Whistleblower reports still assessed by Securities and Exchange Commission despite Covid-19 protocols, SEC says

26 March 2020 00:00

Whistleblowers wishing to report fraud, bribery and other violations to the US Securities and Exchange Commission can still do so, and the commission will still process the reports in the face of coronavirus protection protocols, the SEC said.

"As reflected by recent awards, the SEC’s whistleblower office, like the rest of the Commission’s operations, is fully operational in a telework capacity: taking in whistleblower tips, reviewing and processing award claims, and manning our public hotline," an SEC spokesperson told MLex via e-mail.

Earlier this week, the SEC awarded $1.6 million to a whistleblower in a securities law violation case, and also more than $570,000 to two whistleblowers in an antifraud case. The commission said the information provided led to the "successful enforcement" of the cases, both of which were unnamed.

Under the Dodd-Frank Act, which set up the whistleblower program, people who provide information helpful to the SEC can receive a percentage of judgments collected by the SEC. About $396 million has been paid through the program since it began in 2012.

Online reporting

The SEC's website still maintains an online form inviting whistleblowers to submit tips.

"You’ll need the name of the persons or entities involved, the investment products involved, and your contact information," the site advises. The form can accept uploaded documents.

Whistleblower attorneys see impacts

Although the uncharted waters of the Covid-19 public health emergency are creating uncertainty throughout the legal system, whistleblowers are still active and could become more so, said attorneys engaged in whistleblower representation. Other regulators, such as the Federal Trade Commission's Bureau of Consumer Protection and Bureau of Competition, and the US Justice Department's false claims unit, still rely on whistleblowers or other information from the public.

"We know that whistleblower cases are being filed," said Anne Hartman of Constantine Cannon. "We definitely continue to hear from potential whistleblowers." Constantine Cannon, which is active in False Claims Act cases, last year represented a whistleblower in a case involving fraud and bid-rigging by South Korean companies selling fuel to the US Department of Defense.

Hartman said the layoffs resulting from the Covid-19 response shutdowns would create an opening for whistleblowers. These informants would be able to make sworn statements about the wrongdoing they witnessed and also guide prosecutors to evidence within their former companies. The fact they are no longer insiders doesn't diminish their standing as whistleblowers, she said.

Ed Baker, also of the firm, said prosecutors within US attorney and state attorneys general offices have been reaching out proactively to tell whistleblower lawyers they are still accepting information that could lead to new cases and evidence in ongoing cases.

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