Articles Posted in Hedge funds as whistleblowers

With several knew laws on the books encouraging whistleblowers to come forward with significant rewards for doing so in the financial industry, healthcare, military contracts and more, there is an interesting and sensitive issue which I expect will come to light soon. Because major whistleblower cases can and do affect the bottom line of publicly traded companies, astute hedge fund players can use the whistleblower case as a basis for shorting the stocks and the returns are significant. All that is needed is information that the case is filed or about to be filed and will have a material affect on the stock of a company. There are indications that this lightbulb has already been turned on as some hedge funds are funding whistleblower cases for a percentage of the rewards, which can be in the hundreds of millions. It is not a stretch to assume that the funder will know about the timing of the case. Insider knowledge? No clear answer. In other cases, the hedge funds themselves and their managers, armed with knowledge of fraud on the government are becoming the whistleblower relators themselves! More on this to come…