Hunting wolves of Wall Street in natural habitat

THE drinks were flowing in Miami Beach that evening when Wall Street’s top cop crashed the party.

As dealmakers crowded around the sleek bar at the Fontainebleau Hotel in Miami in September last year, people from the Securities and Exchange Commission were mingling, looking for their next big case.

Like a skunk at a garden party, the SEC has been moving in on the funloving Wall Street conference circuit in the hope of getting a better handle on who’s up to no good in the world of finance. Officials scour attendee lists to spot the biggest players in advance and, properly wearing name tags, schmooze over drinks.

Of course, they don’t accept any — that’s a no-no under SEC policy.

The SEC isn’t the only US regulator trawling conferences for tips of suspicious conduct. The Commodity Futures Trading Commission set up a booth in the middle of an industry gathering in March. Attendees at the Boca Raton Resort & Club in Florida were greeted by smiling agency officials handing out metal whistles emblazoned with “CFTC” and mousepads advertising its toll-free number.

The efforts show how regulators are trying to step up their game after missing Bernard Madoff’s Ponzi scheme and facing criticism that they did not spot Wall Street abuses that led to the 2008 financial crisis.

“You have to credit the SEC for trying to understand what’s actually happening in the market,” said Pat Smith, a former federal prosecutor and partner at Smith Villazor in New York.

Enticing whistleblowers should be a bit easier these days. The 2010 DoddFrank Act allows the SEC to give tipsters bigger awards in more types of cases. In 2014, the agency paid more than $30-million to a source living outside the US in an undisclosed case. —