McIlroy has a lot of work to do to catch Stricker (AP)

JOHNS CREEK, Ga. – Rory McIlroy was back on the course at the PGA Championship with a heavily taped right wrist, chasing his second major championship.

He's got a lot of work to do to catch Steve Stricker.

So does everyone else.

The Wisconsin native set the early pace with a 7-under 63 at Atlanta Athletic Club, just a hair away from posting the best score ever in one of golf's biggest events.

Stricker was scheduled to tee off in the afternoon Friday, giving the morning starters a chance to take a run at his record-tying score.

Those included McIlroy, who blew away the field at the U.S. Open and came into the year's final major as the favorite.

But a mishap Thursday put a damper on his chances, and a triple bogey in the second round left him with a daunting nine-stroke deficit to make up.

McIlroy was injured when he took a foolish swing off a thick tree root at the third hole, forcing him to play most of the opening round with an aching, taped-up wrist.

He still managed a 70, and decided to play on after an MRI showed there was no chance of causing more damage.

"It's the last major of the year," McIlroy said. "I've got, what, six or seven months to the Masters? So I might as well try and play through the pain and get it over and done with."

With a wrapping on his wrist and forearm, McIlroy took a shorter-then-usual warmup at the range. He then teed off on the back side in a group that included two other major champions, Masters winner Charl Schwartzel and British Open champ Darren Clarke.

McIlroy got his score to 1 under on the day and for the tournament when he rolled in a 40-footer for birdie at the 16th.

But the 22-year-old from Northern Ireland ran into major problems at the par-3 17th, dunking his tee shot in the water.

After shooting a stunned look toward his caddie, McIlroy wedged his ball onto the green from the drop zone. But he needed three putts to get down and staggered toward the 18th tee with a triple bogey.

McIlroy made the turn with a 37 and was 2 over for the tournament.

There were a couple of players making a charge. D.A. Points shot a 3-under 32 on the front and closed within three strokes of Stricker. Anders Hansen also was at 4 under with four holes to play.

So many wacky things happened on the first day at this course in Atlanta's sprawling northern suburbs, Stricker's brilliance and McIlroy's injury were only part of the story.

Tiger Woods opened with a 77, his worst score ever in the PGA. Japanese star Ryo Ishikawa put six — yes, SIX! — balls in the water and wound up with an 85, the highest score of his professional career. The groundskeepers had to contend with mowers gone wild, hastily repairing two greens that were damaged while being clipped.

The craziness extended into Friday, when Brandt Snedeker showed up about 2 minutes late for his 8:10 a.m. tee time and was assessed a two-stroke penalty.

Snedeker was seen running toward the first tee, but he didn't get there quick enough to avoid the penalty. It wasn't immediately known what caused him to be late.

There were no glitches for Stricker, at least on Thursday. Starting on the back, he cruised through the tough four-hole finishing stretch with two birdies, sparked by a hybrid tee shot to 10 feet at the 15th, a monstrous par-3.

"I really felt like I was in trouble coming into this tournament," Stricker said. "I really didn't feel that good on the course."

Well, imagine how Woods felt.

He started out like the Tiger of old, making three birdies in the first five holes for a share of the early lead. He ended like the Tiger we've seen more and more of over the past three years, spraying two shots into the water, a dozen into the sand — and not many at all in the fairway.

The only time he's done worse in a major was that 81 in the 2002 British Open, largely because of hideous weather at Muirfield.

He couldn't blame this one on the conditions in Deep South. It's expected to be sunny and sweltering through the weekend.

"I'm not down," Woods said. "I'm really angry right now."

Stricker's Wisconsin neighbor, Jerry Kelly, had a career-best 65 Thursday and was two shots behind heading into his afternoon round.

Former PGA champion Shaun Micheel, who opened with a surprising 66, tumbled off the leaderboard after playing his first 11 holes at 9 over.

___

Follow Paul Newberry at http://www.twitter.com/pnewberry1963

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Exclusive: SEC builds new tips machine to catch the next Madoff (Reuters)

By Sarah N. Lynch and Matthew Goldstein Sarah N. Lynch And Matthew Goldstein – Wed?Jul?27, 8:29?am?ET

WASHINGTON/NEW YORK (Reuters) – For more than three years, U.S. securities regulators investigated allegations of accounting fraud at a small telecom firm called China Voice Holding Corp, but could not make a case.

