New U.S. rule on class actions survives first challenge

The Acting U.S. Comptroller of the Currency Keith Noreika said on Monday he will not petition the council of financial regulatory chiefs to stay a new rule aimed at restoring consumers' ability to band together to sue financial companies.

Since the Consumer Financial Protection Bureau's new rule abolishing "mandatory arbitration clauses" was released earlier this month Noreika had publicly argued with CFPB Director Richard Cordray, saying the rule could threaten the safety and soundness of the banking system. read more »

On National Whistleblower Day, Congress applauds those who speak truth to power

Members of Congress praised the whistleblower community, but they acknowledged that lawmakers still have a lot of work to do to improve protections for those who come forward.

Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa), a longtime champion for whistleblower rights, introduced a resolution commemorating National Whistleblower Day. Every member of the bipartisan Senate Whistleblower Protection Caucus co-sponsored the resolution.

Grassley said he’s written a letter to every president since Ronald Reagan, asking that they hold an official ceremony honoring whistleblowers in the White House Rose Garden. No president yet has taken Grassley up on his idea. read more »

The payoff for society in rewarding whistle-blowers

US program that pays for tips on company fraud helps highlight the role of employees as guardians of their firm's integrity.

In late July, a government agency handed over nearly $2.5 million to one person and $1.7 million to another. If the payouts had been lottery winnings, they might have drawn big headlines. Yet the rewards were barely noticed because they went to individuals who had simply revealed financial misconduct to the US Securities and Exchange Commission.

The SEC did not disclose the names of the whistle-blowers or the companies involved. But the message was clear: For employees who uncover wrongdoing, honesty is a reward beyond itself. (And the benefits to them and society can far surpass those of government lotteries.)

Since 2012, when the SEC first began to offer a bounty for insider tips on fraud and other types of corruption, it has given $156 million to 45 whistleblowers. And these cases have led to the recovery of nearly $1 billion in penalties. Former SEC Chair Mary Jo White says whistle-blowers have become “key sources of very significant cases” and their disclosures have a “transformative impact” on the enforcement of financial laws. read more »

Bribes to low-paid state worker key to $1 billion Miami Medicare fraud case, prosecutors say

Philip Esformes is a fabulously rich businessman who once made more than $10 million in a single year from his network of Miami-Dade nursing and assisted living facilities. He also owns two homes next door to each other on exclusive North Bay Road in Miami Beach, along with numerous other properties in Miami, Chicago and Los Angeles.

Bertha Blanco, a former state administrator who lives in working-class Hialeah, made $31,281 a year overseeing inspections of the very same kinds of healthcare facilities in Miami-Dade. She was fired in late 2016 after working for 29 years at the Florida Agency for Health Care Administration.

Esformes, 48, and Blanco, 66, lived worlds apart but federal authorities say they were linked in a long-running $1 billion Medicare ripoff. read more »

8 Of The Biggest Whistles Ever Blown On Wall Street

Chelsea Manning, Edward Snowden, Julian Assange, Deep Throat. You know the names.

Whether you consider them informants, patriots or glorified tattle-tales, whistleblowers have significantly impacted United States history. They‘ve alerted us to illegal or unethical activity in public and private operations that would have otherwise gone unnoticed.

The U.S. government so lauds their efforts that, in 2014, it dubbed July 30, the anniversary of whistleblowers’ legal protection, National Whistleblower Appreciation Day. read more »

Summer of Samsung: A Corruption Scandal, a Political Firestorm—and a Record Profit    

A year after the exploding phones, Samsung is embroiled in the mess that brought down South Korea’s president. How is it still thriving?

On a Friday in June, Jay Y. Lee, the de facto head of the Samsung conglomerate, is enduring another afternoon at the Central District Court in Seoul, listening to the prosecution quiz a witness about the finer points of equine health. Lee is on trial for bribery and embezzlement, part of a series of scandals that led in March to the ouster of Park Geun-hye, South Korea’s first female president.

Lee and his colleagues stand accused of bribing Park and one of her friends to facilitate a merger between two publicly traded Samsung companies—a combination, prosecutors contend, that was intended to strengthen Lee’s control over the Samsung empire. The form of the alleged bribe was Vitana V, an $800,000 thoroughbred show horse, plus $17 million in donations to foundations affiliated with the friend, whose daughter was hoping to qualify for the 2020 Olympics as an equestrienne. The Samsung executives describe the gifts as standard support for the country’s Olympic ambitions and deny allegations of bribery in this matter and others the prosecution has raised. read more »