Wall Street whistleblowers risk retaliation, regulator apathy
June 1, 2014 8:55 AM Subscribe
The personal price of exposing financial wrongdoing can be devastating. Report for The Financial Times by William D Cohan, including interviews with whistleblowers formerly employed at Lehman Brothers, Deutsche Bank and JPMorgan Chase.
Oops! I'm not sure what the FT is basing their access policy on, but I can read the article as an unregistered user from my location (Singapore).
posted by far flung at 9:08 AM on June 1, 2014
posted by far flung at 9:08 AM on June 1, 2014
I wonder how this is all going to shake out, obviously the Regulators have been captured, and thus corruption will eat away at this like termites, until a sudden collapse.... then the call for heads to roll.
Never forget that there is a meta-level evil above all this as well.... Derivatives.
posted by MikeWarot at 9:15 AM on June 1, 2014 [1 favorite]
Never forget that there is a meta-level evil above all this as well.... Derivatives.
posted by MikeWarot at 9:15 AM on June 1, 2014 [1 favorite]
Even with the government bounties, whistleblowers can still get screwed. This guy, for example. The SEC confirmed his complaint and levied a $300,000USD fine against his firm, but the whistleblower was awarded nothing since the fine did not exceed one million dollars. Of course, he was unceremoniously drummed out along with the wrongdoer for sketchy reasons.
If you're going to bother to have a whistleblower program with any teeth, you need rewards that are going to outweigh the fact that these people will never work in the industry again, regardless of the merits of their case.
posted by dr_dank at 9:20 AM on June 1, 2014 [6 favorites]
If you're going to bother to have a whistleblower program with any teeth, you need rewards that are going to outweigh the fact that these people will never work in the industry again, regardless of the merits of their case.
posted by dr_dank at 9:20 AM on June 1, 2014 [6 favorites]
blow the whistle anonymously. no fingerprints or dna on the envelope. you want to be over here when the shit hits the fan over there.
posted by bruce at 9:27 AM on June 1, 2014 [2 favorites]
posted by bruce at 9:27 AM on June 1, 2014 [2 favorites]
I wonder how this is all going to shake out, obviously the Regulators have been captured, and thus corruption will eat away at this like termites, until a sudden collapse.... then the call for heads to roll.
Didnt that already happen? And the answer was nothing. Nothing happened. Not to the responsible parties anyway, lots of collateral damage happened, millions out of work, careers and fortunes destroyed, on going depression level unemployment in Europe, etc, etc, etc. But nothing happened to the Masters of the Universe, because they own not only the entire regulatory structure, but also the entire government of most Western countries from top to bottom.
So the next collapse will come along, and we know the ending already. Nothing will happen, again. Except for maybe bailouts and tax cuts for the rich. And the further widespread suffering of the rump middle class, but that's a given.
posted by T.D. Strange at 9:30 AM on June 1, 2014 [14 favorites]
Didnt that already happen? And the answer was nothing. Nothing happened. Not to the responsible parties anyway, lots of collateral damage happened, millions out of work, careers and fortunes destroyed, on going depression level unemployment in Europe, etc, etc, etc. But nothing happened to the Masters of the Universe, because they own not only the entire regulatory structure, but also the entire government of most Western countries from top to bottom.
So the next collapse will come along, and we know the ending already. Nothing will happen, again. Except for maybe bailouts and tax cuts for the rich. And the further widespread suffering of the rump middle class, but that's a given.
posted by T.D. Strange at 9:30 AM on June 1, 2014 [14 favorites]
one more poignant note: the ubs (swiss bank) whistleblower got sent to club fed the same day president obama played a round of golf with the head of the bank. american leader express american values. i hope it was a bad round, they had trouble with slick greens, hazards, the rough, the out-of-bounds, balls going off their clubs like hot grounders never to be seen again, just as i did in the one round of golf i have ever played.
posted by bruce at 9:38 AM on June 1, 2014 [4 favorites]
posted by bruce at 9:38 AM on June 1, 2014 [4 favorites]
> And the answer was nothing.
That's because it's not just the regulators that have been captured; it's the entire government.
posted by I-Write-Essays at 9:38 AM on June 1, 2014
That's because it's not just the regulators that have been captured; it's the entire government.
posted by I-Write-Essays at 9:38 AM on June 1, 2014
one more poignant note: the ubs (swiss bank) whistleblower got sent to club fed the same day president obama played a round of golf with the head of the bank.
Birkenfeld was a criminal who abetted tax evasion by US taxpayers. He knew about the evasion because he was a participant. The Feds cut a deal with him and recommended leinency. The judge sentenced him well north of where the government recommended. Upon release, the IRS awarded him $104,000,000. Sounds like things happened the way they were supposed to.
