Dodd-Frank Whistleblowers Help Clean Up Our Markets

Honest investors in public markets—which one way or another refers to most Americans—expect the government to make sure traders and the very exchanges on which they trade are not breaking the rules to rip them off. Whether they know it or not, investors should also be thanking Dodd-Frank whistleblowers for playing a central role in policing both traders and exchanges.

In this era of trading dominated by high-frequency trading strategies that most investors scarcely comprehend, the government can’t play sheriff alone. Many abuses by market participants and financial exchanges have been difficult for the government to detect.

Complex market manipulation strategies are used by traders who are eager to fleece other market participants and exotic order types and other services selectively used by some exchanges have required whistleblowers to expose them to the light of day. Recent government enforcement efforts in these areas have been instigated and aided-and-abetted by expert outsiders. The independent work of these outsiders has helped the government build highly technical enforcement cases.

Shayne C. Stevenson, a partner at Hagens Berman LLP, is counsel to both SEC whistleblower Haim Bodek and the anonymous CFTC “Flash Crash” whistleblower.

About the Author

Since fighting against sweatshops and the exploitation of undocumented workers with the workers' rights organization he founded at the Yale Law School, Shayne has focused his legal career on prosecuting cases against individuals and businesses who victimize others by violence, deception and fraud.

read more »

Who's responsible for regulating Equifax?

When hackers broke into the credit reporting agency Equifax last year, they stole the Social Security numbers, birth dates, addresses and driver’s license numbers of over 140 million people. There was speculation that the Consumer Financial Protection Bureau would crack down on credit agencies and require better data handling. But this week, we found out that while there still might be consequences over the Equifax breach, they won't come from the CFPB. read more »

Petrofac investors warned after fraud inquiry is widened

Petrofac has warned investors that the Serious Fraud Office is deepening its investigation into alleged bribery, corruption and money laundering at the troubled oil services company.

Shares in the FTSE 250 business fell by 4.3 per cent yesterday after it said that more of its directors were expected to be questioned by the fraud agency, some of them under caution, and that the inquiry was now “wide ranging in time and scope”. read more »

Get Ready for Most Cryptocurrencies to Hit Zero, Goldman Says

The tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse, according to Goldman Sachs Group Inc.’s global head of investment research.

Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they’re replaced by a small set of future competitors, Goldman’s Steve Strongin said in a report dated Feb. 5. While he didn’t posit a timeframe for losses in existing coins, he said recent price swings indicated a bubble and that the tendency for different tokens to move in lockstep wasn’t rational for a “few-winners-take-most” market.

“The high correlation between the different cryptocurrencies worries me,” Strongin said. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.” read more »

New York Doctor Sentenced to 13 Years in Prison for Multi-Million Dollar Health Care Fraud

A New York surgeon who practiced at hospitals in Brooklyn and Long Island was sentenced today to 156  months in prison for his role in a scheme that involved the submission of millions of dollars in false and fraudulent claims to Medicare.

“Dr. Syed Ahmed treated Medicare like a personal piggy bank, stealing over $7.2 million by making fraudulent claims for medical procedures he never performed,” stated U.S. Attorney Donoghue.  “Dr. Ahmed will now pay the price for violating the trust that Medicare places in doctors.  His 13-year prison sentence and the heavy payments imposed should send a powerful message of deterrence to other medical professionals who would seek to defraud vital taxpayer-funded programs like Medicare for personal enrichment. read more »