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Sunday, February 7, 2010

The criminal informant model spreads to the SEC

The Los Angeles Times reports that the SEC wants to emulate the IRS's bounty program for rewarding criminal informants: SEC chief wants to catch investment scammers in the act. I posted about the IRS program here: IRS expands use of informants. This trend towards courting criminal informants in white collar investigations, as opposed to innocent whistleblowers, is part of a larger systemic culture in which guilt has become completely negotiable. The IRS, for example, used to balk at rewarding offending informants who actually participated in the wrongdoing, but its new rules make it easier to do. To be sure, there are immense informational benefits to using offenders as snitches--they tend to have more information than innocent bystanders. But it squarely raises one of the central compromises that has dogged criminal snitching in drug and mafia investigations, which is that the process can forgive and even reward serious wrongdoers. The IRS and SEC should think carefully about the extent to which they are willing to emulate the world of drug enforcement, in which guilt and punishment have become percevied as commodities, in which cooperation can become a kind of get-out-of-jail-free card, and in which law enforcement is too often seen as tolerating crime and even violence from its informants in order to secure information.