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SEC Whistleblower Lawyer Blog

Our Attorneys Include a Former SEC Prosecutor and Wall Street Defense Counsel

The Securities and Exchange Commission has kept busy, even through the holidays. On January 10th, 2022, the SEC put out a press release announcing that three more people have received bounties after working with SEC staff to identify and discontinue wrongdoing in the financial sector.  The first whistleblower reported their concerns internally prior to notifying the SEC. This information contributed significantly to an existing investigation. The SEC was not previously aware of this misconduct. This whistleblower’s information assisted the staff in developing a well-organized and effective investigation leading to the enforcement action.  The whistleblower kept in touch with the staff throughout the investigation to help uncover the full extent of misconduct as well as identify all possible witnesses. This information as well as other assistance also helped the SEC staff to obtain evidence of wrongdoing that was occurring overseas. Without this information from the whistleblower, the activity would have been difficult to uncover. In this case, the first whistleblower received an award of $2.6 million.The Securities and Exchange Commission has kept busy, even through the holidays. On January 10th, 2022, the SEC put out a press release announcing that three more people have received bounties after working with SEC staff to identify and discontinue wrongdoing in the financial sector. Continue reading

Given both the breadth of the activities that can constitute violations of the Foreign Corrupt Practices Act (FCPA) (since it precludes giving anything of value) and the severity of the possible penalties (prison terms and millions of dollars in fines), the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have created lists of “red flags,” so executives can know when they are in danger of violating the law. Red flags include: The business transaction takes place in a nation known for corruption The involved parties have a history of previous bribery allegations The involved parties have a poor business reputation The involved parties are known for having a poor (or nonexistent) compliance program There is a lack of due diligence by the involved parties Since FCPA (backlink to FCPA blog when Justia puts up) violations often involve a third party acting as an intermediary between the covered person and entity and a foreign official, there are also red flags for third parties: The third party is involved at request of the foreign official The third party is a relative or close ally of the foreign official The third party will receive excessive compensation or unreasonably large discounts The third party has vaguely described services (even in agreements) The third party isn’t normally engaged in this type of business The third party is a shell company for an offshore jurisdiction or requests payment to offshore bank accountsGiven both the breadth of the activities that can constitute violations of the Foreign Corrupt Practices Act (FCPA) (since it precludes giving anything of value) and the severity of the possible penalties (prison terms and millions of dollars in fines), the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) have created lists of “red flags,” so executives can know when they are in danger of violating the law. Continue reading

Both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are responsible for enforcement of the Foreign Corrupt Practices Act (FCPA). And as this dual-enforcement mechanism suggests, FCPA violators can face criminal and civil penalties, and there are punishments for both the responsible individuals and the entities involved. For individuals convicted of FCPA violations, penalties can include: Up to five years in imprisonment Up to $100,000 in criminal penalties Up to $10,000 in civil penalties For entities convicted of FCPA violation, penalties can include: Up to $2,000,000 in criminal penalties Up to $10,000 in civil penaltiesBoth the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are responsible for enforcement of the Foreign Corrupt Practices Act (FCPA). And as this dual-enforcement mechanism suggests, FCPA violators can face criminal and civil penalties, and there are punishments for both the responsible individuals and the entities involved. Continue reading

After a broker or investment advisor leaves a FINRA member firm, a broker dealer is required to file a Form U5 with FINRA. This form details the broker's termination. This is the case even if the broker voluntarily terminates his or her employment, or the individual is no longer working as a broker, but is still working for the firm in a different capacity.  Many brokers have found after leaving that some firm uses the Form U5 to damage the brokers reputation as a securities representative. This is similar to employees who leave other types of jobs, sometimes on good terms, but are either refused a reference or given a bad one. In either case, the individual changing employment finds him or herself in a difficult position. This is particularly true if the employment was not terminated voluntarily.  Brokers who feel like they have been maligned by former employers have increasingly sought legal counsel in order to defend themselves, clear their name, and usually with a financial settlement from their former firm as well as FINRA.After a broker or investment advisor leaves a FINRA member firm, a broker dealer is required to file a Form U5 with FINRA. This form details the broker’s termination. This is the case even if the broker voluntarily terminates his or her employment, or the individual is no longer working as a broker, but is still working for the firm in a different capacity. Continue reading

