Better Markets Fights to Protect Taxpayers by Restoring Accountability for Fraudsters: Better Markets submitted an amicus “friend of the court” brief to the United States Supreme Court in support of a petition to review an appeal court decision that blocked a whistleblower suit alleging foreclosure fraud at a bank. The petition was highlighted as “petition of the day” by the influential website SCOTUSblog.
Too often, corporate crime pays, but courts should not torture statutory language and intent to facilitate if not enable that outcome, particularly when taxpayers and the government are the victims. Yet that is the inevitable consequence of a recent decision by the federal Sixth Circuit Court of Appeals if it is not reviewed and reversed by the Supreme Court, which our brief seeks.
The appeals court ruled that a bank could not be sued for defrauding a federal agency because it was publicly known that the bank had systematic deficiencies in its foreclosure practices that threatened homeowners, communities, and the stability of the national banking system. But until the filing of the lawsuit by
Advocates for Basic Legal Equality, a community organization in Ohio, it was not publicly known that the bank was defrauding a federal agency by taking its money while violating important requirements of the program. In essence, the Sixth Circuit held that because the bank was generally known to be so bad that the government was on notice that the bank was defrauding its specific program.
This is dangerous logic and bad law, which will leave taxpayers exposed to rampant fraud. If not reviewed and reversed by the Supreme Court, this decision will coin yet another unwelcome crisis-era phrase: huge banks will not only be “too big to fail” and their executives “too big to jail,” but banks known to have systematic problems will be “too bad to sue” for defrauding the government. The Supreme Court should grant the petition, reverse the Sixth Circuit, and restore robust antifraud enforcement.
Speaking of Whistleblowers, the SEC Whistleblower Program Reaches New Highs: This week, the Securities and Exchange Commission (SEC) announcedyet another award of more than $22 million to a whistleblower whose assistance helped the agency stop a “well-hidden” fraud at the company where the whistleblower worked.
The SEC’s whistleblower program, since its 2011 creation, has awarded over $100 million to whistleblowers. Having a program that encourages whistleblowers to come forward is not only admirable but also a step in the right direction toward creating a more transparent and accountable financial system. Also, when you hear people criticizing regulation, financial reform, or the Dodd Frank Act, remember that massive frauds have been uncovered, investigated and stopped because of those regulations and laws.
Clinton’s Plan for Small Business Owners and Efforts to Protect Community Banks: As we have stated before, Wall Street’s handful of dangerous too big to fail banks too often use community banks as a Trojan Horse to hide deregulation provisions that benefit them at the expense of investors and consumers. Hillary Clinton has announced her plan to end the jobs and growth killing too-big-to-fail threat and her plan to protect smaller, community based financial firms.
In addition, she has also announced a plan for small businesses in America. She intends on making it easier to start and grow a small business.
While we don’t agree with all the provisions of her plans, we do believe that both Presidential candidates owe it to the American people to detail what they will do to remove the threat of too-big-to-fail, to protect community financial institutions, and to promote growth and jobs. That’s the only way the American people will be able to hold candidates accountable when they get into office.
The Front Line Investor Protection Agency Puts Industry in “Public” Seats: One would think that as an independent, non-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly, the Financial Industry Regulatory Authority (FINRA) would populate its board drawing more from the public at large than from industry. And one would also think that FINRA would do so not just because it is the right thing to do, but also because its by-laws say so.
Unfortunately, that is simply not the case, as Susan Antilla details in her latest must-read column in The Street: “Finance Execs Fill ‘Public’ Board Seats at FINRA, the Regulator that Promises Investor Protection.”
In what has become yet another in a long line of examples of supposedly public-minded, public-spirited, and public-focused organizations putting industry before the American people, it appears that only eight of 22 seats on their “Public” Board can be considered genuinely public.
If FINRA’s primary mission is to protect investors by ensuring the industry operates fairly and honestly, then wouldn’t one expect the public interest to not only be heard but proportionately represented as well? FINRA should get back to the business of protecting investors by making sure that the public are in fact fairly represented, instead of filling the seats with direct or indirect industry personnel.