SEC Awards More Than $12 Million to Two Whistleblowers
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SEC Awards Over $12 Million to Two Whistleblowers for Their Assistance in Successful Enforcement Action
March 31, 2023 – The SEC announced that it had awarded more than $12 million to two whistleblowers who had provided valuable information and assistance in a successful SEC enforcement action. The awards were made out of a Congressionally-established investor protection fund financed entirely through monetary sanctions paid to the SEC by securities law violators.
The Role of Whistleblowers in Protecting Investors and Capital Markets
Whistleblowers play a crucial role in helping the SEC detect and prosecute wrongdoing and in protecting investors and the capital markets. The information and assistance provided by these two whistleblowers in identifying complex wrongdoing demonstrate the importance of the whistleblower program to the SEC’s enforcement efforts.
The first whistleblower was instrumental in prompting the opening of the investigation and provided information on violations that would have been difficult to detect otherwise. This whistleblower also identified key witnesses, helped staff understand complex fact patterns and issues, and made persistent efforts to remedy the issues. As a result, this whistleblower will receive an award of over $9 million.
The second whistleblower submitted critical new information during the course of the investigation and will receive an award of more than $3 million.
Whistleblower Awards and Eligibility Criteria
Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 to 30 percent of the money collected when monetary sanctions exceed $1 million.
The Dodd-Frank Act protects the confidentiality of whistleblowers, and the SEC does not disclose any information that could reveal a whistleblower’s identity. Whistleblowers who use an attorney gain additional privacy protections, since the SEC does not know the identity of the whistleblower until the investigation proceeds.
The SEC’s whistleblower program is a vital tool in protecting investors and the capital markets from fraud and other securities violations. The recent awards to these two whistleblowers demonstrate the SEC’s commitment to incentivizing individuals to come forward with valuable information to help the agency pursue successful enforcement actions.
If you have information about securities violations and are considering blowing the whistle, call the experienced whistleblower attorneys at Sallah Astarita & Cox, LLC to understand your rights and protections under the law.
SECLaw.com is the online source of securities law new, tips and commentary. Online since 1995 it is the recognized leader in the area, so much so that other attorneys have been reduced to using “seclaw” in their website names in an effort to gain from the site’s popularity.
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SEC Proposes Rule Changes to Enhance Clearing Agency Resilience and Recovery
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The SEC has recently announced proposed rule changes aimed at strengthening the resilience and recovery capabilities of covered clearing agencies. These changes are designed to ensure the continuity of clearing services during times of significant stress and improve the overall risk management framework in the capital markets.
Improving Intraday Margin Monitoring
One of the key aspects of the proposed rule changes is the requirement for covered clearing agencies to establish policies and procedures for a risk-based margin system that actively monitors intraday exposure. This system would have the necessary authority and operational capacity to make intraday margin calls whenever circumstances warrant it. The goal is to respond promptly and effectively to breaches of risk thresholds or instances of elevated volatility in the products cleared or markets served by the agency.
By implementing an intraday margin monitoring system, clearing agencies can better mitigate risk and ensure the smooth functioning of the markets, benefiting investors, issuers, and the overall market infrastructure.
Addressing the Use of Substantive Inputs
The proposal also focuses on the use of substantive inputs in a covered clearing agency’s risk-based margin system. Specifically, it aims to establish policies and procedures that address situations where such inputs are not readily available or reliable. This requirement underscores the importance of having alternative approaches or fallback options to maintain the integrity and effectiveness of the margin system.
By incorporating measures to deal with the unavailability or unreliability of substantive inputs, covered clearing agencies can ensure a robust risk management framework even in challenging circumstances.
Enhancing Recovery and Wind-Down Planning
In addition to the changes mentioned above, the proposed rule includes a new requirement for covered clearing agencies to have a comprehensive recovery and wind-down plan. This plan would consist of nine specific elements, building upon the existing requirement for such a plan. The goal is to ensure that clearing agencies are well-prepared to navigate potential disruptions or crises and can take appropriate actions to recover and wind down their operations in an orderly manner.
The inclusion of these nine elements in the recovery and wind-down plan will provide greater clarity and guidance for covered clearing agencies, enabling them to proactively address risks and challenges and minimize the impact on the broader financial system.
SEC Chair’s Support for the Proposal
SEC Chair Gary Gensler has expressed his support for the proposed rule changes, emphasizing the importance of resilient and well-regulated clearinghouses in reducing risk for the public. He believes that if adopted, these changes will enhance the resiliency of the market plumbing, which is essential for the smooth operation of the capital markets. Ultimately, these enhancements will benefit investors, issuers, and the markets as a whole.