Cases like this are often described in flaming terms and readers are enticed to look at them in black and white and not look into the factual complexity of the cases or the law that controls such awards.
posted by Ironmouth at 9:54 AM on June 1, 2014 [6 favorites]
Birkenfeld was a criminal who abetted tax evasion by US taxpayers. He knew about the evasion because he was a participant. The Feds cut a deal with him and recommended leinency. The judge sentenced him well north of where the government recommended. Upon release, the IRS awarded him $104,000,000. Sounds like things happened the way they were supposed to.
Cases like this are often described in flaming terms and readers are enticed to look at them in black and white and not look into the factual complexity of the cases or the law that controls such awards.
posted by Ironmouth at 9:54 AM on June 1, 2014 [6 favorites]
Birkenfeld was a criminal who abetted tax evasion by US taxpayers. He knew about the evasion because he was a participant.
That's a cute short summary, but it leaves out the fact that Birkenfeld approached the DOJ himself after getting nowhere with UBS, that the DOJ refused to subpoena him so he could avoid penalties for violating Swiss bank secrecy laws, and that the head of the National Whistleblowers Center, among many other groups, denounced the prosecution as stupid and counter-productive.
The Feds cut a deal with him and recommended leinency.
The prosecution calling for 30 months in prison instead of the 40 he got is not exactly what I'd call significant leniency. It's absurd to look at this case and flatly claim the way the DOJ handled this case was "things happening the way they were supposed to."
posted by mediareport at 10:15 AM on June 1, 2014 [8 favorites]
That's a cute short summary, but it leaves out the fact that Birkenfeld approached the DOJ himself after getting nowhere with UBS, that the DOJ refused to subpoena him so he could avoid penalties for violating Swiss bank secrecy laws, and that the head of the National Whistleblowers Center, among many other groups, denounced the prosecution as stupid and counter-productive.
The Feds cut a deal with him and recommended leinency.
The prosecution calling for 30 months in prison instead of the 40 he got is not exactly what I'd call significant leniency. It's absurd to look at this case and flatly claim the way the DOJ handled this case was "things happening the way they were supposed to."
posted by mediareport at 10:15 AM on June 1, 2014 [8 favorites]
Five Terrible Things I Leared as a Corporate Whistleblower (Cracked link).
posted by dirigibleman at 10:18 AM on June 1, 2014 [7 favorites]
posted by dirigibleman at 10:18 AM on June 1, 2014 [7 favorites]
Just adding that Birkenfeld was clearly no angel; his client had been raided by the IRS, he was looking to UBS for assurances, didn't get them, and then decided to blow the whistle. Many folks still believe the prosecution was ill-advised and specific elements of it particularly noxious.
posted by mediareport at 10:43 AM on June 1, 2014
posted by mediareport at 10:43 AM on June 1, 2014
Didn't he go whistleblower because he thought he was going to get caught?
posted by JPD at 10:47 AM on June 1, 2014
posted by JPD at 10:47 AM on June 1, 2014
Yes, he was deeply involved when he contacted the DOJ with tons of incriminating documents.
posted by mediareport at 11:13 AM on June 1, 2014
posted by mediareport at 11:13 AM on June 1, 2014
Lawyer here (ex-practicing). In my experience this sort of thing tends to result from banality-of-evil type stuff rather than mustache-twirling. People have uncanny ways of gerrymandering their own personal ethical code around whatever it is they happen to be doing. The portion of the first article that talks about Lehman's reliance on its outside counsel's "tortured" analysis is particularly instructive. I suspect that the Lehman folks really and truly thought they were playing within the rules.
posted by eugenen at 11:30 AM on June 1, 2014 [3 favorites]
posted by eugenen at 11:30 AM on June 1, 2014 [3 favorites]
whistleblower is a polite word for informer just like "club fed" is a polite way of saying federal minimum security prison. informers only have good information if they are involved...
but with financial crimes it's like volunteering to be the one bad apple.
posted by ennui.bz at 12:38 PM on June 1, 2014 [1 favorite]
but with financial crimes it's like volunteering to be the one bad apple.
posted by ennui.bz at 12:38 PM on June 1, 2014 [1 favorite]
It's interesting that the article mentions Eliot Spitzer's title as the "Sheriff of Wall Street." I never really thought about the fact his scandal-fuelled resignation occurred in early 2008. Even better, North Fork Bank is the one who reported his suspicious financial behavior shortly before rebranding as Capital One.
