"" For more than 20 years, the Securities and Exchange Commission (SEC) has had a program in place to reward whistleblowers who provide the agency with information about insider trading. But a new audit by the SEC Office of Inspector General (OIG) reveals that the program has almost never been used, is barely recognized inside or outside the SEC, and has fundamental design flaws.
It turns out the SEC has received very few applications in the past two decades for bounties under the program -- and only five people have actually received payments since the program first began:
Design Flaws in the Bounty Program
The OIG also found that the program suffers from the following deficiencies: it's poorly recognized by the public and even within the SEC; the criteria for judging bounty applications is overly vague; the SEC does not have good internal policies to guide staff in reviewing bounty applications; the SEC rarely provides whistleblowers with status reports on their applications (a problem we've also heard about at other IG offices); once the applications are passed on, there are no systems in place to ensure that they are processed in an adequate and timely fashion; and the documentation for bounty referrals is often incomplete.
Many Whistleblowers Are Ignored or Even Subjected to Retaliation
POGO previously reported on anecdotal evidence of the problems described by the SEC OIG.
Writing for Politics Daily, we described how one whistleblower was retaliated against after inquiring whether he would be eligible to receive a bounty payment under the SEC's program. Peter Sivere, who at the time was working as a compliance officer at JPMorgan, first approached the SEC with evidence showing that his employer had failed to disclose documents sought in a wide-ranging SEC probe into a practice known as market timing. He was told that he didn't qualify for a bounty payment, but he provided the information anyway.
But instead of protecting Peter Sivere, the SEC enforcement attorney investigating the matter told JPMorgan's counsel about Peter Sivere's initial inquiry about a cash payment. JPMorgan's counsel then used this information to disparage Peter Sivere's whistleblower credentials at a proceeding before the Occupational Safety and Health Administration, in which Peter Sivere had contended that JPMorgan retaliated against him after he went to the SEC.
A subsequent investigation by the SEC OIG found that the enforcement attorney, George Demos , had violated agency rules by disclosing non-public information in an ongoing investigation, and recommended that disciplinary action be taken. George Demos left the SEC shortly thereafter and is now running for Congress.
OIG's Recommendations
To help correct the many deficiencies in the whistleblower bounty program, the OIG's latest audit recommended that the SEC's Enforcement Division develop a communications plan to publicize its existence; post the application on its website with clear instructions for the whistleblower; establish better policies to follow up with the whistleblower once the complaint is received; develop specific criteria for recommending bounty awards; improve its internal controls for tracking tips and complaints; require that a bounty file with minimum documentation be created for each application; and incorporate best practices from comparable programs run by the Department of Justice (DOJ) and Internal Revenue Services (IRS).
Congressional Reforms and Problems with Other Bounty Programs
In the meantime, Congress is also considering legislation to improve the SEC's whistleblower bounty program. The financial regulatory overhaul bill passed by the House last fall included a provision to authorize the SEC to award bounty payments tied to any judicial or administrative action brought by the SEC (i.e., not just insider trading cases) that results in monetary sanctions of over $1 million.
The provision also enables the whistleblower to receive up to 30 percent of the amount recovered (the current limit is 10 percent).
Senate Banking Committee Chairman Christopher Dodd's (D-CT) bill would go even further, ensuring that the whistleblower receives no less than 10 percent of the monetary sanctions, and allowing the whistleblower to appeal any aspect of the SEC's decision, including whether, to whom, and in what amount to make the award.
We applaud these legislative fixes and hope that the final bill reflects the stronger language proposed by the Senate. However, the SEC should also learn from the shortcomings in comparable whistleblower reward programs run by other agencies.
While the False Claims Act has resulted in over $20 billion in recoveries since 1986, the IRS's program to reward whistleblowers who spot tax problems in their workplace shares some of the same problems uncovered by the SEC OIG.
