Amateur Fraud Fighters Who Do the SEC’s Job For Them Can’t Be SEC Whistleblowers, Sorry

I dared to bring up the subject of whistleblowers yesterday, or rather fairly unlimited SEC "protection" for them, and got a pleasantly unexpected perspective when Phil’s Stock World reposted.

Better than the crap I put together at 1 in the morning, Ilene talked to criminal mastermind Sam Antar who chose not to blow the whistle when he was bullshitting his way through Crazy Eddie’s books and now discusses crime, fraud and of course corporate retaliation.

For another perspective on the Dodd Frank Act’s protection for whistleblowers, I asked Sam Antar what he thought, as we have previously spoken about corporate retaliation against critics. 

According Sam, "whistleblowers are legally protected but, in substance, big companies can still retaliate against them. Many whistleblowers will not have the financial resources to protect themselves against deep-pocketed large corporations which have the means to make their lives miserable by filing frivolous lawsuits and using other tactics. It’s a very nasty game that some of these companies play. Other tactics include firing the whistleblowers, pretexting and stalking the whistleblowers, including their family members." 

Sam has personally experienced this sort of behavior and can tell a number of corporate harassment horror stories. And, unfortunately, defending against retaliation can be very expensive. Thus, there’s a tension between these groups – the corporations and the whistleblowers – and the law tries to even the playing field.

That’s great but Sam and Ilene missed the part about this little rule not at all protecting "independent accountants" and others who would actually know about these frauds. It also exempts guys like Sam Antar, who now spend their days culling publicly available information on corrupt companies (like SEC filings when they actually get filed) and attempting to report "anomalies" to the very agency that receives said filings (when they actually get filed). So sorry, Sam, but your ass is on your own:

Information provided by a whistleblower is deemed original if it is based upon the whistleblower’s independent knowledge or analysis, is information unknown to the SEC, and is not derived exclusively from public sources. Examples of public sources include allegations in judicial or administrative hearings, government reports, audits, investigations, and news media (unless the whistleblower is the original source of such information). The proposed rules do not require the whistleblower to have direct firsthand knowledge, but rather allow a whistleblower to report information obtained through his experiences, observations, or communications (even if with third parties) as long as they do not violate other restrictions on independent knowledge. The proposed rules exclude the following as whistleblowers with independent knowledge: (i) persons who obtain information through independent financial audits required under securities laws; (ii) persons who obtain information through violations of federal or state law; (iii) persons who obtain information through legal representation—including attorneys and consulting experts that assist attorneys on client matters (unless permitted under SEC or state bar rules); and (iv) persons who obtain the information through an internal compliance program or investigation or people with legal, compliance, supervisory, or governance responsibilities in the company who obtain such information in the expectation the company will take appropriate action. (my highlighting)

The Center for Audit Quality was a tad "troubled" by these new rules from the SEC and we can’t blame them because so are we.

Especially after that whole business about the SEC talking about buying Treasurys in 2011 and using the "proceeds" to fund this "fund". No one else would go anywhere near such an obvious Ponzi scheme but since the SEC and the U.S. government are sort of the same thing, they’re probably totally OK with doing sketchy transactions amongst themselves like this.