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Could Whistleblowing Be The New Short-Selling?

The Securities and Exchange Commission made an unusual announcement this week, announcing a whistleblower award to a company outsider. Could this been a new way to profit from companies engaged in fraud? Is this a new alternative to short selling? Earlier this week, the SEC announced a $700,000 award to a company outsider who conducted […]

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Whistleblower Retaliation

A year ago, the Securities and Exchange Commission charged Paradigm Capital Management with engaging in prohibited transactions and then retaliating against the head trader who reported the trading activity to the SEC. It was the first time the SEC filed a case under its new authority to bring anti-retaliation enforcement actions. Now it has handed […]

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Compliance Officer Earns Million-Dollar Whistleblower Award

I’m not sure if this is good news or bad news. In August 2014 the SEC announced a modest whistleblower award of $300,000 to an unnamed company employee “who performed audit and compliance functions and reported wrongdoing to the SEC after the company failed to take action when the employee reported it internally. There is […]

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SEC Action for Stifling Whistleblowers in Confidentiality Agreements

A story surfaced a few weeks ago that the Securities and Exchange Commission was taking a close look at employment agreements that limited the actions of whistleblowers. The story behind the story came out. The SEC brought an action against KBR, Inc. for violating whistleblower protection Rule 21F-17 enacted under the Dodd-Frank Act. KBR required […]

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The SEC, Whistleblowers, and Employment Agreements

The Securities and Exchange Commission is taking a look at the backlash in corporate America over the increased whistleblower regime. As with all new regulations, businesses will change practices to meet the requirements and take steps to lessen the impact. According to a story in the Wall Street Journal, the SEC is looking at these […]

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Meet the SEC Whistleblowers

Since the Securities and Exchange Commission set up its whistleblower program in 2011, 6500 people have stepped forward as “whistleblowers.” Maxwell Murphy of the Wall Street Journal made a Freedom of Information Act request to find out more. How successful has the program been and are the people filing really “whistleblowers”? Of those 6500, only […]

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Whistleblower Mistakes by a Private Fund

Paradigm Capital Management encountered a whistleblower and handled it poorly. The hedge fund had been conducting principal trades in violation of  Section 206(3) of the Investment Advisers Act. Paradigm’s head trader reported the violations to the Securities and Exchange Commission. It’s tricky to deal with a hedge fund making principal trades with an affiliated broker-dealer. […]

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How Well is the SEC’s Whistleblower Program Working?

Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act created the SEC’s whistleblower program, awarding cash to individuals who report misdeeds that result in successful SEC cases. If the SEC collects more than $1 million, the whistleblower can receive between 10% and 30% of the award. Section 922 also required the Office […]

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Whistleblower Only Has to Believe There is Something Wrong

Whistleblower rights are growing stronger. The recent award of a reward in excess of $100 million to a whistleblower will certainly attract those looking for financial reward. Dodd-Frank not only increased the chances of getting a reward, it also provided broader rights to employees and the courts are starting to rule strongly in favor of […]

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Sean McKessy, Chief Office of the Whistleblower

SEC’s Whistleblower Annual Report

Dodd-Frank added Exchange Act Section 21F(g)(5) and requires that SEC’s Office of the Whistleblower to report to Congress annually on the whistleblower program. It’s due each October 30. I’m sure the SEC wanted to be in compliance, so they released the first annual report on the Dodd-Frank Whistleblower program (.pdf). Section 922 of the Dodd-Frank […]

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