The IRS program, which was established under the Tax Relief and Health Care Act of 2006, enables whistleblowers to receive between 15 and 30 percent of the collected proceeds.
However, a recent audit by the Treasury Inspector General for Tax Administration found that the IRS's Whistleblower Office does not have a good system in place to manage and track cases, and that no awards have actually been paid out under the new program, in part because the claims can take over a decade to process.
One well-known whistleblower who's still waiting to hear whether he will receive an award is former UBS employee Brad Birkenfeld, who was sentenced to 40 months in prison after he attempted to inform the IRS and DOJ about his role in soliciting wealthy Americans to evade taxes through services provided by the Swiss bank.
Although his ordeal isn't necessarily a reflection on the IRS program, it does highlight the dangers often faced by individuals who blow the whistle on corporate wrongdoing.
In any event, the SEC could use all the help it can get when it comes to handling whistleblower complaints, and we hope that the OIG's recommendations and Congress's legislation will finally enable the SEC to give whistleblowers the protection and recognition they deserve.
-- Michael Smallberg ""Sourcehttp://pogoblog.typepad.com/pogo/2010/04/if-the-sec-has-a-whistleblower-program-but-nobody-ever-uses-it-does-it-really-exist.html
Showing posts with label George Demos. Show all posts
Showing posts with label George Demos. Show all posts
Thursday, April 8, 2010
Speaking Up and Blowing the Whistle is NOT Really Rewarded, You Risk ALL - it Should NOT Be that Way.
" Imagine being in a situation in which you knew you had to be quiet in order to advance your own personal career, rather than speaking up and blowing the whistle on irregularities and improprieties within your firm.
This message is consistently relayed by many a whistleblower who has suffered from having tried to do the right thing. What is the result?
Firms tout their virtuous values of integrity, respect, and excellence while effectively muzzling those who would blow the whistle on crimes and illegal practices.
I believe this reality is all too present in many, if not most, industries in our society today. There is absolutely no doubt it is present on Wall Street. Why do I write this?
A recently released report from the SEC’s Office of Inspector General David Kotz highlights the fact that the ‘whistles on Wall Street’ have been largely silent for a long time.
The Project on Government Oversight highlights this report in a recent commentary,
Not Much Bounty for SEC Whistleblower Program:
For more than 20 years, the Securities and Exchange Commission (SEC) has had a program in place to reward whistleblowers who provide the agency with information about insider trading.
But a new audit by the SEC Office of Inspector General (OIG) reveals that the program has almost never been used, is barely recognized inside or outside the SEC, and has fundamental design flaws.
It turns out the SEC has received very few applications in the past two decades for bounties under the program — and only five people have actually received payments since the program first began:"
Source and Full article with Additional Documents
http://www.senseoncents.com/2010/04/wall-streets-code-of-silence/#comments
Some Comments from On SEC Whistleblowers Above Link
"Does America truly think that a career regulator with longstanding ties within the financial industry can break Wall Street’s “code of silence”? "
" .... make sure America knows that there really is no pretense of investor protection so they can move forward accordingly. "
"Better not to even have the whistleblower program, though, than to pretend it exists. Lastly, the heads of all the banks should be called on the carpet and mandated to outline whistleblower protection programs within their organizations."
"Well, I I guess I thought it has been proven painfully obvious that we had no investor protection from FINRA and that obviously holds true for the SEC as well, but I guess you are right.. the public needs to hear about it again and again until they get it and insist that their representatives take meaningful action to fix things. "
Other Links on Peter Sivere SEC, JP Morgan Whistleblower
SEC IG Report: George Demos Pimped Peter Sivere; (January 28, 2010)
Posted here By
Crystal L. Cox
Investigative Blogger
This message is consistently relayed by many a whistleblower who has suffered from having tried to do the right thing. What is the result?
Firms tout their virtuous values of integrity, respect, and excellence while effectively muzzling those who would blow the whistle on crimes and illegal practices.
