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After a broker or investment advisor leaves a FINRA member firm, a broker dealer is required to file a Form U5 with FINRA. This form details the broker's termination. This is the case even if the broker voluntarily terminates his or her employment, or the individual is no longer working as a broker, but is still working for the firm in a different capacity. Many brokers have found after leaving that some firm uses the Form U5 to damage the brokers reputation as a securities representative. This is similar to employees who leave other types of jobs, sometimes on good terms, but are either refused a reference or given a bad one. In either case, the individual changing employment finds him or herself in a difficult position. This is particularly true if the employment was not terminated voluntarily. Brokers who feel like they have been maligned by former employers have increasingly sought legal counsel in order to defend themselves, clear their name, and usually with a financial settlement from their former firm as well as FINRA.After a broker or investment advisor leaves a FINRA member firm, a broker dealer is required to file a Form U5 with FINRA. This form details the broker’s termination. This is the case even if the broker voluntarily terminates his or her employment, or the individual is no longer working as a broker, but is still working for the firm in a different capacity. Continue reading

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The U.S. Congress has established whistleblower programs with monetary awards to incentivize individuals to report possible violations of the federal securities laws to the Securities & Exchange Commission and the Commodities Futures Trading Commission. The information reported to these agencies can be past, ongoing, or future fraudulent activities. They include: Ponzi or Pyramid schemes or High-Yield Investment Programs Theft or misappropriation of funds or securities Manipulation of a security's price or volume Front running, in which a trader is aware of pending customer orders for a security and buys or sells unfairly. Accounting fraud, in which accountants fail to identify false information made by clients regarding their financial status Pump-and-dump schemes and stock manipulation, including false statements regarding a public company's financial reports and lying to corporate auditors Mutual fund fraud, which entails deceptive acts that disadvantage investors Bribery to obtain or retain business, including with foreign officials Insider trading Fraudulent or unregistered securities offerings Abusive naked short selling Fraudulent conduct associated with municipal securities transactions or public pension plans Initial Coin Offerings and Cryptocurrencies The U.S. Congress has established whistleblower programs with monetary awards to incentivize individuals to report possible violations of the federal securities laws to the Securities & Exchange Commission and the Commodities Futures Trading Commission. The information reported to these agencies can be past, ongoing, or future fraudulent activities. They include: Continue reading

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Whistleblowers help maintain the integrity and fairness of U.S. financial markets. They are a vital watchdog and play an essential role in the securities markets. The whistleblower process can be vigorous and draining and comes with risk. Once a whistleblower decides to take a moral stand on what is right, they must carefully prepare for the process and possible consequences. A whistleblowing complaint might trigger an employment agreement provision that could jeopardize the job of a whistleblower, even out of retaliation. While laws exist to protect whistleblowers who are wrongfully fired, ensuing lawsuits and getting re-established in the workplace can take their toll. There is also the possibility of getting blackballed because of the whistleblower association. Even if not fired, a whistleblower might suffer fear of termination and reprisal. They might get shunned and emotionally ostracized and find themselves in a hostile working environment. Stress and anxiety are often a natural part of the process.Whistleblowers help maintain the integrity and fairness of U.S. financial markets. They are a vital watchdog and play an essential role in the securities markets.

The whistleblower process can be vigorous and draining and comes with risk. Once a whistleblower decides to take a moral stand on what is right, they must carefully prepare for the process and possible consequences. Continue reading

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Whistleblowers should proceed from the very start—as soon as they suspect something is amiss—with the strategic guidance, support, and watchful eye of experienced counsel. The whistleblower path is fraught with difficulty and decision-making that cannot be done without the right attorneys to help. For example: Whistleblowers need counsel to help determine whether they have a viable complaint to make in the first place and, if so, how to make an informed decision about whether to move ahead. Once the decision is made, whistleblowers need experienced counsel to help them gather the evidence and assemble an effective package to maximize success and persuade the government to get involved. The best SEC whistleblower lawyers have experience with the SEC and the whistleblower program. They need a strong advocate to help them through the process with minimal risk, including protection against possible retaliation and mistreatment, including in the workplace. They are entitled to a vigorous pursuit of the monetary reward that comes with a successful complaint. Rewards given are based on the significance of information and assistance given to investigators. The level of protection whistleblowers receive depends on what they report and how they report it. Counsel is required if whistleblowers want to file an anonymous claim with the Securities & Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). Further, they will need counsel to ensure their identities are protected to the extent the law allows.Whistleblowers should proceed from the very start—as soon as they suspect something is amiss—with the strategic guidance, support, and watchful eye of experienced counsel. The whistleblower path is fraught with difficulty and decision-making that cannot be done without the right attorneys to help. For example: Continue reading

