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The SEC settled charges against CRBE, a Dallas-based commercial real estate services and investment firm, for using a clause in their separation agreements that violated the Securities and Exchange Commission’s whistleblower protection rule. Departing employees could receive separation pay only if they signed a release that stated they had not filed any complaints against the firm with the SEC or any other federal agency. This violates the SEC’s whistleblower protection rule for those employees. During 2021 and 2022 nearly 900 former employees had signed this release as part of their separation agreement. Those agreements would impede a former employee from filing a claim. Making it contingent for employees to receive separation pay was an action intended to directly prohibit them from contacting any federal agency regarding the company. This directly violates whistleblower provisions under Exchange Act Rule 21F-17(a).The SEC settled charges against CRBE, a Dallas-based commercial real estate services and investment firm, for using a clause in their separation agreements that violated the Securities and Exchange Commission’s whistleblower protection rule. Departing employees could receive separation pay only if they signed a release that stated they had not filed any complaints against the firm with the SEC or any other federal agency. This violates the SEC’s whistleblower protection rule for those employees. During 2021 and 2022 nearly 900 former employees had signed this release as part of their separation agreement. Continue reading

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Can a company prohibit former employees from speaking to federal regulators, such as the SEC, and function as a whistleblower? They can certainly try, but it is still illegal. Monolith Resources, LLC, based in Nebraska, included language in their employment separation agreements prohibiting departing employees from recovering money through participation in investigations, enforcement actions, or filing claims with the government. This includes participating in the SEC's Whistleblower program. On Friday, September 8, 2023, the privately held tech and energy company agreed to pay a $225,000 penalty for violating the whistleblower protection rules and including this language in their employee separation agreements. According to the SEC, the company included this language for approximately three years.Can a company prohibit former employees from speaking to federal regulators, such as the SEC, and function as a whistleblower? They can certainly try, but it is still illegal.

Monolith Resources, LLC, based in Nebraska, included language in their employment separation agreements prohibiting departing employees from recovering money through participation in investigations, enforcement actions, or filing claims with the government. This includes participating in the SEC’s Whistleblower program. Continue reading

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The SEC recently announced yet another sizeable award to an individual who came forward as a whistleblower. In the press release, the SEC described the $18 million award to a single individual who “refused to turn a blind eye to the wrongdoing, reporting misconduct internally and then to the Commission.”  The whistleblower first reported the conduct internally, and then notified the SEC, who then began an investigation. Information from this whistleblower was also closely related to the charges that were levied by the SEC. The cooperation, information, and assistance the individual provided proved invaluable to SEC staff, saving both time and resources throughout the investigation.   The $18 million award is a percentage of monetary sanctions and other costs collected from the company itself, not from recovered investor’s funds.   A second claimant’s application for award was denied after it was established that they did not contact the SEC within 120 days of internally reporting the conduct and did not lead to a successful enforcement action.  The SEC recently announced yet another sizeable award to an individual who came forward as a whistleblower. In the press release, the SEC described the $18 million award to a single individual who “refused to turn a blind eye to the wrongdoing, reporting misconduct internally and then to the Commission.”  Continue reading

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In the SEC’s latest press releaseIn the SEC’s latest press release, seven individuals have received bounties after supplying credible information and continued assistance that led to a successful enforcement action. The same information and assistance led to another successful related action by a different federal agency. The bounty of $104 million is the fourth largest award in the history of the SEC’s Whistleblower program. Three single claimants and two sets of joint claimants submitted timely information and offered considerable assistance to SEC staff that allowed them to pursue actions against the company for documented misconduct. The same information was used by another agency and led to two more related actions that included awards., seven individuals have received bounties after supplying credible information and continued assistance that led to a successful enforcement action. The same information and assistance led to another successful related action by a different federal agency. The bounty of $104 million is the fourth largest award in the history of the SEC’s Whistleblower program. Continue reading

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The SEC has announced its latest whistleblower bounty of approximately $9 million to one individual. The amount represents a percentage of the collected monetary sanctions from the enforcement actions. In the press release, the SEC stated that the individual “repeatedly” reported their concerns internally before submitting their information to the Enforcement Division. The whistleblower then provided “substantial and ongoing cooperation” to SEC staff, which included substantial, comprehensive information that led to a successful enforcement action.The SEC has announced its latest whistleblower bounty of approximately $9 million to one individual. The amount represents a percentage of the collected monetary sanctions from the enforcement actions.