I believe this reality is all too present in many, if not most, industries in our society today. There is absolutely no doubt it is present on Wall Street. Why do I write this?
A recently released report from the SEC’s Office of Inspector General David Kotz highlights the fact that the ‘whistles on Wall Street’ have been largely silent for a long time.
The Project on Government Oversight highlights this report in a recent commentary,
Not Much Bounty for SEC Whistleblower Program:
For more than 20 years, the Securities and Exchange Commission (SEC) has had a program in place to reward whistleblowers who provide the agency with information about insider trading.
But a new audit by the SEC Office of Inspector General (OIG) reveals that the program has almost never been used, is barely recognized inside or outside the SEC, and has fundamental design flaws.
It turns out the SEC has received very few applications in the past two decades for bounties under the program — and only five people have actually received payments since the program first began:"
Source and Full article with Additional Documents
http://www.senseoncents.com/2010/04/wall-streets-code-of-silence/#comments
Some Comments from On SEC Whistleblowers Above Link
"Does America truly think that a career regulator with longstanding ties within the financial industry can break Wall Street’s “code of silence”? "
" .... make sure America knows that there really is no pretense of investor protection so they can move forward accordingly. "
"Better not to even have the whistleblower program, though, than to pretend it exists. Lastly, the heads of all the banks should be called on the carpet and mandated to outline whistleblower protection programs within their organizations."
"Well, I I guess I thought it has been proven painfully obvious that we had no investor protection from FINRA and that obviously holds true for the SEC as well, but I guess you are right.. the public needs to hear about it again and again until they get it and insist that their representatives take meaningful action to fix things. "
Other Links on Peter Sivere SEC, JP Morgan Whistleblower
SEC IG Report: George Demos Pimped Peter Sivere; (January 28, 2010)
Posted here By
Crystal L. Cox
Investigative Blogger
Tuesday, March 23, 2010
George Demos: George Demos Pimped Peter Sivere - Larry Doyle Article on George Demos blowing Peter Siveres Cover while at the SEC.
"Posted by Larry Doyle on January 28, 2010 9:02 AM
Who is George Demos?
A former enforcement lawyer in the New York office of the SEC,
currently running for Congress from Long Island.
Who is Peter Sivere? A former compliance employee at JP Morgan.
Sivere crossed paths with Demos in 2004 while providing information related to an investigation of questionable mutual fund trading activity. In the midst of Sivere’s engagement with the SEC, his confidence was violated. I highlighted this reality the other day in writing, “The SEC Pimped Peter Sivere.”
Who at the SEC blew Sivere’s cover? Today we learn it was George Demos.
Kudos to the Project on Government Oversight (POGO) for investigating this case and kudos to Politics Daily for highlighting it today in writing, Long Island Congressional Candidate Cited for Giving up J.P. Morgan Whistleblower:
George Demos is a Republican Congressional candidate from Eastern Long Island whose Web site bears the slogan “Fighting for Freedom,” and touts his service as an enforcement lawyer in the New York office of the Securities and Exchange Commission. A bio says that he “handled some of the SEC’s most significant investigations,” including that of Ponzi scheme artist Bernard Madoff, and “worked tirelessly on the cases that never made the headlines.”
But one case that never made headlines was his own: Demos’ campaign Web site and public statements omit any reference to a report last March of the SEC’s Inspector General (IG), which found he had improperly disclosed protected, nonpublic information about a whistleblower to the counsel for that whistleblower’s employer, a major Wall Street bank, JPMorgan Chase. The IG’s charges of misconduct grew out of an SEC probe that began in 2003 of JPMorgan and other big financial institutions suspected of illegal market practices.
Demos has denied he did anything improper, and his campaign declined to comment on the matter. But documents obtained by the Project On Government Oversight (POGO) — a non-partisan non-profit based in Washington — confirm that Demos was the staff attorney who was cited in the IG report for violating SEC rules.
