Posts Tagged ‘SEC Whistleblower Program’
Friday, June 8th, 2012
Ever since it was born out of the passage of the Dodd-Frank financial reform bill in 2010, all eyes have been on the success or failure of the SEC’s Whistleblower Program. Since the program officially went into effect in August 2011, the SEC reports that they have been continually receiving high quality tips at an impressive pace of roughly seven per day. As a result, the fact that, according to insiders, the first payment of an award appears to be imminent, there is a veritable spotlight on the Commission and the award determination process.
In responding to the rumors of a pending award, Sean McKessey, Chief of the SEC Whistleblower Office, has continued to express his enthusiasm for the program and the importance of actually making that first payment. In an article published on Huffington Post, McKessey stated “I view [the program] as already having been a very significant success, but I understand that people want to see the deliverable. And the deliverable, in our view, is paying people for good information…[t]he more the better, obviously.” Further,
As we await official confirmation of the first award payment, the SEC is reminding people that the amount of the award to those who come forward remains subjective, and that the sanctions ultimately imposed against a company must exceed $1 million before they are even eligible for an award. Specifically, at a conference earlier this week, Jane Norberg, deputy chief for the SEC’s Whistleblower Office, told attendees that although there is “no hard and fast formula [in making an award determination] at this point…it is in the SEC’s sole discretion as to how much of an award there is – whether it is 10% or 30% or somewhere in between.”
In an era where the importance of corporate accountability is reaching new heights, the first award from the SEC will undoubtedly send a strong signal. “I think it will be an affirmation that this will not just be a paper program, that we’re not just going out and making speeches,” McKessey said.
Source: The Huffington Post
Sunday, May 6th, 2012
In a recent article entitled “Source’s Cover Blown by the SEC,” the Wall Street Journal claimed that the SEC “inadvertently revealed the identity of a whistleblower.” The alleged disclosure occurred during the SEC’s investigation of Pipeline Trading Systems LLC. According to the article, an SEC lawyer “showed an executive who was being questioned a notebook from the whistleblower filled with jottings about trades, calls and meetings.” From that notebook, the executive claims he recognized the handwriting as that of Peter Earle, who happened to be the whistleblower who prompted the SEC’s investigation.
In a scathing response to the Journal’s story, the SEC disputes the allegations against it. In stark contrast to the story told by the Journal, the SEC asserted that it “in no way exposed Peter Earle as a whistleblower.” In fact, the Commission claims that the use of the notebook was neither “inadvertent” nor a “breach.” Instead, it was a “deliberate decision,” discussed by an SEC lawyer and his supervisor prior to the deposition in which the notebook was exhibited.
Going further, the SEC strongly disagrees with the allegation that the use of the notebooks in no way comprised Mr. Earle’s identity. According to the SEC, “it was widely known…that, after the termination of his employment in 2009, Mr. Earle had approached the SEC – a fact volunteered by witnesses and acknowledged by Mr. Earle long before the exhibition of his notebooks in November 2010.” Yet, despite this knowledge, the SEC maintains that, throughout the investigation, the Commission treated his status as a cooperating witness as confidential. There was “nothing about the notes…or about the SEC’s use of them as exhibits…that revealed anything about whether Mr. Earle or others were cooperating in the SEC’s investigation.”
If you have knowledge of Securities Fraud and would like to discuss the possibility of a whistleblower award under the SEC whistleblower program, please contact our whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, including your ability to remain anonymous in filing for an award, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.
Wednesday, March 21st, 2012
The SEC’s new whistleblower award program is already making an impact, as many insiders are coming forward with investigative leads, hoping to cash in on the program.
The SEC whistleblower program allows individuals who present original information that leads an enforcement action resulting in monetary sanctions of over $1 million to collect an award. The award may range from 10-30%, depending on factors such as the significance of the information. Whistleblowers range from current insiders, former employees, and outside observers.
The SEC vets the tips through its market intelligence unit, which is comprised of nearly fifty attorneys. Potentially good leads are then funneled to enforcement attorneys.
SEC officials have recently commented that the quality of the tips received is surprisingly high, and some have resulted in “huge cases.”
According to the Financial Times, some insiders are taking on the role of detective. Recently, due to concerns with a deal on which he had worked, a company insider submitted a tip to the SEC. That tip resulted in an internal investigation and an SEC inquiry, which uncovered other problematic deals by the targeted company.
