November 17, 2010
I believe that the Whistleblower rewards should extend beyond company insiders to any individual or entity that brings substantial evidence of a fraud to the attention of the SEC.
There are too many regulated entities for the SEC to sufficiently inspect them all. However, there are firms out there that mine data and use forensic accounting for various purposes. An ancillary benefit to such forensic activities is that firms often come across inconsistencies that cannot be explained. These frauds are not reported for fear of a defamation suit, wariness of upsetting a large and powerful entity, fear of upsetting ones clients, and the time and cost burden on being in a position to help the SEC.
In addition financial advisers often hear stories of pitches made to their clients that are quite outlandish. Financial advisers do not report such activities to fear of the SEC looking into their own acticities.
I believe that the SEC should reward individuals and entities, who, like insiders, provide credible, novel evidence of a past or ongoing fraud.
Separately, the forms you are asking folks to fil out are quite cumbersome. In addition, these folks should not need an attorney. After all, who is going to pay for an attorney especially if the SEC does not end up acting on a tip given in good faith.