SEC Whistleblower Program Gets Blowing

Explore:  SEC Whistleblowers

The Securities and Exchange Commission (SEC) announced August 20, 2013 that it awarded more than $25,000 in total to three whistleblowers. The SEC reports that this payment was the first installment in a series that is projected to total $125,000 for each whistleblower. 

Enforcement action

The awards are from the SEC's enforcement action against CEO Andrey C. Hicks and Locust Offshore Management. Hicks pleaded guilty to five counts of wire fraud and consented to the forfeiture of his interest in property already seized by the Justice Department. In total, $170,000 was forfeited during the criminal proceeding. Hicks faces 40 months in prison. 

Payment from the criminal action

SEC whistleblower rules allow tipsters to apply for an award from another regulator's collections where there are related criminal proceedings and money is being collected by an additional agency. The SEC approved 5 percent payouts to the three whistleblowers from the money collected in the criminal action. 

Total numbers and confidentiality

The total value of the assets seized from Hicks is estimated at $845,000 — a 15 percent award gives each tipster approximately $125,000. The SEC's order maintained the anonymity of the whistleblowers. It is reported that two tipsters provided information that instigated the investigation. The third whistleblower identified key witnesses and confirmed the information from the first two tipsters. 

Blowing the SEC’s whistles

The SEC Office of the Whistleblower was authorized by Congress to give financial awards to tipsters who give original information that leads to an SEC enforcement action in which $1,000,000 in sanctions is ordered. Awards are between 10 to 30 percent of the money collected. 

Topics:  SEC, Whistleblowers

Published In: Civil Remedies Updates, Labor & Employment Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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