WASHINGTON, DC, Sept.22, 2014 - The Securities and Exchange Commission announced today that it has approved a record whistleblower award for a whistleblower represented by Phillips & Cohen LLP.
The whistleblower will receive at least $30 million to $35 million for providing information and assistance that led to a substantial recovery by the federal government. The reward is the largest one the SEC has made under the Dodd-Frank whistleblower program, created by Congress in 2010.
"Our client exposed extraordinarily deceitful and opportunistic practices that were deeply entrenched and well hidden," said Erika A. Kelton, a Washington, DC, attorney with Phillips & Cohen LLP, which specializes in representing whistleblowers. "Federal regulators never would have known about this fraud otherwise, and the scheme to cheat investors likely would have continued indefinitely."
To encourage whistleblowers who often put their jobs and careers at risk by reporting wrongdoing, the Dodd-Frank Act allows SEC whistleblowers to remain anonymous to the fullest extent allowed by the law. The whistleblower in this case is a foreign citizen.
"I was very concerned that investors were being cheated out of millions of dollars and that the company was misleading them about its actions," said Phillips & Cohen's whistleblower client. "Deception had become an accepted business practice."
Phillips & Cohen's client provided extensive assistance to the SEC. The company went to great lengths to conceal the fraud, which raked in millions for the company.
"The SEC was extremely responsive and acted quickly after our client provided detailed information about the fraud," Kelton said. "It immediately launched an investigation."
Kelton praised government enforcement officials for their work, particularly the SEC Whistleblower Office, the SEC Division of Enforcement, the Justice Department's Fraud Section and the Federal Bureau of Investigation.
"This case demonstrates how effective the SEC whistleblower program is," Kelton said. "Federal enforcement officials worked closely with the whistleblower to stop a scheme that hurt investors, and by doing so the government was able to hold wrongdoers accountable for their actions. Whistleblowers and investors are fortunate to have Sean McKessy leading the SEC Whistleblower Office."
Dodd-Frank Act authorizes the SEC to pay whistleblowers 10 percent to 30 percent of the amount collected as a result of the whistleblower's information. The reward comes from a special award fund Congress created and does not affect the amount the government collects or the amount returned to investors.
For more information, see the SEC press release, "SEC Announces Largest-Ever Whistleblower Award."