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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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One question many whistleblowers worry about: What if their whistleblowing uncovers their own participation in the wrongdoing? And if it does so, how might that impact their liability and eligibility for an award?   Some culpability is not an automatic bar from a securities whistleblower award. The Securities and Exchange Commission (SEC) understands that some whistleblowers may have participated in the wrongdoing at issue. That may be why they know about it in the first place.One question many whistleblowers worry about: What if their whistleblowing uncovers their own participation in the wrongdoing? And if it does so, how might that impact their liability and eligibility for an award?

Some culpability is not an automatic bar from a securities whistleblower award. Continue reading

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If you are considering filing a whistleblowing report with the United States Securities and Exchange Commission (SEC), you might wonder if the SEC program covers violations that take place abroad. The short answer is: Probably, but it depends. As a starting point, it’s worth noting that there is no requirement for whistleblowers to be US residents or citizens. On the contrary, since the beginning of the SEC’s program, eligible whistleblowers from 130 countries—including the United Kingdom, Canada, China, Australia, and India—have come forward with tips for the SEC to review. When it comes to what (and where) the SEC can investigate, Dodd-Frank Act gives the SEC authority over extraterritorial malfeasance under one of the following two conditions: 1)  when the relevant securities transaction occurs outside of the US, the conduct within the US “constitutes significant steps in furtherance of the [securities] violation,” or 2) when the conduct outside of the US still “has a foreseeable substantial effect” within the US.If you are considering filing a whistleblowing report with the United States Securities and Exchange Commission (SEC), you might wonder if the SEC program covers violations that take place abroad. The short answer is: Probably, but it depends.

As a starting point, it’s worth noting that there is no requirement for whistleblowers to be US residents or citizens. On the contrary, since the beginning of the SEC’s program, eligible whistleblowers from 130 countries—including the United Kingdom, Canada, China, Australia, and India—have come forward with tips for the SEC to review. Continue reading

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If you hear the phrase “Ponzi scheme,” you may immediately think of Bernie Madoff’s $68 billion 20-year long fraud exposed in 2008. But there have been many high-profile Ponzi schemes since. Just in February 2022, film actor Zachary Horwitz was sentenced to 20 years in prison for his Hollywood-based Ponzi Scheme—a $650 million fraud. Then, later that month, the founder of cryptocurrency BitConnect was indicted for his role in a $2 billion Ponzi scheme. And just a couple of weeks later, a Utah business owner received a 19-year prison sentence for his Ponzi Scheme that defrauded 568 victims of $200 million. The phrase “Ponzi scheme” is sometimes thrown around to describe any fraud, but that’s not accurate. So let’s take a minute to explain what a Ponzi Scheme is.  Ponzi Schemes, Defined A Ponzi scheme is a specific type of fraud. The fraudster claims to invest the funds they receive; however, they’re actually taking money from new “investors” and giving it to the earlier “investors.”If you hear the phrase “Ponzi scheme,” you may immediately think of Bernie Madoff’s $68 billion 20-year long fraud exposed in 2008. But there have been many high-profile Ponzi schemes since. Just in February 2022, film actor Zachary Horwitz was sentenced to 20 years in prison for his Hollywood-based Ponzi Scheme—a $650 million fraud. Then, later that month, the founder of cryptocurrency BitConnect was indicted for his role in a $2 billion Ponzi scheme. And just a couple of weeks later, a Utah business owner received a 19-year prison sentence for his Ponzi Scheme that defrauded 568 victims of $200 million. Continue reading

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People toss around the term “fraud” all the time, often it to describe something fake or insincere. But when it comes to the legal understanding of the term in context of the securities laws, fraud means more than something fake. Understanding what fraud means is important for those who work in the financial sphere—especially if you’re working with clients who aren’t sophisticated investors. Where the line is between aggressive sales, marketing and investing, and actual fraud is sometimes hard to determine. It can be helpful to go back to the basics of what fraud entails.   Securities Fraud, Defined Generally speaking, the legal definition of fraud is: a materially false statement that is made with an intent to deceive a victim who relies on the statement, and the victim has suffered damages because of their reliance Each prong of this definition is important. As an example, suppose a firm promises every client that a live human answers every call on the first ring. But sometimes, the receptionist is on another line, and it takes more than one ring to answer. Also, the firm uses voicemail after hours.People toss around the term “fraud” all the time, often it to describe something fake or insincere. But when it comes to the legal understanding of the term in context of the securities laws, fraud means more than something fake. Understanding what fraud means is important for those who work in the financial sphere—especially if you’re working with clients who aren’t sophisticated investors. Where the line is between aggressive sales, marketing and investing, and actual fraud is sometimes hard to determine. Continue reading