Public Comment Period
As part of the regulatory process, the SEC has opened a public comment period for stakeholders and interested parties to provide feedback on the proposed rule changes. The comment period will be open for either 60 days following the release publication on the SEC website or 30 days following publication in the Federal Register, whichever period is longer. This allows for thorough consideration of the proposed changes and ensures that the final rules reflect a wide range of perspectives and expertise.
Have a securities law question? Call New York Securities Lawyers at 212-509-6544.
SECLaw.com is the online source of securities law new, tips and commentary. Online since 1995 it is the recognized leader in the area, so much so that other attorneys have been reduced to using “seclaw” in their website names in an effort to gain from the site’s popularity.
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Leading Index Decline Undermines Investor Expectations
The Conference Board’s Leading Indicators Index declined for 13th month
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JPMorgan, Ex-Broker Agree to Non-Solicit Truce in TRO Battle
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Less than a week after it filed for a temporary restraining order against a broker who jumped to Morgan Stanley, JPMorgan Chase & Co. and the broker have agreed to a stipulated injunction, according to a court filing earlier this week.
As part of the order, Brett A. Jacobson agreed that he would not solicit the bank’s clients, although he is allowed to process account transfer requests that they initiate or do business with them after they transfer, according to a Thursday court filing.
The order also requires Jacobson to return within three days to JP Morgan all documents pertaining to its clients, including copies, handwritten notes, and digitized versions. Jacobson, an 18-year industry veteran and private client advisor who had worked from a Chase bank branch in New York City, moved on April 28 to Morgan Stanley in Melville, New York.
See the full story at AdvisorHub.
SECLaw.com is the online source of securities law new, tips and commentary. Online since 1995 it is the recognized leader in the area, so much so that other attorneys have been reduced to using “seclaw” in their website names in an effort to gain from the site’s popularity.
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Mellissa Campbell Duru Named Division of Corporation Finance’s Deputy Director for Legal and Regulatory Policy
The Securities and Exchange Commission today announced that Mellissa Campbell Duru has been named Deputy Director for Legal and Regulatory Policy in the Division of Corporation Finance. Ms. Duru most recently was a Special Counsel at Covington &…
Read the Full Press Release
Have a securities law question? Call New York Securities Lawyers at 212-509-6544.
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Mellissa Campbell Duru Named Division of Corporation Finance’s Deputy Director for Legal and Regulatory Policy
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The Securities and Exchange Commission today announced that Mellissa Campbell Duru has been named Deputy Director for Legal and Regulatory Policy in the Division of Corporation Finance. Ms. Duru most recently was a Special Counsel at Covington &…
Read the Full Press Release
Have a securities law question? Call New York Securities Lawyers at 212-509-6544.
* This article was originally published here
SECLaw.com is the online source of securities law new, tips and commentary. Online since 1995 it is the recognized leader in the area, so much so that other attorneys have been reduced to using “seclaw” in their website names in an effort to gain from the site’s popularity.
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https://www.seclaw.com/mellissa-campbell-duru-named-division-of-corporation-finances-deputy-director-for-legal-and-regulatory-policy/
State AGs Oppose SEC Rule Regulating Cryptocurrency
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On May 8, 12 states led by Arkansas Attorney General Tim Griffin sent a letter to the Securities and Exchange Commission (SEC), opposing its recently proposed rule to give the commission the authority to regulate non-securities, including cryptocurrencies.
While the current rules give the SEC the authority to regulate investment advisors who hold a client’s fund or securities, the proposed rule would expand the SEC’s jurisdiction to any client assets under the investment advisor’s control. In the letter, the state AGs argue that the SEC does not have the legal authority to regulate assets other than securities, raising federalism concerns since the proposed rule may impose federal regulations on state-chartered trust companies and bank entities. The AGs contend that instead of imposing this rule, the SEC should wait for Congress to decide how to best regulate cryptocurrencies.
Read the full article at Troutman Pepper’s website
SEC Wrong on Crypto
SECLaw.com is the online source of securities law new, tips and commentary. Online since 1995 it is the recognized leader in the area, so much so that other attorneys have been reduced to using “seclaw” in their website names in an effort to gain from the site’s popularity.