The U.S. Congress has established whistleblower programs with monetary awards to incentivize individuals to report possible violations of the federal securities laws to the Securities & Exchange Commission and the Commodities Futures Trading Commission. The information reported to these agencies can be past, ongoing, or future fraudulent activities. They include:  Ponzi or Pyramid schemes or High-Yield Investment Programs Theft or misappropriation of funds or securities Manipulation of a security's price or volume Front running, in which a trader is aware of pending customer orders for a security and buys or sells unfairly. Accounting fraud, in which accountants fail to identify false information made by clients regarding their financial status Pump-and-dump schemes and stock manipulation, including false statements regarding a public company's financial reports and lying to corporate auditors Mutual fund fraud, which entails deceptive acts that disadvantage investors Bribery to obtain or retain business, including with foreign officials Insider trading Fraudulent or unregistered securities offerings Abusive naked short selling Fraudulent conduct associated with municipal securities transactions or public pension plans Initial Coin Offerings and Cryptocurrencies The U.S. Congress has established whistleblower programs with monetary awards to incentivize individuals to report possible violations of the federal securities laws to the Securities & Exchange Commission and the Commodities Futures Trading Commission. The information reported to these agencies can be past, ongoing, or future fraudulent activities. They include: Continue reading

Whistleblowers help maintain the integrity and fairness of U.S. financial markets. They are a vital watchdog and play an essential role in the securities markets.  The whistleblower process can be vigorous and draining and comes with risk. Once a whistleblower decides to take a moral stand on what is right, they must carefully prepare for the process and possible consequences.  A whistleblowing complaint might trigger an employment agreement provision that could jeopardize the job of a whistleblower, even out of retaliation. While laws exist to protect whistleblowers who are wrongfully fired, ensuing lawsuits and getting re-established in the workplace can take their toll. There is also the possibility of getting blackballed because of the whistleblower association.  Even if not fired, a whistleblower might suffer fear of termination and reprisal. They might get shunned and emotionally ostracized and find themselves in a hostile working environment. Stress and anxiety are often a natural part of the process.Whistleblowers help maintain the integrity and fairness of U.S. financial markets. They are a vital watchdog and play an essential role in the securities markets.

The whistleblower process can be vigorous and draining and comes with risk. Once a whistleblower decides to take a moral stand on what is right, they must carefully prepare for the process and possible consequences. Continue reading

Whistleblowers should proceed from the very start—as soon as they suspect something is amiss—with the strategic guidance, support, and watchful eye of experienced counsel. The whistleblower path is fraught with difficulty and decision-making that cannot be done without the right attorneys to help. For example:  Whistleblowers need counsel to help determine whether they have a viable complaint to make in the first place and, if so, how to make an informed decision about whether to move ahead. Once the decision is made, whistleblowers need experienced counsel to help them gather the evidence and assemble an effective package to maximize success and persuade the government to get involved. The best SEC whistleblower lawyers have experience with the SEC and the whistleblower program. They need a strong advocate to help them through the process with minimal risk, including protection against possible retaliation and mistreatment, including in the workplace. They are entitled to a vigorous pursuit of the monetary reward that comes with a successful complaint. Rewards given are based on the significance of information and assistance given to investigators. The level of protection whistleblowers receive depends on what they report and how they report it. Counsel is required if whistleblowers want to file an anonymous claim with the Securities & Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Further, they will need counsel to ensure their identities are protected to the extent the law allows.Whistleblowers should proceed from the very start—as soon as they suspect something is amiss—with the strategic guidance, support, and watchful eye of experienced counsel. The whistleblower path is fraught with difficulty and decision-making that cannot be done without the right attorneys to help. For example: Continue reading

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