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On January 1, 2021, overriding a veto by then-President Trump, the Senate passed into law the Anti-Money Laundering Act of 2020 (AMLA)—the largest anti-money laundering legislative effort since the 2001 Patriot Act. The AMLA fortified existing laws, such as the Bank Secrecy Act (BSA), as well as a somewhat anemic whistleblowing program, to align it more closely with the highly-successful Securities and Exchange Commission (SEC) whistleblower program. The result is that the amended AMLA’s enforcement reach is now much broader than the SEC’s program. Industry watchers predict the new whistleblowing program may have seismic repercussions throughout the financial world. In this post, we’ll review some of AMLA’s key points, while in the next two, we’ll focus on how AMLA impacts whistleblowing—who is eligible, what are the possible awards, and how whistleblowers can identify the kinds of tips that are likely to earn an AMLA award. On January 1, 2021, overriding a veto by then-President Trump, the Senate passed into law the Anti-Money Laundering Act of 2020 (AMLA)—the largest anti-money laundering legislative effort since the 2001 Patriot Act. The AMLA fortified existing laws, such as the Bank Secrecy Act (BSA), as well as a somewhat anemic whistleblowing program, to align it more closely with the highly-successful Securities and Exchange Commission (SEC) whistleblower program. Continue reading

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The rash of cryptocurrency failures, cybersecurity failings, and potential for money laundering are a focus of the U.S. Securities and Exchange Commission (SEC) examiners in the coming year. The high-profile FTX case and criminal charges against Sam Bankman-Fried and others have brought the issues to the SEC’s attention. The SEC handled 24 enforcement actions involving cryptocurrency in the first half of 2023. Going forward, the SEC will pay closer attention to cryptocurrency assets and companies, as well as anti-money laundering (ALM) programs going into 2024.The rash of cryptocurrency failures, cybersecurity failings, and potential for money laundering are a focus of the U.S. Securities and Exchange Commission (SEC) examiners in the coming year. The high-profile FTX case and criminal charges against Sam Bankman-Fried and others have brought the issues to the SEC’s attention. The SEC handled 24 enforcement actions involving cryptocurrency in the first half of 2023. Continue reading

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The Commodities Futures Trading Commission (CFTC) recently announced the award of $18 million to a single whistleblower who provided substantial assistance to the agency. This information led to a successful CFTC enforcement action as well as a related action with another federal agency. The whistleblower met with Division of Enforcement (DOE) staff on multiple occasions to discuss their concerns. Information from the individual was “significant in amount and quality,” according to the CFTC press release. In the order, the CFTC noted that the individual’s contributions “enhanced Division staff’s ability to resolve the Covered Action.”  Without this information, CFTC staff would have been unable to establish specific facts in the covered action that were “underlying.”The Commodities Futures Trading Commission (CFTC) recently announced the award of $18 million to a single whistleblower who provided substantial assistance to the agency. This information led to a successful CFTC enforcement action as well as a related action with another federal agency. The whistleblower met with Division of Enforcement (DOE) staff on multiple occasions to discuss their concerns. Information from the individual was “significant in amount and quality,” according to the CFTC press release. Continue reading

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New York-based hedge fund investment and technology development firm D. E. Shaw has settled with the SEC over charges that it violated the rights of current and former employees when it raised “impediments” for them to become whistleblowers. The SEC also fined D. E. Shaw $10M to settle the charges. D. E. Shaw has since updated its documentation to allow employees to contact the SEC and other agencies to report possible misconduct. At issue is the firm’s requirement that employees sign agreements that prohibited the disclosure of sensitive or confidential information to any third party. Without an exception for possible SEC whistleblowers, employees were prevented from contacting the SEC with any damning information they felt necessary. Exiting employees were also required to sign a release indicating that they had not filed any reports with any governmental agency, or risk losing deferred compensation and other financial incentives.New York-based hedge fund investment and technology development firm D. E. Shaw has settled with the SEC over charges that it violated the rights of current and former employees when it raised “impediments” for them to become whistleblowers. The SEC also fined D. E. Shaw $10M to settle the charges. D. E. Shaw has since updated its documentation to allow employees to contact the SEC and other agencies to report possible misconduct. Continue reading

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The Commodity Futures Trading Commission (CFTC) announced an award of more than $300,000 to a whistleblower who submitted information to the agency regarding a company’s misconduct. Information from the whistleblower was “precise,” and described exactly the activity involved, leading to the CFTC’s Enforcement Division to open an investigation. The individual provided continual assistance during the investigation, offered additional evidence along with interpretations and explanations for CFTC staff. As a result, CFTC staff were able to move forward with the investigation while conserving resources.The Commodity Futures Trading Commission (CFTC) announced an award of more than $300,000 to a whistleblower who submitted information to the agency regarding a company’s misconduct.