The IG referred the case to the agency’s management for possible disciplinary action, but the SEC took no action. Soon after that, Demos quietly resigned from his job and launched his bid for a seat in the House of Representatives. "
Source of George Demos - Peter Sivere Article
and Full Article Click Below
http://www.senseoncents.com/2010/01/sec-ig-report-george-demos-pimped-peter-sivere/
Posted Here by
Crystal L. Cox
Industry Whistleblower
Who is George Demos?
A former enforcement lawyer in the New York office of the SEC,
currently running for Congress from Long Island.
Who is Peter Sivere? A former compliance employee at JP Morgan.
Sivere crossed paths with Demos in 2004 while providing information related to an investigation of questionable mutual fund trading activity. In the midst of Sivere’s engagement with the SEC, his confidence was violated. I highlighted this reality the other day in writing, “The SEC Pimped Peter Sivere.”
Who at the SEC blew Sivere’s cover? Today we learn it was George Demos.
Kudos to the Project on Government Oversight (POGO) for investigating this case and kudos to Politics Daily for highlighting it today in writing, Long Island Congressional Candidate Cited for Giving up J.P. Morgan Whistleblower:
George Demos is a Republican Congressional candidate from Eastern Long Island whose Web site bears the slogan “Fighting for Freedom,” and touts his service as an enforcement lawyer in the New York office of the Securities and Exchange Commission. A bio says that he “handled some of the SEC’s most significant investigations,” including that of Ponzi scheme artist Bernard Madoff, and “worked tirelessly on the cases that never made the headlines.”
But one case that never made headlines was his own: Demos’ campaign Web site and public statements omit any reference to a report last March of the SEC’s Inspector General (IG), which found he had improperly disclosed protected, nonpublic information about a whistleblower to the counsel for that whistleblower’s employer, a major Wall Street bank, JPMorgan Chase. The IG’s charges of misconduct grew out of an SEC probe that began in 2003 of JPMorgan and other big financial institutions suspected of illegal market practices.
Demos has denied he did anything improper, and his campaign declined to comment on the matter. But documents obtained by the Project On Government Oversight (POGO) — a non-partisan non-profit based in Washington — confirm that Demos was the staff attorney who was cited in the IG report for violating SEC rules.
The IG referred the case to the agency’s management for possible disciplinary action, but the SEC took no action. Soon after that, Demos quietly resigned from his job and launched his bid for a seat in the House of Representatives. "
Source of George Demos - Peter Sivere Article
and Full Article Click Below
http://www.senseoncents.com/2010/01/sec-ig-report-george-demos-pimped-peter-sivere/
Posted Here by
Crystal L. Cox
Industry Whistleblower
Thursday, March 11, 2010
Long Island Congressional Candidate Cited for Giving Up JPMorgan Whistleblower
""George Demos is a Republican Congressional Candidate from Eastern Long Island whose Web site bears the slogan "Fighting for Freedom," and touts his service as an enforcement lawyer in the New York office of the Securities and Exchange Commission. A bio says that he "handled some of the SEC's most significant investigations," including that of Ponzi scheme artist Bernard Madoff, and "worked tirelessly on the cases that never made the headlines."
But one case that never made headlines was his own: Demos' campaign Web site and public statements omit any reference to a report last March of the SEC's Inspector General (IG), which found he had improperly disclosed protected, nonpublic information about a whistleblower to the counsel for that whistleblower's employer, a major Wall Street bank, JP Morgan Chase.
The IG's charges of misconduct grew out of an SEC probe that began in 2003 of JPMorgan and other big financial institutions suspected of illegal market practices.
Demos has denied he did anything improper, and his campaign declined to comment on the matter. But documents obtained by the Project On Government Oversight (POGO) -- a non-partisan non-profit based in Washington -- confirm that Demos was the staff attorney who was cited in the IG report for violating SEC rules.
