Wednesday, May 25, 2011

Let us help you protect yourself from us

Businesses criticize whistleblower reward plan
The government already pays bounties to whistleblowers for exposing fraud, from tax evasion to Medicare scams and Pentagon procurement abuses.

As part of an overhaul of financial regulation, Congress and President Obama last year demanded a formal reward system at the SEC, which polices Wall Street and punishes fraud against investors. Under the Wall Street regulatory overhaul known as the Dodd-Frank Act, whistleblowers are entitled to rewards of 10 percent to 30 percent of the money they help the SEC recoup through enforcement actions.

The Securities and Exchange Commission is scheduled to vote Wednesday on a far-reaching proposal to combat corporate wrongdoing by paying private employees to join the fight. The bounties could give tipsters a powerful incentive to expose the kind of abuses that have cost investors dearly, from the Enron and WorldCom accounting frauds of a decade ago to the Fannie Mae and Freddie Mac scandals of later years and alleged misrepresentations involving toxic mortgages.

Some business groups have said they are worried that the SEC could be overwhelmed with tips. They say they want to ease the burden on regulators by screening the complaints.

“Companies are far better equipped to assess complaints in the context of their particular business and to ‘separate the wheat from the chaff,’ ” two major Wall Street groups, the Financial Services Roundtable and the American Bankers Association, said in a December letter to the SEC.

The article includes mention of many of the pushbacks wanted by industry, which, on the whole, strip the regulations of most efficacy, in Guambat's opinion.

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