Then last November, they got an unexpected break. A Texas-based tax consultant doing work for a firm affiliated with China Voice contacted the U.S. Securities and Exchange Commission with information about suspicious money transfers she'd detected.

The call from Dee Dee Stone was quickly routed to a preliminary version of the SEC's new $21 million "Tips, Complaints and Referrals" or TCR Database, which the agency later fully deployed in March. Within 24 hours, Stone, a former Internal Revenue Service agent, got a call from an SEC attorney spearheading the China Voice inquiry.

Five months later, the SEC on April 29 sued several China Voice executives, claiming they had duped investors out of $8.6 million in a Ponzi scheme. Agency lawyers say without Stone's help, regulators may not have even discovered the scheme, let alone made a case so soon.

The alleged fraud at China Voice was small in the annals of Wall Street sins. But the SEC's response to Stone is an indication that after dropping the ball on Bernie Madoff, the nation's top securities cops are trying to modernize the way they handle tips and complaints about potential wrongdoing.

The TCR Database is the SEC's most significant response to its well-documented fumbling of early tips about Madoff's $65 billion fraud. The SEC's new Office of Market Intelligence, which last summer also forged a first-of-its kind partnership with the Federal Bureau of Investigation, is using the database as a key tool.

The changes are part of an effort by SEC Chairman Mary Schapiro to overcome the agency's reputation for being a step or two behind the bad guys. It is far too soon for the SEC to declare victory. But some of the agency's harshest critics notice a change.

Among them is Harry Markopolos, the Boston-based financial analyst and fraud investigator best-known for trying to alert regulators about problems with Madoff's operation. Markopolos said since the database went into operation, he has submitted three of his own tips. In all three cases, he heard back from an SEC attorney within days, or in one case, a few hours.

"Everything they should have done in the Madoff case they are now doing," said Markopolos. "They have done a fantastic job of reforming themselves."

In February 2009, Markopolos told the House Committee on Financial Services that the SEC's "investigative ineptitude and financial illiteracy" permitted Madoff's crimes to go on for so long.

PAPER, PENCILS & FAXES

It took the embarrassment of the Madoff scandal to drag the SEC into the 21st century when it comes to tracking tips and complaints.

Tips used to come via phone calls, e-mails, faxes and even handwritten letters into the SEC's 11 regional offices and Washington headquarters. Before the Madoff case, the SEC's Los Angeles office might receive a written complaint about a bad broker, for instance, and stuff the letter into a filing cabinet if it was deemed without merit. So, if later on a complaint about the same broker was sent to the SEC's Chicago office, staff there would have no easy way of knowing about the earlier tip and connecting the dots.

Sometimes, the only way an attorney could find out if someone had looked into a complaint would be to call all the other SEC offices.

"It was a sieve, basically," says Russ Ryan, a partner in the Washington law office of King & Spalding who spent a decade at the SEC before leaving in 2004. "It probably got better as I went along in my career, but I remember back when I first started there, it was a lot of paper and pencil type stuff."

Now with the TCR Database, once a tip or complaint is entered into the system, about 2,300 SEC employees can see it and add new information.

"All of the plumbing was brought into one place," said Thomas Sporkin, a nearly 19-year veteran SEC attorney in Washington, who oversees the agency's new Market Intelligence Unit and its 41-member team.

The database is emerging alongside a new program by the FBI's criminal profiling group in Quantico, Va. that is creating a series of behavioral composites to help agents investigate white collar crime.

The more systematic approach by the SEC and FBI comes in response to the growth and complexity of financial crimes in recent years. In the US government's 2010 fiscal year, the FBI's economics crime unit reports the bureau had 1,703 active securities and commodities fraud investigations, a 41 percent increase over the number of active investigations in 2008.

Over the past year, the amount of monetary penalties the SEC has imposed on wrongdoers has almost tripled, with high-profile cases against companies such as Goldman Sachs, Citigroup and Morgan Keegan for their roles in the crisis.

Sporkin's 41-member Market Intelligence Unit last month moved into new offices in Washington that look a little bit like a Wall Street trading floor, where they process more than 100 tips, complaints and referrals that come in each day.

The group's chief task is to ensure legitimate tips, like the one from Stone about China Voice, get routed to the right attorneys. The triage process begins with analyzing the information provided by tipsters, whistleblowers and self-regulatory organizations on an online questionnaire in the TCR Database portal.(https://denebleo.sec.gov/TCRExternal/index.xhtml)

The SEC is also trying to revamp the way it uses the raw data it gathers. Sporkin's team is working side-by-side with an FBI expert in financial crimes under a deal agreed to last August.

