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SEC awards approximately $2.5 million to whistleblower
On April 9, the SEC announced an approximately $2.5 million whistleblower award in connection with a successful enforcement action. According to the redacted order, the whistleblower supplied information that led to charges related to a breach of fiduciary duties owed to investors, provided significant ongoing assistance to enforcement staff, and reported the information internally to the company.
The SEC has now paid approximately $762 million to 148 individuals since the inception of the whistleblower program in 2012.
U.S.-EU release statement on Joint Financial Regulatory Forum
On March 24 and 25, EU and U.S. participants, including officials from the Treasury Department, Federal Reserve Board, CFTC, FDIC, SEC, and OCC, participated in the U.S.-EU Joint Financial Regulatory Forum to discuss topics of mutual interest, including those related to (i) “next steps” for Covid-19 recovery and for mitigating financial stability risks; (ii) “sustainable finance”; (iii) banking and insurance multilateral and bilateral engagement; (iv) capital market regulatory and supervisory cooperation; (v) regulatory and supervisory developments pertaining to financial innovation, including the importance of promoting ongoing “responsible innovation and international supervisory cooperation”; and (vi) anti-money laundering and countering the financing of terrorism (AML/CFT) issues, including “the potential for enhanced cooperation to combat money laundering and terrorist financing bilaterally and in the framework of [the Financial Action Task Force].” Participants also discussed possible responses to climate-related financial risks, as well as “the progress in their respective legislative and supervisory efforts to ensure a smooth transition away from LIBOR.”
SEC awards more than $500,000 to whistleblower under “safe harbor” provision
On March 29, the SEC announced a more than $500,000 whistleblower award in connection with an enforcement action. According to the redacted order, the whistleblower raised concerns about alleged securities violations internally, which prompted an investigation by the company. The company then reported the information to an outside agency, which in turn made a referral to Commission staff, thus prompting the opening of the SEC’s investigation. The SEC noted that the whistleblower also provided helpful documents and met with Commission staff, allowing the SEC and another agency to quickly file actions and shut down the ongoing fraudulent scheme. Additionally, the SEC explained that because the whistleblower also submitted a tip to the SEC within 120 days of reporting the violations internally to the company, the whistleblower satisfied the SEC’s whistleblower rule’s “safe harbor” provision, thereby allowing the SEC to treat the whistleblower’s information “as though it had been made on the date that the [whistleblower] provided that same information to his/her employer[].”
The SEC has now paid approximately $760 million to 145 individuals since the inception of the whistleblower program in 2012. The Commission noted that, with this award, it has now “awarded 40 individuals this fiscal year, surpassing last year’s record of 39 individual awards,” and has “awarded whistleblowers nearly $200 million in the first half of FY21 alone.”
SEC issues more than $6.5 million in whistleblower awards
On March 9, the SEC announced an approximately $1.5 million whistleblower award in connection with a successful enforcement action. According to the redacted order, the whistleblower provided information that led to the opening of the investigation, and assisted enforcement staff by providing multiple written submissions and identifying potential witnesses. The whistleblower also met with enforcement staff multiple times to explain information.
Earlier, on March 4, the SEC announced a more than $5 million joint award to two whistleblowers who alerted enforcement staff to misconduct occurring abroad that would otherwise “have been difficult to detect.” According to the redacted order, the whistleblowers voluntarily submitted a joint tip that led to the opening of the investigation, and continued to assist enforcement staff by providing information that directly supported certain allegations in the enforcement action. However, in the same order, the SEC affirmed denial of two other claimants’ award claims after determining that the individuals did not submit information leading to the successful enforcement of the covered action. The SEC noted, among other things, that these claimants’ tips did not cause the opening of the investigation and that the information provided related to conduct by “entirely different companies” and was not used in the covered action.
The SEC has now paid approximately $759 million to 143 individuals since the inception of the whistleblower program in 2012.
