Tuesday, July 27, 2010

Millionaire Whistle-Blower Program in Dodd-Frank Financial "Reform" Bill

Irony and cynicism are not lost, at least not to me.

Another gem has been unearthed from the Dodd-Frank (or Donk) bill of financial "reform", now a law of the land. CNBC reports:

The Hypocrisy of the Millionaire Whistle-Blower Program (7/27/2010 CNBC)

"Under a little noticed provision of the Dodd-Frank Wall Street reform bill, the government will pay bounties that could amount to millions of dollars to whistle-blowers who bring evidence of fraud to the Securities and Exchange Commission.

"The odd thing is that just a few years ago, similar payoffs in securities fraud cases were regularly occurring-but they were illegal.

"Four years ago, a grand jury indicted the Milberg Weiss law firm for making illegal payments to lead plaintiffs in numerous securities class action cases from 1981 to 2001. The firm had been paying a portion of its attorney's fees to the lead plaintiffs in the cases.

"The government alleged that this "kickback" created a conflict of interest between the lead plaintiffs and the rest of the class members, ultimately reducing the payout to the victims in the cases.

"The Milberg Weiss partners all pled guilty. Two of the partners went to jail.

"The new Dodd-Frank whistle-blower award will allow people who give information to the government to collect rewards that can amount to up to 30 percent of the recovery from the resulting SEC case. This will reduce the amount of money available for distribution to victims of the securities fraud-just as the Milberg Weiss kickbacks allegedly reduced the payouts to the victims in the class-action suits.

"One of the strongest justifications for outlawing kickbacks to lead plaintiffs in class actions is that the payments seemed to be part of the class-action extortion racket, in which plaintiff's lawyers would file class-action suits any time a company's stock dropped. Having a ready-made set of paid-off lead plaintiffs made this task all too easy." [The article continues.]

But now since the government will be making the kickback, I mean, "incentive" payment, why it will be all dandy. Extortion racket? What are you talking about? The government in the business of extortion racket? (Have you read Smedley Butler yet?)

This "incentive" payment immediately brought up in my mind the "incentive" payment that the US military made to people in Iraq and Afghanistan to supposedly ferret out "terrorists". And we know who those "terrorists" mostly turned out to be, don't we? Instead of "terrorists", we imprisoned farmers, goat herd, anyone, who were turned in by someone who needed money, who held some personal grudge against them.

Another sublime irony is the whistleblowing by Wikileaks. Wikileaks has disclosed what a racket and an uncontrollable mess the whole Afghan war waged by the US and its NATO allies has been. Instead of rewarding the whisleblower, the US government is going after them. Bradley Manning is locked up in Kuwait for his whistleblowing - disclosing the video of the US military in Iraq gleefully shooting the civilians.

This is getting too rich. Rat out a fraudulent bankster and be a millionaire! But don't you dare rat out the government, or you will get 50 years in jail!


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