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FBI to Help SEC Monitor Financial Fraud Tips

By Andrew Ramonas

A senior FBI official said Wednesday at a Senate hearing that the bureau will put one of its agents in a Securities and Exchange Commission office that handles tips, referrals and complaints sent to the federal regulatory agency.

FBI Assistant Director Kevin Perkins told members of the Senate Judiciary Committee that the bureau and the SEC recently agreed to put an FBI agent in the commission?s Office of Market Intelligence, as part of an effort to increase cooperation between the agencies on fighting financial fraud. Perkins joined Director Robert Khuzami of the SEC Division of Enforcement and Assistant Attorney General Lanny Breuer of the Justice Department Criminal Division to testify about their work to fight economic crimes since the enactment of the Fraud Enforcement and Recovery Act in May 2009.

?This cooperative effort on the part of both organizations will allow for much better coordination with regard to the referral of potential criminal activity in securities markets,? Perkins said.

Khuzami said the SEC is also offering new incentives to insiders who come forward with information about economic crimes.

The commission is offering reduced sanctions for company insiders who help with financial fraud investigations. The SEC is also creating a Whistleblower Office within the Office of Market Intelligence, which was established earlier this year. The Dodd-Frank Wall Street Recovery and Reform Act, which became law in July, gave the commission the ability to offer significant awards to whistleblowers of financial fraud.

?Those ? two efforts should do a lot to get us earlier information on the inside while a scheme is unfolding,? Khuzami said. ?That?s the best way to get as high up in the organization as we can.?

Sen. Ted Kaufman (D-Del.) in December at a similar hearing expressed frustration about the dearth of high-profile prosecutions tied to the 2008 financial meltdown. The senator reiterated his disappointment at the hearing Wednesday.

Breuer said the DOJ and its law enforcement partners are committed to fighting financial fraud at all levels. He said the DOJ has targeted ?thousands? of fraudsters, including corporate executives in the last year.

?We have doubled our efforts to send a strong, deterrent message to would-be fraudsters by vigorously prosecuting these criminals and sending them to jail,? Breuer said.

Full post as published by Main Justice on September 22, 2010 (boomark / email).