I'm not mentioning this for conspiracy theory's sake, rather to show how effective it is to damage someone's reputation instead of addressing the information that was brought to light. It's the ultimate ad hominem attack. Just look... half of this thread is about whether or not Birkenfield (as opposed to anyone else at UBS) is really a Bad Guy.
posted by Johann Georg Faust at 5:21 PM on June 1, 2014 [2 favorites]
I'm not mentioning this for conspiracy theory's sake, rather to show how effective it is to damage someone's reputation instead of addressing the information that was brought to light. It's the ultimate ad hominem attack. Just look... half of this thread is about whether or not Birkenfield (as opposed to anyone else at UBS) is really a Bad Guy.
posted by Johann Georg Faust at 5:21 PM on June 1, 2014 [2 favorites]
The prosecution calling for 30 months in prison instead of the 40 he got is not exactly what I'd call significant leniency. It's absurd to look at this case and flatly claim the way the DOJ handled this case was "things happening the way they were supposed to."
I think 30 months is just fine for a criminal who turned state's evidence. He's a criminal. He could have quit the first moment he was asked to do something he thought was illegal. He did not.
I'm not mentioning this for conspiracy theory's sake, rather to show how effective it is to damage someone's reputation instead of addressing the information that was brought to light. It's the ultimate ad hominem attack. Just look... half of this thread is about whether or not Birkenfield (as opposed to anyone else at UBS) is really a Bad Guy.
The argument presented in the post is that the government is not doing enough in rewarding whistleblowers. An example presented was Mr. Birkenfield. Many important details in that example were left out, such as the fact that he engaged in criminal activity to help rich people evade taxes for a giant bank. I believed those facts were important to show how, at least in Mr. Birkenfeld's case, the response of the government appeared to me to be appropriate, with a recommendation for a 2 1/2 year sentence for his crimes rather than a larger one. Other facts were not included, including the fact that the Government does not set sentence, a judge does and the judge can disagree. Also the fact that days after he was released, Mr. Birkenfeld was given a large award for his whistleblowing, an award the size of a lottery win.
Other facts were presented to make the government look bad, one's that had nothing to do with the case--specifically that President Obama played golf with UBS' head on the day of Mr. Birkenfeld's release. This is stupid. First, President Obama does not make individual prosecution decisions in these cases. He does not have time to deal with them. Second, the fact that Birkenfeld was released the day the President happened to have played golf with a UBS senior employee (we are not given the name or office, just "head"), is pure coincidence. Third, it is mind-numbingly dumb that the President is supposed to never meet with the head of the world's largest banking entity because of one single charge, to which UBS plead guilty. There is nothing dumber than playing the old conservative game of gotcha like that. None of these issues have nothing to do with the question of prosecution or of whistleblower rewards.
These are complex issues, not easily dealt with in a two-sentence answer.
posted by Ironmouth at 9:41 AM on June 2, 2014 [1 favorite]
I think 30 months is just fine for a criminal who turned state's evidence. He's a criminal. He could have quit the first moment he was asked to do something he thought was illegal. He did not.
I'm not mentioning this for conspiracy theory's sake, rather to show how effective it is to damage someone's reputation instead of addressing the information that was brought to light. It's the ultimate ad hominem attack. Just look... half of this thread is about whether or not Birkenfield (as opposed to anyone else at UBS) is really a Bad Guy.
The argument presented in the post is that the government is not doing enough in rewarding whistleblowers. An example presented was Mr. Birkenfield. Many important details in that example were left out, such as the fact that he engaged in criminal activity to help rich people evade taxes for a giant bank. I believed those facts were important to show how, at least in Mr. Birkenfeld's case, the response of the government appeared to me to be appropriate, with a recommendation for a 2 1/2 year sentence for his crimes rather than a larger one. Other facts were not included, including the fact that the Government does not set sentence, a judge does and the judge can disagree. Also the fact that days after he was released, Mr. Birkenfeld was given a large award for his whistleblowing, an award the size of a lottery win.
Other facts were presented to make the government look bad, one's that had nothing to do with the case--specifically that President Obama played golf with UBS' head on the day of Mr. Birkenfeld's release. This is stupid. First, President Obama does not make individual prosecution decisions in these cases. He does not have time to deal with them. Second, the fact that Birkenfeld was released the day the President happened to have played golf with a UBS senior employee (we are not given the name or office, just "head"), is pure coincidence. Third, it is mind-numbingly dumb that the President is supposed to never meet with the head of the world's largest banking entity because of one single charge, to which UBS plead guilty. There is nothing dumber than playing the old conservative game of gotcha like that. None of these issues have nothing to do with the question of prosecution or of whistleblower rewards.
These are complex issues, not easily dealt with in a two-sentence answer.
posted by Ironmouth at 9:41 AM on June 2, 2014 [1 favorite]
« Older WWDC 2014: Buttons so different you won't want to... | "If you can read this, I have cancer again." Newer »
This thread has been archived and is closed to new comments
posted by 1adam12 at 9:00 AM on June 1, 2014