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New York-based hedge fund investment and technology development firm D. E. Shaw has settled with the SEC over charges that it violated the rights of current and former employees when it raised “impediments” for them to become whistleblowers. The SEC also fined D. E. Shaw $10M to settle the charges. D. E. Shaw has since updated its documentation to allow employees to contact the SEC and other agencies to report possible misconduct. At issue is the firm’s requirement that employees sign agreements that prohibited the disclosure of sensitive or confidential information to any third party. Without an exception for possible SEC whistleblowers, employees were prevented from contacting the SEC with any damning information they felt necessary. Exiting employees were also required to sign a release indicating that they had not filed any reports with any governmental agency, or risk losing deferred compensation and other financial incentives.New York-based hedge fund investment and technology development firm D. E. Shaw has settled with the SEC over charges that it violated the rights of current and former employees when it raised “impediments” for them to become whistleblowers. The SEC also fined D. E. Shaw $10M to settle the charges. D. E. Shaw has since updated its documentation to allow employees to contact the SEC and other agencies to report possible misconduct. Continue reading

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The Commodity Futures Trading Commission (CFTC) announced an award of more than $300,000 to a whistleblower who submitted information to the agency regarding a company’s misconduct. Information from the whistleblower was “precise,” and described exactly the activity involved, leading to the CFTC’s Enforcement Division to open an investigation. The individual provided continual assistance during the investigation, offered additional evidence along with interpretations and explanations for CFTC staff. As a result, CFTC staff were able to move forward with the investigation while conserving resources.The Commodity Futures Trading Commission (CFTC) announced an award of more than $300,000 to a whistleblower who submitted information to the agency regarding a company’s misconduct.

Information from the whistleblower was “precise,” and described exactly the activity involved, leading to the CFTC’s Enforcement Division to open an investigation. The individual provided continual assistance during the investigation, offered additional evidence along with interpretations and explanations for CFTC staff. As a result, CFTC staff were able to move forward with the investigation while conserving resources. Continue reading

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In a recent press release,In a recent press release, the Commodities Futures Trading Commission (CFTC) announced $15 million in bounties awarded to two whistleblowers for individual cases. In the first case, a whistleblower affiliated with a company notified the CFTC of activity that was harming its customers. The CFTC opened an investigation and discovered the information to be credible and original. The individual offered continual assistance, saving CFTC staff resources and time. This included assisting staff with interpreting vital evidence, including another witness to corroborate the claims. During the investigation, the whistleblower’s information contradicted and made more sense than the company’s official explanation. The CFTC increased its analysis of the activity and the harm being done to the customers under Section 23 of the Commodities Exchange Act. Overall, this whistleblower’s information was crucial to the successful investigation and enforcement action. the Commodities Futures Trading Commission (CFTC) announced $15 million in bounties awarded to two whistleblowers for individual cases.

In the first case, a whistleblower affiliated with a company notified the CFTC of activity that was harming its customers. The CFTC opened an investigation and discovered the information to be credible and original. The individual offered continual assistance, saving CFTC staff resources and time. This included assisting staff with interpreting vital evidence, including another witness to corroborate the claims. Continue reading

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The SEC settled charges against CRBE, a Dallas-based commercial real estate services and investment firm, for using a clause in their separation agreements that violated the Securities and Exchange Commission’s whistleblower protection rule. Departing employees could receive separation pay only if they signed a release that stated they had not filed any complaints against the firm with the SEC or any other federal agency. This violates the SEC’s whistleblower protection rule for those employees. During 2021 and 2022 nearly 900 former employees had signed this release as part of their separation agreement. Those agreements would impede a former employee from filing a claim. Making it contingent for employees to receive separation pay was an action intended to directly prohibit them from contacting any federal agency regarding the company. This directly violates whistleblower provisions under Exchange Act Rule 21F-17(a).The SEC settled charges against CRBE, a Dallas-based commercial real estate services and investment firm, for using a clause in their separation agreements that violated the Securities and Exchange Commission’s whistleblower protection rule. Departing employees could receive separation pay only if they signed a release that stated they had not filed any complaints against the firm with the SEC or any other federal agency. This violates the SEC’s whistleblower protection rule for those employees. During 2021 and 2022 nearly 900 former employees had signed this release as part of their separation agreement. Continue reading

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Can a company prohibit former employees from speaking to federal regulators, such as the SEC, and function as a whistleblower? They can certainly try, but it is still illegal. Monolith Resources, LLC, based in Nebraska, included language in their employment separation agreements prohibiting departing employees from recovering money through participation in investigations, enforcement actions, or filing claims with the government. This includes participating in the SEC's Whistleblower program. On Friday, September 8, 2023, the privately held tech and energy company agreed to pay a $225,000 penalty for violating the whistleblower protection rules and including this language in their employee separation agreements. According to the SEC, the company included this language for approximately three years.Can a company prohibit former employees from speaking to federal regulators, such as the SEC, and function as a whistleblower? They can certainly try, but it is still illegal.

Monolith Resources, LLC, based in Nebraska, included language in their employment separation agreements prohibiting departing employees from recovering money through participation in investigations, enforcement actions, or filing claims with the government. This includes participating in the SEC’s Whistleblower program. Continue reading

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The SEC recently announced yet another sizeable award to an individual who came forward as a whistleblower. In the press release, the SEC described the $18 million award to a single individual who “refused to turn a blind eye to the wrongdoing, reporting misconduct internally and then to the Commission.”  The whistleblower first reported the conduct internally, and then notified the SEC, who then began an investigation. Information from this whistleblower was also closely related to the charges that were levied by the SEC. The cooperation, information, and assistance the individual provided proved invaluable to SEC staff, saving both time and resources throughout the investigation.   The $18 million award is a percentage of monetary sanctions and other costs collected from the company itself, not from recovered investor’s funds.   A second claimant’s application for award was denied after it was established that they did not contact the SEC within 120 days of internally reporting the conduct and did not lead to a successful enforcement action.  The SEC recently announced yet another sizeable award to an individual who came forward as a whistleblower. In the press release, the SEC described the $18 million award to a single individual who “refused to turn a blind eye to the wrongdoing, reporting misconduct internally and then to the Commission.”  Continue reading

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In the SEC’s latest press releaseIn the SEC’s latest press release, seven individuals have received bounties after supplying credible information and continued assistance that led to a successful enforcement action. The same information and assistance led to another successful related action by a different federal agency. The bounty of $104 million is the fourth largest award in the history of the SEC’s Whistleblower program. Three single claimants and two sets of joint claimants submitted timely information and offered considerable assistance to SEC staff that allowed them to pursue actions against the company for documented misconduct. The same information was used by another agency and led to two more related actions that included awards., seven individuals have received bounties after supplying credible information and continued assistance that led to a successful enforcement action. The same information and assistance led to another successful related action by a different federal agency. The bounty of $104 million is the fourth largest award in the history of the SEC’s Whistleblower program. Continue reading

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The SEC has announced its latest whistleblower bounty of approximately $9 million to one individual. The amount represents a percentage of the collected monetary sanctions from the enforcement actions. In the press release, the SEC stated that the individual “repeatedly” reported their concerns internally before submitting their information to the Enforcement Division. The whistleblower then provided “substantial and ongoing cooperation” to SEC staff, which included substantial, comprehensive information that led to a successful enforcement action.The SEC has announced its latest whistleblower bounty of approximately $9 million to one individual. The amount represents a percentage of the collected monetary sanctions from the enforcement actions.

In the press release, the SEC stated that the individual “repeatedly” reported their concerns internally before submitting their information to the Enforcement Division. The whistleblower then provided “substantial and ongoing cooperation” to SEC staff, which included substantial, comprehensive information that led to a successful enforcement action. Continue reading

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The Commodity Futures Trading Commission has issued a press release regarding fraud surrounding the buying and selling of carbon credits, which fall under the category of commodities. The CFTC is interested in whistleblower tips about anyone engaged in misconduct in the sale or trade of these credits. Employees, investors, and anyone else who finds fraud or believes it may exist is encouraged to get in touch with the CFTC. What Is A Carbon Credit? You may have heard the terms “carbon credits,” “carbon allowances,” or “carbon offset” referred to in articles and blogs in relation to climate change. Buying a carbon credit allows the purchaser to emit a certain amount of Co2 gases and other types of greenhouse gases. The purchaser can emit up to one ton of these gases per credit. These credits are purchased from projects that remove or reduce carbon output in exchange for the allowed emissions. They help companies move toward their goal of reducing greenhouse gases and reducing the effects of climate change globally. Many companies also have a goal of “zero emissions,” and carbon credits help reach that goal.The Commodity Futures Trading Commission has issued a press release regarding fraud surrounding the buying and selling of carbon credits, which fall under the category of commodities. The CFTC is interested in whistleblower tips about anyone engaged in misconduct in the sale or trade of these credits. Employees, investors, and anyone else who finds fraud or believes it may exist is encouraged to get in touch with the CFTC. Continue reading

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In December 2022, the social media world was stunned to learn that federal prosecutors and the Securities and Exchange Commission (SEC) were filing civil and criminal charges against eight social media influencers. According to the complaints, the prosecutors and SEC accuse the influencers of using their social media visibility to manipulate stock prices—a $114 million fraud scheme. As we will discuss below, the case highlights the line between legitimate advice to investors and illegality, whether it's dispensed online for the public or in more traditional forms of investor communications. A Pump-And-Dump Reimagined Is Still A Pump-And-Dump In the 2022 case, the defendants allegedly ran a “pump and dump” scheme. According to the criminal indictment, the defendants purchased stocks at a low value, then posted positive but unfounded messages about them on social media. They disseminated false claims about how long they intended to hold onto the securities, the amount of due diligence they’d conducted relating to the securities’ values, and how much they believed the securities would increase in value. It worked. The stock prices rose. Then, the defendants secretly sold their shares, profiting at least $114 million from their manipulations.In December 2022, the social media world was stunned to learn that federal prosecutors and the Securities and Exchange Commission (SEC) were filing civil and criminal charges against eight social media influencers. According to the complaints, the prosecutors and SEC accuse the influencers of using their social media visibility to manipulate stock prices—a $114 million fraud scheme. As we will discuss below, the case highlights the line between legitimate advice to investors and illegality, whether it’s dispensed online for the public or in more traditional forms of investor communications. Continue reading

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