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If you’re aware of a SPAC that is defrauding investors, you may be wondering if you should go to the Securities and Exchange Commission (SEC) and become a whistleblower. While how to best submit your case will always depend on your case, here are guidelines to help you understand the process. But one thing to keep in mind from the start: It’s important to realize that the SEC receives many tips, but it only pursues a few. So the real issue isn’t how you file a tip. Your real question should be, “How do you get the SEC to take an interest in your case?” The best way to do that is to have an attorney experienced in whistleblowing prepare and submit your tip for you. Industry watchers say that using an attorney automatically means that the SEC will take your application more seriously—because having an attorney saves the SEC time. Your attorney will have already pre-screened your case for its legal merit. And an experienced whistleblower attorney can craft a submission that is tailored to address the relevant legal standards and to meet the SEC priorities and other interests. If you’re aware of a SPAC that is defrauding investors, you may be wondering if you should go to the Securities and Exchange Commission (SEC) and become a whistleblower. While how to best submit your case will always depend on your case, here are guidelines to help you understand the process. But one thing to keep in mind from the start: It’s important to realize that the SEC receives many tips, but it only pursues a few. So the real issue isn’t how you file a tip. Your real question should be, “How do you get the SEC to take an interest in your case?” Continue reading

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The SEC announced another whistleblower bounty that paid nearly $3.5 million to four individuals. Jointly, three whistleblowers provided information to the SEC that led to the staff opening an investigation. The investigation led to a successful enforcement action by the SEC. Additionally, that information and investigation led to another agency opening its own investigation, culminating in a separate enforcement action. The fourth whistleblower used publicly available information to offer additional insights to the SEC. This information and analysis showed additional allegations to the staff that furthered the investigation. However, this whistleblower was “an outsider not affiliated with the Company.”  The individual’s analysis from public information was highly detailed and took considerable time and effort to research and collate, such as changes in the company’s stock pricing. The report submitted to the SEC took approximately seven weeks to complete.The SEC announced another whistleblower bounty that paid nearly $3.5 million to four individuals.

Jointly, three whistleblowers provided information to the SEC that led to the staff opening an investigation. The investigation led to a successful enforcement action by the SEC. Additionally, that information and investigation led to another agency opening its own investigation, culminating in a separate enforcement action. Continue reading

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The SEC has announced its latest whistleblower bounty of $6 million to five individuals in two groups for one single covered action. The first group, known as “Claimant 1” in the order, provided crucial documents to the SEC that led to requests for additional documentation. These documents were the crux of the SEC’s case. The individuals continued to provide documentation and information to help SEC staff to understand the company’s business practices. The second group was called “Claimant 2” in the order. These individuals provided firsthand accounts of the ongoing wrongdoing to the SEC, since they were familiar with the business processes and systems of the defendant in question. “Claimant 2” also sat for interviews, offered continued assistance, and gave on-the-record testimonies in the case. All five individuals also provided ongoing assistance to the SEC throughout the investigation.The SEC has announced its latest whistleblower bounty of $6 million to five individuals in two groups for one single covered action.

The first group, known as “Claimant 1” in the order, provided crucial documents to the SEC that led to requests for additional documentation. These documents were the crux of the SEC’s case. The individuals continued to provide documentation and information to help SEC staff to understand the company’s business practices. Continue reading

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The Commodities Futures Trading Commission (CFTC) recently awarded a bounty of $10 million to a whistleblower who offered original information voluntarily. The information led to the opening of an investigation and a subsequent successful enforcement action. According to the order, the individual provided the information properly via a Form TCR that involved information previously unknown to the CFTC, and in violation of the Commodity Exchange Act (CEA.) The whistleblower was under no obligation to provide this information, and provided it at the outset of the investigation, when the CFTC was unaware of the ongoing conduct.The Commodities Futures Trading Commission (CFTC) recently awarded a bounty of $10 million to a whistleblower who offered original information voluntarily. The information led to the opening of an investigation and a subsequent successful enforcement action.

According to the order, the individual provided the information properly via a Form TCR that involved information previously unknown to the CFTC, and in violation of the Commodity Exchange Act (CEA.) The whistleblower was under no obligation to provide this information, and provided it at the outset of the investigation, when the CFTC was unaware of the ongoing conduct. Continue reading

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