Information from the whistleblower was “precise,” and described exactly the activity involved, leading to the CFTC’s Enforcement Division to open an investigation. The individual provided continual assistance during the investigation, offered additional evidence along with interpretations and explanations for CFTC staff. As a result, CFTC staff were able to move forward with the investigation while conserving resources. Continue reading

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In a recent press release,In a recent press release, the Commodities Futures Trading Commission (CFTC) announced $15 million in bounties awarded to two whistleblowers for individual cases. In the first case, a whistleblower affiliated with a company notified the CFTC of activity that was harming its customers. The CFTC opened an investigation and discovered the information to be credible and original. The individual offered continual assistance, saving CFTC staff resources and time. This included assisting staff with interpreting vital evidence, including another witness to corroborate the claims. During the investigation, the whistleblower’s information contradicted and made more sense than the company’s official explanation. The CFTC increased its analysis of the activity and the harm being done to the customers under Section 23 of the Commodities Exchange Act. Overall, this whistleblower’s information was crucial to the successful investigation and enforcement action. the Commodities Futures Trading Commission (CFTC) announced $15 million in bounties awarded to two whistleblowers for individual cases.

In the first case, a whistleblower affiliated with a company notified the CFTC of activity that was harming its customers. The CFTC opened an investigation and discovered the information to be credible and original. The individual offered continual assistance, saving CFTC staff resources and time. This included assisting staff with interpreting vital evidence, including another witness to corroborate the claims. Continue reading

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The SEC settled charges against CRBE, a Dallas-based commercial real estate services and investment firm, for using a clause in their separation agreements that violated the Securities and Exchange Commission’s whistleblower protection rule. Departing employees could receive separation pay only if they signed a release that stated they had not filed any complaints against the firm with the SEC or any other federal agency. This violates the SEC’s whistleblower protection rule for those employees. During 2021 and 2022 nearly 900 former employees had signed this release as part of their separation agreement. Those agreements would impede a former employee from filing a claim. Making it contingent for employees to receive separation pay was an action intended to directly prohibit them from contacting any federal agency regarding the company. This directly violates whistleblower provisions under Exchange Act Rule 21F-17(a).The SEC settled charges against CRBE, a Dallas-based commercial real estate services and investment firm, for using a clause in their separation agreements that violated the Securities and Exchange Commission’s whistleblower protection rule. Departing employees could receive separation pay only if they signed a release that stated they had not filed any complaints against the firm with the SEC or any other federal agency. This violates the SEC’s whistleblower protection rule for those employees. During 2021 and 2022 nearly 900 former employees had signed this release as part of their separation agreement. Continue reading

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Can a company prohibit former employees from speaking to federal regulators, such as the SEC, and function as a whistleblower? They can certainly try, but it is still illegal. Monolith Resources, LLC, based in Nebraska, included language in their employment separation agreements prohibiting departing employees from recovering money through participation in investigations, enforcement actions, or filing claims with the government. This includes participating in the SEC's Whistleblower program. On Friday, September 8, 2023, the privately held tech and energy company agreed to pay a $225,000 penalty for violating the whistleblower protection rules and including this language in their employee separation agreements. According to the SEC, the company included this language for approximately three years.Can a company prohibit former employees from speaking to federal regulators, such as the SEC, and function as a whistleblower? They can certainly try, but it is still illegal.

Monolith Resources, LLC, based in Nebraska, included language in their employment separation agreements prohibiting departing employees from recovering money through participation in investigations, enforcement actions, or filing claims with the government. This includes participating in the SEC’s Whistleblower program. Continue reading

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The SEC recently announced yet another sizeable award to an individual who came forward as a whistleblower. In the press release, the SEC described the $18 million award to a single individual who “refused to turn a blind eye to the wrongdoing, reporting misconduct internally and then to the Commission.”  The whistleblower first reported the conduct internally, and then notified the SEC, who then began an investigation. Information from this whistleblower was also closely related to the charges that were levied by the SEC. The cooperation, information, and assistance the individual provided proved invaluable to SEC staff, saving both time and resources throughout the investigation.   The $18 million award is a percentage of monetary sanctions and other costs collected from the company itself, not from recovered investor’s funds.   A second claimant’s application for award was denied after it was established that they did not contact the SEC within 120 days of internally reporting the conduct and did not lead to a successful enforcement action.  The SEC recently announced yet another sizeable award to an individual who came forward as a whistleblower. In the press release, the SEC described the $18 million award to a single individual who “refused to turn a blind eye to the wrongdoing, reporting misconduct internally and then to the Commission.”  Continue reading

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In the SEC’s latest press releaseIn the SEC’s latest press release, seven individuals have received bounties after supplying credible information and continued assistance that led to a successful enforcement action. The same information and assistance led to another successful related action by a different federal agency. The bounty of $104 million is the fourth largest award in the history of the SEC’s Whistleblower program. Three single claimants and two sets of joint claimants submitted timely information and offered considerable assistance to SEC staff that allowed them to pursue actions against the company for documented misconduct. The same information was used by another agency and led to two more related actions that included awards., seven individuals have received bounties after supplying credible information and continued assistance that led to a successful enforcement action. The same information and assistance led to another successful related action by a different federal agency. The bounty of $104 million is the fourth largest award in the history of the SEC’s Whistleblower program. Continue reading

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