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SEC Whistleblower Lawyer Blog

Articles Posted in SEC Whistleblower

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In a recent press release, the SEC announced the award of $12 million to two whistleblowers who assisted in an enforcement action against a registered broker-dealer involved in wrongdoing. The first whistleblower received a $9 million bounty after providing a tip that led to the SEC’s investigation. Without this information, the activity at the firm would have been “difficult to detect.” This whistleblower continued to provide information and assistance during the investigation. This included the identification of witnesses and “helping staff understand complex fact patterns and issues related to the matters under investigation.” The first whistleblower suffered hardships while trying to remedy the issues at hand. The SEC used this whistleblower’s information to build its investigative plan and draft initial document requests. The firm in question was ultimately ordered to pay an undisclosed amount in disgorgement of prejudgment interest and a civil money penalty.In a recent press release, the SEC announced the award of $12 million to two whistleblowers who assisted in an enforcement action against a registered broker-dealer involved in wrongdoing.

The first whistleblower received a $9 million bounty after providing a tip that led to the SEC’s investigation. Without this information, the activity at the firm would have been “difficult to detect.” This whistleblower continued to provide information and assistance during the investigation. This included the identification of witnesses and “helping staff understand complex fact patterns and issues related to the matters under investigation.” Continue reading

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Following their 2021 appearance, SEC whistleblower attorneys Scott Silver and David Chase were invited back to the ‘Cut To The Chase’ legal podcast to discuss SEC whistleblower program updates and the relevance of the program in recent news, including the collapse of FTX. ‘Cut To The Chase’ is hosted by Miami attorney and entrepreneur Gregg Goldfarb, who discusses legal and public interest news with authorities in their field. Scott Silver and David Chase, who each have their own separate law firms, have formed a strategic alliance to work together representing SEC whistleblowers. Scott Silver is the managing partner of Silver Law Group, a nationally-recognized law firm that helps investors recover losses caused by stockbroker misconduct, fraud, and Ponzi schemes. David Chase formerly worked as an attorney in the SEC’s Enforcement Division and now runs The Law Firm of David R. Chase P.A. where he works on securities and regulatory matters and helps investors recover losses.Following their 2021 appearance, SEC whistleblower attorneys Scott Silver and David Chase were invited back to the ‘Cut To The Chase’ legal podcast to discuss SEC whistleblower program updates and the relevance of the program in recent news, including the collapse of FTX.

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The US Securities and Exchange Commission’s Whistleblower ProgramThe US Securities and Exchange Commission’s Whistleblower Program passed the $1 billion mark of awards in September of 2021. To mark the occasion, SEC Chair Gary Gensler discussed the significance of this milestone in an official SEC YouTube video. At the time, the SEC had paid out bounties of $1,074,010,519.76 to 207 individuals for their information and assistance. (The latest press releases have not indicated the number of whistleblowers who have been awarded bounties.) Emphasizing the important public service that whistleblowers provide, Mr. Gensler discussed how their contributions to the SEC’s law enforcement “help us to be better cops on the beat.” Whistleblowers offer their time and service to the commission to assist in investigations and enforcement actions. Ultimately, their assistance helps the SEC to protect the public from misconduct and assist in helping them recovering lost investment funds. passed the $1 billion mark of awards in September of 2021. To mark the occasion, SEC Chair Gary Gensler discussed the significance of this milestone in an official SEC YouTube video. At the time, the SEC had paid out bounties of $1,074,010,519.76 to 207 individuals for their information and assistance. (The latest press releases have not indicated the number of whistleblowers who have been awarded bounties.) Continue reading

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The SEC recently announced that it has awarded a bounty of more than $28 million to “joint whistleblowers” who offered information and assisted in a successful enforcement action. The order indicated that there were four individuals that were called “Claimant 1,” and will each receive 25% of the total, or roughly $7 million each. The SEC decided to consolidate the four individuals into a single Claimant entity, stating in the order: We have determined to treat the Joint Claimants jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their information to the Commission through the same counsel and provided substantively identical whistleblower award applications. See Exchange Act Section 21F(a)(6) (defining “whistleblower” to mean “2 or more individuals acting jointly who provide information relating to a violation of the securities laws to the Commission”) . . . the Office of the Whistleblower is directed to pay each of them individually 25% of their joint award.The SEC recently announced that it has awarded a bounty of more than $28 million to “joint whistleblowers” who offered information and assisted in a successful enforcement action. The order indicated that there were four individuals, who will each receive 25% of the total, or roughly $7 million each. Continue reading

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After another successful enforcement action, the SEC has awarded $18 million to three whistleblowers who each contributed vital information. Whistleblower #1 alerted the SEC that the entity was engaging in fraudulent activity. They offered valuable information that led to the SEC’s investigation into a “fraudulent scheme.” Additionally, they provided the SEC staff with documentation and ongoing assistance throughout the investigation. The information gave SEC staff a substantial advantage that furthered the investigation and led to the success of the enforcement action. After the beginning of the investigation, whistleblowers #2 and #3 offered additional information that also advanced the SEC’s case. While some of second and third whistleblowers’ information was the same as #1, they provided new information that was relevant to the charges in the action. This information was provided after the investigation was already underway, and led to lesser awards for both. After another successful enforcement action, the SEC has awarded $18 million to three whistleblowers who each contributed vital information.

