Whistleblowers awarded $1.2 million by Securities and Exchange Commission
Four whistleblowers will be rewarded with a total of $1.2 million by the U.S. Securities and Exchange Commission for exposing wrongdoing, the agency reported April 18, 2022.
Two other whistleblowers who sought a reward from the Securities and Exchange Commission were denied, however.
Whistleblowers are vital to helping to maintain the integrity of U.S. financial markets, noted Scott Williams, CEO of Ethic Alliance.
“It’s important for whistleblowers to know that to receive rewards, first in time, first in right generally applies. It’s incumbent upon them to report credible, original information quickly,” said Williams.
Ethic Alliance is a for-profit corporation and law firm whose purpose is to empower, educate and protect whistleblowers, ensuring they receive the protection they need and the rewards they are entitled to under US law (the US government will typically reward whistleblowers 10%-30% of the amount recovered or sanctioned under various whistleblower laws). Ethic Alliance protects whistleblowers through a secure, encrypted reporting and messaging platform, attaching the strong legal protection of attorney-client privilege from the moment a report is filed with us, and access to a network of specialty attorneys that have made careers protecting and supporting whistleblowers, and working with the US government to win whistleblower lawsuits.
In public disclosures, the Securities and Exchange Commission did not identify the four whistleblowers it recently rewarded or details of the alleged wrongdoing they exposed.
In one case, a whistleblower will receive an award of $450,000. The Commission said that the “Claimant initially reported his/her concerns internally before providing information to Commission staff that significantly contributed to an existing investigation. Claimant provided information that helped streamline the staff’s investigation and saved the staff time and resources. Claimant also provided ongoing assistance over the course of the investigation through phone and in-person interviews and identified witnesses and specific events of interest, advancing the staff’s investigation.”
In a second case, a whistleblower is expected to receive approximately $45,000. The Commission noted that “(1) Claimant provided new information that prompted Commission staff to open an investigation into the alleged misconduct; (2) Claimant participated in a voluntary interview with Commission staff; (3) the charges brought by the Commission were based in part on conduct that was the subject of the information provided by Claimant; and (4) Claimant suffered hardships as a result of the underlying misconduct.”
In the third case, two whistleblowers will receive approximately $700,000. In a related action, the Commission said, it obtained monetary sanctions totaling more than $1 million.
The Commission noted that “the record demonstrates that Claimants voluntarily provided original information to the Commission which the Commission passed along to [another agency] and that this original information led to the successful enforcement of both the Covered Action and Related Action.”
The Commission went on to say that, “Claimants’ information prompted Commission staff to begin an examination that led to the Covered Action, (ii) Claimants’ assistance helped focus the examination; (iii) some of the charges in the Commission’s Order were based, in part, on the information submitted by Claimants; and (iv) there was substantial law enforcement interest in the information provided, as it related to an ongoing fraud involving the misappropriation of investor funds.”
The two whistleblowers will each receive half of the joint award, the SEC said.
In the reward request which the SEC denied, the agency noted that the case involved an investigation into a company “indicating that subsidiaries of the Company had made improper payments to employees of its [redacted]…in an effort to obtain or retain business…”
The Commission launched an administrative cease-and-desist proceeding against the company, charging it with violations. The company was ordered to pay disgorgement and prejudgment interest.
Two unidentified whistleblowers filed award claims related to the case. One of the claimants argued that he/she provided the Commission with original information related to activities at the company’s wholly-owned subsidiary just a few months before the Commission opened its investigation, and further claimed his/her submission significantly contributed to the success of the Commission’s enforcement action.
The other claimant contended that information he/she provided formed at least part of the grounds for the subpoena that the Commission issued to the company and that this subpoena led to information being revealed that assisted the Commission’s investigation and contributed to the success of its enforcement action.
The Commission maintained, however, that it neither received nor used any of the information provided by either claimant.
Contact Ethic Alliance at info@ethicalliance.com
Related links: https://www.sec.gov/rules/other/2022/34-94743.pdf
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