In the press release, the SEC stated that the individual “repeatedly” reported their concerns internally before submitting their information to the Enforcement Division. The whistleblower then provided “substantial and ongoing cooperation” to SEC staff, which included substantial, comprehensive information that led to a successful enforcement action. Continue reading

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In December 2022, the social media world was stunned to learn that federal prosecutors and the Securities and Exchange Commission (SEC) were filing civil and criminal charges against eight social media influencers. According to the complaints, the prosecutors and SEC accuse the influencers of using their social media visibility to manipulate stock prices—a $114 million fraud scheme. As we will discuss below, the case highlights the line between legitimate advice to investors and illegality, whether it's dispensed online for the public or in more traditional forms of investor communications. A Pump-And-Dump Reimagined Is Still A Pump-And-Dump In the 2022 case, the defendants allegedly ran a “pump and dump” scheme. According to the criminal indictment, the defendants purchased stocks at a low value, then posted positive but unfounded messages about them on social media. They disseminated false claims about how long they intended to hold onto the securities, the amount of due diligence they’d conducted relating to the securities’ values, and how much they believed the securities would increase in value. It worked. The stock prices rose. Then, the defendants secretly sold their shares, profiting at least $114 million from their manipulations.In December 2022, the social media world was stunned to learn that federal prosecutors and the Securities and Exchange Commission (SEC) were filing civil and criminal charges against eight social media influencers. According to the complaints, the prosecutors and SEC accuse the influencers of using their social media visibility to manipulate stock prices—a $114 million fraud scheme. As we will discuss below, the case highlights the line between legitimate advice to investors and illegality, whether it’s dispensed online for the public or in more traditional forms of investor communications. Continue reading

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GavelMoney-300x200Largely ignored amidst the fanfare (and controversy) surrounding the spending bill that President Biden signed into law at the end of the year is a historic provision relating to whistleblowing and anti-corruption efforts. Industry experts have heralded passage of the Anti-Money Laundering (AML) Whistleblower Improvement Act as a vital step against foreign and domestic corruption. Continue reading

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Glass-300x200On September 28, 2020, the Securities and Exchange Commission (SEC) announced it had settled actions against two public companies for improperly reporting their quarterly Earnings Per Share (EPS). These actions were the first to come out of the agency’s Division of Enforcement’s “EPS Initiative.” A handful of other companies have been investigated since then due to the initiative, and there are signals that this is just the beginning. For SEC whistleblowers, the EPS Initiative and related enforcement actions shine new light on companies’ malfeasance and liability. Continue reading

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In our last post, we went over a brief history of the Securities and Exchange Commission (SEC) whistleblower program—including its creation in the aftermath of the catastrophic multi-billion dollar Ponzi schemes run by Bernard Madoff and Alan Stanford, and the recognition that the SEC had been repeatedly warned about both frauds but failed to act on the information. We also reviewed some of the ways in which the SEC has revised the program in recent years. This post explores the impact of the program’s origin and those early challenges on whistleblowers today. Ponzi Schemes Remain A Focus For The SEC Since 2008, the SEC has viewed traditional Ponzi schemes as a “vital” element of the agency’s enforcement activity. More recently, the SEC has expanded its sphere to Ponzi schemes involving cryptocurrencies. In our last post, we went over a brief history of the Securities and Exchange Commission (SEC) whistleblower program—including its creation in the aftermath of the catastrophic multi-billion dollar Ponzi schemes run by Bernard Madoff and Alan Stanford, and the recognition that the SEC had been repeatedly warned about both frauds but failed to act on the information. We also reviewed some of the ways in which the SEC has revised the program in recent years. This post explores the impact of the program’s origin and those early challenges on whistleblowers today. Continue reading

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The Securities and Exchange Commission (SEC) whistleblower program is considered one of the more successful government initiatives around—especially when it comes to financial institutions and investing. It’s been so successful that Congress has created other whistleblowing programs closely modeled after the SEC’s. Despite the fanfare, many financial executives, corporate CEOs, and most main street investors may not be aware of the history of the whistleblowing program—especially why it was created in the first place. But it’s worth spending time to address because the history of the program impacts how it operates today.   In this first post, we’ll discuss the evolution of the program. In the next, we’ll look at the ways the SEC program’s origins continue to impact whistleblowers today. The Securities and Exchange Commission (SEC) whistleblower program is considered one of the more successful government initiatives around—especially when it comes to financial institutions and investing. It’s been so successful that Congress has created other whistleblowing programs closely modeled after the SEC’s. Despite the fanfare, many financial executives, corporate CEOs, and most main street investors may not be aware of the history of the whistleblowing program—especially why it was created in the first place. But it’s worth spending time to address because the history of the program impacts how it operates today.   Continue reading

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