SEC Whistleblower Awards for Independent Analysis
On January 15, 2016, the SEC announced a whistleblower award of $700,000 to a company outsider who conducted a detailed analysis that led to a successful SEC enforcement action. This is among several awards that the SEC has provided to whistleblowers for independent analysis of publicly available information, and will likely encourage securities analysts and fraud examiners to disclose independent analysis to the SEC.
While most of the SEC whistleblower awards to date were provided to corporate insiders who provided original information leading to monetary sanctions exceeding $1 million, the Dodd-Frank Act also authorizes payment of whistleblower awards for “independent analysis” that is not already known to the SEC from any other source.
The rules implementing the SEC whistleblower award provision of the Dodd-Frank Act define “independent analysis” as “your own analysis, whether done alone or in combination with others . . . your examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.”
SEC Whistleblower Program Not Limited to Corporate Insiders
In the press release announcing the award, Andrew Ceresney, Director of the SEC’s Enforcement Division, notes that “[t]he voluntary submission of high-quality analysis by industry experts can be every bit as valuable as first-hand knowledge of wrongdoing by company insiders.” And indeed a primary impetus for the SEC whistleblower award program was the SEC’s failure to act on independent analysis provided by Harry Markoplos about Bernard Madoff’s ponzi scheme. Markopolos detected Madoff’s fraud nearly nine years before it became public and provided the SEC with detailed analysis, and repeatedly implored the SEC to act on his findings.
Markopolos’ poignant Congressional testimony about his efforts to stop Madoff’s fraud is available below, and is a good reminder why the SEC should reward original independent analysis that enables the SEC to protect investors. The testimony also reveals the courage required to blow the whistle on fraud and the real risks that whistleblowers take when they expose fraudulent schemes.
Experienced SEC Whistleblower Attorneys
The experienced whistleblower lawyers at Zuckerman Law represent whistleblowers worldwide before the SEC under the Dodd-Frank SEC Whistleblower Program. The firm has a licensed Certified Public Accountant and Certified Fraud Examiner on staff to enhance its ability to investigate and disclose complex financial fraud to the SEC.
Whistleblower law firm Zuckerman Law has substantial experience investigating securities fraud schemes and preparing effective submissions to the SEC concerning a wide range of federal securities violations, including:
- Accounting fraud;
- Investment and securities fraud;
- EB-5 investment fraud;
- Manipulation of a security’s price or volume;
- Fraudulent securities offerings and Ponzi schemes;
- Unregistered securities offerings;
- Investment adviser fraud;
- False or misleading statements about a company or investment;
- Inadequate internal controls; and
- Violations of auditor independence rules.
To learn more about the SEC Whistleblower Program, download Zuckerman Law’s eBook: SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award: