Katz Banks Kumin and Phillips & Cohen Comment on SEC Whistleblower Client’s $9 Million Award

SEC Whistleblower Program Proves Effective with Notable Award Increase

On Wednesday, July 12, 2023, the U.S. Securities and Exchange Commission announced an award of more than $9 million to a whistleblower client jointly represented by Katz Banks Kumin LLP and Phillips & Cohen LLP. Their client provided critical information to the Commission leading directly to a successful enforcement action against a large financial institution. The SEC Press Release and accompanying Order expressly acknowledged their client’s crucial role in not only initially alerting the SEC to the misconduct, but for their client’s “substantial and ongoing cooperation,” leading to the successful enforcement action.

Debra Katz and Adam Herzog of Katz Banks Kumin, and Sean McKessy of Phillips & Cohen, represented the anonymous whistleblower. Mr. Herzog lauded the news: “We are thrilled that the SEC has recognized our client’s critical role in uncovering the illegal actions addressed by the SEC’s enforcement action and the client’s tremendous efforts in protecting investors’ rights. Our client did so at incredible risk to himself. Thankfully, the SEC continues to implement the SEC Whistleblower Program in an effective way, creating a safe harbor for whistleblowers to provide the SEC with the information it would not otherwise have concerning securities violations. As the SEC’s Order reflects, the Whistleblower Program is a powerful tool that balances the goal of exposing illegal activities with the need to protect whistleblowers from retaliation.”

SEC Whistleblower Program Proves Effective with Notable Award Increase

Mr. McKessy, now at Phillips & Cohen and previously the first Chief of the SEC’s Office of the Whistleblower, added: “It is very gratifying to represent courageous individuals like our client to support the SEC’s Enforcement efforts in preventing or stopping fraud on investors. The award order marks the culmination of a long and arduous road for our client, who could not be more deserving of this award. In recent years, the SEC has issued awards of increasing size and with increasing frequency, and I am thrilled it has now recognized our client with the issuance of a well-deserved award. I commend the SEC for its consistently strong work investigating cases like these and bringing wrongful actors to justice, and for taking recent steps to improve and streamline the whistleblower award processes.”

Mr. Herzog readily agreed. “The recent growth of the SEC Whistleblower Program is a wonderful development not only for our clients, but for the SEC and the investing public being protected. The word is really getting out there to potential whistleblowers that they can safely and effectively report their concerns by utilizing the Program. Our client who was awarded in Wednesday’s order is the best example of how the SEC Whistleblower Program is supposed to work. We are over the moon to be able to apply our experience and expertise towards assisting clients like this in getting the results they deserve.”

Congress created the SEC Whistleblower Program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Under the SEC program rules, an individual who voluntarily provides original information that leads to an enforcement action resulting in over $1 million in monetary sanctions is entitled to receive an award in the amount of 10 to 30% of the moneys collected. With this latest award to the firms’ client, the SEC has now added to the over 328 awards totaling over $1.3 billion paid out to whistleblowers that the SEC Whistleblower Office reported in its November 15, 2022 Annual Report.

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