Merrill Lynch Whistleblowers Who Sold Clients Notes That Lost 95% And Then Moved To UBS Took Out Some Insurance First (Recorded Incriminating Calls With A Superior)

Consider taking a page from Mark Manion and Glen Rinwall's playbook.
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By Bank of America Corporation (Merryl Lynch Wealth Management) [CC BY-SA 4.0], via Wikimedia Commons

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Have you recently sold a product to clients that basically lost all of its value? Do you want to do something to help your investors but have received some pushback from management? Consider taking the following steps:

  • Get your boss on the phone and get him talking about how he knows the investment is a real dog but doesn't want to make a big deal of it; have a recording device secretly running the whole time
  • Secure a gig at another bank
  • Once you've settled in at the new shop, file a whistleblower complaint against your former employer
  • Profit!

The Securities and Exchange Commission is preparing a civil enforcement case against Merrill Lynch over an investment that fell as much as 95% in value and was marketed in a way that one of the firm’s financial advisers called “borderline crooked,” people close to the probe said...With clients complaining after the value of the notes plunged, the brokers secretly taped calls with executives at Merrill, left the firm for rival UBS Group AG and then filed a whistleblower complaint over the notes with the SEC...so-called roll costs averaged about 12% of the principal per quarter in the first half of 2011, before falling to an average of less than 4% per quarter in the second half of the year, according to Merrill. In the calls, the brokers allege they were never told the costs could grow so large...The advisers were told on the calls not to suggest to their clients the product was flawed. “What you’d love to do is avoid customer complaint,” Mark Ryan, a manager at the firm, told Messrs. Ringwall and Manion. “We can’t just tell everyone, ‘Hey this is a defective product.’”

In making your recordings, something like "Hey this is a defective product" would be ideal, but some variation is expected. Follow all these steps and you'll 1. Ingratiate yourself to your clients, helpfully directing their anger exclusively toward higher-ups ("...investors say in [Finra] claims that they aren’t complaining about the conduct of Messrs. Ringwall and Manion, who sold them the notes") and 2. Maybe see a little extra cash thrown your way at the end of all this.

The advisers can claim a reward if their tip leads the SEC to bring a case against Merrill and impose sanctions of more than $1 million.

SEC Readies Case Against Merrill Lynch Over Notes That Lost 95% [WSJ]

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UBS Whistleblower's $104 Million Award Poses Interesting Conundrum For Would-Be Snitches

Remember Bradley Birkenfeld? He's the guy who single-handedly made the U.S. government’s case against UBS and forced the Swiss bank to hand over the names of thousands of tax cheats, which resulted in the US scoring $780 million from UBS and may have inspired some 33,000 Americans to "voluntarily disclose offshore accounts to the IRS, generating more than $5 billion." And yet, despite his assistance, Birkenfeld wasn't immediately thanked for a job well done. Instead, he was sentenced to forty months in prison (fair-ish, considering he showed a few clients how to avoid paying taxes himself) and told to piss off by the Internal Revenue Service, from whom he sought an award, because he was "not forthcoming about his own role in the scheme," even as a Justice Department attorney admitted that "...without Mr. Birkenfeld walking into the door of the Department of Justice in the summer of 2007, I doubt as of today that this massive fraud would have been discovered by the US government" (or as his lawyer put it, "They didn't know how to spell UBS until he showed up. He didn't just give them a piece of the puzzle. He gave them the entire puzzle"). Now, after doing 32 months at Schuylkill Federal Correctional Institution, getting let out early on account of "good-time credit," and living in a halfway house in New Hampshire, Birkenfeld has finally been thrown a bone. Bradley Birkenfeld, the former UBS AG banker who told the Internal Revenue Service how the bank helped thousands of Americans evade taxes, secured an IRS award of $104 million, an amount his lawyers said may be the largest ever for a U.S. whistle-blower. Birkenfeld told authorities how UBS bankers came to the U.S. to woo rich Americans, managed $20 billion of their assets, and helped them cheat the IRS. He pleaded guilty to conspiracy in 2008, a year after reporting the bank’s conduct to the Justice Department, U.S. Senate, IRS and Securities and Exchange Commission. He was released from prison Aug. 1...Birkenfeld, 47, worked at Zurich-based UBS, the largest Swiss bank, for five years. He sought a reward from the IRS of as much as 30 percent of any taxes the agency recovered as a result of his whistle-blowing activities. Clearly this whole thing should stir up a few questions inside you all, chief among them: how much money would it take to get you to befriend or get yourself employed with some rogue people so you can blow the whistle on them? Would you do any time for it? If so, how much? And are we talking Club Fed or a place where your roommate spoons you every night? UBS Whistle-Blower Secures $104 Million Award From IRS [Bloomberg]

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]