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The Morning Risk Report: Bernie Madoff’s Legacy—Whistleblower Inc. |
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Bernard Madoff in March 2009. Later that year, he would be sentenced to 150 years in prison for operating a long-running Ponzi scheme. PHOTO: JIN LEE/BLOOMBERG NEWS
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Ten years ago, Bernard Madoff’s multibillion-dollar Ponzi scheme, one of the biggest frauds in U.S. history, shocked the financial world. It soon emerged that a forensic accountant, Harry Markopolos, had been alerting regulators for years, but no one listened. At Mr. Markopolos’s urging, the Securities and Exchange Commission created a cash-for-tips program, designed to encourage reports of financial wrongdoing and prevent the lapses in oversight that gave Mr. Madoff free rein.
Today, an entire industry is devoted to surfacing tips from company insiders and expert analysts who scrutinize corporate filings. Whistleblower Inc. is the most tangible consequence of the Madoff scandal a decade after the money manager’s Dec. 11, 2008 arrest. At the center of this new ecosystem stands the Securities and Exchange Commission’s Office of the Whistleblower, which has paid more than $326 million to 59 whistleblowers in seven years
[Continued below...]
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The existence of the program has already changed corporate behavior, says Dick Walker, a former SEC enforcement director now at King & Spalding LLP. Firms have to move faster to probe problems because they know the SEC may soon hear about them from a whistleblower, he added.
Mr. Walker said the program also had an obvious downside for big banks such as Deutsche Bank, where he worked as global general counsel for a decade. Some employees who faced tough internal reviews, or even termination over their performance, could claim to be whistleblowers, he said. “Becoming a whistleblower puts sand in the gears,” Mr. Walker said.
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| From Risk & Compliance Journal |
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Officials Who Take Bribes Face Few Penalties, Study Finds |
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Public officials who accepted bribes from companies based in the wealthiest countries were unlikely to be punished, according to a new report by the Organization for Economic Cooperation and Development.
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Google CEO Faces Lawmakers Skeptical Over Privacy, Alleged Bias |
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Google Chief Executive Sundar Pichai deflected questions about anti-conservative bias on the world’s largest search engine as he made a long-awaited first public appearance before lawmakers who have grown increasingly skeptical of Silicon Valley.
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Hain Celestial Settles SEC Charges for Internal Control
Failures |
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Hain Celestial Group Inc. has settled charges brought by the U.S. Securities and Exchange Commission over its revenue recognition practices, which had led to several quarters of delayed financial reports.
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MiMedx Called on Lawmakers for Help Before Its Accounting
Scandal |
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MiMedx Group, a maker of tissue-graft products, called on two influential lawmakers for help. Now the actions of the lawmakers could prove embarrassing as MiMedx faces possible collapse amid a burgeoning accounting scandal and multiple federal investigations.
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Unpublished Report Found Campus Banks Cashing In on High
Fees |
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Consumer Financial Protection Bureau analysis of fees associated with college students’ bank accounts found Wells Fargo & Co. products were the most expensive, and fees were higher for accounts where banks paid colleges to market their products.
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Americans Were Scammed on Tropical Real Estate, FTC
Says |
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The Federal Trade Commission filed suit last month against the developers and Belize’s Atlantic International Bank, alleging it facilitated the alleged fraud. The incident marked the first time the FTC sued a foreign bank. Through a court order, the FTC froze $10 million of the bank’s assets. Additionally, in a rare move for a civil matter, a federal court in Maryland froze the passports and assets of four defendants who live in California.
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China Agrees to Reduce Tariffs on U.S. Autos |
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China agreed to reduce tariffs on U.S. autos to 15%, down from 40%, during a phone call with U.S. officials that opened the latest round of trade talks aimed at settling a trade dispute between two major economic powers.
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Theresa May to Face No-Confidence Vote Amid Brexit
Disarray |
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British Prime Minister Theresa May is set to face a vote of confidence Wednesday after rebel lawmakers from her own Conservative Party triggered a vote that could further destabilize the already chaotic Brexit process.
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Super Micro Finds No Malicious Hardware in Motherboards |
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NSA Cyber Chief Says Companies Are Losing Ground |
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Huawei’s Top Customer in Japan Reassesses Ties |
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SoftBank Group Corp. is assessing the impact of eliminating less-expensive Huawei Technologies Co. gear from its Japanese network following a U.S. campaign to restrict the Chinese company’s business with allies.
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Nissan-Renault Scandal Shows It’s Hard to Keep Alliances On Track |
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The white-hot tensions between Nissan Motor Co. and Renault SA following the arrest of longtime alliance leader Carlos Ghosn show that it has never been easy for the global auto industry to pull off mergers and partnerships.
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Applebee’s Franchisee Gets Court Approval of Bankruptcy
Plan |
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RMH Franchise Holdings Inc., the nation’s second-largest Applebee’s franchisee, won final bankruptcy court approval of a reorganization that earlier was opposed by the chain’s franchiser and key creditors.
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Tencent Music Prices Its IPO at Bottom of Range |
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McDonald’s to Trim Antibiotics From Its Beef |
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WPP Chief Mark Read Sets Turnaround Plan in Motion |
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WPP PLC Chief Executive Mark Read set out his vision for a turnaround on Tuesday, a strategy he hopes will make the world’s largest advertising company better-positioned to contend with the rapidly changing marketing landscape.
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Vote Paves Way for Dell to Trade Publicly Again |
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Dell Technologies Inc. is set to return to public markets later this month, after the PC maker and data-storage company recut a deal that garnered sufficient shareholder support.
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Huawei’s Meng Wanzhou Granted Bail by Canadian Judge |
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A Canadian judge granted bail to Huawei Technologies Co. finance chief Meng Wanzhou, setting the stage for a new confrontation with China as the U.S. seeks the executive’s extradition.
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New Accounting Rules Drove Up U.S. Audit Fees in 2017 |
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U.S. public companies paid a median of 2.5% more in 2017 to auditors for assuring that their financial statements are free from material misstatements, according to an annual survey by the Financial Education & Research Foundation.
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