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Articles Posted in SEC Whistleblower

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Four whistleblowers who assisted the SEC in two separate enforcement proceedings have been individually awarded a financial bounty as a result of providing important information. The first order saw awards to two whistleblowers, with the first receiving a $2 million award. The provided information led to an investigation, and the individual provided continual assistance including in-person interviews and the identification of central entities and persons. The second whistleblower in the order was awarded $150,000 after providing more limited information expanding the investigation into additional allegations of misconduct at the same company. The second order awarded $1.1 million to the first whistleblower, and the second in excess of $500,000. The first whistleblower alerted the SEC to the misconduct after reporting it internally. The second whistleblower’s information was not as extensive, and not submitted as timely as the first one, with some “unreasonable delay.” The two actions arose from the same “nucleus of facts.” Therefore, this action was treated as a single covered action when determining the amount of awards given to both individuals. A third whistleblower was involved in this action. However, the SEC decided against awarding a bounty, and the individual chose not to seek reconsideration of that decision.Four whistleblowers who assisted the SEC in two separate enforcement proceedings have been individually awarded a financial bounty as a result of providing important information.

  1. The first order saw awards to two whistleblowers, with the first receiving a $2 million award. The provided information led to an investigation, and the individual provided continual assistance including in-person interviews and the identification of central entities and persons. The second whistleblower in the order was awarded $150,000 after providing more limited information expanding the investigation into additional allegations of misconduct at the same company.
  2. The second order awarded $1.1 million to the first whistleblower, and the second in excess of $500,000. The first whistleblower alerted the SEC to the misconduct after reporting it internally. The second whistleblower’s information was not as extensive, and not submitted as timely as the first one, with some “unreasonable delay.” The two actions arose from the same “nucleus of facts.” Therefore, this action was treated as a single covered action when determining the amount of awards given to both individuals. A third whistleblower was involved in this action. However, the SEC decided against awarding a bounty, and the individual chose not to seek reconsideration of that decision.

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Although insider trading is clearly illegal, it is hard to detect without the participation of whistleblowers who collaborate with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading (CFTC). Illegal insider trading occurs when individuals buy or sell securities based on non-public information. Dishonest insiders intend to anticipate market moves and make illegal advantageous trades while outsiders miss out on profits or suffer losses. Examples of Illegal Insider Trading Illegal Insider trading comes in various forms. According to the SEC, some of the most common examples are as follows:   Corporate officers, directors, and employees who trade the corporation’s securities after learning of significant, confidential corporate developments; Friends, business associates, family members, and other “tippees” of such officers, directors, and employees, who trade the securities after receiving such information; Employees of law, banking, brokerage, and printing firms who trade based on information they obtain in connection with providing services to the corporation whose securities they traded; Government employees who trade based on confidential information they learned because of their employment with the government; Political intelligence consultants who may tip or trade based on material, non-public information they obtain from government employees; and Other persons who misappropriate and take advantage of confidential information from their employers, family, friends, and others.Although insider trading is clearly illegal, it is hard to detect without the participation of whistleblowers who collaborate with the Securities and Exchange Commission (SEC) and the Commodity Futures Trading (CFTC).

Illegal insider trading occurs when individuals buy or sell securities based on non-public information. Dishonest insiders intend to anticipate market moves and make illegal advantageous trades while outsiders miss out on profits or suffer losses. Continue reading

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The SEC’s Office of the Whistleblower has awarded another bounty to someone who helped by offering information. The individual involved provided original information that led to a successful enforcement action. The information provided by the individual assisted the SEC with both administrative and judicial actions, and were treated as a single “Covered Action.” Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower, said that, “The whistleblower alerted the SEC to previously unknown conduct and then provided substantial additional assistance, which conserved a considerable amount of SEC resources.” A second individual who submitted information was not awarded a bounty and did not seek reconsideration of the decision.The SEC’s Office of the Whistleblower has awarded another bounty to someone who helped by offering information.

