Would-Be New York Whistleblowers: Your Patience May Be Rewarded

Big paydays could be coming soon.

Good read.

If you’ve got some dirt on your employer and you live in New York, you might want to keep it under your hat until the state green lights Attorney General Eric Schneiderman’s plan to make ratting out much, much more lucrative in the Empire State. That is, unless you’re barred from doing so by your company’s general counsel or a nondisclosure agreement. Then you might want to wait until the SEC gets around to banning that practice again.

Like the federal programs, the New York program would give tipsters awards of between 10% and 30% of the amount of penalties recovered if their information leads to an state enforcement action with sanctions of more than $1 million. The legislation would also protect financial-services tipsters from retaliation….

Federal authorities have often been limited in the amount they can offer whistleblowers in bank cases, as there is a $1.6 million cap on whistleblower payouts under the law the Justice Department has used to bring many recent bank cases.

Dodd-Frank regulations prohibit companies from interfering with employees reporting potential securities-law violations to the agency….

The agency has asked the firms to turn over every nondisclosure agreement, confidentiality agreement, severance agreement and settlement agreement they entered into with employees since Dodd-Frank went into effect, as well as documents related to corporate training on confidentiality, according to the letter and the people familiar with the matter. The agency letter viewed by the Journal also asked for “all documents that refer or relate to whistleblowing” and a list of terminated employees.

New York Attorney General to Propose New Whistleblower Bounty Program [WSJ Risk & Compliance Journal blog]
SEC Probes Companies’ Treatment of Whistleblowers [WSJ]


SEC Burns Whistleblower In The Most SEC Way Possible

In recent years, the Securities and Exchange Commission has had its share a fuck-ups come to light. The regulator took a pass on heeding the warning signals by Bernie Madoff himself that he was running a Ponzi scheme, it chose to go after David Einhorn rather than Allied Capital when the hedge fund manager suggested all was not right at the company, and yesterday, it was announced that the Commission is suing Egan-Jones for lying about having rated 150 ABS bonds on an SEC application four years ago (in reality it had rated zero), information that could have been fact-checked at the time but was not because there were new clips on www.ladyboyjuice.com, www.anal-sins.com, and www.fuck-my-wife.com to watch. Today the team scored a new victory when it outed an informant. Federal securities regulators, in a sensitive breach, inadvertently revealed the identity of a whistleblower during a probe of a firm that ran a stock trading platform. The gaffe by the Securities and Exchange Commission occurred during an investigation of Pipeline Trading Systems LLC when an SEC lawyer showed an executive who was being questioned a notebook from the whistleblower filled with jottings about trades, calls and meetings. The executive says he recognized the handwriting. Pipeline, which didn't admit or deny the allegations, was the subject of a page-one Wall Street Journal article earlier this month. The article didn't name the whistleblower, but he has now agreed to be publicly identified. He is Peter C. Earle, 41, a former employee of a Pipeline trading affiliate. Mr. Earle said he was "disappointed" the SEC took steps in its probe that ended up disclosing his identity to Pipeline. The SEC confirmed showing the notebook to an executive of the business it was investigating. SEC officials said there is always a risk a whistleblower's identity might be disclosed during an investigation, but its practice has been to avoid unnecessarily revealing an informant's identity. The person shown the notebook (in a November 2010 SEC interview), Gordon Henderson, was the head of Pipeline's trading affiliate, Milstream Strategy Group. He said in an interview that he previously suspected Mr. Earle was an SEC informant. Mr. Henderson's desk was near Mr. Earle's in Milstream's New York office, and he said he recognized Mr. Earle's handwriting in the notebook. Related: "Mr. Earle said he made other internal complaints about trading, and was fired on April 3, 2009. Mr. Henderson said the reasons for dismissal included poor performance and a belief Mr. Earle was having an affair with the wife of another Milstream trader at the time. Mr. Earle denied both allegations, calling the notion of poor performance 'ridiculous.'" Source's Cover Blown By SEC [SEC]