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A “blank check company,” more formally known as a special purpose acquisition company (SPAC), was virtually unheard of ten years ago. However, as fewer companies have been able to launch initial public offerings (IPOs) on their own, SPACs skyrocketed in popularity. By 2020, half of all IPOs were tied to a SPAC, and the largest of these included billion-dollar deals. But the rise of SPACs has led to their abuse—taking advantage of investors—and a resulting crackdown by the Securities and Exchange Commission (SEC). Whether you’re working in the financial sectors steering investors to SPACs or more directly involved in a SPAC, you should be aware that they are one of the SEC’s top enforcement priorities. And if you know of SPAC-related wrongdoing, you should consider becoming an SEC whistleblower. In the following posts, we’ll explore SPACs and the SEC’s increasing policing of them.A “blank check company,” more formally known as a special purpose acquisition company (SPAC), was virtually unheard of ten years ago. However, as fewer companies have been able to launch initial public offerings (IPOs) on their own, SPACs skyrocketed in popularity. By 2020, half of all IPOs were tied to a SPAC, and the largest of these included billion-dollar deals. But the rise of SPACs has led to their abuse—taking advantage of investors—and a resulting crackdown by the Securities and Exchange Commission (SEC). Continue reading

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Congress passed the Dodd-Frank Act on July 21, 2010, in response to the SEC’s failure to identify several Ponzi schemes and other securities fraud that had bilked investors out of billions of dollars and adversely affected the U.S. economy. The Act included provisions to protect whistleblowers who report securities law violations to the Securities and Exchange Commission (SEC) and provided incentives for SEC whistleblowers to come forward. The SEC whistleblower program created by Dodd-Frank has been a resounding success, receiving thousands of tips and reports of alleged securities fraud and other serious matters since its inception. Tips from whistleblowers have led to enforcement actions that so far have yielded more than $2.5 billion in financial remedies, most of which has gone to harmed investors. Whistleblowers have also reaped benefits: In September of 2021, the SEC reported it had issued more than $1 billion in awards (or bounties) for information or assistance in SEC investigations and enforcement actions.Congress passed the Dodd-Frank Act on July 21, 2010, in response to the SEC’s failure to identify several Ponzi schemes and other securities fraud that had bilked investors out of billions of dollars and adversely affected the U.S. economy. The Act included provisions to protect whistleblowers who report securities law violations to the Securities and Exchange Commission (SEC) and provided incentives for SEC whistleblowers to come forward. Continue reading

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The Securities and Exchange Commission (SEC) has explained that “as investor demand for climate and other environmental, social, and governance (ESG) information soars, the SEC is responding with an all-agency approach” that reflects the risks and opportunities of ESG and climate investing. The agency is putting its policies into practice this year, and investigations are leading to increased enforcement. The SEC’s ESG-Related Institutional Actions The SEC announced the creation of the new “Climate and ESG Task Force” within its Division of Enforcement in 2021. In addition to an emphasis on identifying material gaps or misstatements within firms’ disclosures of climate risks under existing rules, the SEC promised the new task force would be developing initiatives—such as data analysis—to proactively identify ESG-related misconduct. At the same time, the task force would actively “evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues.”The Securities and Exchange Commission (SEC) has explained that “as investor demand for climate and other environmental, social, and governance (ESG) information soars, the SEC is responding with an all-agency approach” that reflects the risks and opportunities of ESG and climate investing. The agency is putting its policies into practice this year, and investigations are leading to increased enforcement. Continue reading

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The SEC announced an award of $279 million to an individual for substantial assistance in an enforcement action. It’s the largest award in the history of the SEC’s Whistleblower program. The previous record for an award was made in October of 2020, when a whistleblower received $114 million. While the whistleblower did not submit the original information that initiated the SEC investigation, the information provided, and assistance afforded, by the whistleblower “expanded the scope of misconduct charged," according to Creola Kelly, Chief of the SEC’s Office of the Whistleblower. Their continued involvement and assistance included numerous interviews and many written submissions that greatly assisted the SEC’s investigation. Two additional whistleblowers were deemed ineligible. Their claims were denied after the SEC determined that neither one submitted information that led to or assisted in any successful enforcement of a covered action.  The SEC announced an award of $279 million to an individual for substantial assistance in an enforcement action. It’s the largest award in the history of the SEC’s Whistleblower program. The previous record for an award was made in October of 2020, when a whistleblower received $114 million. Continue reading

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In a recent press release, the SEC announced the award of $12 million to two whistleblowers who assisted in an enforcement action against a registered broker-dealer involved in wrongdoing. The first whistleblower received a $9 million bounty after providing a tip that led to the SEC’s investigation. Without this information, the activity at the firm would have been “difficult to detect.” This whistleblower continued to provide information and assistance during the investigation. This included the identification of witnesses and “helping staff understand complex fact patterns and issues related to the matters under investigation.” The first whistleblower suffered hardships while trying to remedy the issues at hand. The SEC used this whistleblower’s information to build its investigative plan and draft initial document requests. The firm in question was ultimately ordered to pay an undisclosed amount in disgorgement of prejudgment interest and a civil money penalty.In a recent press release, the SEC announced the award of $12 million to two whistleblowers who assisted in an enforcement action against a registered broker-dealer involved in wrongdoing.