SEC issues multiple whistleblower awards
On March 1, the SEC announced a more than $500,000 whistleblower award in connection with a successful enforcement action. According to the redacted order, two whistleblowers provided timely tips that revealed an ongoing fraud and formed the basis for the SEC’s action, as well as a related action from another government agency. The SEC noted that both whistleblowers provided “substantial, ongoing assistance” that conserved the agencies’ time and resources.
Earlier on February 25, the SEC announced whistleblower awards totaling more than $1.7 million in two separate enforcement actions. According to the first redacted order, the SEC awarded a whistleblower over $900,000 for providing significant information and documents, including “a critical declaration,” that helped expedite an investigation and allowed the SEC to “shut down an ongoing. . .scheme preying on retail investors.” In the second redacted order, a whistleblower was awarded over $800,000 for providing “important evidence of false and misleading statements made to investors,” which led to the “return [of] millions of dollars to harmed investors.”
The SEC has now paid approximately $753 million to 140 individuals since the inception of the program in 2012.
SEC issues multiple whistleblower awards, including award based on DOJ agreement
On February 23, the SEC announced a more than $9.2 million award to a whistleblower whose information and assistance led to successful related DOJ actions. This marks the first SEC whistleblower award based on a DOJ non-prosecution agreement or deferred prosecution agreement since amendments to the SEC’s whistleblower program rules took effect last December (covered by InfoBytes here). The SEC noted that the whistleblower was previously awarded for his contributions to a successful SEC enforcement action based on the same information that supported the DOJ’s actions, which is a prerequisite in order to be eligible for a related-action award. According to the redacted order, the whistleblower provided significant, original information to the SEC about an ongoing fraud that “enabled a large amount of money to be returned to investors harmed by the fraud.” The SEC provided the information to the DOJ, noting that the whistleblower provided significant assistance by traveling at the whistleblower’s own expense to be interviewed by DOJ.
Earlier on February 19, the SEC announced whistleblower awards totaling nearly $3 million in two separate enforcement actions. According to the first redacted order, the SEC awarded a whistleblower over $2.2 million for providing original information that significantly contributed to the investigation and resulted in the “return of millions of dollars to harmed clients.” According to the SEC, the whistleblower also “took personal and professional risks by raising concerns internally in an effort to remedy the misconduct.”
In the second redacted order, the SEC awarded a whistleblower nearly $700,000 for alerting Commission staff to a fraudulent reporting scheme, which prompted the opening of an investigation. The SEC noted that the whistleblower voluntarily provided critical documents and information to Commission staff, helped identify key documents and witnesses, thus conserving SEC time and resources, and “internally raised concerns about the perceived conduct in an effort to remedy the violations.”
The SEC has now paid approximately $750 million to 136 individuals since the inception of the program in 2012.
SEC issues nearly $600,000 whistleblower award
On January 14, the SEC announced a whistleblower award of nearly $600,000 in connection with a successful enforcement action. According to the redacted order, the whistleblower provided new, highly valuable information during the course of the investigation, as well as substantial assistance, including meeting with enforcement staff numerous times and providing critical investigative leads. Additionally, the SEC notes that “there is a close nexus” between the whistleblower’s information and certain charges in the covered action.
The SEC has now paid approximately $738 million to 134 individuals since the inception of the program.
SEC issues whistleblower awards totaling over $1.1 million
On January 7, the SEC announced whistleblower awards totaling over $1.1 million in separate enforcement actions. According to the first redacted order, the SEC awarded three whistleblowers nearly $500,000 for providing information in two related enforcement actions. Information voluntarily provided by the first whistleblower—a company outsider—prompted the opening of the investigation, while the second and third whistleblowers provided significant information contributing to the success of the actions, while also assisting investigative staff.
In the second redacted order, the SEC awarded a whistleblower nearly $600,000 for voluntarily providing information leading to a successful enforcement action, assisting Commission staff, and repeatedly reporting “concerns internally in an effort to correct the problems at the company.”
