 6y agoWe need more of this across the board, not just in SEC. Whistleblowers in corporations and in federal agencies throughout. And the justice department should pay handsome fees for taking the risk - one can just retire off of it. Kind of like Bug bounties but for corruption/illegal behavior. No one would trust anyone for partnering with corruption schemes and it would just die out.
- pldr1234 6y agoI'll admit, I'm super impressed with this system. It doesn't exist in my home country, whistleblowers are actually treated very poorly here. Whatever else you can say about the US, their whistleblower system absolutely is a great example of market incentives working for their public.
- WarOnPrivacy 6y agoIt depends on whose wrongdoing is getting outed. US Gov is fine when the whistle is getting blown on someone else. When US Gov's misdeeds get brought to light, it has no greater purpose than deploying revenge against the whisteblower. The last administration filed more espionage charges against whistleblowers than all previous administrations combined. https://slate.com/news-and-politics/2013/06/edward-snowden-is-eighth-person-obama-has-pursued-under-espionage-act.html https://slate.com/news-and-politics/2013/06/edward-snowden-i...
- drited 6y agoYou can get a list of these on the SEC website. Another recent one was in amount 27 million. Some pay a fraction of the fines awarded. Big numbers here particularly if the whistle-blower approaches it in the right way. I have a few ideas on that...