The SEC Undermined a Powerful Weapon Against White-Collar Crime

“In a quiet vote on Sept. 23, the Republican-dominated SEC adopted amendments that could allow it to lower payments to whistleblowers. Its argument is that awards should only be as large as necessary to prompt people to come forward, and excessively high payouts might be better spent on other priorities.

Advocates say that may dissuade whistleblowers, insulating the biggest Wall Street banks and investment firms, which are typically subject to the largest fines and whose wrongdoing is often the most difficult to spot without help from highly paid insiders.

The SEC’s shift may exacerbate the effects of the Trump administration’s blitz of deregulation of the financial services industry, advocates fear. With weaker incentives to report fraud, regulators may have fewer allies as they monitor markets for the kind of bad behavior that can follow such loosening of rules.”

” The SEC declined to comment. Defenders of the SEC’s action point out that the rule also contained some provisions that are good for whistleblowers, such as the ability to more quickly dismiss frivolous complaints that gum up the system and a new presumption that whistleblowers who help the commission attain settlements worth less than $5 million should get the maximum allowable award. Also, fiscal year 2020 saw the highest payouts in the program’s history and the most claims processed overall.”

“The commission weakened the law in other ways, too, making it harder for whistleblowers to get a bounty if they did not have inside information but instead provided analysis that SEC staff members could plausibly have inferred on their own — even if the staff hadn’t done so.”

“The financial adviser who blew the whistle on his firm says the new rules will surely dissuade some insiders at his level from stepping forward.

“If these guys decide they want to lower their awards, they’re going to get $200,000 employees taking a shot, and that’s about it,” he said. “The only people who know stuff are the people who are at the top.””

““I appreciate the fact that the average guy on the street can’t comprehend these numbers,” he said. “That it would be offensive to a normal human being making normal money. Lots of people on Wall Street make $100 million every 10 years. They’re not risking that for a million bucks.””

Federal watchdog says “substantial likelihood of wrongdoing” at US broadcasting agency

“In letters to 11 whistleblowers on Wednesday night, the US Office of Special Counsel (OSC) — an investigative and prosecutorial government body — revealed that it had found “a substantial likelihood of wrongdoing” at the USAGM, which oversees four media organizations: Voice of America, Middle East Broadcasting, Radio Free Asia, and Radio Free Europe/Radio Liberty.

With help from the Government Accountability Project (GAP), which represents more than 20 current and former staffers at the USAGM, 11 whistleblowers sent specific complaints to the OSC over the last few months.

They included allegations that USAGM leadership “repeatedly violated the Voice of America (VOA) firewall” and “engaged in gross mismanagement and abuse of authority.” Further, the whistleblowers claimed leadership “pressured career staff to illegally repurpose … congressionally appropriated funds and programs without notifying Congress.”

On Wednesday evening, the OSC replied to these and other allegations, noting that what the whistleblowers alleged seemed to be true.

“OSC has found a substantial likelihood of wrongdoing based on the information you submitted in support of your allegations,” wrote Karen Tanenbaum, an attorney with OSC’s Retaliation and Disclosure Unit.

However, OSC gives any offending agency — in this case, UASGM — 60 days to conduct its own probe and respond to the complaints. It’s not until that investigation ends that OSC makes a final determination.”

Congress flummoxed by firing of top intel watchdog

“Trump has defended the firing, telling reporters on Saturday during a White House coronavirus task force briefing that the longtime public official was a “total disgrace” for the way he handled a whistleblower complaint that led to the president’s impeachment.”

“Meanwhile, Atkinson released a lengthy statement Sunday night about his firing, asserting that Trump removed him simply for doing his job.
“It is hard not to think that the president’s loss of confidence in me derives from my having faithfully discharged my legal obligations as an independent and impartial Inspector General,” Atkinson wrote.

Democrats have condemned the firing as an abuse of power and a brazen act of politically motivated retribution by a president emboldened after the Senate acquitted him in his impeachment trial. Republicans have been tepid in their criticism of the action, but some, including Sen. Chuck Grassley of Iowa, said the firing “demands an explanation,” while others largely deferred to the president’s unorthodox leadership style.”