The IG referred the case to the agency's management for possible disciplinary action, but the SEC took no action. Soon after that, Demos quietly resigned from his job and launched his bid for a seat in the House of Representatives.
But the confidential information that Demos disclosed was used by a JPMorgan lawyer against one of the bank's own employees, a whistleblower who had alerted the SEC to possible wrongdoing by his employer, according to the report and other documents, some released under the Freedom of Information Act.
The significance of the case goes beyond politics.
In response to widespread public anger over Wall Street abuses and a weak economy, the SEC and its latest chairman, Mary Schapiro, have pledged repeatedly to protect whistleblowers and pay more attention to their reports of illegality and market abuse.
The Madoff case itself involved a whistleblower whose information the SEC had largely ignored, and a financial analyst at a prominent Wall Street company said last year that he, too, had trouble getting phone calls returned by the SEC after informing the agency his employer might be breaking the law. In response, the SEC has launched a program to cope with the hundreds of thousands of tips it receives every year, but progress has been painfully slow.
Meanwhile, the SEC also appears to be brushing aside or delaying action on the recommendations of its own IG, and not just in the Demos matter. In response to a recent Freedom of Information Act request submitted by POGO, the SEC has said that since 2007 there have been more than 200 recommendations from its IG on which the agency has either taken no action, or on which action was still pending.
Demos is a 33-year-old politically wired attorney who attended Fordham Law School. According to his campaign Web site, his donor list includes wealthy Wall Streeters and others, who have given him more than $300,000 since October.
His bio includes stints in the District Attorney's office in Suffolk County, Long Island, and service as enforcement lawyer at the SEC from 2002 to 2009.
He was involved in the campaigns of former New York Gov. George Pataki and former Sen. Alfonse D'Amato, and is now in a field of candidates, including Chris Cox, an attorney and the grandson of former President Richard Nixon, who are seeking the GOP nomination in New York's 1st Congressional District, a swing district. The seat is currently held by Tim Bishop, a Democrat, who is considered vulnerable in November.
The SEC IG's findings did not identify Demos by name when they were included in the watchdog's semi-annual report to Congress last year. But documents obtained by POGO, including internal SEC materials and related correspondence, make clear that Demos' conduct lay behind the section of the report on the JPMorgan whistleblower, who worked as a mid-level compliance officer in New York.
According to a redacted version of the report, the whistleblower, whose name is Peter Sivere, first came to the SEC with what he described as "confidential" evidence of the bank's alleged failure to disclose material sought in the SEC probe.
The SEC was investigating a practice known as market timing, which can be illegal. It typically involves trading that favors short-term buyers and sellers to the detriment of long-term shareholders like retirees.
After the whistleblower's initial e-mail contact with the SEC in June 2004, Demos replied to him, confirming, among other things, that the agency's probe was "confidential."
Several major institutions, such as Bank of America and Alliance Capital Management, later reached settlements in similar SEC inquiries, but JPMorgan was never charged with a violation, and this week had no comment.
In July 2004, Sivere brought an employment claim against JPMorgan before the Occupational Safety and Health Administration. He contended that the bank began threatening his job after he had gone to the SEC. JPMorgan strongly disputed Sivere's allegations.
OSHA issued a preliminary finding in favor of the whistleblower, saying there was "reasonable cause to believe" that he had faced retaliation, and that his "preliminary reinstatement" was warranted. Not long after, Demos informed JPMorgan's counsel that Sivere had initially sought a cash payment from the SEC for information he was offering the agency, apparently in hopes of benefiting from a well-publicized SEC program to elicit information from tipsters.
The lawyer for JPMorgan then used Sivere's confidential request for a bounty to question his whistleblower credentials, and informed OHSA that he had asked for money. Apparently concerned that this had damaged his case, despite the initial finding in his favor, Sivere then dropped his complaint against JPMorgan and settled the case.
