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If you’ve become aware of a Ponzi scheme, your first instinct may be to disclose the information and stop the fraud. But how do you know who to tell? What do you do next? Who can answer your questions?   The United States Securities & Exchange Commission (SEC) established its Office of the Whistleblower in 2011. Anyone with original information on a Ponzi scheme or other fraud can report this information to the SEC and alert the agency to the misconduct. SEC whistleblowers may be eligible to receive a monetary award following a successful enforcement action.  A whistleblower can be anyone who has information on a Ponzi scheme or other fraudulent activity that results in financial losses. Whether you’ve invested in a Ponzi scheme, know someone who has, are a broker or other industry insider, or someone who recognizes the signs of a Ponzi scheme, you may be able to become a SEC Whistleblower. However, simply reporting that you believe someone is operating a ponzi scheme will not be enough.  A whistleblower must present original new information to the SEC in a way that is compelling and leads to the investigation and prosecution of misconduct by the SEC. If you’ve become aware of a Ponzi scheme, your first instinct may be to disclose the information and stop the fraud. But how do you know who to tell? What do you do next? Who can answer your questions?

The United States Securities & Exchange Commission (SEC) established its Office of the Whistleblower in 2011. Anyone with original information on a Ponzi scheme or other fraud can report this information to the SEC and alert the agency to the misconduct. SEC whistleblowers may be eligible to receive a monetary award following a successful enforcement action.  Continue reading

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SEC whistleblower attorneys Scott Silver and David Chase, recently authored an article for law.com to discuss their predictions for the SEC’s Whistleblower program during the second Trump administration. With the new administration, changes come to nearly every part of government, and the SEC is no exception. President Trump has nominated former SEC commissioner Paul Atkins to replace current SEC chair Gary Gensler. No hearing has yet been scheduled for Atkins, but he is expected to be confirmed.SEC whistleblower attorneys Scott Silver and David Chase, recently authored an article for law.com to discuss their predictions for the SEC’s Whistleblower program during the second Trump administration.

With the new administration, changes come to nearly every part of government, and the SEC is no exception. President Trump has nominated former SEC commissioner Paul Atkins to replace current SEC chair Gary Gensler. No hearing has yet been scheduled for Atkins, but he is expected to be confirmed. Continue reading

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Do you have information about a Ponzi scheme? You could be eligible for a whistleblower award from the SEC for your knowledge and information.   Ponzi schemes are infamous for promising high returns in a short time. Like most financial crimes, the scheme’s operators take investor funds and leave the investor with little to nothing. From the original scheme from Charles Ponzi to Bernie Madoff’s massive fraud, any Ponzi scheme uses the same basic framework:  Solicit and take money from investors  Use cash for whatever they like  Solicit new money from new investors   Use new funds to pay previous investors Do you have information about a Ponzi scheme? You could be eligible for a whistleblower award from the SEC for your knowledge and information.

Ponzi schemes are infamous for promising high returns in a short time. Like most financial crimes, the scheme’s operators take investor funds and leave the investor with little to nothing. From the original scheme from Charles Ponzi to Bernie Madoff’s massive fraud, any Ponzi scheme uses the same basic framework:  Continue reading

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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

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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

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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

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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

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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

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