The individual involved provided original information that led to a successful enforcement action. The information provided by the individual assisted the SEC with both administrative and judicial actions, and were treated as a single “Covered Action.” Continue reading

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Recently the SEC awarded a bounty of $1.2 million to a whistleblower who offered staff credible information as well as time and additional resources that led to a successful enforcement action. The whistleblower, who was not publicly identified, provided information as well as ongoing assistance and additional documentation. The individual also met with SEC staff and sat for interviews related to the case. Acting Chief of the SEC’s Office of the Whistleblower Emily Pasquinelli, said, “Today’s whistleblower played a critical role in the SEC bringing an enforcement action. The whistleblower timely reported the securities law violations to the Commission and then played a key role in the successful resolution of the action.”  According to the order, the individual first reported the information to their supervisor, then waited 120 days before reporting it to the SEC. The CSR found that the reporting time frame was not subject to the rule of exclusion, and approved the award. The Claims Review Staff recommended the payment of $1.2 million to the individual, who acted on their own.Recently the SEC awarded a bounty of $1.2 million to a whistleblower who offered staff credible information as well as time and additional resources that led to a successful enforcement action.

The whistleblower, who was not publicly identified, provided information as well as ongoing assistance and additional documentation. The individual also met with SEC staff and sat for interviews related to the case. Continue reading

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The SEC announced that it has awarded yet another whistleblower the sum of $1 million for information that led to a successful enforcement action. In addition to providing valuable information, the individual also cooperated and worked with SEC staff on an ongoing basis, which saved the SEC time and resources. The whistleblower’s information included the identification of “key players,” and was also of interest to law enforcement. In the order, the SEC indicated that coming forward did result in “personal and professional hardships” for the individual, despite the confidentiality guaranteed under Dodd-Frank. The SEC funds the Whistleblower program from monetary sanctions obtained from individual and companies that have been sued by the SEC, as well as from administrative fees. SEC bounties are never paid from moneys recovered on behalf of defrauded investors, which is returned to them when possible.The SEC announced that it has awarded yet another whistleblower the sum of $1 million for information that led to a successful enforcement action. In addition to providing valuable information, the individual also cooperated and worked with SEC staff on an ongoing basis, which saved the SEC time and resources.

The whistleblower’s information included the identification of “key players,” and was also of interest to law enforcement. In the order, the SEC indicated that coming forward did result in “personal and professional hardships” for the individual, despite the confidentiality guaranteed under Dodd-Frank. Continue reading

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The SEC recently announced it has awarded several whistleblowers a total of $5.3 million who provided information and assistance for separate enforcement proceedings. In the first case, the whistleblower received an SEC bounty of $4 million for “extraordinary assistance” and information that led the SEC to open an investigation that resulted in a successful enforcement action. The individual provided documentation with explanations, identified key witnesses, and gave hours of personal assistance by phone and other communication with SEC staff. While working to correct and resolve the misconduct, the individual also took personal and professional risks when reporting it internally. The second combined SEC bounty of $1.3 million went to three individuals who provided information that resulted in a separate investigation and a cease-and-desist proceedings against the target company. (The proceedings are currently pending.) The first individual provided the most information, provided considerable assistance to the SEC staff, and helped conserve time and resources. Because this individual played a vital role in the investigation, they received the larger of the three awards. The second and third whistleblowers share in a bounty totaling $270,000. All three of these whistleblowers provided information about a possible securities violation that was occurring, or was about to occur. While the initial information started out as two separate investigations, they were both used to file a “covered action.”The SEC recently announced it has awarded several whistleblowers a total of $5.3 million who provided information and assistance for separate enforcement proceedings.

In the first case, the whistleblower received an SEC bounty of $4 million for “extraordinary assistance” and information that led the SEC to open an investigation that resulted in a successful enforcement action. The individual provided documentation with explanations, identified key witnesses, and gave hours of personal assistance by phone and other communication with SEC staff. While working to correct and resolve the misconduct, the individual also took personal and professional risks when reporting it internally. Continue reading

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In a recent announcement, two whistleblowers are sharing an SEC bounty of $3 million after supplying information that led to a successful enforcement action. The individuals worked separately and independently with SEC staff, providing information as well as continued assistance during the investigation. Both gave several interviews as well as relevant documents. Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower, said in her statement, “The first whistleblower provided information early in the investigation and helped SEC staff develop its case and focus its resources, while the second whistleblower helped staff uncover misappropriated funds and fraudulent transfers.”  The first whistleblower provided the SEC with assistance early in their investigation, helping staff to “focus its resources and theories.” In the case of the second whistleblower, the individual was instrumental in helping SEC staff to locate fraudulent transfers and misappropriated funds.In a recent announcement, two whistleblowers are sharing an SEC bounty of $3 million after supplying information that led to a successful enforcement action.

