People toss around the term “fraud” all the time, often it to describe something fake or insincere. But when it comes to the legal understanding of the term in context of the securities laws, fraud means more than something fake. Understanding what fraud means is important for those who work in the financial sphere—especially if you’re working with clients who aren’t sophisticated investors. Where the line is between aggressive sales, marketing and investing, and actual fraud is sometimes hard to determine. Continue reading
If you’re aware of a SPAC that is defrauding investors, you may be wondering if you should go to the Securities and Exchange Commission (SEC) and become a whistleblower. While how to best submit your case will always depend on your case, here are guidelines to help you understand the process. But one thing to keep in mind from the start: It’s important to realize that the SEC receives many tips, but it only pursues a few. So the real issue isn’t how you file a tip. Your real question should be, “How do you get the SEC to take an interest in your case?” Continue reading
The SEC announced another whistleblower bounty that paid nearly $3.5 million to four individuals.
Jointly, three whistleblowers provided information to the SEC that led to the staff opening an investigation. The investigation led to a successful enforcement action by the SEC. Additionally, that information and investigation led to another agency opening its own investigation, culminating in a separate enforcement action. Continue reading
The SEC has awarded $3M to three different whistleblowers for assisting with three distinct covered actions in three separate orders.
1. In the first order, the Claims Review Staff (CRS) awarded a bounty of $1.5 million to an individual who provided original information and voluntarily gave assistance to SEC staff that led to a successful covered action. Continue reading
The SEC has again given an award to a whistleblower. This time it totals $3.5 million, and comes after multiple instances of support from the individual.
The whistleblower’s contribution prompted SEC staff to investigate more possible securities violations. This made the investigation easier for the SEC staff, which saved them time and resources. Continue reading
Most whistleblowers are keen to keep their activity concealed and private until the information becomes public. In an unusual twist, one whistleblower decided to publish a research report online detailing the fraudulent activity of a company and that of its CEO prior to notifying the SEC of the fraud.
Within days of sharing this information online, the whistleblower then shared the same information with the SEC. The individual was persistent in reaching out to SEC staff about this information. Their continued contact led to the SEC opening an investigation that resulted in a successful enforcement action. This whistleblower was an outsider, not an employee of the company. Continue reading
As we’ve blogged many times, the SEC pays whistleblowers monetary awards out of funds collected from companies and individuals that violate securities law through administrative fines and other sanctions. Since 2012, when the first award was made, the SEC has awarded $1.2 billion to 245 whistleblowers. Continue reading
When it comes to legal terminology, there’s one term that is frequently discussed but little understood: Arbitration. Let’s discuss what arbitration is and how it can impact your whistleblower claim.
Arbitration is a sort of private mini-trial to litigate disputes between two or more parties. Rather than going to court for a lawsuit, disputing parties present facts and arguments before a private judge, known as an arbitrator, that the parties have hired to hear their case. The arbitrator makes a decision on the case, just as a judge in a court would do, and the parties must follow the arbitrator’s decision. Continue reading
- In the first proceeding, the SEC awarded two individuals a bounty of $37 million that provided crucial evidence leading to the success of the covered action. One individual helped SEC staff understand the evidence provided, and led to additional relevant information. The continuing assistance of both gave staff more information that helped to advance the investigation. Another governmental agency was involved with this action with its own separate “covered action.” Both whistleblowers received 50% of the bounty amount.
- In the second proceeding, the SEC awarded one individual $1.8 million for the new information they provided that saw SEC staff open a new investigation into misconduct. The individual quickly offered an internal report, and continued to provide SEC staff with information, documentation, and other assistance throughout the investigation. Charges in the affiliated covered action were a direct result of this individual’s contributions, which caused them to suffer hardships as a result.
- In the third proceeding, a whistleblower received an SEC bounty of $1.5 million for information and assistance in an existing investigation that led to a successful enforcement action. As with the previous two, this individual gave continued and substantial assistance to SEC staff throughout the investigation. This whistleblower provided new information that saved staff time and resources and helped staff to understand the issues involved.
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