In the third redacted order, a whistleblower was awarded more than $100,000 for providing independent analysis leading to a successful enforcement action. The whistleblower, among other things, “used information from various publicly available documents to calculate an estimate of an important metric for [the company],” and then “showed that the [c]ompany’s disclosures regarding that metric were implausible.” According to the SEC, this is the fifth individual who received an award based on independent analysis in fiscal year 2021.
The SEC has now paid approximately $737 million to 133 individuals since the inception of the program.
Multi-national bank settles FCPA and commodities fraud charges for $130 million
On January 8, the DOJ announced it had entered into a deferred prosecution agreement with a German-based multi-national financial services company (company), in which the company agreed to pay more than $130 million to resolve an investigation into violations of the Foreign Corrupt Practices Act (FCPA) and a separate investigation into a commodities fraud scheme.
According to the DOJ, between 2009 and 2016, the company admitted to knowingly and willfully conspiring to conceal payments to business development consultants (BDC) which were actually bribes to foreign officials in order to obtain business. The company admitted that employees agreed to “misrepresent the purpose of payments to BDCs and falsely characterize[d] payments to others as payments to BDCs” in violation of the FCPA’s books, records, and accounts provisions. Additionally, company employees failed to implement adequate internal accounting controls in violation of the FCPA by, among other things, (i) failing to conduct meaningful due diligence regarding the BDCs; (ii) paying BDCs who were not under contract with the company at the time; and (iii) paying BDCs without adequate documentation of the services purportedly performed.
Additionally, the DOJ stated that between 2008 and 2013, the company’s precious metal traders engaged in a scheme to defraud other traders on the New York Mercantile Exchange Inc. and Commodity Exchange Inc. by placing orders to buy and sell precious metals futures contracts with the intent to cancel those orders before execution. The company previously settled with the CFTC in January 2018 for substantially the same conduct (covered by InfoBytes here).
Of the total $130 million penalty, the company will pay a criminal penalty of nearly $80 million to the DOJ in relation to the FCPA violations, and will pay $43 million in disgorgement and prejudgment interest to the SEC to settle allegations that the company violated the FCPA’s books and records and internal accounting controls provisions. The company will pay over $7.5 million in relation to the commodities scheme, for criminal disgorgement, victim compensation, and a criminal penalty. The DOJ noted that the company received full credit for cooperation with the investigations and for significant remediation.
SEC issues whistleblower awards totaling over $5.2 million
On December 22, the SEC announced a more than $1.6 million award to a whistleblower whose critical information and assistance led to a successful SEC enforcement action. According to the redacted order, the whistleblower provided ongoing assistance to SEC staff as well as “original information that solidified their suspicions about certain defendants’ fraudulent” actions despite concerns about personal safety.
Earlier, on December 18, the SEC announced whistleblower awards totaling over $3.6 million in three separate enforcement actions. According to the first redacted order, the SEC awarded a whistleblower more than $1.8 million for voluntarily providing significant information and substantial assistance to SEC staff in a successful enforcement action. The whistleblower provided information—which “revealed a hard to detect fraudulent scheme” leading to the return of millions of dollars to harmed investors—and also “took immediate steps to mitigate the harm to investors and suffered hardships for doing so.”
In the second redacted order, the SEC awarded a whistleblower over $1.2 million for providing information leading to a successful enforcement action, although the Commission noted that the award amount was impacted after it determined the whistleblower “was culpable for actively participating in and financially benefiting from the fraudulent scheme” and “unreasonably delayed reporting” the scheme to the SEC.
In the third redacted order, a whistleblower was awarded more than $500,000 for providing significant information and ongoing assistance to SEC staff in a successful enforcement action. However, the SEC rejected the whistleblower’s claim that a higher award amount was warranted after it determined, among other things, that the whistleblower “unreasonably delayed reporting the misconduct for several years while investors were being harmed.”
The SEC has now paid approximately $736 million to 128 individuals since the inception of the program.