The individuals worked separately and independently with SEC staff, providing information as well as continued assistance during the investigation. Both gave several interviews as well as relevant documents. Continue reading

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On April 9, 2021, The SEC announced the award of $2.5 million to a whistleblower for information and assistance that led to a successful enforcement action. This case involved a breach of fiduciary duty that was owed to investors. The SEC determined that the individual voluntarily provided “significant ongoing assistance” which included information and meeting with staff. This whistleblower provided key information that helped the SEC bring their enforcement action. The company was engaged in ongoing violations of the federal securities laws, which led to law enforcement interest. Additionally, the whistleblower also reported  concerns internally to the company prior to notifying the SEC. A second claimant was involved in this case, but the SEC’s Claims Review Staff (CRS) determined it ineligible. The claimant decided not to request a review of this preliminary determination.  The SEC decides on an award by treating both the administrative and judicial facts as a single “covered action,” since the case arose from the same information. An SEC bounty can be anywhere from 10% to 30% of recovered funds that total over $1 million from civil monetary penalties and disgorgement. These bounties are never taken from defrauded investor funds.On April 9, 2021, The SEC announced the award of $2.5 million to a whistleblower for information and assistance that led to a successful enforcement action.

This case involved a breach of fiduciary duty that was owed to investors. The SEC determined that the individual voluntarily provided “significant ongoing assistance” which included information and meeting with staff. This whistleblower provided key information that helped the SEC bring their enforcement action. Continue reading

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Today, The Securities and Exchange Commission (SEC) announced the awarding of two separate bounties to two whistleblowers, $13 million and $10 million, respectively. Both individuals provided significant assistance and information that led to several successful enforcement actions for the SEC as well as related actions for another federal agency. This means that the information provided benefitted both the SEC and the other agency, resulting in an SEC bounty for both. The SEC order stated that both whistleblowers submitted information that led to the discovery of a “complex and fraudulent scheme involving multiple individuals and tens of millions of dollars in ill-gotten gains.” The SEC has a strict 90-day guideline for submissions. In this case, the second whistleblower was 18 days late, which would normally disqualify one for an SEC award. Under the circumstances, timely reporting would have resulted in a significant hardship to that individual. Due to the “significant” contributions to the investigation, the SEC exercised their discretionary authority to suspend the 90-day deadline and award the individual an SEC bounty for their assistance.The Securities and Exchange Commission (SEC) announced the awarding of two separate bounties to two whistleblowers, $13 million and $10 million, respectively. Both individuals provided significant assistance and information that led to several successful enforcement actions for the SEC as well as related actions for another federal agency. Continue reading

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The Securities and Exchange Commission (SEC) announced that it awarded a whistleblower $4.2 million for critical and original information that led to a successful enforcement action. The individual tipped the SEC regarding specific possible violations of the federal securities laws that, in turn, caused an investigation to be opened.  Once the investigation was commenced, the SEC whistleblower provided material assistance to the SEC, including documentation, identifying “key players” in the fraudulent scheme and meeting with SEC staff. This successful SEC enforcement action brings the number of whistleblowers who received bounties to 164 since the program’s inception. Thus far, the SEC has awarded a total of $905 million to those whistleblowers who provided the SEC with tips, documents and information. These SEC enforcement actions ultimately lead to the recovery of millions of dollars for defrauded investors, and further strengthened the SEC’s deterrent effect in the securities markets. Financial Recovery A whistleblower may receive an award (also known as a bounty) from the SEC ranging from 10% to 30% of the financial sanctions recovered from the wrongdoers assuming the total collected exceeds $1M. This translates into $100,000 to $300,000 for a $1M recovered by the SEC. Notably, the SEC bounties are not taken from the money recovered for investors. In addition, after the $1M threshold is reached, a whistleblower may also be entitled to a percentage of recovered amounts arising from related cases brought by other governmental agencies.The Securities and Exchange Commission (SEC) announced that it awarded a whistleblower $4.2 million for critical and original information that led to a successful enforcement action. The individual tipped the SEC regarding specific possible violations of the federal securities laws that, in turn, caused an investigation to be opened. Once the investigation was commenced, the SEC whistleblower provided material assistance to the SEC, including documentation, identifying “key players” in the fraudulent scheme and meeting with SEC staff. Continue reading

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