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SEC Whistleblower Lawyer Blog

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As reported in the Wall Street Journal, employees of tech companies in Silicon Valley and elsewhere are increasingly coming forward to the Securities and Exchange Commission (SEC). These employees-turned-SEC whistleblowers are explaining how their companies are overpromising and underdelivering on their promises or otherwise violating the federal securities laws. In some cases, SEC whistleblowers have revealed that their companies have been making false representations about their technology. When it comes to the headline-making allegations about Theranos Inc., whistleblower employee Tyler Shultz claimed that the company was falsifying its lab tests and was not making an effective product. As important as the whistleblowing of outright fraud—that tech works when it doesn't—are, these issues aren't the only concerns the SEC wants to hear about. Frequently, companies exaggerate their technology success to inflate the companies prospects or earnings to increase its stock price or manipulate its financial records.As reported in the Wall Street Journal, employees of tech companies in Silicon Valley and elsewhere are increasingly coming forward to the Securities and Exchange Commission (SEC). These employees-turned-SEC whistleblowers are explaining how their companies are overpromising and underdelivering or otherwise violating the federal securities laws. Continue reading

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In recent years, many investors have been looking for new ways to invest. One way funds have been doing that is by pooling a type of asset or debt into an investment fund. Ownership of the pool is sold as shares, with profits to be allocated between the shareholders if the pool’s assets increase in value. One such category of these pooled asset investments is “life settlement funds,” but the Securities and Exchange Commission (SEC) and others are warning that many of these funds are a scam. In a life settlement fund, an investment company is purchasing life insurance policies from the elderly. The company pays out a lump sum to an insured person in exchange for being named the person’s beneficiary. The company collects a number of these policies into a fund, then it sells shares of the fund to investors. In theory, the fund investors will receive the life insurance payouts when the insured people die. And whenever the eventual payout exceeds the lump sum paid, the investors expect to receive a profit.In recent years, many investors have been looking for new ways to invest. One way funds have been doing that is by pooling a type of asset or debt into an investment fund. Ownership of the pool is sold as shares, with profits to be allocated between the shareholders if the pool’s assets increase in value. One such category of these pooled asset investments is “life settlement funds,” but the Securities and Exchange Commission (SEC) and others are warning that many of these funds are a scam. Continue reading

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The SEC recently announced two amendments to their Whistleblower program rules that will make coming forward a little more lucrative for interested individuals. The first amendment to Rule 21F-3 allows the SEC to pay bounties to whistleblowers for actions brought by other federal agencies. This is particularly helpful when the action would lead to the award being paid by the other entity’s own whistleblower program. These changes let the SEC make an award when the other agency’s program isn’t comparable to the SEC’s, or if the SEC’s award would pay $5 million or less.  For the second amendment, the SEC is allowed to reconsider the amount of an award bounty, but only for the purpose of proposing an increase. The option to reconsider an award to lower the amount has been removed.The SEC recently announced two amendments to their Whistleblower program rules that will make coming forward a little more lucrative for interested individuals.

The first amendment to Rule 21F-3 allows the SEC to pay bounties to whistleblowers for actions brought by other federal agencies. This is particularly helpful when the action would lead to the award being paid by the other entity’s own whistleblower program. Continue reading

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Once again, two SEC whistleblowers will receive bounties through the SEC’s Office of the Whistleblower, following a successful enforcement action. The first SEC whistleblower receives $13 million after voluntarily providing information that initiated the investigation. They notified SEC staff of the firm’s “abusive practices” for several years prior to the opening of the investigation. Some of this information led to activity that would have been otherwise hard for SEC staff to uncover. The SEC also used information from the investigation in settlement proceedings with the firm’s legal counsel. Their assistance also helped SEC staff to understand the facts of the case. This individual provided ongoing and continuing assistance including witness identification and obtaining documentation. Through the process, the whistleblower also suffered personal hardship as a result.Once again, two SEC whistleblowers will receive bounties through the SEC’s Office of the Whistleblower, following a successful enforcement action.

The first SEC whistleblower receives $13 million after voluntarily providing information that initiated the investigation. They notified SEC staff of the firm’s “abusive practices” for several years prior to the opening of the investigation. Continue reading

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In this blog, we often discuss the financial bounties that whistleblowers receive from the US Securities & Exchange Commission (SEC) and occasionally, the Commodities Futures Trading Commission (CFTC.) What isn’t always discussed is the time and effort that it takes for a whistleblower to get to that point. Recently the SEC issued a press release for National Whistleblower Appreciation Day (on July 30th), commending those who seek to bring fraudulent people and companies to justice. Whistleblowers who report information to the SEC generally involve securities law violations. (OSHA, the Occupational Safety & Health Administration, also has its own whistleblower program for safety and environmental breaches in the workplace.) Becoming a whistleblower can encompass personal risk. The financial bounties are more than just an incentive. Offering monetary awards can also help individual whistleblowers through financial difficulties because of their assistance to the SEC.In this blog, we often discuss the financial bounties that whistleblowers receive from the US Securities & Exchange Commission (SEC) and occasionally, the Commodities Futures Trading Commission (CFTC.) What isn’t always discussed is the time and effort that it takes for a whistleblower to get to that point. Continue reading

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Scott Silver and David Chase were selected as top-rated securities litigation attorneys by Super Lawyers for 2022. Scott received the same award in 2021, and was previously selected for Super Lawyers’ Rising Stars list. David Chase was selected to Super Lawyers for years 2006-2007, 2009-2019, and 2021-2022. Scott and David can represent you as an SEC whistleblower if you have timely, credible, and original information or analysis information regarding stock market manipulations, Ponzi schemes, theft of investor funds, false public filings and press releases, accounting fraud, payment of bribes to secure foreign business, and any other misconduct involving investments and the financial markets.Scott Silver and David Chase were selected as top-rated securities litigation attorneys by Super Lawyers for 2022. Scott received the same award in 2021, and was previously selected for Super Lawyers’ Rising Stars list. David Chase was selected to Super Lawyers for years 2006-2007, 2009-2019, and 2021-2022. Continue reading

