SEC Whistleblower Lawyer Blog

December 5, 2016

SEC Awards $3.5 Million to Whistleblower

The Securities and Exchange Commission (the “SEC’) announced on December 5, 2016 that it had awarded a whistleblower approximately $3.5 million for coming forward with information that led to an SEC enforcement action.

The $3.5 million whistleblower award brings the total amount awarded to whistleblowers to $135 million to 36 whistleblowers. In addition to the amount awarded to whistleblower, the SEC has collected over $874 million in financial remedies through enforcement actions brought about by whistleblower tips.

Under the SEC whistleblower program, established by the Dodd-Frank Act in 2011, the SEC is required to ardently protect confidentiality of whistleblowers and cannot disclose information that might indirectly or directly reveal a whistleblower’s identity.

November 14, 2016

SEC Awards $20 Million to Whistleblower

by Silver Law Group

The sound of a whistle on Wall Street blew loudly this week for one informative whistleblower. What did that whistle sound like? It sounded like $20 million.

On November 14, 2016, the Securities and Exchange Commission (“SEC”) announced an award of more than $20 million to a whistleblower who gave valuable information that enabled the SEC to initiate an enforcement action against wrongdoers before the wrongdoers squandered the money. The $20 million award is the third-highest since the SEC’s whistleblower program issued its first award in 2012.

Under the SEC whistleblower rules, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity. This is why the details in almost all news releases regarding a whistleblower award are sparse. Even the SEC order determining the whistleblower claim is largely redacted. Other whistleblower orders follow suit.

October 1, 2016

SEC Orders Half-million Dollar Penalty for Firing Whistleblower

by Silver Law Group

On September 29, 2016, the Securities and Exchange Commission (the “SEC”) announced that casino-gaming company International Game Technology (“IGT”) agreed to pay a $500,000 penalty for firing an employee who reported to senior management and the SEC that the company’s financial statements might be distorted.

The whistleblower retaliation case is the second of its kind since the Dodd-Frank Act authorized the agency to bring retaliation charges. According to the SEC order, the employee had been a director of an IGT division since 2008 and received positive performance reviews throughout his time with the company and never received any sort of discipline or corrective action.

The whistleblower received a favorable evaluation in the 2014 mid-year review and was deemed an employee on the rise, according to the order. Shortly after that review, the whistleblower raised concerns to his managers, to the company’s internal complaint hotline, and to the SEC that IGT’s publicly-reported financial statements may have been misstated. Approximately three months after the whistleblower raised his concerns, according to the order, IGT terminated him.

September 30, 2016

Anheuser-Busch InBev Pays $6 Million to Settle Charges that is Violated Whistleblower Protection Laws

by Silver Law Group

The Securities and Exchange Commission announced on September 28, 2016 that Anheuser-Busch InBev agreed to pay $6 million to settle charges that the company violated the Foreign Corrupt Practices Act (FCPA) and attempted to silence a whistleblower who reported the misconduct.

An SEC investigation found that the company used third-party sales promoters to make improper payments to government officials in India to increase the sales and production the company’s products in India. According to the SEC order, Anheuser-Busch InBev repeatedly ignored employee complaints, had inadequate internal accounting controls to detect and prevent the improper payments, and failed to ensure that transactions involving the promoters were recorded properly in its books and records.

Additionally, according to the order, the SEC found that Anheuser-Busch InBev entered into a separation agreement that stopped an employee from continuing to voluntarily communicate with the SEC about the potential FCPA violations due to a substantial financial penalty that would be imposed for violating strict non-disclosure terms.

September 21, 2016

SEC Issues $4 Million Whistleblower Award; Program Surpasses $111 Million Total Awards

by Silver Law Group

The Securities and Exchange Commission announced on September 20, 2016 an award of over $4 million to a whistleblower. The whistleblower’s original information alerted the SEC to a fraud.

The SEC whistleblower program was established by Congress in 2011 to incentivize whistleblowers with specific, timely and credible information about federal securities laws violations to report to the SEC. Since its inception, the SEC whistleblower program has awarded more than $111 million to 34 whistleblowers.

