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SEC Whistleblower Lawyer Blog

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New York-based investment advisors Two Sigma Investments LP and Two Sigma Advisers LP have settled SEC charges and repaid funds after a researcher made unauthorized changes to the firm’s investment models used to make investment decisions. Known collectively as “Two Sigma,” the firm paid $90 million in civil penalties to settle the SEC claims, then voluntarily repaid $165 million to affected funds and client accounts.

The firm failed to handle vulnerabilities in its investment models and address multiple supervisory and compliance breakdowns. Separately, two employees warned the firm repeatedly about the possibility of unauthorized changes to the models, and how any changes could have severe negative impacts on the firm and the firm's customers.

Unfortunately, Two Sigma did not act upon their information immediately, and an employee tampered with the investment models without authorization. Additionally, Two Sigma violated Whistleblower protection rules in exit contracts for departing employees.New York-based investment advisors Two Sigma Investments LP and Two Sigma Advisers LP have settled SEC charges and repaid funds after a researcher made unauthorized changes to the firm’s investment models used to make investment decisions. Known collectively as “Two Sigma,” the firm paid $90 million in civil penalties to settle the SEC claims, then voluntarily repaid $165 million to affected funds and client accounts. Continue reading

The SEC recently reached a $3 million collective settlement with seven public companies charged with violating whistleblower protection Rule 21F-17(a). This rule prohibits any actions by companies that impede an individual from communicating directly with the SEC staff about a possible securities law violation they observe.

The companies cited were:

Acadia Healthcare Company Inc., $1.3 million
k.a. Brands Holding Corp., $399,000
AppFolio, Inc., $692,000
IDEX Corp., $75,000
LSB Industries, Inc., $156,000
Smart for Life, Inc., $19,500The SEC recently reached a $3 million collective settlement with seven public companies charged with violating whistleblower protection Rule 21F-17(a). This rule prohibits any actions by companies that impede an individual from communicating directly with the SEC staff about a possible securities law violation they observe. Continue reading

The SEC recently announced that it has awarded money to two whistleblowers for their information that led to an SEC enforcement action against a company as well as a related action against the same company by another federal agency. Both individuals voluntarily provided critical information that led to the successful enforcement actions. In the first case, Claimant #1 brought the misconduct to the SEC’s attention, but did not have anything more to offer outside of the initially supplied information. The supplied information was generalized, contained errors, and the individual didn’t fully understand the schemes. Furthermore, the individual did report the misconduct to their supervisor but did not notify the SEC for more than two years afterward. The SEC awarded this whistleblower a bounty of $4 million.The SEC recently announced that it has awarded money to two whistleblowers for their information that led to an SEC enforcement action against a company as well as a related action against the same company by another federal agency. Both individuals voluntarily provided critical information that led to the successful enforcement actions. Continue reading

The SEC recently awarded two whistleblowers a total of $98M for original information they submitted that led to the opening of an investigation and a successful enforcement action involving misconduct. The first whistleblower received the lion’s share of the bounty, which totaled over $87 million. For the second whistleblower, the award totaled over $16 million. Both awards were percentages of the financial sanctions collected in the case, which both included SEC actions as well as another enforcement action by a different federal agency.The SEC recently awarded two whistleblowers a total of $98M for original information they submitted that led to the opening of an investigation and a successful enforcement action involving misconduct.

The first whistleblower received the lion’s share of the bounty, which totaled over $87 million. For the second whistleblower, the award totaled over $16 million. Both awards were percentages of the financial sanctions collected in the case, which both included SEC actions as well as another enforcement action by a different federal agency. Continue reading

Billionaire investor and founder of Hayman Capital Management, Kyle Bass, succeeded in obtaining a reversal of the SEC's denial of his bid to receive a whistleblower bounty for exposing fraud at United Development Funding (UDF), a Dallas-based land developer.  Bass filed a whistleblower tip regarding UDF to the SEC after one of his analysts found proof that it was a Ponzi scheme.

In a surprising move, the SEC overturned its prior denial and awarded Bass $400,000 for providing information that helped the agency secure civil penalties against certain UDF executives.  Notably, this is the first time the SEC has reversed a denial of a whistleblower award.Billionaire investor and founder of Hayman Capital Management, Kyle Bass, succeeded in obtaining a reversal of the SEC’s denial of his bid to receive a whistleblower bounty for exposing fraud at United Development Funding (UDF), a Dallas-based land developer. Bass filed a whistleblower tip regarding UDF to the SEC after one of his analysts found proof that it was a Ponzi scheme. Continue reading

On June 17, 2024, the U.S. Securities and Exchange Commission (“SEC”) announced a $37 million dollar whistleblower award, marking this the first whistleblower award of 2024. While the Dodd-Frank Act mandates confidentiality regarding the whistleblower's identity and enforcement action, this substantial award underscores the SEC's ongoing commitment to investor protection.

Chief of the SEC’s Office of the Whistleblower, Creola Kelly, emphasized, “Today’s award illustrates the importance of the SEC’s whistleblower program, as the whistleblower’s information helped the agency return millions of dollars to harmed investors.”On June 17, 2024, the U.S. Securities and Exchange Commission (SEC) announced a $37 million dollar whistleblower award, marking this the first whistleblower award of 2024. While the Dodd-Frank Act mandates confidentiality regarding the whistleblower’s identity and enforcement action, this substantial award underscores the SEC’s ongoing commitment to investor protection. Continue reading

The SEC (US Securities and Exchange Commission) has exacting criteria for both submission of whistleblower tips and their issuance of any financial bounties, including the amounts.

How SEC Whistleblower Awards Are Determined

The general rule for the award amount is 10% to 30% of all monetary fines collected from the entities in question based on a judgment in excess of $1 million. The money is not taken from investor funds. The fines and other civil penalties imposed on and collected from those involved in misconduct goes into the fund that pays the SEC’s whistleblower awards.

Occasionally other federal agencies separately offer their own awards in addition to the SEC’s bounties. They are awarded and calculated separately from the SEC’s.

The awards are not made automatically, and the whistleblower must submit a claim them once the case is published on the SEC’s website.The SEC (US Securities and Exchange Commission) has exacting criteria for both submission of whistleblower tips and their issuance of any financial bounties, including the amounts.

How SEC Whistleblower Awards Are Determined

The general rule for the award amount is 10% to 30% of all monetary fines collected from the entities in question based on a judgment in excess of $1 million. The money is not taken from investor funds. The fines and other civil penalties imposed on and collected from those involved in misconduct goes into the fund that pays the SEC’s whistleblower awards. Continue reading

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