When it comes to securities fraud, 2009 was either the best of times or the worst. Both arguments are made in the statistics.
Last year, the
-- Sought 71 temporary restraining orders to halt misconduct and prevent further harm to investors. That was up 82 percent from 2008.
-- Doubled the number of formal investigations of securities violations.
-- Ordered wrongdoers to disgorge some
-- Asked courts for 82 asset freezes to preserve money owed to victimized investors, up 78 percent from the year before.
For
What's not so positive is that the numbers also reflect that millions of investors lost billions of dollars before the crooks were caught. As the
That has Khuzami pursuing a new tack. Last month he kicked off a whistle-blower initiative intended to catch the crooks red-handed -- hopefully before they've done too much damage and when they still have assets to seize. He's also pressing for legislation that would provide big economic incentives for securities tattletales.
The
The program includes "cooperation agreements," which promise that the
Also, Khuzami has lent his support to a legislative effort to add whistle-blower payments and protections to U.S. securities laws.
If the proposal becomes law, someone who provided pivotal information that allowed regulators to catch a felon such as Madoff could collect up to 30 percent of the amount regulators later recovered from the scam as a reward.
A similar provision was added to tax laws four years ago, and the
Both laws are modeled after the nation's False Claims Act, says
"Whistle-blower laws provide a powerful incentive for people to come forward," Kohn said. "The U.S. government has collected billions and billions of dollars as the result of the False Claims Act."
Khuzami considers the
"People who engage in a lot of white-collar crimes are often planning their defenses at the same time as they are planning their offense," Khuzami said.
People who illegally trade based on nonpublic information, for example, often collect research reports in advance to create a paper trail that would indicate they bought the stocks for valid and public reasons, he added.
"To strip that away and expose it for (the fabricated alibi) that it is is much easier with an insider," Khuzami said. "When an insider can tell a jury what happened and how it's really powerful."
However, the success of Khuzami's new whistle-blower effort may well rest on the shoulders of
Birkenfeld's supporters say that his prison term will discourage whistle-blowers everywhere from stepping forward, and they are seeking a presidential pardon for him. They say that in return for his extraordinary cooperation with the government, Birkenfeld remains the only banker involved in the largest illegal tax scheme in history to receive a long prison sentence.
"Being a whistle-blower is never easy," Kohn said.
"They never treated him as a whistle-blower, and it's probably going to cost the government billions of dollars because the Swiss are now refusing to cooperate," he said. "Birkenfeld has had a chilling effect on whistle-blowers."
Khuzami had no role in the Birkenfeld case, but the
"Cooperators' testimony allows us to act more quickly -- find out where the bank accounts are located and increase our chance of returning more money to investors," he said. "And the earlier you shut down a case, the less victims there are. Tomorrow's victims will not materialize."
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The concept 'good as gold' is polished to a fine shine from time to time by negative factors such as volatile currencies, weak financial markets, bank failures and instability due to political, economic and financial unrest. Historically considered a safe haven, gold's performance in recent years has benefitted from all those forms of global financial pestilence
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Rather than waste your time with useless lists, I'll emphasize timeless investment principles for 2010 and beyond. But I can hear you now. You also want specifics, not just concepts. I'll give you specifics, too.
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Despite federal spending consuming 27.2 percent of GDP, the United States maintains a Aaa rating. But you can't say the same about many countries in both the developed and developing world where continued fallout from the economic crisis is hurting their credit ratings. As a result, investors have viewed the economic situations in these countries as increasingly risky bets.
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SEC Enforcement Chief Wants to Catch Investment Scammers in the Act
(c) 2010 Kathy Kristof