I am a lawyer who represents whistleblowers who make tips to the SEC and the IRS, and I have written several blog entries about the fact that up until now neither agency has issued very many awards to whistleblowers. However, both agencies, and especially the SEC’s Office of the Whistleblower, which was created fairly recently, have begun to pick up the pace in recent months.
On November 16, 2012, the SEC Office of the Whistleblower announced that it had resolved six cases during the preceding month. In each of these cases, the SEC resolved a lawsuit or investigation in which a defendant was accused of violating SEC regulations, and the defendants wound up paying monetary sanctions of more than $1 million dollars to the SEC. Whistleblowers whose tips led to the Commission either opening these investigations or filing these actions, will be eligible to receive a percentage of what the SEC collected. The sanctions in these cases may or may not have been the result of a tip from a whistleblower, so the SEC is not stating that it definitely will be making 6 awards to whistleblowers, but rather that whistleblowers have 90 days to apply for an award if they are eligible to do so.
The SEC recovered more than $1,000,000 in In the Matter of Massachusetts Mutual Life Insurance Company. Apparently the matter was simply an administrative proceeding, and never went to court. The case was filed and also resolved on November 15, 2012.
The SEC sued and recovered against Private Equity Management Group, Inc., Private Equity Management Group, LLC, and Danny Pang. The case was filed in the United States District Court for the Central District of California. The case was filed on April 24, 2009. The final judgment came three and a half years later, on October 22, 2012.
The recent SEC announcement also lists the case of SEC v. Conrad M. Black, F. David Radler and Hollinger, Inc. The case was filed all the way back in November of 2004 and not resolved until nearly eight years later, on October 9, 2012. The SEC had filed the case for SEC rule violations in the United States District Court for the Northern District of Illinois.
The SEC also released information that it had obtained sanctions of more than a million dollars in a case filed against defendants Jonathan R. Curshen, Michael S. Krome, David C. Ricci, Ronny Morales Salazar, Robert L. Weidenbaum, Ariav “Eric” Weinbaum, and Yitzchak (or, “Izhack”) Zigdon. The SEC had filed the case against the defendants back on February 18, 2011, in the United States District Court for the Southern District of Florida. The final judgment in the case was issued a year and a half later, on October 9, 2012.
The SEC will be paying an award to a whistleblower in a case called SEC v. East Delta Resources Corp., Victor Sun, David Amsel, and Mayer Amsel. The case was filed more than two years ago, on January 26, 2010. The final judgment or order in the case came more than two and a half years later, on October 18, 2012. The lawsuit was filed in the U.S. District Court for the Eastern District of New York.
Finally, the SEC announced it had obtained a sanction of more than a million dollars in a case it had filed in the United States District Court for the Northern District of Georgia. The case itself was only filed on October 2, 2012, and a judgment was issued on October 19, 2012. The case was filed against defendants James (“Jim”) S. Quay, Stephen Quay (also known as Stephen Jameson), and Jeffrey A. Quay.
Since the SEC’s whistleblower provision operates differently from other whistleblower laws such as the False Claims Act, a whistleblower does not bring the suit and is not named publicly on any pleadings in the case.