Whistleblower’s Disclosure of Ponzi Scheme Underscored the Importance of Rewarding Whistleblowers

According to an article in the New York Times, a trader named Arthur Schlobohm detected a $160 million Ponzi scheme run by Trevor Cook.   As a result of Mr. Schlobohm’s courageous whistleblowing, Mr. Cook was sentenced to 25 years in prison and ordered to pay $158 million in restitution.

Mr. Schlobohm says that because regulators and law enforcement authorities are more reactive than proactive when it comes to financial crimes, it’s up to members of the industry to alert people about frauds before investors are hurt.

“The private sector — people like myself, people that are allocators of capital, people that are professional analysts in the asset-management world — have the highest degree of knowledge to be able to sniff this out in a minuscule amount of time, like I did,” [Mr. Schlobohm] said.

The Dodd-Frank Act provides monetary rewards to whistleblowers just like Mr. Schlobohm who detect and report fraud committed against private citizens, investors, and shareholders.  Check out more information about The Employment Law Group® and its SEC Whistleblower Practice or CFTC Whistleblower Practice.

Tagged: Dodd-Frank Act, Enforcement Bodies, Securities and Exchange Commission (SEC), Whistleblower Laws (Federal)