"At SEC, the system can be deaf to Whistleblowing" - I say the SEC has Motives to NOT Listen as they Still are NOT Listening To Billion Dollar Tips.

Mary Schapiro - Your Fired !!

" By Zachary A. Goldfarb
Washington Post Staff Writer
Thursday, January 21, 2010

Eric Kolchinsky was an executive at Moody's, the credit rating company, when he called a top official at the Securities and Exchange Commission in September to warn that his firm might be violating securities law. He reported that Moody's was blessing mortgage-backed investments that it knew were dangerous, according to a person familiar with the conversation.

The SEC official assured Kolchinsky that someone from the agency would call him back shortly. But the call never came, Kolchinsky later told congressional investigators who were examining how the credit rating industry's failures contributed to the financial crisis. He had gone to Congress after losing patience with the SEC.

Kolchinsky is one in a series of whistleblowers who in recent years tried to tip off the SEC to potential wrongdoing, only to be ignored, misunderstood or left to wonder whether they were being listened to. The SEC has no system in place to guide how officials should handle tips and complaints from outsiders, making it difficult for investigators to take advantage of an invaluable source of information.

This failure helped to continue two of the most celebrated frauds of the last decade for several years, potentially costing unwitting investors millions of dollars. Countless others may have been left vulnerable to shysters because of warnings that went unheeded.

Since SEC Chairman Mary L. Schapiro took office last year, she has said that fixing the holes in the process for handling tips and complaints has been a top priority. But improving the way hundreds of thousands of tips are analyzed and pursued has proven difficult.

The SEC's enforcement division got back in touch with Kolchinsky about his allegations only after he told the story publicly to a congressional committee last fall, according to a person familiar with the matter.

The SEC said it responded to Kolchinsky's concerns but declined to provide details or to say how fast it did so. Moody's said it examined his allegations and found nothing improper.
The SEC has a haphazard, decentralized system for analyzing outsider information.

Tips arrive by phone, mail and e-mail to officials throughout the agency -- investor education to enforcement divisions. A study commissioned by the SEC last year and conducted by Mitre, a nonprofit group that does research for the federal government, found that the SEC lacks technology to analyze tips and complaints, as well as cohesive policies for what officials should do when they get information.

Whistleblower complaints are one of the main ways that investigators should be tipped to wrongdoing, SEC officials say, along with inconsistencies in financial filings and alerts from financial exchanges about suspicious trading patterns. But the SEC lags behind some other federal agencies in handling tips.

The Internal Revenue Service, for instance, pays reward money to whistleblowers who provide credible information about tax fraud. The Federal Trade Commission has set up a call center for tips and complaints.

On top of structural problems at the SEC, agency officials individually made mistakes in handling several recent cases, sometimes violating agency rules.

Members of Schapiro's management team said they recognized problems with the system for handling whistleblowers shortly after taking over.

"There was no uniformity to it. Every division and office had its own system of recording, tracking or handling tips and complaints. That system was pretty rudimentary," said Steve Cohen, the official tasked by Schapiro to overhaul the agency's tips, complaints and whistleblower program. "We're already working to acquire and deploy technology that centralizes all of the agency's tips and complaints so they can be sorted, reviewed, analyzed and tracked."

No shortage of witnesses

The SEC's struggles were underlined over the past two years with the revelation of two huge Ponzi schemes.

In the case of Bernard L. Madoff, whistleblowers had provided credible information to various SEC units for years.

The most prominent of these informants, a Boston financial analyst named Harry Markopolos, contacted the enforcement division on numerous occasions, according to the SEC's inspector general.

In one instance, Markopolos provided a detailed explanation of why Madoff's business was probably a fraud. Enforcement officials listened, but they dismissed him in their internal discussions. Two former enforcement officials told the inspector general that they discounted Markopolos's information because he was not an insider in Madoff's company.

Then, a few months after the Madoff scheme exploded into the headlines, the SEC exposed a second large Ponzi scheme, run by R. Allen Stanford. But that happened five years after an insider went to the SEC, warning that Stanford might be conducting a fraudulent business.

Leyla Wydler had been a vice president at Stanford's Houston-based company when she first started asking her supervisors tough questions about what the firm did with clients' money, according to her testimony before Congress last year. Her superiors were evasive, and she ultimately was fired.

After that, she went to the National Association of Securities Dealers, a private industry regulator overseen by the SEC. The NASD dismissed her concerns. Then in September 2004, she contacted the SEC's Fort Worth office, according to her congressional testimony. She followed up with a letter to an official there, questioning whether clients' money had been invested in the way Stanford said.

She never heard from the SEC again -- until January 2009, days before the SEC finally filed a case against Stanford, according to her testimony. The agency wanted to know more about her allegations. An inspector general report from June 2009 said the SEC began looking into Stanford years earlier but struggled to build a case against him.

Turning in the Tipster

In one case, it was the SEC that blew the whistle on Peter Sivere, an informant.