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The SEC has announced its latest whistleblower awards for two individuals in the same case. The first whistleblower received a bounty of more than $12.5 million after alerting the SEC to an ongoing fraudulent scheme. As a result, SEC staff initiated an investigation and the whistleblower offered continued support to them. The second whistleblower received more than $2.5 million. This individual’s information was more “limited in nature,” but was also significant in the eventual enforcement action. The information from both whistleblowers was original and submitted voluntarily. Information from both whistleblowers was substantial in nature and led to the successful SEC enforcement action. The amounts reflect the amount of contribution each offered. The order called the first whistleblower’s contribution “more significant.”The SEC has announced its latest whistleblower awards for two individuals in the same case.

The first whistleblower received a bounty of more than $12.5 million after alerting the SEC to an ongoing fraudulent scheme. As a result, SEC staff initiated an investigation and the whistleblower offered continued support to them. Continue reading

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A whistleblower whose original information led to an investigation by the U. S. Department of Justice (DOJ) has also received a bounty of $2M from the Securities and Exchange Commission (SEC). Recent amendments to the whistleblower rules mean that DOJ actions, such as deferred and non-prosecution agreements, are now subject to whistleblower awards. The whistleblower also offered original information to both the SEC and the DOJ, as well as “extensive, ongoing assistance to both investigations.”  Both agencies opened their investigations based upon the whistleblower’s information and assistance.A whistleblower whose original information led to an investigation by the U. S. Department of Justice (DOJ) has also received a bounty of $2M from the Securities and Exchange Commission (SEC).

Recent amendments to the whistleblower rules mean that DOJ actions, such as deferred and non-prosecution agreements, are now subject to whistleblower awards. Continue reading

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The Commodities Futures Trading Commission (CFTC) announced that almost $200 million was awarded to a whistleblower who provided information that contributed to an open investigation and led to successful actions by the CFTC, another U.S. federal regulator, and a foreign regulator. A press release from the CFTC stated that the information provided by the whistleblower “led the CFTC to important, direct evidence of wrongdoing. In order to qualify for an award, a whistleblower who significantly contributed to the success of an enforcement action must demonstrate that there is a “meaningful nexus” between the information provided and the CFTC’s ability to successfully complete its investigation, and to either obtain a settlement or prevail in a litigated proceeding.” The CFTC has given whistleblower awards for enforcement actions that have resulted in sanctions of over $3 billion. The CFTC’s whistleblower program was created under the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010. The program’s first award was in 2014, and the CFTC has awarded mover $300 million to whistleblowers.The Commodities Futures Trading Commission (CFTC) announced that almost $200 million was awarded to a whistleblower who provided information that contributed to an open investigation and led to successful actions by the CFTC, another U.S. federal regulator, and a foreign regulator. Continue reading

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It’s axiomatic that whistleblowing only works if people are willing to come forward and tell authorities of companies’ wrongdoing. That’s why Securities and Exchange Commission (SEC) sees retaliation—being punished for having made a report of wrongdoing—as a primary threat to its whistleblowing initiative: If people believe they will be punished for reporting companies’ malfeasance to the SEC, then they’re less likely to come forward. Therefore, the SEC has rules that bar retaliation against whistleblowers after they’ve reported potential securities law violations, and the SEC has been vigorously enforcing them. Under the law, “employers may not discharge, demote, suspend, harass, or in any way discriminate against an employee in the terms and conditions of employment who has reported conduct to the Commission that the employee reasonably believed violated the federal securities laws.”Let me be clear: Retaliation protections are a key component of the whistleblower program, and we will bring charges against companies or individuals who violate the anti-retaliation protections when appropriate.

—Jay Clayton,

Former Chairman, Securities and Exchange Commission Continue reading

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