Gretchen Morgensen: A Whistle was Blown, but Who was Listening?


Livinglies's Weblog

The Securities and Exchange Commission calls itself the whistle-blower’s advocate. But one participant in the agency’s lauded whistle-blower program isn’t so sure.

He is Michael J. Lutz, an accounting specialist who raised his hand in early 2013 when he was at Radian Group, the giant mortgage insurer. At the time, Radian was still weathering the subprime crisis; it had insured loads of soured mortgages, and Mr. Lutz believed the company was lowballing the amount it might have to pay in claims on the loans.

Mr. Lutz, 31, worked at Radian’s headquarters in Philadelphia verifying that the company’s internal accounting controls were effective. This task is also known as Sarbanes-Oxley testing, named for the Enron-era legislation that bolstered the penalties for accounting fraud.

Radian was required to set aside reserves against potential losses on bad loans, and Mr. Lutz reckoned that his employer was materially understating those amounts. The…

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About Here and Now

I rant about issues concerning foreclosure, real estate law and any topic of interest. Normally my day job is Fashion and Costume Design. I like writing and reading interesting subjects.
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