Another SEC Whistleblower, More On the Way

Another SEC Whistleblower, More On the Way

The Securities and Exchange Commission just announced the issuance of the agency’s second Dodd-Frank whistleblower award—serving as a reminder to in-house counsel to bolster their companies’ own internal reporting programs, attorneys say.

Three claimants qualify to collect 5 percent each of a $7.5 million enforcement action against a “sham hedge fund” and its CEO, according to the agency. In an order [PDF] issued last week, the commission determined that each claimant “voluntarily provided original information” that “led to the successful enforcement” of the matter concerning Locust Offshore Management and chief executive Andrey Hicks.

Under the rules of the program, created as part of the Dodd-Frank financial reform law, SEC whistleblowers may be able to collect between 10 and 30 percent of enforcement actions worth more than $1 million, if the information they provide about misconduct proves significant. Though since the 2011 inception of the program, the agency has announced only one other whistleblower award.

But this latest announcement comes after Stephen Cohen, associate director of the SEC’s division of enforcement, recently hinted that there’s much more whistleblower action on the horizon.

“There will be a likely change in the discussion about the magnitude of some of these awards over the next six to 12 months,” Cohen told an audience at the Corporate Crime Reporter conference in Washington, D.C., last month.

Cohen, a panelist at the conference, said that whistleblowers are in a position to share information on misconduct that is either “too costly or impossible” for the agency to obtain.

“The net effect of this,” Cohen said, “is that whistleblowers, and in some instances counsel, are putting together information for us, sometimes in huge reports with evidence, with documents, bringing it to us, and giving us sometimes a roadmap, sometimes a starting place for us to do an investigation, at least pointing us in the right direction—sometimes helping us all along the way to the end.”

Source: Corporate Counsel

Previous Post: Are Podcasts the Answer to Your Law Firm Marketing Strategy?
Next Post: Compliance Issues in Social Media

Leave a Reply