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In a recent press releaseIn a recent press release, the SEC announced that it has awarded an individual a bounty of $17 million for their assistance as a whistleblower. The individual provided information that led to the SEC opening an investigation. Additionally, the individual gave continued assistance to SEC staff, speaking with them on multiple occasions. Information provided by this individual led to both a primary covered action as well as a secondary related action. The related action had considerable interest from law enforcement. Both actions were successful and led to charges, based on the information regarding conduct provided by the individual whistleblower. This led to two successful enforcement actions—a covered action and a related action—and the award totaling $17 million. "Today’s award underscores the SEC’s commitment to rewarding meritorious whistleblowers who provide valuable information and exemplary cooperation that advance the agency’s enforcement efforts," said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. The SEC has now awarded more than $1.3 billion to 278 whistleblowers since the introduction of the program in 2012. The identities of the whistleblowers are kept confidential under the Dodd-Frank Act, and no identifying information is released., the SEC announced that it has awarded an individual a bounty of $17 million for their assistance as a whistleblower.

The individual provided information that led to the SEC opening an investigation. Additionally, the individual gave continued assistance to SEC staff, speaking with them on multiple occasions. Continue reading

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In a recent press release, the US Securities & Exchange Commission (SEC) announced the award of more than $6M in bounties in two separate orders. Both orders involve providing information to the SEC for two covered actions. In the first order, the whistleblower was described as an “outside professional” who was the target of a product solicitation. Believing the product to be misrepresented, the individual contacted SEC staff to notify them of the activity. SEC staff opened an investigation, and the individual offered original information and continual assistance that led to a successful enforcement action. The Claims Review Staff (CRS) awarded this whistleblower “more than $3 million.” In the second order, CRS awarded “over $3 million” after the individual voluntarily provided original information that produced another successful enforcement action. The whistleblower in this order was an insider who first filed an internal report, and then submitted detailed information to the SEC. The SEC subsequently initiated an investigation into the allegations. This whistleblower met with staff, offered additional information, and identified relevant and important witnesses and documents throughout the investigation.In a recent press release, the US Securities & Exchange Commission (SEC) announced the award of more than $6M in bounties in two separate orders. Both orders involve providing information to the SEC for two covered actions.

In the first order, the whistleblower was described as an “outside professional” who was the target of a product solicitation. Believing the product to be misrepresented, the individual contacted SEC staff to notify them of the activity. SEC staff opened an investigation, and the individual offered original information and continual assistance that led to a successful enforcement action. The Claims Review Staff (CRS) awarded this whistleblower “more than $3 million.” Continue reading

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While Special Purpose Acquisition Companies (SPACs) SPACs—shell companies created for the sole purpose of funding the future acquisition of another company—have existed since the 1990s, interest (and investing) in them took off during the pandemic. But the rise of SPAC popularity means that hedge funds and others have been entering the SPAC market, while a number of SPACs are under investigation. That has led the Securities and Exchange Commission (SEC) to propose new rules relating to SPACs. The proposed rules set out requirements that SPACs would need to comply with to avoid registering as an investment company covered by the Investment Company Act. For example, a non-registered SPAC could only have cash and specified securities as assets. Also, once the SPAC had acquired a target company, the SPAC would need to switch to operating the target's business rather than continue as an investment entity.   Many of the proposed rules relate to disclosure requirements. If adopted, the SPACs will need to provide more information relating to SPAC sponsors, conflicts of interest, and dilution. They'd also need to provide disclosures relating to "de-SPAC transactions," i.e., the SPAC merger with an acquired company and these transactions' fairness to their investors. Most SPACs would also no longer be protected from liability when making forward-looking statements, such as projections, in filings.While Special Purpose Acquisition Companies (SPACs) SPACs—shell companies created for the sole purpose of funding the future acquisition of another company—have existed since the 1990s, interest (and investing) in them took off during the pandemic. But the rise of SPAC popularity means that hedge funds and others have been entering the SPAC market, while a number of SPACs are under investigation. That has led the Securities and Exchange Commission (SEC) to propose new rules relating to SPACs. Continue reading

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Leaders of the Securities and Exchange Commission (SEC) recently released its 2022 priorities for its Department of Examinations (EXAMS)—the office charged with monitoring risks and protecting investors. The SEC has made a point of saying the list is just a guideline. EXAMS will still pursue other investigations not on the list. But for those who are considering becoming a whistleblower, it can help strategize your reporting. EXAMS' priorities include: Private fund management— including calculation of fees, risk management, and portfolio strategies, with an emphasis on private funds investing in Special Purpose Acquisition Companies (SPACs) where the fund adviser is also the SPAC sponsor Violations of fiduciary duties—such as broker-dealer and SEC-registered investment advisers (RIAs) failure to protect retail investors, through conflicts of interest, insufficient or inaccurate disclosures, account conversions, and rollovers Crypto and emerging technologies—including failure to meet the standards of conduct when offering, selling, and trading crypto-assets, and RIAs and broker-dealers' use of automated digital investment advice (a.k.a. "robo-advisers") to boost salesLeaders of the Securities and Exchange Commission (SEC) recently released its 2022 priorities for its Department of Examinations (EXAMS)—the office charged with monitoring risks and protecting investors. The SEC has made a point of saying the list is just a guideline. EXAMS will still pursue other investigations not on the list. But for those who are considering becoming a whistleblower, it can help strategize your reporting. Continue reading

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