The first whistleblower received a $9 million bounty after providing a tip that led to the SEC’s investigation. Without this information, the activity at the firm would have been “difficult to detect.” This whistleblower continued to provide information and assistance during the investigation. This included the identification of witnesses and “helping staff understand complex fact patterns and issues related to the matters under investigation.” Continue reading

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Following their 2021 appearance, SEC whistleblower attorneys Scott Silver and David Chase were invited back to the ‘Cut To The Chase’ legal podcast to discuss SEC whistleblower program updates and the relevance of the program in recent news, including the collapse of FTX. ‘Cut To The Chase’ is hosted by Miami attorney and entrepreneur Gregg Goldfarb, who discusses legal and public interest news with authorities in their field. Scott Silver and David Chase, who each have their own separate law firms, have formed a strategic alliance to work together representing SEC whistleblowers. Scott Silver is the managing partner of Silver Law Group, a nationally-recognized law firm that helps investors recover losses caused by stockbroker misconduct, fraud, and Ponzi schemes. David Chase formerly worked as an attorney in the SEC’s Enforcement Division and now runs The Law Firm of David R. Chase P.A. where he works on securities and regulatory matters and helps investors recover losses.Following their 2021 appearance, SEC whistleblower attorneys Scott Silver and David Chase were invited back to the ‘Cut To The Chase’ legal podcast to discuss SEC whistleblower program updates and the relevance of the program in recent news, including the collapse of FTX.

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The US Securities and Exchange Commission’s Whistleblower ProgramThe US Securities and Exchange Commission’s Whistleblower Program passed the $1 billion mark of awards in September of 2021. To mark the occasion, SEC Chair Gary Gensler discussed the significance of this milestone in an official SEC YouTube video. At the time, the SEC had paid out bounties of $1,074,010,519.76 to 207 individuals for their information and assistance. (The latest press releases have not indicated the number of whistleblowers who have been awarded bounties.) Emphasizing the important public service that whistleblowers provide, Mr. Gensler discussed how their contributions to the SEC’s law enforcement “help us to be better cops on the beat.” Whistleblowers offer their time and service to the commission to assist in investigations and enforcement actions. Ultimately, their assistance helps the SEC to protect the public from misconduct and assist in helping them recovering lost investment funds. passed the $1 billion mark of awards in September of 2021. To mark the occasion, SEC Chair Gary Gensler discussed the significance of this milestone in an official SEC YouTube video. At the time, the SEC had paid out bounties of $1,074,010,519.76 to 207 individuals for their information and assistance. (The latest press releases have not indicated the number of whistleblowers who have been awarded bounties.) Continue reading

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The SEC recently announced that it has awarded a bounty of more than $28 million to “joint whistleblowers” who offered information and assisted in a successful enforcement action. The order indicated that there were four individuals that were called “Claimant 1,” and will each receive 25% of the total, or roughly $7 million each. The SEC decided to consolidate the four individuals into a single Claimant entity, stating in the order: We have determined to treat the Joint Claimants jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their information to the Commission through the same counsel and provided substantively identical whistleblower award applications. See Exchange Act Section 21F(a)(6) (defining “whistleblower” to mean “2 or more individuals acting jointly who provide information relating to a violation of the securities laws to the Commission”) . . . the Office of the Whistleblower is directed to pay each of them individually 25% of their joint award.The SEC recently announced that it has awarded a bounty of more than $28 million to “joint whistleblowers” who offered information and assisted in a successful enforcement action. The order indicated that there were four individuals, who will each receive 25% of the total, or roughly $7 million each. Continue reading

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After another successful enforcement action, the SEC has awarded $18 million to three whistleblowers who each contributed vital information. Whistleblower #1 alerted the SEC that the entity was engaging in fraudulent activity. They offered valuable information that led to the SEC’s investigation into a “fraudulent scheme.” Additionally, they provided the SEC staff with documentation and ongoing assistance throughout the investigation. The information gave SEC staff a substantial advantage that furthered the investigation and led to the success of the enforcement action. After the beginning of the investigation, whistleblowers #2 and #3 offered additional information that also advanced the SEC’s case. While some of second and third whistleblowers’ information was the same as #1, they provided new information that was relevant to the charges in the action. This information was provided after the investigation was already underway, and led to lesser awards for both. After another successful enforcement action, the SEC has awarded $18 million to three whistleblowers who each contributed vital information.

SEC whistleblower #1 alerted the SEC that the entity was engaging in fraudulent activity. They offered valuable information that led to the SEC’s investigation into a “fraudulent scheme.” Additionally, they provided the SEC staff with documentation and ongoing assistance throughout the investigation. The information gave SEC staff a substantial advantage that furthered the investigation and led to the success of the enforcement action. Continue reading

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