An article in law.com’s Compliance Hot Spots newsletter titled SEC Tells Whistleblower: Wait a Minute reports that an anonymous whistleblower is seeking an order from the D.C. Circuit Court of Appeals to force the SEC to make a determination about his application for a potential award stemming from Teva Pharmaceuticals’ $519 million settlement with the DOJ and SEC to resolve FCPA violations.
The article reports that whistleblowers and their counsel are frustrated by delays in processing award applications and quotes SEC whistleblower lawyer Jason Zuckerman discussing proposed amendments to the SEC whistleblower rules that would allow for a more streamlined review of applications that can be denied on a relatively straightforward basis:
Jason Zuckerman, of the Washington-based whistleblower firm Zuckerman Law, said those portions of the proposed rule change “should speed things up.”
“But at the end of the day there is a lack of resources in [the SEC’s whistleblower] office,” he said. “Hopefully there will be more staffing available for them to process these applications.”
SEC Processing of Applications for Whistleblower Awards
The whistleblower’s petition for mandamus alleges that the SEC denied him justice by unreasonably delaying a preliminary determination on his claim for an award under the SEC’s whistleblower program. The whistleblower seeks a writ of mandamus directing the SEC to issue a preliminary determination regarding his claim within 60 days and a final order within six months.
In an opposition brief filed on July 11, 2019, the SEC explains the substantial complexities involved in adjudicating applications for whistleblower awards, asserts that it is working diligently and in good faith to process claims within a reasonable period, and urges the Court to deny the mandamus petition. In particular, the SEC asserts the following:
- The SEC is processing a voluminous number of other whistleblower applications.
- There are substantial complexities involved in adjudicating claims regarding the Teva matter because, among other things, there are six claimants in the matter and the case involves parallel SEC and DOJ cases.
- The process for making a preliminary determination entails SEC staff preparing a written recommendation as to whether the claimant is eligible for an award for the particular covered action and recommending an award percentage. This requires a detailed and often complex analysis of the facts of the case and each claimant’s contributions, as well as the applicable legal standards governing awards.
- The SEC must balance its desire to process award claims within a reasonable period with the need to devote resources to other important Commission responsibilities.
- Allocating additional Enforcement staff to the Office of the Whistleblower (“OWB”) would limit the investigative and trial staff available to bring critical cases.
- The whistleblower’s request would require the agency to reallocate resources to and prioritize his claim over: (a) the review of award applications filed by other claimants; (b) other OWB work to protect whistleblowers; and (c) other agency enforcement priorities, such as investigations of, and enforcement actions to enjoin ongoing violations of the federal securities laws.
For more information about how the SEC processes applications for SEC whistleblower awards, see our post: What happens after I apply for an SEC whistleblower award?
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If you have information that may qualify for an SEC whistleblower award, contact the Director of our SEC whistleblower practice at email@example.com call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959. All inquiries are confidential. In conjunction with our courageous clients, we have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies and return funds to defrauded investors.
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