For the past several years, the Securities and Exchange Commission’s whistleblower rewards program has been championed by lawyers and politicians as powerful incentives to approach the regulator with evidence of wrongdoing. However, a new study finds that nearly a quarter of the SEC’s whistleblower awards have gone to attorney law firms that have close ties to the regulator, potentially deterring other whistleblowers from coming forward. A decade after a forensic accountant raised red flags about Bernard Madoff’s multi-billion-dollar Ponzi scheme to regulators who didn’t listen, an entire industry is turning to suggestions from company insiders and expert analysts who are reporting on corporate filings. and submit them to the SEC for monetary rewards. , the SEC said Has awarded more than $1.3 billion to 281 individuals Through the whistleblower program since 2011. The program, established by the 2010 Dodd-Frank Act, gives whistleblowers between 10% and 30% of the amount generated through monetary penalties if their tips result in successful enforcement action and the fine exceeds $1 million. Even though the SEC Whistleblower Rewards Program is praised for its success in detecting and investigating potential wrongdoing, the private, unregulated industry of whistleblower lawyers may distort the program’s goal to encourage more whistleblowing, Alexander Platt said a recent research paper by, associate professor of law at the University of Kansas School of Law. The paper argues that a disproportionate portion of the rewards are going to a focused group of “well-connected, repeat players” who can use their connections to help their customers claim. According to the working paper, this could deter potential whistleblowers from coming forward. Read also: SEC whistleblower awards program may have revolving-door problem, study says Newsletter Sign-Up WSJ | Risk and Compliance Journal Our Morning Risk Report includes insights and news on governance, risk and compliance. Using SEC data from awards issued between 2012 and 2020 obtained through the Freedom of Information Act, the study shows that about 23% of awards in the database — or 30 — with at least one attorney went to law firms that were former SEC officials, highlighting the potential benefits of connections to this group. The study found that two-thirds of the total awards went to whistleblowers represented by lawyers. Within that group, about a quarter of those awards, or 22 awards, went to lawyers who had previously won awards from the SEC. Data shows that about a third of recipients did not have legal representation in the database. Jordan Thomas, a lawyer who helped set up the SEC Whistleblower Program and now at the law firm SEC Whistleblower Advocates PLLC, is “a major ‘revolver'” according to the study. The study noted that Mr Thomas, during his time working for the law firm Labton Sucharo LLP, was responsible for 10 awards in the study’s database, about 20% of all dollars given in the study, about $152.6. million was. “The commission does not show any special preference or treatment for claimants who are represented by attorneys that had former SEC attorneys,” an SEC spokesperson said in an email. Mr Thomas did not respond to a request for comment. Mr Platt wrote, “Tipsters represented by attorneys outperformed non-represented people, repeat attorneys outperformed first-timers, and lawyers who worked on the SEC outperformed just about everyone else.” used to perform.” The SEC does not publicly name whistleblowers or identify cases when they announce whistleblower awards, or say whether whistleblowers have legal representation. Some whistleblower lawyers may promote that certain rewards were given to their clients as part of marketing the success of their efforts, without disclosing the names. The odds of winning the prize are less than 0.54%, considering the SEC received a total of more than 52,430 TIPS between August 2011 and September 2021, according to a Wall Street Journal data analysis based on the agency’s annual report. Whistleblowers, sometimes high-level insiders, have been critical of the regulator’s enforcement actions. For example, three unnamed whistleblowers who helped the regulator reach a $415 million settlement with Bank of America Corp received a total of $83 million in 2018. Mr Platt said the opacity of the process, such as a lack of disclosure about whether an attorney represented the whistleblower and how much the attorney is charged, has created an uneven playing field. He said lawyers charge high fees — up to 40% of the award money — and without regulation on the industry, those fees could remain high. “There are some reasons to worry…[the attorneys] Some are taking advantage of the special connection and reach that is only due to their prior roles,” he said. Oliver Budde, a Wall Street whistleblower who now represents other whistleblowers in Oliver Budde’s law office, said the study’s findings track with what he has observed in the field. “It’s worth looking forward to,” he said. Some whistleblower lawyers refuted the study’s findings and questioned the study’s objectives, including its funding. Mr Platt said the study was funded exclusively by the University of Kansas School of Law. “The idea is that this small group of whistleblower lawyers and advocates [controlling the SEC] “It’s absurd,” said Siri Nelson, executive director of the Washington-based nonprofit National Whistleblower Center. Being overwhelmed by the number of tips SEC whistleblower program employees receive, whistleblower attorneys help individuals investigate their claims and report them to various agencies, she said. With more agencies like the Financial Crimes Enforcement Network setting up their own cash-for-tips program, “we need lawyers to help us reach the agency—it’s intimidating, sometimes only whistleblower lawyers.” hold your hand,” she said. Rebecca Katz, who leads the law firm Motley Fool Rice LLC’s SEC whistleblower litigation team and has worked in the SEC’s enforcement department, said the study does not accurately portray the industry. She said that the sector is competitive and lawyers get more clients in the market. “I think the rotation in the defense bar from the SEC is a huge problem,” she said. write to Mengqi Sun at mengqi.sun@wsj.com
%% Sounds like Rebecca Katz= right Overall a good idea, even if there room for improvement.......................................................
Regardless becoming a whistle blower is career ending move.Option up and engage the informal economy. There is more to made there anyways. Akuma