Whistleblowing is Paying Off

The WSJ reported this week that the SEC has handed out it's second ever Dodd-Frank award for whistleblowing. the article says that the SEC expects more awards in the future. Here's a quote...

Wall Street Justice III: Fraud Pays in Healthcare Industries

One of my students forwarded me a link to an article describing numerous pharmaceuticals that have committed fraud only to have the CEO receive a hand slapping and a multi-million dollar bonus on the way out the door. Here are a few of the cases mentioned in the Forbes article:

Scammers Taking Advantage of Confusion About Health Care Bill

According to an article by The Associated Press, scammers are trying to cash in on confusion about the new health care legislation. Given that wherever there is money, there is fraud, this doesn't surprise me. Scammers are about as consistent a creature as they come! Here are a few quotes:

Health and Human Services Sec. Kathleen Sebelius said Tuesday she is warning state officials about a proliferation of scams involving phony health insurance policies. ...

Some of the hustlers are going door to door claiming there's a limited open-enrollment period to buy health insurance now. But the big expansion of coverage won't come for another four years, and door-to-door salespeople are unlikely to be part of the plan then.

"Unfortunately, scam artists and criminals may be using the passage of these historic reforms as an opportunity to confuse and defraud the public," Sebelius wrote in a letter to state insurance commissioners and attorneys general.

Anyone want to buy some snake oil?

Today I got an email from a neighbor who is promoting a new product that is supposed to relieve pain. The "amazing product" shown in the picture is touted as an energy wand that uses "breakthrough amized fusion technology." The claim is that the wand will "turn on your body's own source energy within" so you can "experience your aches and pains leaving your body."

In the email, the wand is said to be responsible for immediately relieving the pain of a man whose ribs were sore for three years since his second open heart surgery. Sounds pretty good, right? Well, additionally, the wand was able to make lemons taste sweeter and make bitter olive oil lose its bitterness and become “quite pleasant.”

Now, these claims were only the beginning. Migraines went away; knee pain vanished, back pain immediately gone, broken noses healed, nasal steroids were no longer needed! I know that some people will actually find relief when using it. Why?

Another bubble candidate

In addition to the green energy industry, I believe that the health care industry has potential to develop into our next bubble. The attitude toward the health care industry is similar in many ways to the pre-bubble attitude toward the housing industry. Similar to housing (and green energy), health care is being subjected to a great deal of government tinkering, with the objective of making health care affordable for all (note: I will save my political views on health care reform for another post--in this post I simply wish to point out the similarities between the pre-bubble housing industry and the current health care industry). In addition, many individuals believe that the demand for health care will continue to either increase or remain constant, similar to the "house prices will always increase" belief. Although differences between the two industries (e.g. a lower degree of leverage in health care) may limit the severity of a health care bubble in comparison to the housing bubble, I still believe that health care is a viable candidate for our next bubble.