| The Whistleblower Cash Cow |
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| Sunday, 15 August 2010 04:54 | |
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If you're ever tempted to think that you're making a wise investment, think again. There is no such thing as an investment, period, be it with a Wall Street broker or the real estate broker on Main Street. It's all speculation! That may sound like a bold assertion, but it's the premise of our bookThe Big Gamble: Are You Investing or Speculating? If you've never asked yourself that question, we invite you to read the book. But even for those who were hoodwinked into believing they were putting their money into something that was expected to reap favorable returns—you know, an "investment"—at the very least, you believed that the SEC was looking out for you—taking measures to insure that investment vehicles passed the smell test before being offered to the public. After horror stories like the Bernie Madoff scandal, we learned that in spite of all the warning alerts, the SEC was asleep at the wheel. Widespread corruption and the resulting financial meltdown finally led to the recent sweeping financial reform bill signed into law last month. And now the SEC is front and center. There is one key section of the bill that hasn't gotten much attention in the mass media yet. It's Section 748—Commodity Whistleblower Incentives and Protection. And it could reap big rewards for the whistleblower, and protect any future consumers who would have otherwise been at risk for big losses. What qualifies you, the whistleblower, for the reward? It's simple. Just provide the SEC with original information that leads to a successful enforcement case. The reward: The SEC will be required to reward you with up to 30 percent of any company payout over $1 million. One million dollars? That's small potatoes when you compare the numbers. For instance in December 2008, Siemens Corp. paid a settlement of $800 million to the U.S. government. This year Astra Zeneca settled for $520 million and in 2009, Pfizer Corp. paid a record $2.3 billion. The last two cases were a result of whistleblower testimony. Thirty percent of that? Do the math! It's no wonder the SEC is expecting a huge response. This could generate a surge in allegations against US-listed companies and Wall Street banks. The lure of seven-figure bounties is likely to boost the number of tip-offs from senior employees and third parties alike. Previously, many would-be informants were afraid to come forward for fear of ugly repercussions. But again, note the title of Section 748. In addition to the word, "Incentives," there is also that comforting word, "Protection." Naturally the SEC will have to staff up to handle the influx of reports, plus take the necessary time to weed out all the false allegations made by disgruntled and malicious employees. (It goes without saying that this to be a boon for all the corporate law firms, who'll be paid vast sums to fight tooth and nail to defend their clients.) But the bill has the potential to change the way Wall Street does business—which is exactly what the bill’s proponents in Congress are hoping for. It's also creates high profile expectations from the SEC and applies renewed pressure to perform. Will it actually reap good results? We don't know yet how this will play out, but if successful, it could serve to protect those who don't have the time or expertise to perform their own due diligence before doling out their hard-earned money. We're referring to those that don't fully understand that they are never investing—they are always speculating!The Big Gamble: Are You Investing or Speculating? |
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