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SEC Whistleblower Lawyer Blog

Articles Posted in SEC Whistleblower

If you’re deciding to become a whistleblower, there are a number of issues that you should consider. The first of these is to know that just because you provide information to the Securities and Exchange Commission (SEC) about a potential securities violation, that does not mean that you are automatically eligible to receive a whistleblower award. So let’s look at what it takes for you to be considered “an eligible whistleblower” (i.e., someone eligible for an award).  You are likely eligible for an award if:  You are voluntarily providing original information to the SEC or another federal enforcement agency Your information reveals a potential SEC violation Your information either triggers a new SEC investigation or has a significant impact on an ongoing investigation The SEC issues more than $1 million in sanctions because of the information you uncovered  Importantly, two factors that do not affect your eligibility are your citizenship and your employment. You do not have to be a U.S. citizen to be eligible. You can be from anywhere and live anywhere (and the sanction doesn’t have to have taken place on U.S. soil, either). Additionally, you don’t have to be an official or employee of the company to make a report.If you’re deciding to become a whistleblower, there are a number of issues that you should consider. The first of these is to know that just because you provide information to the Securities and Exchange Commission (SEC) about a potential securities violation, that does not mean that you are automatically eligible to receive a whistleblower award. So let’s look at what it takes for you to be considered “an eligible whistleblower” (i.e., someone eligible for an award). Continue reading

On September 24, 2021, the Securities and Exchange Commission (SEC) announced that it awarded roughly $36 million to a whistleblower who provided information and assistance that “significantly contributed to the success of an SEC enforcement action as well as actions by another federal agency.”  The other agency was not named, and limited information was provided in order to protect the identity of the whistleblower.  According to the SEC’s press release, the whistleblower gave information on an illegal scheme that was crucial to the government. The whistleblower met with the SEC’s and the other agency’s staff multiple times and identified “key documents and witnesses.”  “Today’s whistleblower brought valuable new information to the attention of the SEC and to another federal agency, greatly assisting ongoing investigations…Whistleblowers can act as a springboard for an investigation or, like here, they can propel forward an already existing investigation,” said Emily Pasquinelli of the SEC’s Office of the Whistleblower.  As of this writing, the SEC has awarded about $1.1 billion to 214 people since it first issued an award in 2012. Whistleblowers are not paid with money from harmed investors, but from sanctions paid to the SEC by violators of securities laws.On September 24, 2021, the Securities and Exchange Commission (SEC) announced that it awarded roughly $36 million to a whistleblower who provided information and assistance that “significantly contributed to the success of an SEC enforcement action as well as actions by another federal agency.”

The other agency was not named, and limited information was provided in order to protect the identity of the whistleblower. Continue reading

The SEC continues awarding monies to whistleblowers who assist staff with information that either leads to a successful enforcement action or makes things easier for investigative staff.  Two whistleblowers have been awarded a combined bounty of $11.5 million. The first whistleblower received an award of nearly $7 million, and the second received $4.5 million for information and assistance in the case.  In the SEC’s order, Secretary Vanessa Countryman stated that:  Both claimants had independently and voluntarily provided the SEC with credible and relevant information in regards to the company in question leading to a successful enforcement action The first claimant “persistently” contacted the SEC with information for years before staff finally opened an investigation Claimant 1 was also the primary source of information for the investigation, offering information that would have been nearly impossible for staff to uncover otherwise This included the identification of witnesses and helping SEC staff understand the “complex fact patterns” involved in the case The first individual “made persistent efforts to remedy the issues, while suffering hardships” Claimant 2 also voluntarily offered information that was based on “recent experience” and offered staff a “better understanding” of the issues This whistleblower also offered considerable assistance to staff throughout the investigation and assisted SEC staff evidence requests and settlement negotiations However, Claimant 2 delayed reporting to the SEC for “several years” after learning of the wrongdoing, which led to an appropriate reduction of the award  As always, all identifying information regarding the whistleblowers is kept confidential in compliance with the Dodd-Frank Act. The SEC has surpassed the $1B mark in awarding whistleblowers, which is not taken from recovered investor’s monies.The SEC continues awarding monies to whistleblowers who assist staff with information that either leads to a successful enforcement action or makes things easier for investigative staff.

