Whistleblowers Fight Over SEC Award

It was predictable someone would submit a phony whistleblower claim, and I suppose it was predictable there would be a fight over an actual award, like co-workers diving for a share of proceeds from an office pool lottery ticket.

In a case filed in the United States District Court for the Northern District of Illinois, Eastern Division, the plaintiff claims three persons collaborated to develop evidence for a whistleblower claim. The three allegedly planned to make the whistleblower submission in the name of a jointly owned entity. After reading Rule 21F-2, which states only natural persons, and not entities, may be whistleblowers, the three allegedly changed their plans and determined that the defendant would submit the claim and the three would share in the proceeds. The SEC ultimately awarded the defendant $14.7 million. The defendant allegedly reneged on the promise to share the award. The defendant allegedly settled with one of the other two, and the third commenced the action.

The defendant has filed a motion for a more definite statement, or in the alternative a motion to dismiss. The defendant claims the complaint “is an unintelligible assortment of confusing statements” and that the action is like the “claims of co-workers who are trying to claim a portion of a co-workers lottery winnings because they work together.”

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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