Attorney General Eric Holder is calling on Congress to enhance a federal whistleblower law to encourage Wall Street executives who may be reluctant to report illegal conduct.
Insider information has been critical in recent federal prosecutions of financial firms, giving investigators "smoking gun" evidence that can be used to show an intent to commit fraud, Holder said Wednesday in remarks prepared for a speech in New York.
A Justice Department official said the government is currently investigating potential illegal conduct by individuals at major financial institutions. Holder is hopeful, the official said, that these cases will lead to criminal charges against some company executives in the next few months.
But in his remarks, Holder said federal law should be changed to allow bigger rewards to Wall Street whistleblowers who provide evidence of financial fraud.
The law applying to fraud against investors or consumers caps the reward to whistleblowers at $1.6 million. By contrast the federal False Claims act, which applies to fraud committed against government programs, allows whistleblowers to receive as much as one-third of the eventual financial settlement.
While the $1.6 million cap may seem like a lot of money, Holder said it is not a sufficient lure to induce a Wall street executive to risk a career by turning over insider information.
Holder also said the FBI must be allowed to hire more agents devoted to white collar crime with expertise in forensic accounting. While such a background was once a staple of the FBI's hiring, it switched its focus to counterterrorism after the 9/11 attacks. Rather than ask the FBI to divert resources, it must be able to add to its overall ranks, he said.
Over the past few years, the attorney general said, financial firms have become skilled at structuring themselves to prevent senior executives from having knowledge of all that goes on at their firms. Such arrangements, he said, are attempts to shirk accountability and cannot be permitted to continue.