SEC Whistleblower Lawyer Blog

September 21, 2016

SEC Issues $4 Million Whistleblower Award; Program Surpasses $111 Million Total Awards

The Securities and Exchange Commission announced on September 20, 2016 an award of over $4 million to a whistleblower. The whistleblower’s original information alerted the SEC to a fraud.

The SEC whistleblower program was established by Congress in 2011 to incentivize whistleblowers with specific, timely and credible information about federal securities laws violations to report to the SEC. Since its inception, the SEC whistleblower program has awarded more than $111 million to 34 whistleblowers.

The SEC lays out the process for a whistleblower. First, a whistleblower submits a tip to the SEC. The SEC will then analyze and investigate the tip. A case will be filed if the tip is fruitful to the SEC and penalties will be ordered. Notices of the covered actions will then be posted, and the whistleblower will file a claim. Once the SEC determines the award, between 10 and 30 percent of what the SEC collected when monetary sanctions exceed $1 million, a payout will be made to the whistleblower from the Investor Protection Fund.

September 14, 2016

Insider Whistleblowers in the Financial Advice Sector Set to Increase

by Silver Law Group

Insiders in the investment advice sector are starting to grow bolder and start a trend of notifying the SEC of bad-acting firms and principals.

On August 30, 2016, the Securities and Exchange Commission announced another whistleblower award in the amount of more than $22 million. The amount is the second-largest total the SEC has awarded a whistleblower. The whistleblower’s detailed tip and extensive assistance helped the SEC halt a “well-hidden” fraud at the company where the whistleblower worked, according to the SEC.

Earlier this month, Indiana announced its first whistleblower award, giving $95,000 to a former JP Morgan official who helped the state’s regulator make an advice-related case against the firm that resulted in a $950,000 settlement.

September 14, 2016

How Attorney Contingency Fees Work for Whistleblowers

by Silver Law Group

Litigating a case can take a long time and accrues many costs and fees. Among those fees include filing costs, the cost of hiring an expert to testify, the cost of various office tasks such as printing and mailing, and many others. But the first cost that immediately comes to most people’s minds is attorney’s fees.

Often times, the costs of paying an attorney might dissuade people from getting one in the first place or bowing to financial pressure in the midst of case simply because the client does not have enough money to continue paying an attorney. Paying thousands of dollars to an attorney without having absolute certainty a client will win his or her case can be a daunting endeavor.

The contingency fee presents a solution to all those upfront costs.

September 6, 2016

SEC Announces Second-Largest Whistleblower Award for Company Insider Who Helped Uncover Fraud

by Silver Law Group

On August 30, 2016, the Securities and Exchange Commission (“SEC”) announced the award of more than $22 million to a company insider whistleblower.

According to the SEC order, the SEC determined the whistleblower’s tip and extensive assistance helped the agency stop a well-hidden fraud at the whistleblower’s employing company.

The $22 million-plus award is the second-largest total the SEC has awarded a whistleblower. The largest award was $30 million, and it was awarded in 2014.

August 22, 2016

Another Company Paying Penalty for Violating SEC Whistleblower Rules; Company Severance Agreements Removed Financial Incentives for Whistleblowing

by Silver Law Group

California-based Health Net Inc. has agreed to pay a penalty for illegally using its severance agreements to require outgoing employees to waive their ability to obtain monetary awards from the Securities and Exchange Commission (the “SEC”) whistleblower program.

Health Net has agreed to pay a $340,000 penalty per the SEC’s order.

According to the SEC’s order, Health Net included a provision that enumerating various potential claims against it that a departing employee waived as a condition of being paid monetary severance payments – essentially an agreement stipulating to keep quiet or risk losing your money.

August 16, 2016

Atlanta-based Company Paying Penalty for Violating Important SEC Whistleblower Protection Rule

by Silver Law Group

Atlanta-based building products distributor BlueLinx Inc. is settling charges that it violated an important whistleblower protection rule by using severance agreements that required departing employees to waive their rights to monetary recovery should they file a charge or complaint with the Securities and Exchange Commission (the “SEC”) or other federal agencies.

BlueLinx has agreed to pay a $265,000 penalty per the SEC’s order.

According to the SEC’s order, BlueLinx’s restrictive provisions were an attempt to bar employees from filing charges against the company and to keep their mouths shut if the company ever committed any securities law violations. The restrictive language in the agreements essentially forced employees leaving the company to waive possible whistleblower awards or risk losing their severance payments and other post-employment benefits.

June 14, 2016

SEC Awards Whistleblowers Close to $10 Million in One Week

by Silver Law Group

us-dollars-money The Securities and Exchange Commission has awarded at least $8.95 million to four whistleblowers in May 2016.

The first award was on May 13, 2016, when the SEC awarded a whistleblower $3.5 million for providing a tip that strengthened the SEC’s case in an ongoing investigation. According to the order determining the whistleblower award claim, the tip helped give the SEC leverage in settlement negotiations with the bad-acting party.

A few days later on May 17, 2016, the SEC announced it would award between $5 million and $6 million to a former company insider whose tip led the SEC to uncover securities violations that would have been nearly impossible for it to discover without the whistleblower’s information. That award, according to the press release, is the SEC’s third highest to a whistleblower.

April 11, 2016

SEC Whistleblower Program Affords Protection to Vanguard Lawyer Who raised Concerns About the Company

by Silver Law Group

save-the-qeen-1244290 The Securities and Exchange Commission (“SEC”) has taken the side of the whistleblower in a dispute against mutual fund giant Vanguard Group.

The SEC filed a brief on March 28, 2016 in support of David Danon, a former lawyer at the Pennsylvania-based money manager who said Vanguard terminated him because he raised concerns about some of the firm’s tax practices. Danon filed a wrongful termination lawsuit against Vanguard in late 2015.

The Dodd-Frank Act entices “whistleblowers” to come forth and help the SEC identify possible fraud and other violations much earlier than might have been possible, consequently reducing harm to investors, preserving the integrity of U.S. capital markets, and swiftly holding perpetrators of unlawful conduct accountable, according to the SEC Office of the Whistleblower website.

April 8, 2016

US Commodity Futures Trading Commission Announces Whistleblower Award of More Than $10 Million

by Silver Law Group

1st-place-1238508 The U.S. Commodity Futures Trading Commission (“CFTC”) announced on April 4, 2016 an award of more than $10 million to a whistleblower who provided important, original information that led to a successful CFTC enforcement action.

The award is the largest made by the CFTC’s whistleblower program, according to a CFTC press release.

The CFTC whistleblower program, like the SEC’s program, was created by the 2010 Dodd-Frank Act. It allows for payment of monetary awards to whistleblowers who voluntarily provide the CFTC with original information about violations of the Commodity Exchange Act (“CEA”) that lead the CFTC to bring an enforcement action that results in more than $1 million in sanctions. The total amount of the whistleblower award, according to the CFTC’s program website, is between 10 and 30 percent of the monetary sanctions collected in the CFTC action.

October 30, 2015

Workplace Retaliation Claim Remanded by Appellate Court

by Silver Law Group

Workplace-Retaliation-Claim-Remanded-by-Appellate-Court

Second Circuit of Appeals reverses lower court’s dismissal

The Second Circuit of Appeals contributed to the ongoing battle over the definition of a whistleblower September 10 by remanding a workplace retaliation case dismissed by a lower court in 2014.

Daniel Berman reported an alleged violation within his corporation before reporting it to the SEC, allegedly resulting in his termination, according to Law 360. Berman, a former financial director at Neo@Oglivy, sued the marketing firm and its parent company, WPP Group USA, Inc., in January 2014.