Background

Due to the financial crises over the past few years, the United States has turned a critical eye toward finding and punishing fraud arising from the financial sector, either from the misuse of TARP funds, or violations of SEC or CFTC regulations. To accomplish this, the government has offered substantial rewards and protections as an incentive for individuals with knowledge of financial fraud.

In return for information possibly leading to enforcement proceedings and monetary sanctions, the government provides whistleblowers with substantial financial rewards, confidentiality, and protections against employer retaliation.

• TARP Financial Fraud Qui Tam Cases
• SEC Financial Fraud Cases
• Commodity Futures Financial Fraud Cases
• Derivative Financial Fraud Cases

TARP Fund Abuse Whistleblowers

The Troubled Asset Relief Program (TARP) is a government program that sought to purchase “troubled assets” in an attempt to stabilize the U.S. economy. Since its inception in 2008, the program has grown to include banks, insurance companies, mutual fund and investment companies, and automakers and their related enterprises.

TARP fraud could range from material misrepresentations made to the government during the initial selection process to using the money contrary to the rules and regulations of the TARP agreement or regulations.

A typical agreement may include provisions that limit executive compensation, require reasonable efforts to control costs, or place controls on how the money is spent. Any monies spent contrary to these agreements or regulations may constitute fraud.

An individual with relevant knowledge of TARP fraud could be eligible for whistleblower status and all the rewards and protections available under the law.

Dodd-Frank Whistleblowers

On July 21, 2010, President Obama signed the Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The bill, in part, is meant to encourage whistleblowers to step forward in response to fraud within the U.S. financial sector.

Unlike TARP fraud, in which the government must be part of any violation, Dodd-Frank applies to violations of almost any law regulating securities, commodities, derivatives, or finance. Such fraud may include insider trading, Ponzi schemes, bribery, or violations of the Foreign Corrupt Practices Act (FCPA).

The Act creates incentives for relevant information about fraud in three different areas:

Securities

The Securities and Exchange Commission (SEC) is authorized to pay an award to any whistleblower who supplies relevant information to the agency about violations of SEC regulations. This includes assurances of confidentiality and protections against employer retaliation.

SEC enforcement authority applies to federal securities laws, the securities industry, U.S. stock and options exchanges, and other U.S. electronic securities markets. Considering the N.Y. Stock Exchange alone has a daily trading value of $153 billion, the potential for fraud is substantial.

Commodities

The Dodd-Frank Act also authorized the Commodities Futures Trading Commission (CFTC) with similar whistleblower authority as the SEC. The CFTC works to maintain open and fair markets for commodities and futures contracts.

This can involve nearly every type of business, including livestock, currency, energy, and insurance. The CFTC is also largely responsible for regulating and maintaining the derivatives market.

Derivatives

Prior to the passage of the Dodd-Frank Act, the derivatives market was largely unregulated. The Act gives the CFTC broad regulatory authority which includes not only swaps, but also options and other transactions based on market indices, commodities, rates, and financial interests.

The Act also gives the SEC authority over “security-based swaps,” which refer to a narrow subset of swaps related to individual securities or loans.

Whistleblower Rewards, Protections, and Benefits

Learn more about whistleblower rewards, confidentiality, and anti-retaliation protections available under the False Claims Act and related federal laws.

Results in Securities Fraud Cases

The Law Offices of David Berg has extensive involvement in prosecuting complex fraud and securities cases. The firm has represented individuals throughout the United States in qui tam cases against large multinational companies that have defrauded federal and state governments.

David Berg’s Securities Fraud Case Results:

• Led detailed investigation into sub-prime mortgages and derivatives for a $5 billion hedge fund.
• Lead counsel for 15,000 limited partners who sued Marriott Corporation for securities fraud.
• Negotiated a $425 million settlement, one of the largest involving real estate.
• Representation involving investigation of options backdating at a Fortune 500 company.
• Obtained a verdict worth $52 million for Robert Bass’s investment company.
• Co-lead counsel in one of the largest securities class actions in the nation’s history.

Contact The Law Offices of David Berg

If you have knowledge of securities, investment, or financial fraud, contact The Law Offices of David Berg for a confidential consultation.

Schedule a Consultation or call 713-529-5622.