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HSBC Securities and Scotia Capital Fined $15M and $7.5M Respectively by SEC for Recordkeeping Failures
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On May 11, 2023, the SEC charged HSBC Securities (USA) Inc. and Scotia Capital (USA) Inc. for their employees’ longstanding and widespread failures to preserve and maintain electronic communications. To settle the charges, HSBC and Scotia admitted that their conduct violated recordkeeping provisions of the federal securities laws and agreed to pay penalties of $15 million and $7.5 million, respectively.
Off-Channel Communications at HSBC Securities and Scotia Capital
The SEC’s investigation of HSBC Securities and Scotia Capital, both registered broker-dealers, found that both firms had a pervasive and long-standing practice of off-channel communications. The firms admitted that their employees communicated about securities business matters on their personal devices, using messaging platforms such as WhatsApp. Neither firm maintained or preserved the vast majority of these communications, in violation of the federal securities laws.
The SEC’s Orders
The failings of HSBC Securities and Scotia Capital involved employees at multiple levels of authority, including supervisors and senior executives. Both firms cooperated with the SEC’s investigation by self-reporting the recordkeeping failures after gathering communications from the personal devices of a sample of their personnel.
The SEC charged both firms with violating certain recordkeeping provisions of the Securities Exchange Act of 1934 and failing to reasonably supervise to prevent and detect those violations. Along with the financial penalties, each firm was censured and ordered to cease and desist from committing violations of the relevant recordkeeping provisions.
Compliance Consultants and Settlements
HSBC Securities and Scotia Capital also agreed to retain compliance consultants to conduct comprehensive reviews of their policies and procedures related to the retention of electronic communications found on personal devices and their respective frameworks for addressing non-compliance by their employees with those policies and procedures.
Separately, the Commodity Futures Trading Commission announced settlements with the firms for related conduct.
Read the Full Press Release
Have a securities law question? Call New York Securities Lawyers at 212-509-6544.
SECLaw.com is the online source of securities law new, tips and commentary. Online since 1995 it is the recognized leader in the area, so much so that other attorneys have been reduced to using “seclaw” in their website names in an effort to gain from the site’s popularity.
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Dutch Medical Supplier Philips to Pay More Than $62 Million to Settle FCPA Charges
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The Securities and Exchange Commission today announced that Amsterdam-based Koninklijke Philips N.V. will pay more than $62 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) with respect to conduct related to its sales…
Read the Full Press Release
Have a securities law question? Call New York Securities Lawyers at 212-509-6544.
Mark J. Astarita, Esq. is a securities lawyer who represents investors, financial professionals and firms in litigation, arbitration and regulatory matters across the country. He is a partner in the national securities law firm of Sallah Astarita & Cox, LLC and can be reached by email at mja@sallahlaw.com or by phone at 212-509-6544.
Follow us on Twitter, Facebook and The Securities Law Blog .
Mark J. Astarita, Esq. is a securities lawyer who represents investors, financial professionals and firms in litigation, arbitration and regulatory matters across the country. He is a partner in the national securities law firm of Sallah Astarita & Cox, LLC and can be reached by email at mja@sallahlaw.com or by phone at 212-509-6544.
Follow us on Twitter, Facebook and The Securities Law Blog .
SECLaw.com is the online source of securities law new, tips and commentary. Online since 1995 it is the recognized leader in the area, so much so that other attorneys have been reduced to using “seclaw” in their website names in an effort to gain from the site’s popularity.
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He tried once before and was denied, but Elon Musk has asked a federal appeals court in New York to throw out his 2018 agreement with US regulators requiring a Tesla Inc. lawyer to screen all his company-related Twitter posts, calling it an illegal limitation on his free-speech rights.
Musk, Tesla’s chief executive officer and now the owner of Twitter Inc., has claimed that the agreement with the US Securities and Exchange Commission violates the First Amendment to the Constitution and that the SEC is harassing him.
The requirement “chills Mr. Musk’s speech,” limiting his ability to make statements about Tesla that don’t violate any securities laws, Ellyde R. Thompson, an attorney representing the Tesla CEO, told the panel.
Last year, US District Judge Lewis Liman refused to release Musk from the deal and end his “Twitter Sitter” requirement, saying the CEO was “simply bemoaning that he felt like he had to agree to it at the time” and now “wishes that he had not.” Liman also denied Musk’s effort to block an SEC subpoena seeking information on his tweets.
Full Article is at Fortune’s website.SECLaw.com is the online source of securities law new, tips and commentary. Online since 1995 it is the recognized leader in the area, so much so that other attorneys have been reduced to using “seclaw” in their website names in an effort to gain from the site’s popularity.
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