The FBI agent gets to look at all the tips about securities fraud as they come into Sporkin's team. For the FBI, the partnership offers the promise of faster criminal investigations. For the SEC, it's a chance to learn a trick or two from law enforcement.

Having an FBI agent embedded with the SEC "is really revolutionary," Sporkin said.

Other regulators are trying to set up their own FBI partnerships, including the Commodity Futures Trading Commission, which regulates the futures and over-the-counter derivatives market. The CFTC, which declined to comment, has also been closely studying the operation of Sporkin's team.

THE FBI EMBED

Jeffrey Horner, the FBI agent embedded with Sporkin's group, is an accountant who worked for audit giant PriceWaterhouseCoopers before joining the bureau in 2004.

Horner says he's not allowed to talk about specifics, but the nearly year-long partnership has led to new leads and bolstered existing FBI files.

"Some of the raw data that comes into the SEC, the (FBI) case agents may not be aware of," he said. "So plugging them in with the SEC and the information that the SEC has can be very valuable to an ongoing investigation."

FBI agent Horner is also sitting in on two SEC working groups examining micro-cap fraud and Chinese businesses that have done so-called reverse mergers with small U.S. shell companies. The FBI has opened its own broad investigation into reverse mergers and allegations of accounting irregularities.

Horner also uses the SEC's tips system to drill into areas of particular interest to the FBI. Right now, for instance, he is on the lookout for tips about high-yield investment scams as well as high-priority areas such as insider-trading and market manipulation.

The real test of the partnership -- and the effectiveness of the TCR Database -- will lie in the kind of cases the SEC and federal prosecutors file.

An independent analysis of the work of Sporkin's team could come when SEC Inspector General David Kotz conducts a planned audit of the Market Intelligence Unit's triage work. Kotz, who issued a scathing report on the SEC's failures in the Madoff affair, has called the new database an adequate response to ensure tips are "acted upon in a timely and appropriate manner."

Former SEC lawyers and securities attorneys wonder whether more agents need to be assigned to the SEC-FBI partnership.

"My sense is that there would be so many things going across that person's desk, I am not sure one person can manage it," said James Cox, a law professor at the Duke University School of Law.

Officials with the SEC and the FBI don't rule out an enhanced relationship. They note that before Horner was embedded with the SEC, the two agencies coordinated on major investigations, such as the probe into insider trading by hedge funds.

At the same time, officials say they are sensitive to law enforcement protocols prohibiting prosecutors and the FBI from sharing investigative materials, such as wiretapped conversations, with securities regulators. They say it's easier for the FBI and SEC to work hand-in-hand before an investigation gets going to avoid any defense allegations of improper collaboration or information-sharing.

REWARDING WHISTLEBLOWERS

Sporkin's group is a work in progress and the TCR Database has some limits. It can't yet be cross-checked against other internal databases. The system s not advanced enough to perform more sophisticated analysis or data-mining, such as cross-checks against trading activity, company filings or news feeds.

"It will be several years before we really see whether this new system is a success," said Bradley J. Bondi, a former SEC attorney who is now a partner with Cadwalader, Wickersham & Taft LLP. "But I think the new system is a step in the right direction."

It's a system Sporkin expects will become bigger and better over time, especially now that the SEC in May finalized rules for its own whistleblower program, rewarding individuals who provide the agency with a high-quality tip that leads to a successful enforcement action.

Stone's tip about the potential Ponzi scheme at China Voice came in November 2010, after she says she grew concerned about the number of complaints she was hearing from investors in China Voice and related partnerships.

On May 31, Stone, testifying before a U.S. judge in Dallas in the China Voice case, said she learned about the new whistleblower rule only after hiring an attorney in advance of her court appearance. Her attorney, Misty Gutierrez, declined to comment; Stone didn't return telephone calls to her consulting business, Number Crunchers.

Stone told U.S. District Judge Reed O'Connor she started reviewing the bank statements for China Voice and those related companies after hearing the complaints, and quickly concluded, "something was wrong."

She talked about the money transfers with a friend who also once worked for the IRS and agreed the math didn't add up. The next day, Stone said she called the SEC.

(Editing by Bill Tarrant)

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