A well-known Washington securities lawyer who did not want his name used in a discussion of the sensitive case explained that "whistleblowers are often unfairly disparaged for requesting payments, even though U.S. law specifically authorizes rewards to certain informants." JPMorgan has denied any impropriety. It ultimately fired Sivere in October 2004.
In October 2008, the SEC's IG launched its own investigation in response to information from Sivere. Its final report provided a description of what it said was Demos' improper disclosure, as well as an earlier, internal SEC examination of the matter.
Demos, when first questioned by an SEC supervisor, "did not admit" to the improper disclosure, the IG report says, though he did concede he might have been responsible, saying he "did not remember."
Based on that inconclusive evidence, Demos' SEC superior drew no definite conclusion about whether Demos had made the disclosure. Even so, he formally "counseled" Demos in late 2005 about the importance of keeping protected information within the agency, the IG said.
The IG later interviewed Demos' SEC superior and others at the agency. The IG also contacted lawyers for JPMorgan, including one to whom the disclosure had been made. That lawyer readily identified Demos as the source of his information, according to documents.
As the IG report concludes, Demos "not only gave . . . JPMorgan permission to use the non-public information about an informant against him [in the OHSA proceeding], but actually encouraged such use."
The IG found that Demos' disclosure was a violation of SEC rules, which severely restrict the release of confidential information obtained in the course of an investigation.
The failure of Demos' campaign to let prospective voters know about any of these events may not be surprising, but only days after he launched his run for Congress on Oct. 13, 2009, candidate Demos sent a two-page letter rebutting charges of ethical misconduct in the SEC matter that had surfaced in another forum: the Departmental Disciplinary Committee of the New York State Supreme Court Appellate Division, which reviews and investigates ethical complaints against lawyers.
Upset that the SEC was doing nothing in response to its own IG's disciplinary referral, the New York ethics complaint naming Demos was filed by Sivere, the fired whistleblower. Demos' letter in response to that complaint argued that it was "entirely without merit."
The complaint has yet to be resolved, but could result in a finding of no wrongdoing or penalties ranging from censure to disbarment.
In his letter to the Supreme Court's Disciplinary Committee, Demos concedes that information about the whistleblower may have been released, but only in line with SEC "regulations and policies." Demos' statement appears to be at odds with the IG's finding.
His letter also attacks the protected status of the whistleblower's information, arguing that the one time JPMorgan employee "was owed no duty of confidentiality or loyalty by the Commission [SEC] or me" -- another statement that contradicts the IG's conclusions.
Michael Smallberg is an investigator at the Project On Government Oversight (POGO). Adam Zagorin is Journalist in Residence at POGO. POGO is a non-partisan, non-profit government watchdog group based in Washington, D.C.""
Source
http://www.politicsdaily.com/2010/01/28/long-island-congressional-candidate-cited-for-giving-up-jpmorgan/
I do not believe that the SEC even Tries to Check on Reports or Tips... I believe that the SEC, Mary Schapiro looks at who the "Names" and "Players" are and decides from there whether to look into it or not.. the Iviewit Trillion Dollar Stolen Patent Case Shows this VERY Well... as the SEC, Mary Schapiro knows full well of a Massive Shareholder Fraud and they DO NOTHING.. they don't even seem to acknowledge it has been reported...
more on the iViewit Stolen Patent at
www.Iviewit.TV and www.DeniedPatent.com
and More on Mary Schapiro Click Here
the Obama Administration Brags about new laws to protect Whistleblowers... Laws seem to be in place but in the Real World Whistleblowers are Treated as Criminals and their Lives are turned upside down...
But one case that never made headlines was his own: Demos' campaign Web site and public statements omit any reference to a report last March of the SEC's Inspector General (IG), which found he had improperly disclosed protected, nonpublic information about a whistleblower to the counsel for that whistleblower's employer, a major Wall Street bank, JP Morgan Chase.
The IG's charges of misconduct grew out of an SEC probe that began in 2003 of JPMorgan and other big financial institutions suspected of illegal market practices.
