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SEC Whistleblower Lawyer Blog

Insider Whistleblowers in the Financial Advice Sector Set to Increase

Insiders in the investment advice sector are starting to grow bolder and start a trend of notifying the SEC of bad-acting firms and principals.

On August 30, 2016, the Securities and Exchange Commission announced another whistleblower award in the amount of more than $22 million.  The amount is the second-largest total the SEC has awarded a whistleblower.  The whistleblower’s detailed tip and extensive assistance helped the SEC halt a “well-hidden” fraud at the company where the whistleblower worked, according to the SEC.

Earlier this month, Indiana announced its first whistleblower award, giving $95,000 to a former JP Morgan official who helped the state’s regulator make an advice-related case against the firm that resulted in a $950,000 settlement.

The awards given this month highlight the importance of insiders stepping out of the shadows to “blow the whistle” on their bad-acting employers.  The insider whistleblowers have a better vantage point of the workings of their firm than an individual looking in from the outside.

Most whistleblower cases involve insider trading and off-market scams, such as Ponzi schemes.  According to an InvestmentNews report, wirehouses will likely be targeted by whistleblowers, as that is where most of the activity is to take place since they have wide-ranging operation that can show systemic problems.

Whistleblower regulation continues to sprout at the state level.  Indiana and Utah are currently the only states that have whistleblower laws, but other states are starting to notice the effect of these laws.  Utah alone has successfully prosecuted 15 cases based on leads from whistleblowers, according to the report.

At the federal level, the SEC surpassed $100 million in total awards with the $22 million awarded on August 30, 2016.  Precisely, $107 million has been awarded to 33 whistleblowers.  The largest amount was $30 million, and was awarded in 2014.

The whistleblowing rules provide great protection to the whistleblower, ensuring the whistleblower remains anonymous throughout the process and afterwards.  All in all, whistleblower rules offer confidentiality, protection from retaliation, and reward fraud tipsters for reporting wrongdoing that leads to an SEC enforcement action in which over $1 million in sanctions is ordered.  The award can range anywhere from 10 to 30 percent of the sanctions, according to the website.

Scott L. Silver, managing partner of the Silver Law Group, was an early proponent of the whistleblower legislation and authored a primer on the SEC Whistleblower Program.  Our legal team includes former defense attorneys and government prosecutors now working to protect whistleblowers.

Silver Law Group is committed to the protection of whistleblowers through the whistleblower claim process and can prosecute your whistleblower claims.  If you have questions about your legal rights as a whistleblower, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.

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