SEC whistleblower #1 alerted the SEC that the entity was engaging in fraudulent activity. They offered valuable information that led to the SEC’s investigation into a “fraudulent scheme.” Additionally, they provided the SEC staff with documentation and ongoing assistance throughout the investigation. The information gave SEC staff a substantial advantage that furthered the investigation and led to the success of the enforcement action. Continue reading

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Traditionally, a “hedge” is a fence or other boundary that protects one’s property. When someone “hedges their bet,” they avoid committing themselves to one specific decision—by putting something else out as a possibility. And then, of course, a hedge is an asset someone holds to protect oneself against a financial loss. Remembering those classic definitions helps in attaining a better understanding of a “hedge fund.” Because investing in a hedge fund is an investment that protects against loss—but it’s also about avoiding the potential downsides of committing to one particular investment. And ironically enough, a hedge fund can also make investors more vulnerable to unscrupulous fund managers and risky investments.Traditionally, a “hedge” is a fence or other boundary that protects one’s property. When someone “hedges their bet,” they avoid committing themselves to one specific decision—by putting something else out as a possibility. And then, of course, a hedge is an asset someone holds to protect oneself against a financial loss. Remembering those classic definitions helps in attaining a better understanding of a “hedge fund.”

Because investing in a hedge fund is an investment that protects against loss—but it’s also about avoiding the potential downsides of committing to one particular investment. And ironically enough, a hedge fund can also make investors more vulnerable to unscrupulous fund managers and risky investments. Continue reading

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The Securities and Exchange Commission (SEC) Commission issued a new bulletin educating investors about performance claims. And this new bulletin is a good reminder to analyze performance claims on two separate but equally significant bases: How is the performance calculated and presented? How reliable is the performance claim? How is the performance calculated and presented? When it comes to calculations and presentations of performance, marketing materials and other documents should state the methodology for determining the investment’s value. For example, it should identify the relevant market and economic conditions used to calculate the investment’s return. It should describe the firm’s process for assessing performance. And importantly, it should explain how an investment firm charges the client—breaking out fees and expenses. If it fails to do so, the firm inflates the anticipated gain’s size.The Securities and Exchange Commission (SEC) Commission issued a new bulletin educating investors about performance claims. And this new bulletin is a good reminder to analyze performance claims on two separate but equally significant bases:

  • How is the performance calculated and presented?
  • How reliable is the performance claim?

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With their varying portfolios, hedge funds are not obligated to complete some of the registration and reporting requirements that apply to other types of securities investments. But that doesn’t mean that hedge funds are exempt from any reporting. Instead, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) promulgated joint reporting requirements specifically for advisers of hedge funds and other private funds. Under the Advisers Act, hedge fund advisers who are registered with the SEC or CFTC and have a fund of at least $150 million must file Form PF filings on an annual basis. Smaller advisers must identify: the assets under their management, the use of leverage, liquidity, fund performance, counterparty credit risk exposure, and trading and clearing mechanisms.With their varying portfolios, hedge funds are not obligated to complete some of the registration and reporting requirements that apply to other types of securities investments. But that doesn’t mean that hedge funds are exempt from any reporting. Instead, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) promulgated joint reporting requirements specifically for advisers of hedge funds and other private funds. Continue reading

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In May of this year, a New York City jury convicted a man known as “Mr. T” for running a boiler room operation that defrauded dozens of American and Canadian victims. Of course, the defendant was not the famed actor. Instead, it was another man, Robert Lenard Booth. But the confusion over his name is worth noting because it’s related to Booth’s boiler room scam. Booth was convicted of securities fraud, wire fraud, and money laundering. He set up fake investment companies with names that were similar to real firms, to convince his victims they were investing with legitimate companies. Then, to seal the deal, he had his victims sign non-disclosure agreements and send money to accounts they believed were held by clearinghouses in New York, Hong Kong, and Singapore. But the firms were in fact boiler rooms located in New York, Panama, and Thailand, and clearinghouses were fronts for Thai money laundering operations. Following his conviction, Booth faced up to 45 years in prison.In May of this year, a New York City jury convicted a man known as “Mr. T” for running a boiler room operation that defrauded dozens of American and Canadian victims. Of course, the defendant was not the famed actor. Instead, it was another man, Robert Lenard Booth. But the confusion over his name is worth noting because it’s related to Booth’s boiler room scam. Continue reading

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Continuing to award bounties to those who step up to report securities fraud, the SEC has recently awarded $5 million to a whistleblower for offering information and assistance. This information eventually led to a successful enforcement action where the SEC collected fines, sanctions, and other funds from the company. The whistleblower first reported their concerns internally, then reported them to the SEC. The press release indicated that the whistleblower’s information also helped the SEC with their investigation. This included the identification of witnesses and the creation of requests for information and documents. Creola Kelly, Chief of the SEC’s Office of the Whistleblower, stated, “­Th­­­­­­­­­e whistleblower in this case provided helpful information and substantial ongoing assistance, saving the SEC time and resources during its investigation."Continuing to award bounties to those who step up to report securities fraud, the SEC has recently awarded $5 million to a whistleblower for offering information and assistance. This information eventually led to a successful enforcement action where the SEC collected fines, sanctions, and other funds from the company. Continue reading

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