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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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Most employees aren’t surprised when they’re asked to sign a non-disclosure agreement (NDA) as a condition of employment. It’s one way to warn and penalize employees about telling company secrets. But when the NDA prohibits an employee from becoming a whistleblower, the SEC steps in. From 2015 through 2019, Brinks hired between 2,000 and 3,000 new employees annually. The company required new employees to sign an NDA that prevented them from disclosing any financial or business information to third parties without written permission from the company. This included governmental agencies. The highly restrictive wording failed to give an exemption for an employee who wanted to become an SEC whistleblower and disclose wrongdoing. Employees who did violate the agreement—for any reason—were subject to $75,000 in liquidated damages, along with Brinks’ legal fees.Most employees aren’t surprised when they’re asked to sign a non-disclosure agreement (NDA) as a condition of employment. It’s one way to warn and penalize employees about telling company secrets. But when the NDA prohibits an employee from becoming a whistleblower, the SEC steps in. Continue reading

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Compared to the decades of experience investors have with the S&P and NASDAQ, everyone's a comparative rookie when it comes to cryptocurrency. And crypto's appeal often comes from the idea that crypto exists outside of traditional banking. However, overlooked in that idea is the reality that—not unlike traditional banking and other investment platforms—many crypto services charge users expensive fees for these crypto transactions. And these fees can get very steep, very quickly. All that's true, assuming that those platforms and third-party vendors are properly disclosing and administering those fees. But that's not always the case: In 2020, Robinhood paid $65 million in fines to settle claims that it failed to disclose commission fees and failed to get the best possible terms for when executing customers' orders. Elements that can influence crypto fees, markups or commissions.Compared to the decades of experience investors have with the S&P and NASDAQ, everyone’s a comparative rookie when it comes to cryptocurrency. And crypto’s appeal often comes from the idea that crypto exists outside of traditional banking. However, overlooked in that idea is the reality that—not unlike traditional banking and other investment platforms—many cryptocurrency services charge users expensive fees for these crypto transactions. And these fees can get very steep, very quickly. Continue reading

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In January of this year, the Securities and Exchange Commission (SEC) published a "Risk Alert" warning potential investors about four areas of concern—ways in which investment advisers are defrauding their clients. Let's briefly discuss each of these in turn, to see what concerning practices you should be on the lookout for. Hedge Fund Failure to Act Consistently with Disclosures The SEC is finding that some advisors are failing to take actions consistent with the material disclosures they have made to clients or investors, such as: disclosing one investment strategy but then using another; failing to follow the required practices in limited partnership agreements (e.g., fail to identify conflicts of interest); or charging them a fee based on the original cost basis of an investment when they've sold, written off, or otherwise disposed of a portion of that investment.In January of this year, the Securities and Exchange Commission (SEC) published a “Risk Alert” warning potential investors about four areas of concern—ways in which investment advisers are defrauding their clients. Let’s briefly discuss each of these in turn, to see what concerning practices you should be on the lookout for. Continue reading

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Before sitting down for her now-famous 60 Minutes interview, former Facebook employee Frances Haugen had filed eight complaints with the Securities and Exchange Commission (SEC). In these, she alleged that Facebook was misleading investors in how the company doesn’t act against hate crime, how it facilitates the spread of disinformation, how it harms young girls’ psychological wellbeing, and much more. Within days of Haugen’s interview, Haugen was testifying on Capitol Hill, members of Congress began debating new legislation to regulate Facebook, and Facebook stock prices dropped 15% from the previous month.  It’s hard to imagine that any whistleblower who isn’t thinking about Facebook and Haugen, particularly if the allegations would have a large impact on the company or the industry. But there are more practical considerations, in addition to headlines, that could impact a whistleblowing case. Let’s consider a few of these. The larger the case, the longer it will probably take Haugen isn’t the first to have made complaints about Facebook’s conduct. What made the difference, from the public reaction to the SEC’s investigation, was the sheer volume of material that she had accumulated. The larger the case, the more facts there will be to gather, so it will probably take longer to investigate and litigate. That’s true from your perspective: You may want to take more time to gather evidence before bringing in the information to the SEC. And a bigger case means you will have a longer wait before the case is resolved and you see an award.Before sitting down for her now-famous 60 Minutes interview, former Facebook employee Frances Haugen had filed eight complaints with the Securities and Exchange Commission (SEC). In these, she alleged that Facebook was misleading investors in how the company doesn’t act against hate crime, how it facilitates the spread of disinformation, how it harms young girls’ psychological wellbeing, and much more. Continue reading

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Of those who provide tips to the Securities and Exchange Commission (SEC) whistleblowing program, an estimated 20% are anonymous when they submit their information. And the SEC is required to keep whistleblowers’ information confidential. But what if you submitted the information anonymously, and your identity became known? The main thing to be aware of is that you’re protected from employer retaliation relating to your whistleblowing. The SEC acts strongly against employer retaliation—and it includes a broad range of bad acts to constitute retaliation. If retaliation does occur, you can sue for double-back pay and damages, and that money would be in addition to any award you receive for reporting the violation. And perhaps ironically, a retaliation claim is easier to prove if your identity is known. If you’ve technically remained anonymous, any employer can simply assert then it would be impossible for the firm to have retaliated against you for an act they didn’t know you had done.Of those who provide tips to the Securities and Exchange Commission (SEC) whistleblowing program, an estimated 20% are anonymous when they submit their information. And the SEC is required to keep whistleblowers’ information confidential. But what if you submitted the information anonymously, and your identity became known? Continue reading

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Perhaps one of the most difficult parts of becoming a whistleblower is feeling alone when you go against your company. But what if you and another colleague both decide to go to the Securities and Exchange Commission (SEC) and become joint whistleblowers? How does that change the equation? You and a colleague can become joint whistleblowers, and you can both receive an award. (For instance, in April 2021, the SEC announced that joint whistleblowers would share a $50 million award.) To become joint whistleblowers, you must submit the tip together, and then you’ll later need to file a joint Form WB-APP to claim an award. It can also be helpful if you share the same legal counsel to ensure you’re submitting the same information.Perhaps one of the most difficult parts of becoming a whistleblower is feeling alone when you go against your company. But what if you and another colleague both decide to go to the Securities and Exchange Commission (SEC) and become joint whistleblowers? How does that change the equation?

You and a colleague can become joint whistleblowers, and you can both receive an award. (For instance, in April 2021, the SEC announced that joint whistleblowers would share a $50 million award.) Continue reading

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