The SEC lays out the process for a whistleblower. First, a whistleblower submits a tip to the SEC. The SEC will then analyze and investigate the tip. A case will be filed if the tip is fruitful to the SEC and penalties will be ordered. Notices of the covered actions will then be posted, and the whistleblower will file a claim. Once the SEC determines the award, between 10 and 30 percent of what the SEC collected when monetary sanctions exceed $1 million, a payout will be made to the whistleblower from the Investor Protection Fund.

September 14, 2016

Insider Whistleblowers in the Financial Advice Sector Set to Increase

by Silver Law Group

Insiders in the investment advice sector are starting to grow bolder and start a trend of notifying the SEC of bad-acting firms and principals.

On August 30, 2016, the Securities and Exchange Commission announced another whistleblower award in the amount of more than $22 million. The amount is the second-largest total the SEC has awarded a whistleblower. The whistleblower’s detailed tip and extensive assistance helped the SEC halt a “well-hidden” fraud at the company where the whistleblower worked, according to the SEC.

Earlier this month, Indiana announced its first whistleblower award, giving $95,000 to a former JP Morgan official who helped the state’s regulator make an advice-related case against the firm that resulted in a $950,000 settlement.

September 14, 2016

How Attorney Contingency Fees Work for Whistleblowers

by Silver Law Group

Litigating a case can take a long time and accrues many costs and fees. Among those fees include filing costs, the cost of hiring an expert to testify, the cost of various office tasks such as printing and mailing, and many others. But the first cost that immediately comes to most people’s minds is attorney’s fees.

Often times, the costs of paying an attorney might dissuade people from getting one in the first place or bowing to financial pressure in the midst of case simply because the client does not have enough money to continue paying an attorney. Paying thousands of dollars to an attorney without having absolute certainty a client will win his or her case can be a daunting endeavor.

The contingency fee presents a solution to all those upfront costs.

September 6, 2016

SEC Announces Second-Largest Whistleblower Award for Company Insider Who Helped Uncover Fraud

by Silver Law Group

On August 30, 2016, the Securities and Exchange Commission (“SEC”) announced the award of more than $22 million to a company insider whistleblower.

According to the SEC order, the SEC determined the whistleblower’s tip and extensive assistance helped the agency stop a well-hidden fraud at the whistleblower’s employing company.

The $22 million-plus award is the second-largest total the SEC has awarded a whistleblower. The largest award was $30 million, and it was awarded in 2014.

August 22, 2016

Another Company Paying Penalty for Violating SEC Whistleblower Rules; Company Severance Agreements Removed Financial Incentives for Whistleblowing

by Silver Law Group

California-based Health Net Inc. has agreed to pay a penalty for illegally using its severance agreements to require outgoing employees to waive their ability to obtain monetary awards from the Securities and Exchange Commission (the “SEC”) whistleblower program.

Health Net has agreed to pay a $340,000 penalty per the SEC’s order.

According to the SEC’s order, Health Net included a provision that enumerating various potential claims against it that a departing employee waived as a condition of being paid monetary severance payments – essentially an agreement stipulating to keep quiet or risk losing your money.

August 16, 2016

Atlanta-based Company Paying Penalty for Violating Important SEC Whistleblower Protection Rule

by Silver Law Group

Atlanta-based building products distributor BlueLinx Inc. is settling charges that it violated an important whistleblower protection rule by using severance agreements that required departing employees to waive their rights to monetary recovery should they file a charge or complaint with the Securities and Exchange Commission (the “SEC”) or other federal agencies.

BlueLinx has agreed to pay a $265,000 penalty per the SEC’s order.

According to the SEC’s order, BlueLinx’s restrictive provisions were an attempt to bar employees from filing charges against the company and to keep their mouths shut if the company ever committed any securities law violations. The restrictive language in the agreements essentially forced employees leaving the company to waive possible whistleblower awards or risk losing their severance payments and other post-employment benefits.