We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
In a heavily redacted decision issued on April 5,
2016, the SEC approved the claim of one whistleblower and
denied the claim of another for providing information related to an
unidentified enforcement action. The SEC awarded $275,000 to
the primary claimant (Claimant 1) but offset that amount by the
monetary obligations due related to a separate Final
Judgment. Although the April 5 order was heavily redacted,
the publicly available information confirms that the $275,000 award
was based on a percentage of the monetary sanctions from both the
SEC case and a related criminal action. This is the first
time an SEC order has required a tipster to spend whistleblower
proceeds to settle a court-ordered debt.
As has been frequently discussed in this space,
the rules around whistleblowers create incentives for
individuals to provide information to the SEC that might lead to
enforcement actions. Under Dodd-Frank, an officer, director,
trustee, or partner must provide the SEC with "original
information" that leads to sanctions in order to be eligible
for an award. If the sanctions in those actions exceed $1
million, the original informant may be eligible for a whistleblower
award. Even those who
learn of fraud from another employee may be eligible.
Awards have ranged from
as much as $30 million to the more nominal amount awarded
here.
The SEC also denied an award to a second claimant (Claimant 2)
in the same matter, finding that Claimant 2 had not provided any
information that led to the successful enforcement of the action at
issue. The SEC found that none of the tips identified by
Claimant 2 had been provided to the staff responsible for the
action and further that each of Claimant 2's tips had been
designated for "no further action" by the Office of
Market Intelligence, the initial reviewer of this kind of
information. The record also demonstrated that Claimant 2 had
not been in contact with or provided any information to the team
responsible for the action at issue. Claimant 2 initially
challenged the decision and requested the record materials
underlying the preliminary determination. However, Claimant 2
failed to sign the confidentiality agreement required before
receiving the materials and then, when Claimant 2 did finally
return the agreement, made substantial objectionable modifications
to the agreement before signing. The Office of the
Whistleblower therefore declined to provide the record and, on
review, the SEC found the denial was appropriate.
The order highlights the SEC's willingness to accept tips
even from those who may have been convicted of wrongdoing in the
past. It seems that, even in cases where the whistleblower
does not present a neat and tidy situation of a complete innocent
pointing the finger at a bad actor or action, the SEC is still
comfortable with providing incentives for individuals to come
forward if they see violations.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
13 Dec 2019, Speaking Engagement, Palo Alto, United States
Los Angeles partner Alyssa Caridis will lead the session on “Attorneys’ Fees” at the 20th Annual Berkeley – Stanford Advanced Patent Law Institute in Palo Alto on December 13th.
Los Angeles partner Alyssa Caridis will lead the session on “Attorneys’ Fees” at the 20th Annual Berkeley – Stanford Advanced Patent Law Institute in Palo Alto on December 13th. The session will examine how the law on exceptional cases and attorney misconduct has developed in the five years since Octane Fitness, including whether (and how) courts have changed the way they analyze attorney misconduct and how the rules of ethics play into this analysis. For more information on the conference and to view the full agenda, please click here.
In its November disciplinary report, FINRA recapped actions against member firms and individuals for violations of FINRA rules, MSRB rules, and federal securities laws and rules.
Vice Chancellor Slights, of the Delaware Court of Chancery, included a slightly self-effacing, and only slightly humorous, note in his recent opinion in a fiduciary claim against the directors of Tesla, Inc., ...
We have reported previously on the activities of Aussie Farms, an animal rights group in Australia that, earlier this year, published an internet-based interactive map.
Trade journals are full of articles discussing the plethora of M&A deals that have recently closed. However, for every closing there are far more deals that begin the process but are not completed.
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Life Sciences Quarterly (Q3 2019): SEC Enforcement And Class Actions Regarding FDA Communications (Video)