Demos has denied he did anything improper, and his campaign declined to comment on the matter. But documents obtained by the Project On Government Oversight (POGO) -- a non-partisan non-profit based in Washington -- confirm that Demos was the staff attorney who was cited in the IG report for violating SEC rules.
The IG referred the case to the agency's management for possible disciplinary action, but the SEC took no action. Soon after that, Demos quietly resigned from his job and launched his bid for a seat in the House of Representatives.
But the confidential information that Demos disclosed was used by a JPMorgan lawyer against one of the bank's own employees, a whistleblower who had alerted the SEC to possible wrongdoing by his employer, according to the report and other documents, some released under the Freedom of Information Act.
The significance of the case goes beyond politics.
In response to widespread public anger over Wall Street abuses and a weak economy, the SEC and its latest chairman, Mary Schapiro, have pledged repeatedly to protect whistleblowers and pay more attention to their reports of illegality and market abuse.
The Madoff case itself involved a whistleblower whose information the SEC had largely ignored, and a financial analyst at a prominent Wall Street company said last year that he, too, had trouble getting phone calls returned by the SEC after informing the agency his employer might be breaking the law. In response, the SEC has launched a program to cope with the hundreds of thousands of tips it receives every year, but progress has been painfully slow.
Meanwhile, the SEC also appears to be brushing aside or delaying action on the recommendations of its own IG, and not just in the Demos matter. In response to a recent Freedom of Information Act request submitted by POGO, the SEC has said that since 2007 there have been more than 200 recommendations from its IG on which the agency has either taken no action, or on which action was still pending.
Demos is a 33-year-old politically wired attorney who attended Fordham Law School. According to his campaign Web site, his donor list includes wealthy Wall Streeters and others, who have given him more than $300,000 since October.
His bio includes stints in the District Attorney's office in Suffolk County, Long Island, and service as enforcement lawyer at the SEC from 2002 to 2009.
He was involved in the campaigns of former New York Gov. George Pataki and former Sen. Alfonse D'Amato, and is now in a field of candidates, including Chris Cox, an attorney and the grandson of former President Richard Nixon, who are seeking the GOP nomination in New York's 1st Congressional District, a swing district. The seat is currently held by Tim Bishop, a Democrat, who is considered vulnerable in November.
The SEC IG's findings did not identify Demos by name when they were included in the watchdog's semi-annual report to Congress last year. But documents obtained by POGO, including internal SEC materials and related correspondence, make clear that Demos' conduct lay behind the section of the report on the JPMorgan whistleblower, who worked as a mid-level compliance officer in New York.
According to a redacted version of the report, the whistleblower, whose name is Peter Sivere, first came to the SEC with what he described as "confidential" evidence of the bank's alleged failure to disclose material sought in the SEC probe.
The SEC was investigating a practice known as market timing, which can be illegal. It typically involves trading that favors short-term buyers and sellers to the detriment of long-term shareholders like retirees.
After the whistleblower's initial e-mail contact with the SEC in June 2004, Demos replied to him, confirming, among other things, that the agency's probe was "confidential."
Several major institutions, such as Bank of America and Alliance Capital Management, later reached settlements in similar SEC inquiries, but JPMorgan was never charged with a violation, and this week had no comment.
In July 2004, Sivere brought an employment claim against JPMorgan before the Occupational Safety and Health Administration. He contended that the bank began threatening his job after he had gone to the SEC. JPMorgan strongly disputed Sivere's allegations.
OSHA issued a preliminary finding in favor of the whistleblower, saying there was "reasonable cause to believe" that he had faced retaliation, and that his "preliminary reinstatement" was warranted. Not long after, Demos informed JPMorgan's counsel that Sivere had initially sought a cash payment from the SEC for information he was offering the agency, apparently in hopes of benefiting from a well-publicized SEC program to elicit information from tipsters.
