Does concealment of potential liability violate federal securities laws?

Regulation S-K Item 103 requires the corporation to briefly describe material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the corporation is a party and to “include similar information as to any such proceedings known to be contemplated by governmental authorities.” (Emphasis supplied). And registered corporations are required to disclose unlawful – but uncharged – conduct when such violations specifically threaten investors’ ability to receive a return.

Materiality cannot be determined exclusively based on quantitative metrics such as the percent of earnings or revenue affected by the misstatement. SEC Staff Accounting Bulletin No. 99, 64 Fed. Reg. 45,150, 45,151 (Aug. 19, 1999) (codified at 17 C.F.R. pt. 211). Rather, a corporation must consider qualitative factors that “may cause misstatements of quantitatively small amounts to be material.” Id. The Bulletin specifically contemplates “whether the misstatement involves concealment of an unlawful transaction.” Id.

SEC Whistleblower Reward Program

Since 2012, the SEC has issued more than $1.8 billion in awards to whistleblowers, which includes awards to our clients totaling millions of dollars. Experienced and effective SEC whistleblower lawyers can provide critical guidance to whistleblowers throughout this process to protect their identities and increase the likelihood that they maximize their awards.

In matters in which we obtained SEC whistleblower awards for our clients, the public orders announcing the awards note the “significant assistance” provided to SEC staff that enabled the SEC to complete investigations more quickly.

If you have original information that you would like to report to the SEC Office of the Whistleblower, contact the Director of our SEC Whistleblower Practice at mstock@zuckermanlaw.com or call our leading SEC whistleblower lawyers at (202) 930-5901 or (202) 262-8959. All inquiries are confidential.

In conjunction with our courageous clients, our SEC whistleblower attorneys have helped the SEC halt multi-million dollar investment schemes, expose violations at large publicly traded companies, and return funds to defrauded investors.

In contrast to many other SEC whistleblower law firms, our multi-disciplinary team of SEC whistleblower lawyers includes a Certified Public Accountant and Certified Fraud Examiner with substantial experience auditing public companies and investigating complex fraud schemes. We understand the many challenges that the SEC faces in investigating our clients’ disclosures and take measures to increase the likelihood that the SEC will be able to effectively pursue the disclosures that our SEC whistleblower lawyers provide on behalf of our clients.

Under the SEC Whistleblower Reward Program, whistleblowers can submit tips anonymously to the SEC through an attorney and be eligible for an award for exposing any material violation of the federal securities laws, including:

The SEC has jurisdiction over a wide range of industries and entities – both public and private.

Recently the Association of Certified Fraud Examiners published a profile of SEC whistleblower attorney Matthew Stock’s success working with whistleblowers to fight fraud:

Click below to hear SEC whistleblower attorney Matthew Stock’s tips for SEC whistleblowers: