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Dodd-Frank Legislation Prompting More Whistleblowers Already!
Theanonymous whistleblower suit was filed against Plainfield Asset Management, a hedge fund that once had $5 billion in assets under management, alleging the fund inflated assets and then charged management fees based on those false figures. The FBI has initiated an investigation, reports Fortune.
The fund says it has done nothing wrong. In a letter to investors it stated the SEC conducted an exam of Plainfield in June 2009 that lasted nearly three weeks. "We had an exit interview with the SEC in October 2009, and no issue regarding valuation was raised," the fund said.
This may or may not amount to anything. But employees are well-incented to raise these issues, and it will be interesting to see who hears the siren call of a possible huge payout.
Controversy has been dogging the fund. The Manhattan DA is also investigating allegations that the firm "engaged in a so-called loan-to-own scam," reports Fortune. Some of the fund's borrowers say Plainfield loaned them money and then "fabricated" a default event into order to take over their businesses.
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