The lawyer for JPMorgan then used Sivere's confidential request for a bounty to question his whistleblower credentials, and informed OHSA that he had asked for money. Apparently concerned that this had damaged his case, despite the initial finding in his favor, Sivere then dropped his complaint against JPMorgan and settled the case.
A well-known Washington securities lawyer who did not want his name used in a discussion of the sensitive case explained that "whistleblowers are often unfairly disparaged for requesting payments, even though U.S. law specifically authorizes rewards to certain informants." JPMorgan has denied any impropriety. It ultimately fired Sivere in October 2004.
In October 2008, the SEC's IG launched its own investigation in response to information from Sivere. Its final report provided a description of what it said was Demos' improper disclosure, as well as an earlier, internal SEC examination of the matter.
Demos, when first questioned by an SEC supervisor, "did not admit" to the improper disclosure, the IG report says, though he did concede he might have been responsible, saying he "did not remember."
Based on that inconclusive evidence, Demos' SEC superior drew no definite conclusion about whether Demos had made the disclosure. Even so, he formally "counseled" Demos in late 2005 about the importance of keeping protected information within the agency, the IG said.
The IG later interviewed Demos' SEC superior and others at the agency. The IG also contacted lawyers for JPMorgan, including one to whom the disclosure had been made. That lawyer readily identified Demos as the source of his information, according to documents.
As the IG report concludes, Demos "not only gave . . . JPMorgan permission to use the non-public information about an informant against him [in the OHSA proceeding], but actually encouraged such use."
The IG found that Demos' disclosure was a violation of SEC rules, which severely restrict the release of confidential information obtained in the course of an investigation.
The failure of Demos' campaign to let prospective voters know about any of these events may not be surprising, but only days after he launched his run for Congress on Oct. 13, 2009, candidate Demos sent a two-page letter rebutting charges of ethical misconduct in the SEC matter that had surfaced in another forum: the Departmental Disciplinary Committee of the New York State Supreme Court Appellate Division, which reviews and investigates ethical complaints against lawyers.
Upset that the SEC was doing nothing in response to its own IG's disciplinary referral, the New York ethics complaint naming Demos was filed by Sivere, the fired whistleblower. Demos' letter in response to that complaint argued that it was "entirely without merit."
The complaint has yet to be resolved, but could result in a finding of no wrongdoing or penalties ranging from censure to disbarment.
In his letter to the Supreme Court's Disciplinary Committee, Demos concedes that information about the whistleblower may have been released, but only in line with SEC "regulations and policies." Demos' statement appears to be at odds with the IG's finding.
His letter also attacks the protected status of the whistleblower's information, arguing that the one time JPMorgan employee "was owed no duty of confidentiality or loyalty by the Commission [SEC] or me" -- another statement that contradicts the IG's conclusions.
Michael Smallberg is an investigator at the Project On Government Oversight (POGO). Adam Zagorin is Journalist in Residence at POGO. POGO is a non-partisan, non-profit government watchdog group based in Washington, D.C.""
Source
http://www.politicsdaily.com/2010/01/28/long-island-congressional-candidate-cited-for-giving-up-jpmorgan/
I do not believe that the SEC even Tries to Check on Reports or Tips... I believe that the SEC, Mary Schapiro looks at who the "Names" and "Players" are and decides from there whether to look into it or not.. the Iviewit Trillion Dollar Stolen Patent Case Shows this VERY Well... as the SEC, Mary Schapiro knows full well of a Massive Shareholder Fraud and they DO NOTHING.. they don't even seem to acknowledge it has been reported...
more on the iViewit Stolen Patent at
www.Iviewit.TV and www.DeniedPatent.com
and More on Mary Schapiro Click Here
the Obama Administration Brags about new laws to protect Whistleblowers... Laws seem to be in place but in the Real World Whistleblowers are Treated as Criminals and their Lives are turned upside down...
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