Brief History of the Global Financial Crisis and SEC

The global financial crisis of the 2000’s resulting in part from the collapse of the Lehman Brothers bank is something that the world is still experiencing the vestiges of fallout from. The largest bankruptcy by any company in United States history and gave rise to the phrase “too big to fail” in regards to corporations so ingrained into the economic system that their failure would result in a catastrophic domino effect.

Predatory lending became a standard of not just Lehman Brothers but several banking institutions in the US as lax regulations allowed. More homeowners were being loaned money and the bundling of sub-prime mortgages into mortgage backed securities allowed the banks to give out riskier loans. In addition to the mortgage backed securities the American government also encouraged banks to loan to lower income families as part of the CRA or Community Reinvestment Act. As more families bought houses the price of housing in general went up and those low-income families had to take higher and higher loans. This lead to higher delinquency rates and higher default rates. This all came to a head in 2008 when Lehman filed for bankruptcy.

This bankruptcy resulted in a bailout of several banks in the United States and abroad however that did not stop the plummeting of stocks. Six hundred billion dollars was created by the federal reserve as an injection into the banking system. Several regulations and regulations were enacted to police these risky practices in the future and this is where the SEC Whistleblower law firm comes into place.

The SEC Whistleblower program was created in response to this crisis to allow employees a safe outlet in which to report security law violations. It was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection act of 2010. Coming off the heels of the Bernard Madoff scandal in regards to his Ponzi scheme the SEC is not just concerned with the housing market that started the financial crisis of 2008 but also looks at other dishonest and illegal financial transgressions. Things the SEC Whistleblower program are looking for are things like Ponzi Schemes, price manipulation and insider trading. It gives incentives to report these activities for a reward of 10-30% of any monetary sanctions.

It is able to receive tips anonymously to prevent retaliation against any whistle-blowers. Employers are not able to fire, suspend, demote or in any way affect the current employment of the whistle-blower. One does not have to work for the organization in question in order to submit a tip to the SEC. All that is necessary is voluntary first-hand knowledge of a violation occurring in the past, present or future. Things that are public knowledge are not considered for the SEC.

The SEC has been able to acquire over 1.4 billion dollars since its founding and has proven to be a great success in punishing those violating security law. It is a very important part of protecting American consumers from predatory financial practices. It ensures anyone that comes forward with information regarding is protected and rewarded in order to encourage more people to come forward with information and help curb corruption in the financial sector.

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