The Residential Mortgage-Backed Securities Working Group has
launched a whistleblower website to report fraudulent activities in the
mortgage-backed securities market. The Working Group wants to hear from people
who worked in the RMBS market who acted responsibly but who also may have
witnessed greed and misconduct that crossed the legal line and created havoc
for investors and the economy.
The SEC’s Office of the Whistleblower
said that the Working Group is particularly interested in information about residential
mortgage-backed securities fraud from corporate insiders who worked in the
industry and witnessed the misconduct. Fraud can be hard to uncover
without help from whistleblowers who were corporate insiders, noted the SEC,
adding that the Working Group has the ability to pursue fraud even when it
occurred several years ago.
The Residential Mortgage-Backed
Securities Fraud Working Group is part of the Financial Fraud Enforcement Task
Force, which was set up by President Obama in November 2009 to hold accountable
those who helped bring about the financial crisis as well as those who would
attempt to take advantage of the efforts at economic recovery.The RMBS
Working Group is a collaborative effort led by five co-chairs including the SEC
Enforcement Director and state and federal prosecutors. The Working Group and
its members are focused on investigating potential false or misleading
statements, deception or other misconduct by market participants in the
creation, packaging and sale of mortgage-backed securities.
The RMBS website is a new call to those insiders who know
about fraud that occurred in the RMBS market, who know it's time to expose that
fraud, and who want to help the Working Group hold accountable those
individuals and institutions who broke the law in pursuit of bigger paydays, said Acting Associate Attorney General Tony
West. He added that
whistleblowers enjoy legal rights that protect their ability to speak out without
the fear of retaliation. He pledged that the Working Group will do everything
it can to maintain the confidence and trust of whistleblowers who come forward.
The approach to RMBS investigations is systematic and smart,
noted Co-Chair and SEC Enforcement Director Robert Khuzami, with cross-agency
teams comprised of experienced prosecutors and investigators utilizing market
experts and risk-based criteria to triage transactions for review, and bringing
to bear the entire palette range of state and federal legal theories and
remedies. The SEC Director said that the
numbers reveal the Working Group’s effort and commitment, with the SEC alone
bringing to the effort more than 40 SEC staff from eight offices trained in
securitized products.
The SEC teams bring substantial ongoing investigatory work
to the effort as well. Since 2010, he observed, the SEC has issued over
300 subpoenas or document requests resulting in more than 30 million pages of
documents with interviews or sworn testimony taken from over 180 witnesses, all
focused on whether firms failed to disclose important information when selling residential
mortgage-backed securities.