Sivere worked in the compliance office of New York investment bank J.P. Morgan Chase. As part of a team helping the bank furnish documents related to a 2004 SEC probe into suspected illegal trading, he found an e-mail that he thought was incriminating.

According to a subsequent report by the SEC inspector general, the e-mail said J.P. Morgan was knowingly providing hundreds of millions of dollars in credit to a firm "in the business of day trading mutual funds" -- which is illegal.

Sivere asked his superiors if this e-mail had been turned over to the SEC but did not get an answer. Instead, he was taken off the SEC project, according to the inspector general report. Sivere accessed his superiors' e-mail accounts to retrieve relevant e-mails, then contacted the SEC. He told the agency that he had relevant documents and asked whether he could receive a reward. He was told he was not eligible, but he turned over the documents anyway.

Sivere informed J.P. Morgan that he had contacted the SEC.

The company fired him, partly on the grounds that he had "sought payment from the SEC to provide documents and information to them outside of the normal scope of their investigation," according to a letter company lawyers wrote defending his dismissal. J.P. Morgan declined to comment for this article.

Sivere was shocked to learn that J.P. Morgan knew he had inquired about a bounty. He had been promised that his discussions with the SEC were confidential.

An SEC internal probe found that an investigator working on the case disclosed Sivere's information to J.P. Morgan's lawyers, violating the agency's confidentiality rules. The inspector general recommended that the SEC official who made the disclosure be referred for disciplinary action. None was taken, according to agency documents.

Retraining the Watchdog

Cohen, who is overhauling the SEC's whistleblower practices, said a database, jury-rigged from existing technology, will be in place this month to centralize all tips and complaints. Officials said that by the end of 2010, they hope to develop technology that would not only centralize the data but also automatically analyze them for patterns to help officials prioritize cases.

Currently, the SEC is setting procedures for responding to whistleblowers and is creating an office of market intelligence to coordinate how the agency's various units respond to tips.

The agency also wants to be able to reward whistleblowers, which it can only do now for insider-trading cases. The SEC has requested that Congress pass legislation giving it the ability to offer financial rewards to people who provide evidence of violations of securities law. ""

Source of Article
http://www.washingtonpost.com/wp-dyn/content/article/2010/01/20/AR2010012005125_2.html

The SEC Gets Tips that Will inevitable Cost Shareholder Millions and they HAVE No System in place to really handle these tips, yet they act like they are taking in Tips and Handling them. The Iviewit Technologies Case will one day explode into Billions in Loss and the SEC has ignored the Eliot Bernstein SEC Complaint - and has know of the Involvement of Proskauer Rose way before the Standford Billions were lost. More on the Iviewit Stolen Patent and what Companies are affected go to http://www.deniedpatent.com/ and www.Iviewit.TV

Why is there no Accountability for the SEC Insiders that let these Billion Dollar Scams Happen then after the Scam and many innocent investors lose everything, the SEC insider gets a a Really Good Job at a high profile law firm. And no one seems to raise an eyebrow.

All these Billion Dollar Investment schemes seem to have the same thing in common. They have a Mega Law Firm behind them helping them, and the Law firms such as Proskauer Rose seem to have No Accountability for the Damage they due to investors.

In the Stanford investment Scandal SEC Sjoblom went to Proskauer Rose - talk about a conflict of Interest - Proskauer Rose seems to be behind a whole lot of these Billion Dollar Scams and they never seem to be held accountable.

In the Dreier Scandal there was Proskauer Rose LLP Attorney Sheila Gowan.

In the Madoff Scandal and there is said to a woman who fled the SEC to the Law Firm Proskauer Rose and that she is fingered all over the SEC report on Madoff failures.

So the SEC seems to hire these lawyers and let them run these scams and there seems to be no REAL regulators of any kind for the ones in place seem to be part of the organized RICO Enterprise of Criminal Lawyers and Law Firms and the US court System does not seem to be able to do anything about them.

Is the SEC Liable for Billions to Trillions of Investors money when it is Obviously, Easily proved that the SEC Ignored TIPS for Years upon Years in all these cases. Time to Sue the SEC. This Government Agent should not be above the law, it is as if they let this stuff go on - on Purpose for pay offs and cushy jobs... and year after year the same scheme plays out and no one seems to be able to bring Justice, Accountability, or Real Action from the SEC to do what the Duty of the SEC is....

Links

Sheila M. Gowan - Proskauer Rose - Iviewit
http://www.free-press-release.com/news-iviewit-trillion-fed-suit-defendant-proskauer-rose-sued-in-global-class-action-re-stanford-ponzi-1252249099.html

Standford - Proskauer Rose - Thomas Sjoblom
http://www.proskauersucks.com/2010/01/thomas-v-sjoblom-allen-stanford.html

Madoff - Proskauer Rose
http://www.proskauerrosesucks.com/2010/02/proskauer-rose-madoff-mary-shapiro-sec.html

Read more...

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...

Read more...