Window Closing for Some SEC Whistleblowers to Collect Awards

SEC whistleblowers have a very limited amount of time left to claim their rewards in seven cases resolved by the Securities and Exchange Commission (“SEC”) in October of this year.

The SEC Office of the Whistleblower lists cases in which the SEC has claimed monetary sanctions of more than $1,000,000. In those cases, people who tipped the SEC to the fraud, leading to the investigation or the filed case, are eligible to receive a portion of what the SEC got. Not all of these cases resulted from a whistleblower tip, but some may have.

The SEC does not contact the whistleblowers, meaning that the whistleblowers and the whistleblower’s attorneys must look to the SEC site for notice that the case has resolved. Whistleblowers then have to file the proper legal forms in order to claim part of the reward. They have only 90 business days to make their claims. In these seven cases, the time period expires on December 31, 2012.

Oracle Corporation agreed to pay $2,000,000 to resolve SEC claims that had been filed against it in the United States District Court for the Northern District of California. According to the allegations, some employees of Oracle’s Indian subsidiary had set money aside, off company books, and used the money “to make unauthorized payments to phony vendors.”

The SEC also obtained large sanctions in a case, SEC v. Irwin Boock, Stanton B. J. DeFreitas, Nicolette D. Loisel, Roger L. Shoss, and Jason C. Wong, brought by the SEC in the USDC for the Southern District of New York.

On August 29, 2012, the SEC recovered more than a million dollars in sanctions in a case filed in the U.S. District Court for the District of Columbia against Wyeth LLC. The next day, also in the District of Columbia, the SEC recovered more than a million dollars in sanctions against Pfizer Inc. Wyeth and Pfizer were accused of violating the Foreign Corrupt Practices Act. According to the allegations, the companies had bribed doctors employed by foreign governments to purchase their pharmaceutical products.

SEC sanctions exceeded $1,000,000 in a Central District of California case filed against three individuals: Nancy Shao Wen Chu, Elizabeth Tsang, also called Yuen Yee Tsang, and Eric Jon Strasser. That case resolved on August 8, 2012. According to the SEC’s press release, the three booked false sales revenues in order to obtain investors and to convince lenders to provide loans for Soyo Group, Inc. Soyo no longer exists, but at the time it was a consumer electronics and computer parts company based in California.

In the Matter of Wells Fargo Brokerage Services, LLC n/k/a Wells Fargo Securities, LLC and Shawn Patrick McMurtry, the SEC levied more than a million in monetary sanctions in an administrative proceeding that did not get filed with a court. The allegations related to failure to assess and disclose the risk of the sale of asset-backed commercial paper to institutional customers such as municipalities and non-profits.

The final matter, SEC v. Stanley J. Kowalewski and SJK Investment Management, Inc., resolved on July 6, 2012. It had been filed approximately three years earlier, on August 25, 2009.

If these cases were achieved because whistleblowers brought tips to the SEC, then these whistleblowers have just over two weeks left to file their claims to a percentage of what the SEC recovered.