Award Winning Attorneys
SEC Whistleblower Program
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NEW YORK – An independent survey of hedge fund professionals commissioned by [Jordan Thomas][prior firm][‘s], HedgeWorld and the Hedge Fund Association, revealed that nearly half (46 percent) believe that their competitors engage in illegal activity; more than one third (35 percent) have personally felt pressure to break the rules and about one third (30 percent) have witnessed misconduct in the workplace.
When asked if they would blow the whistle or report the misconduct, 87 percent of respondents said they would report wrongdoing given the protections and incentives such as those offered by the SEC Whistleblower Program. This investor protection program has broad extraterritorial reach and offers eligible whistleblowers, regardless of nationality, significant employment protections, monetary awards and the ability to report anonymously. To ensure that adequate funds are available to pay awards, Congress has established a replenishing Investor Protection Fund, which currently has a balance in excess of $450 million.
“While wrongdoing in the hedge fund industry may not be as widespread as many outside the industry believe, it does occur, and people in the industry are aware of it,” remarked Christopher Clair, Managing Editor at Hedgeworld. “It’s only when we eliminate the unfair advantages sought and exploited by some that true alpha can be found.”
“The high percentage of hedge fund professionals that are aware of the SEC Whistleblower Program and are willing to report wrongdoing is extremely encouraging,” said Jordan Thomas, Chair of the Whistleblower Representation Practice at [prior firm]. “Without individuals willing to report possible securities violations, internally or externally, responsible organizations and law enforcement authorities cannot police the marketplace effectively and efficiently.”
The survey’s top ten findings include:
-46 percent of respondents reported that their competitors likely have engaged in unethical or illegal activity in order to be successful.
-35 percent of respondents reported feeling pressured by their compensation or bonus plan to violate the law or engage in unethical conduct, while 25 percent of respondents reported other
pressures that might lead to unethical or illegal conduct.
-30 percent of respondents reported that they had personally observed or had first-hand knowledge of wrongdoing in the workplace.
-87 percent of respondents would report wrongdoing given the protections and incentives such as those offered by the SEC Whistleblower Program, while 83 percent of respondents were aware of
this important program.
-29 percent of respondents reported that it was likely that they would be retaliated against if they were to report wrongdoing in the workplace.
-28 percent of respondents reported that if leaders of their firm learned that a top performer had engaged in insider trading, they would be unlikely to report the misconduct to law
enforcement or regulatory authorities; 13 percent of respondents reported that leaders of their firm would likely ignore the problem.
-54 percent of respondents reported that the SEC is ineffective in detecting, investigating and prosecuting securities violations.
34 percent of respondents reported that recent regulation and law enforcement scrutiny will weaken the hedge fund industry.
-13 percent of respondents reported that hedge fund professionals may need to engage in unethical or illegal activity in order to be successful and an equal percentage would commit a crime—
insider trading—if they could make a guaranteed $10 million and get away with it.
-93 percent of respondents reported that their firm put the best interests of investors first.
“Our members have a deep commitment to corporate integrity,” noted Lara Block, Executive Director of the Hedge Fund Association. “Although some of the findings are troubling, this groundbreaking survey provides valuable insights that will help the industry to further strengthen its investor protection programs and root out any bad actors.”
About the Survey
Between February 25-March 17, 2013, ORC International conducted a confidential online survey of 127 respondents age 18 or older who work in the Hedge Fund industry. The sample for the study came from three sources: HedgeWorld, The Hedge Fund Association and ResearchNow.