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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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Employers are prohibited from retaliating against whistleblower, but many employers do so anyway without regard for the employee’s rights or federal law. Gaia is a member-supported subscription streaming company that features videos for yoga, meditation, spirituality, mysticism, and other non-mainstream topics. The company was formerly known as Gaiam, a purveyor of equipment and DVDs for yoga and other exercise, which later included streaming videos. The company split in 2016, with the video streaming side becoming Gaia, and the yoga equipment company changing its name and branding to GetACTV. The company has recently settled with the SEC after errors in reporting that led to overstatements of its business customers. In the process, the company terminated one employee for speaking up about the numbers.Employers are prohibited from retaliating against whistleblower, but many employers do so anyway without regard for the employee’s rights or federal law.

Gaia is a member-supported subscription streaming company that features videos for yoga, meditation, spirituality, mysticism, and other non-mainstream topics. The company was formerly known as Gaiam, a purveyor of equipment and DVDs for yoga and other exercise, which later included streaming videos. The company split in 2016, with the video streaming side becoming Gaia, and the yoga equipment company changing its name and branding to GetACTV. Continue reading

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The cryptocurrency world is still reeling from the collapse of FTX, the crypto exchange that went bankrupt last December. Overnight, it seemed that billions had disappeared, and no one—notably not its CEO, Sam Bankman-Fried—seemed to know where the money had gone. It’s unclear if investors will ever see any money returned to them. And it’s equally unclear if Bankman-Fried will ever see the inside of a prison cell. What Is Sam Bankman Fried Accused Of Doing? Authorities are prosecuting Bankman-Fried to the fullest extent of the law. The Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) have both accused him of fraud. Meanwhile, federal prosecutors are accusing Bankman-Fried of defrauding his lenders, his customers, and the United States. They have also charged him with conspiracy to commit fraud, conspiracy to commit money laundering, and violations of federal campaign finance laws.The cryptocurrency world is still reeling from the collapse of FTX, the crypto exchange that went bankrupt last December. Overnight, it seemed that billions had disappeared, and no one—notably not its CEO, Sam Bankman-Fried—seemed to know where the money had gone. It’s unclear if investors will ever see any money returned to them. And it’s equally unclear if Bankman-Fried will ever see the inside of a prison cell. Continue reading

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In our previous posts, we’ve examined the Securities and Exchange Commission’s (SEC) increased enforcement actions against what are called “special purpose acquisition companies” (SPACs). In our final post for the SPAC series, we’ll examine other issues in recent SEC enforcement actions, and some SPAC-related rules the SEC plans to implement. Misleading And Defrauding Investors Just as the agency wants to prevent fraud in other types of investments, the SEC is also concerned about fraud in the SPAC context. This applies equally to fraud perpetrated by the SPAC and the potential targets that a SPAC would acquire.In our previous posts, we’ve examined the Securities and Exchange Commission’s (SEC) increased enforcement actions against what are called “special purpose acquisition companies” (SPACs). In our final post for the SPAC series, we’ll examine other issues in recent SEC enforcement actions, and some SPAC-related rules the SEC plans to implement. Continue reading

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In our last post, we reviewed the basics of a special purpose acquisition company (SPAC), also called "blank check companies," to understand why the Securities and Exchange Commission is so concerned about SPACs. This form of investment that wasn't even on people's radar a decade ago is now an SEC enforcement priority. As we explained, while the promises of a massive return from a SPAC may make investors' hearts skip a beat, the very nature of SPACs should give every SEC investigator heartburn. A SPAC is, by definition, a legal shell company with no business operations or assets. The entire company is built on a promise that investors will make a fortune when the first entity (the SPAC) acquires another company.In our last post, we reviewed the basics of special purpose acquisition companies (SPACs), also called “blank check companies,” to understand why the Securities and Exchange Commission is so concerned about SPACs. This form of investment that wasn’t even on people’s radar a decade ago is now an SEC enforcement priority. Continue reading

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A “blank check company,” more formally known as a special purpose acquisition company (SPAC), was virtually unheard of ten years ago. However, as fewer companies have been able to launch initial public offerings (IPOs) on their own, SPACs skyrocketed in popularity. By 2020, half of all IPOs were tied to a SPAC, and the largest of these included billion-dollar deals. But the rise of SPACs has led to their abuse—taking advantage of investors—and a resulting crackdown by the Securities and Exchange Commission (SEC). Whether you’re working in the financial sectors steering investors to SPACs or more directly involved in a SPAC, you should be aware that they are one of the SEC’s top enforcement priorities. And if you know of SPAC-related wrongdoing, you should consider becoming an SEC whistleblower. In the following posts, we’ll explore SPACs and the SEC’s increasing policing of them.A “blank check company,” more formally known as a special purpose acquisition company (SPAC), was virtually unheard of ten years ago. However, as fewer companies have been able to launch initial public offerings (IPOs) on their own, SPACs skyrocketed in popularity. By 2020, half of all IPOs were tied to a SPAC, and the largest of these included billion-dollar deals. But the rise of SPACs has led to their abuse—taking advantage of investors—and a resulting crackdown by the Securities and Exchange Commission (SEC). Continue reading

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Congress passed the Dodd-Frank Act on July 21, 2010, in response to the SEC’s failure to identify several Ponzi schemes and other securities fraud that had bilked investors out of billions of dollars and adversely affected the U.S. economy. The Act included provisions to protect whistleblowers who report securities law violations to the Securities and Exchange Commission (SEC) and provided incentives for SEC whistleblowers to come forward. The SEC whistleblower program created by Dodd-Frank has been a resounding success, receiving thousands of tips and reports of alleged securities fraud and other serious matters since its inception. Tips from whistleblowers have led to enforcement actions that so far have yielded more than $2.5 billion in financial remedies, most of which has gone to harmed investors. Whistleblowers have also reaped benefits: In September of 2021, the SEC reported it had issued more than $1 billion in awards (or bounties) for information or assistance in SEC investigations and enforcement actions.Congress passed the Dodd-Frank Act on July 21, 2010, in response to the SEC’s failure to identify several Ponzi schemes and other securities fraud that had bilked investors out of billions of dollars and adversely affected the U.S. economy. The Act included provisions to protect whistleblowers who report securities law violations to the Securities and Exchange Commission (SEC) and provided incentives for SEC whistleblowers to come forward. Continue reading

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The Securities and Exchange Commission (SEC) has explained that “as investor demand for climate and other environmental, social, and governance (ESG) information soars, the SEC is responding with an all-agency approach” that reflects the risks and opportunities of ESG and climate investing. The agency is putting its policies into practice this year, and investigations are leading to increased enforcement. The SEC’s ESG-Related Institutional Actions The SEC announced the creation of the new “Climate and ESG Task Force” within its Division of Enforcement in 2021. In addition to an emphasis on identifying material gaps or misstatements within firms’ disclosures of climate risks under existing rules, the SEC promised the new task force would be developing initiatives—such as data analysis—to proactively identify ESG-related misconduct. At the same time, the task force would actively “evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues.”The Securities and Exchange Commission (SEC) has explained that “as investor demand for climate and other environmental, social, and governance (ESG) information soars, the SEC is responding with an all-agency approach” that reflects the risks and opportunities of ESG and climate investing. The agency is putting its policies into practice this year, and investigations are leading to increased enforcement. Continue reading

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