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Archive for the ‘Whistleblower’ Category

Company officer earns $500,000 whistleblower award for reporting fraud

The Securities and Exchange Commission today announced a whistleblower award payout between $475,000 and $575,000 to a former company officer who reported original, high-quality information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million.
Officers, directors, trustees, or partners who learn about a fraud through another employee reporting the misconduct generally aren’t eligible for an award under the SEC’s whistleblower program. However, there is an exception to this exclusion that makes an officer eligible if he or she reports the information to the SEC more than 120 days after other responsible compliance personnel possessed the information and failed to adequately address the issue. This is the first SEC whistleblower award to an officer under these circumstances.

“Corporate officers have front-row seats overseeing the activities of their companies, and this particular officer should be commended for stepping up to report a securities law violation when it became apparent that the company’s internal compliance system was not functioning well enough to address it,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.

The SEC has now awarded 15 whistleblowers since its whistleblower program began more than three years ago. Payouts have totaled nearly $50 million out of an investor protection fund established by Congress. The fund is financed entirely through monetary sanctions paid to the SEC by securities law violators, and no money is taken or withheld from harmed investors to pay whistleblower awards.

Whistleblower awards can range from 10 percent to 30 percent of the money collected in a case. By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.

Path cleared for Whistleblower to sue UBS

UBS AG lost a bid Tuesday to dismiss a whistle-blower lawsuit by a former commercial mortgage-backed securities strategist who said he was fired for refusing to publish misleading research reports. U.S. District Judge Jesse Furman in Manhattan found that Trevor Murray, who was fired in February 2012, could move forward with his case. Murray alleges that after he complained to superiors, the Swiss bank retaliated against him in violation of the Dodd-Frank Act. The ruling was one of a handful to date to address the scope of the whistleblower provisions of Dodd-Frank, the 2010 law enacted in response to the U.S. financial crisis. UBS argued the Dodd-Frank whistleblower provisions did not apply to Murray as he only complained to people at UBS and not the U.S. Securities and Exchange Commission.  But Furman cited rules adopted by the SEC in 2011 interpreting the Dodd-Frank law as extending the law’s anti-retaliation provisions to protect individuals whose disclosures were made under the earlier Sarbanes-Oxley Act, regardless of if the person complained to the SEC itself. “Applying this analysis here, the Court concludes that deference to the SEC’s rule is warranted,” Furman said. 



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