I am pleased to report that the whistleblower program under the Securities and Exchange Commission (SEC) is working very well. In a clear sign of the increased awareness – and effectiveness – of the program, the SEC awarded five whistleblowers a total of more than $26 million for their assistance in four separate enforcement actions between May 13 and June 9.
• May 13, 2016: the SEC awarded $3.5 million to a whistleblower who provided useful information in an ongoing investigation. Notably, the information the whistleblower provided did not cause the Commission to open a new line of inquiry; rather, the information “significantly contributed” to the ongoing investigation by focusing the Commission on a particular issue and providing additional settlement leverage during its negotiations with the company.
• May 17, 2016: the Commission announced an award of $5-6 million (its third highest in history) to a “former company insider” who provided a detailed tip that, according to the Commission, “led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower’s information.”
• May 20, 2016: the Commission jointly awarded more than $450,000 to two individuals for a tip that led to the opening of a corporate accounting investigation and for their assistance as the investigation proceeded.
• June 9, 2016: the SEC awarded $17 million – the second largest award in the history of the whistleblower program – to a “former company employee” who provided a tip which, according to the SEC, “substantially advanced the agency’s investigation and ultimate enforcement action.”
Andrew Ceresney, Director of Enforcement for the SEC, stated that when employees – who are often well-positioned to identify wrongdoing – “report specific and credible tips to us, [the SEC] will leverage that inside knowledge to advance [its] enforcement of the securities laws and better protect investors and the marketplace.” These awards reaffirm the SEC’s intent to encourage whistleblowers to come forward and provide useful information – and show that the program is gaining momentum.
The SEC’s whistleblower program, as part of Dodd-Frank, has now awarded more than $85 million to 32 whistleblowers since the program’s inception in 2011. Whistleblowers may be eligible for such an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action.
These awards can range from 10 to 30 percent of the money collected when the monetary sanctions exceed $1 million. Payments are made out of an investor protection fund established by Congress that is financed through monetary sanctions paid to the SEC as a result of securities law violations.
Due to the increasing activity involving whistleblower cases, our firm has assigned lawyers to a team to handle these cases. As we have reported, these cases can arise under either federal or state law. If you are aware of fraud being committed against the federal government, or a state government, the False Claims Act (FCA) or a state law can protect and reward you for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, you can contact a lawyer at Beasley Allen for a free and confidential evaluation of your claim. You can contact one of the lawyers on our Whistleblower Litigation Team at 800-898-2034 or by email at Archie.Grubb@beasleyallen.com, Larry.Golston@beasleyallen.com, Lance.Gould@beasleyallen.com, Andrew.Brashier@beasleyallen.com, Clay.Barnett@beasleyallen.com or Rebecca.Gilliland@beasleyallen.com.
Source: Bloomberg News
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