Two whistleblowers have been awarded a combined bounty of $11.5 million. The first whistleblower received an award of nearly $7 million, and the second received $4.5 million for information and assistance in the case. Continue reading

In one of the highest payouts since the inception of the SEC’s Whistleblower Program, an individual recently received a total bounty of an astounding $110M. It’s the second highest award paid to a whistleblower, following a $114M award paid just last October. The SEC awarded the individual $40 million, and the other agency paid $70 million for a related action.  This brings the SEC’s Whistleblower program’s total awards to the $1 billion mark since 2012, and payments made to a total of 207 individuals. In FY2021 alone, the SEC has paid out over $500 million in whistleblower bounties. These come from financial sanctions collected from wrongdoers, such as civil penalties and disgorgement, not from money recovered on behalf of defrauded investors.  The whistleblower provided information from “significant independent analysis”  that greatly assisted both the SEC’s staff and the second agency in their investigations.  In the same press release and order, the SEC announced that a second whistleblower received a bounty of $4M after supplying information that was “much more limited” and provided after the beginning of an investigation.In one of the highest payouts since the inception of the SEC’s Whistleblower Program, an individual recently received a total bounty of an astounding $110M. It’s the second highest award paid to a whistleblower, following a $114M award paid just last October. The SEC awarded the individual $40 million, and the other agency paid $70 million for a related action. Continue reading

Whistleblowers have made a busy summer for the SEC this year, and there is no sign of any slowdown. Two cases saw bounties of $6 million, as described in a recent press release.  In the first order, whistleblower received a bounty of over $3.5 million after reporting new and beneficial information to the SEC. This information helped SEC to expand an already-existing investigation into a new geographical area. Noted in the SEC order is that this whistleblower is also a foreign national, and traveled for in-person meetings with staff multiple times regarding this case. The individual continued to provide assistance and information that ultimately led to charges related to the enforcement action, and ultimately, an award.  The second order saw a whistleblower receive more than $2.4 million after notifying the SEC about “previously unknown conduct.” This information led to the SEC opening its investigation. The individual notified their own employer internally prior to notifying the SEC. They continued to meet with SEC staff, provided additional documentation, and identified possible witnesses for the enforcement action.Whistleblowers have made a busy summer for the SEC this year, and there is no sign of any slowdown. Two cases saw bounties of $6 million, as described in a recent press release.

In the first order, whistleblower received a bounty of over $3.5 million after reporting new and beneficial information to the SEC. This information helped SEC to expand an already-existing investigation into a new geographical area. Noted in the SEC order is that this whistleblower is also a foreign national, and traveled for in-person meetings with staff multiple times regarding this case. The individual continued to provide assistance and information that ultimately led to charges related to the enforcement action, and ultimately, an award. Continue reading

The SEC has announced the award of $3.5 million to whistleblowers in two unrelated successful enforcement proceedings. In the first case, one individual was awarded a bounty of $2M after alerting the SEC to an ongoing fraud that led to the agency opening their investigation. The individual offered continuing assistance, which included documents, interviews, and other information that helped SEC staff conserve time and resources. The second order saw one individual receive a $1M bounty, and a second one receive $500,000. The first whistleblower provided information that the SEC used as their framework for the investigation. They also provided additional assistance throughout the investigation. The second whistleblower offered “independent analysis” that helped refine the investigation’s focus and assisted with the creation of a subpoena. The second whistleblower’s knowledge also helped the SEC staff members with the final charges that were eventually brought by the commission. The Use Of Non-GAAP Methodology Although not a factor in these two cases, many companies use Non-GAAP, or Non-Generally Accepted Accounting Practices. Some use Non-GAAP to supplement their reporting to give a clearer picture to investors. However, the SEC has also discovered that many companies use Non-GAAP in the process of committing fraud.The SEC has announced the award of $3.5 million to whistleblowers in two unrelated successful enforcement proceedings.

In the first case, one individual was awarded a bounty of $2M after alerting the SEC to an ongoing fraud that led to the agency opening their investigation. The individual offered continuing assistance, which included documents, interviews, and other information that helped SEC staff conserve time and resources. Continue reading

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

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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