States Eye New York Whistle-Blower Law as Tax Fraud Tool

State lawmakers and tax administrators are taking a closer look at enacting whistle-blower statutes as a strategy for prosecuting big-ticket incidents of tax fraud and scooping revenue into state coffers.

At least four jurisdictions—Arkansas, Michigan, Pennsylvania and the District of Columbia—are considering legislation that would add tax code violations to the list of actionable frauds to come under the umbrella of their false claims acts (FCAs). In addition, Illinois is considering revisions to its law as it pertains to tax violations.

OPKO's BioReference unit faces U.S. false claims probe

OPKO Health Inc has disclosed that its clinical laboratory unit BioReference Laboratories is under investigation for improperly billing the federal government for services for patients at certain hospitals.

OPKO Health, a Miami-based pharmaceutical and diagnostics company, said in a securities filing on Tuesday that the U.S. Attorney's Office in Manhattan informed BioReference last month that it believed the company violated the False Claims Act. read more »

SEC Charges CEO With Failing to Disclose Perks to Shareholders

Public companies must properly disclose perks, benefits, and other forms of compensation paid to CEOs and certain other highly compensated executive officers.  The Securities and Exchange Commission today announced that the former CEO of a marketing company has agreed to pay $5.5 million to settle charges that his perks were not properly disclosed to shareholders.

According to the SEC’s order, shareholders were informed in annual filings that Miles S. Nadal received an annual perquisite allowance of $500,000 in addition to other benefits as the chairman and CEO of MDC Partners.  But the SEC’s investigation found that without disclosing information to investors as required, MDC Partners paid for Nadal’s personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery, and a wide range of other perks.  All total, Nadal improperly obtained an additional $11.285 million in perks beyond his disclosed benefits and $500,000 annual allowances.  He has since resigned and returned $11.285 million to the company. read more »

Barclays C.E.O. Apologizes for Handling of Whistle-Blower Complaint

Barclays shareholders vented their frustrations with James E. Staley, the British bank’s chief executive, on Wednesday after he was caught up in a regulatory inquiry last month over his treatment of a whistle-blower complaint.

At the bank’s annual meeting in London, one shareholder called for Mr. Staley to step down from the stage — John McFarlane, the Barclays chairman, declined the request — and another later asked for Mr. Staley to resign immediately.

On Wednesday, Mr. Staley offered another in a series of public apologies for his actions.

“I feel it is important that I acknowledge to you — our shareholders — that I made a mistake in becoming involved in an issue which I should have left to the business to deal with,” Mr. Staley told investors on Wednesday. “I have apologized to the board, and I would today like to apologize to you as well, for that error.” read more »

Hedge Funds Are Facing a U.S. Criminal Probe Over Bond Valuations

U.S. prosecutors are investigating one of Wall Street’s darkest markets, focusing on hedge funds suspected of inflating the value of debt securities in their portfolios to juice the fees they collect.

Having prosecuted traders who lied to customers about bond prices, the government is now scrutinizing hedge funds that allegedly solicited bogus price quotes from brokers, according to three people familiar with the matter who asked not to be identified. Such a practice would have enabled the funds to pump up the value of illiquid securities on their books.

The incentive to manipulate valuations has become more pronounced as investors have abandoned hedge funds because of poor returns and high fees. Assets managed by hedge funds declined last year for the first time since the financial crisis, with investors yanking more than $70 billion, according to Hedge Fund Research Inc. The opacity of certain parts of the debt market, with illiquid, sometimes distressed securities, had made it a prime target for deception because of the difficulty of determining prices. read more »