“In the stock market we’ve had good intel simply because of the surveillance by self-regulatory organizations and the firms themselves,” says Thomas Sporkin, head of the SEC’s market intelligence unit. “This program similarly provides a set of eyes and ears on the corporate side,” he said.
To read more about the SEC turning whistleblower tips into cases, see the full Financial Times article at http://www.ft.com/intl/cms/s/0/15e5a89c-6a27-11e1-b54f-00144feabdc0.html?ftcamp=published_links/rss/companies_us/feed//product#axzz1pl9KTUK8.
If you have knowledge of Securities Fraud or Corporate Fraud and would like to discuss the possibility of a whistleblower award under the SEC whistleblower program, please contact our whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.
Tuesday, February 21st, 2012
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), amended the Securities Exchange Act of 1934 (the “Exchange Act”) by, among other things, adding a provision to provide for a whistleblower program under the Securities and Exchange Commission (“SEC”). Specifically, § 21F directed the Commission to make monetary awards to eligible individuals who voluntarily provide original information that leads to successful Commission enforcement actions resulting in the imposition of monetary sanctions over $1,000,000, and certain related successful actions. Awards are required to be made in the amount of 10% to 30% of the monetary sanctions collected, and are to be paid from the Commission’s Investor Protection Fund (the “Fund”). On August 12, 2011, the Final Rules implementing the processes and procedures for the whistleblower program became effective.
In November 2011, the SEC Office of the Whistleblower issued its first annual report (available here) detailing its success during a shortened fiscal year 2011. Notably, according to the annual report, in the seven weeks after the law took effect in August, the SEC received an impressive 334 tips with market manipulation, corporate disclosures, and offering fraud standing out as the most common complaint categories. Further, submissions came from individuals in 37 states as well as several foreign countries.
While the program is still in its infancy, the responsiveness of its agents and staff, as well as the leadership of Director Sean McKessey, suggests that it will only gain momentum in 2012.
Thursday, April 28th, 2011
The SEC has postponed adoption of rules for its whistleblower program. According to the Dodd-Frank Act, final regulations for the whistleblower program were to be adopted by the SEC no later than April 21, 2011. Earlier this week, the SEC announced on its website that it is planning to adopt new rules some time between May and end of July. SEC spokesperson John Nester did not provide any specifics about the delay, commenting only that the SEC was crafting all the new rules for Dodd-Frank with an emphasis on “getting it right.”
The financial industry needs an effective fast-track incentive program for whistleblowers. The Dodd-Frank program augments the SEC’s 40 year old insider trading reward program that never realized its potential as a decentralized fraud enforcement mechanism. The SEC, under the old insider trading program, only paid out awards to whistleblowers four times. SEC watchers generally discount the insider trading program and are skeptical about the SEC’s interest in working with whistleblowers in general.
The new Dodd-Frank whistleblower program has generated considerable interest among would be whistleblowers and large companies. Frustrated employees and fraud fighters are delighted to have another program that incentivizes whistleblowers; large companies criticize the program because it encourages whistleblowers to report fraud directly to the government, bypassing internal corporate compliance procedures.
Whistleblowers could file SEC claims for rewards under the Dodd-Frank Act as of last July but will be expected to comply with the new rules once the new rules are adopted. Kenney & McCafferty, P.C. is happy to assist you in assessing your potential SEC whistleblower claim. Call K&M for a free consultation today
Tags: bank fraud award, banking whistleblower, banking whistleblower award, corporate fraud, corporate fraud whistleblower, corporate whistleblower award, finance industry fraud, market fraud, market fraud whistleblower, market whistleblower award, mortgage fraud, mortgage fraud whistleblower, mortgage whistleblower award, Sarbanes Oxley award, Sarbanes Oxley violation, Sarbanes Oxley whistleblower, Sarbanes Oxley whistleblower award, SEC whistleblower, SEC whistleblower award, SEC Whistleblower Program, SEC whistleblower reward, securities violations, securities violations reward, securities whistleblower, securities whistleblower award, SOX retaliation, SOX whistleblower, SOX whistleblower award, whistleblower
Posted in retaliation, SEC Whistleblower Program, Uncategorized, Whistleblower Protection | Comments Off