Three kinds of SEC cases where whistleblower support is invaluable

posted on:
September 21, 2016

author:
Andrew Brashier

Since the launch of the U.S. Securities & Exchange Commission (SEC) whistleblower program, the SEC has received more than 14,000 tips from whistleblowers, including tips from every state and from more than 95 foreign countries. Moreover, the SEC has issued Final Orders and Preliminary Determinations pertaining to over 390 claims for whistleblower awards. The number of whistleblower tips received by the SEC each year has grown 30 percent in the last three years. Nearly 4,000 tips were reported last year alone.

Andrew Ceresney, Director of the Division of Enforcement, highlighted three categories of SEC cases where whistleblower assistance is particularly helpful. These categories were discussed during his speech at the Sixteenth Annual Taxpayers Against Fraud Conference in Washington, D.C., last Wednesday.

Before discussing the three categories of SEC cases where whistleblowers shine the most, Ceresney left no room for doubt when he stated, “as long as a whistleblower believes that he or she has information that may suggest a violation of the federal securities laws, [the SEC] [is] interested in hearing from them.” Ceresney went on to list the following categories of SEC cases: Issuer Reporting and Disclosure, Offering Frauds and Ponzi Schemes, and violations of the Foreign Corrupt Practices Act (FCPA). Whistleblower support in each of these categories has become invaluable.

Issuer Reporting and Disclosure

During the last fiscal year, the SEC brought 114 actions against 191 parties involving financial fraud. As it concerns issuer reporting and disclosure cases, whistleblowers − in addition to helping the SEC discover well-hidden misconduct − are able to provide a roadmap aiding the SEC in uncovering violations, saving valuable time that would otherwise have been spent scrutinizing accounting records and documents. Moreover, the whistleblower is able to give descriptions of vital documents, which greatly aids in discovery.

Offering Frauds and Ponzi Schemes

Offering Frauds and Ponzi Schemes are extremely difficult to detect until it is too late. Therefore, whistleblowers help the SEC focus on false and misleading statements made by the offenders by providing memoranda and marketing materials. By providing this material, the whistleblower empowers the SEC to act quickly, protecting more citizens from investing in these fraudulent opportunities.

Violations of the FCPA

The majority of evidence concerning Foreign Corrupt Practices Act (FCPA) violations is found overseas. Therefore, whistleblowers play a vital role during FCPA cases due to the difficulties in investigation overseas conduct. To date, eight awards have been made to whistleblowers living in foreign countries. Ceresney emphasized, “In fact, our largest whistleblower awards to date − $30 million − went to a foreign whistleblower who provided us with key original information about an ongoing fraud that would have been very difficult to detect.”

Are you aware of fraud being committed against the federal government, or a state government? If so, the FCA can protect and reward you for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.

Source: U.S. Securities & Exchange Commission

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