Whistleblowers Should Seek Representation
If you make the decision to become a whistleblower, you want to choose a lawyer to represent you. And no matter which field you are reporting the fraud from, select a law firm that has extensive experience in whistleblower cases, such as LabatonSucharow. Their firm believes, When courageous individuals speak out against wrongdoing, we stand up, we step closer and use every tool in our arsenal to make their voices heard.
After the 2007-2008 global financial crisis, the nation was in a quandary of how to upset corrupt corporations and incidents of securities fraud. Financial experts realized without the help of informed individuals, law enforcement would be helpless in policing the marketplace. In 2010, Congress enacted the U.S. Securities and Exchange Commission (SEC) Whistleblower Program, which provides strong employee protection, monetary compensation, and anonymous reporting.
Fortunately, thousands of whistleblowers from all over the world and from a variety of different backgrounds are coming forward to tell their stories. At LabatonSucharow, they represent numerous international whistleblowers in high-profile matters that involve an array of securities violations, including Corporate Disclosures and Financials, Foreign Corrupt Practices Act, and Trade violations. In addition, staff travel overseas to better serve international clients and to discuss whistleblowing with them and their families.
The SEC Whistleblower Program applies to violations of U.S. securities laws, however, violations occur all over the world. Obviously, every case is different, jurisdictional issues are complicated, and organizations/individuals with investors, investments, operations, employees, or clients in the US may be subject to SEC jurisdiction. At LabatonSucharow, they seek to level the playing field so whistleblowers can successfully report securities violations without regret. With a process as complicated as this, imagine not having an attorney to help you navigate!
Since the beginning of the whistleblower movement, submissions have come from people in 103 countries, comprising about 10% of all the agency’s tips. This percentage has increased by 10% annually. International whistleblowers have secured a number of significant bounties as well, including $30 million—the largest in the history of SEC Whistleblowers.
Every year, the SEC receives over 20,000 leads, complaints, and referrals. Investigators check out the most promising hits and determine which should be investigated. Usually, they end up investigating about 2,000 cases over the course of several years. Of those cases, only a small number will lead to successful enforcement actions in which the monetary sanctions exceed $1 million.
After the SEC posts the Notice of Eligibility, it usually takes a year or more for the whistleblowers to receive their payment. In order to meet the demand for quicker payments, the SEC has hired more staff. Eventually, they expect the wait time to decrease. Like any other system, payments can get bogged down simply because of the complexity of the enforcement action, the number of other applicants, and the number of appeals to the Commission.
It is up to the SEC which whistleblowers receive compensation and how much. When an SEC whistleblower is denied a monetary compensation, they are able to appeal the decision, but not the amount of money. They must appeal the decision with the U.S. Court of Appeals for the District of Columbia Circuit or to a local federal appeals court. A whistleblower has 30 days in which to appeal the SEC’s decision.
Over the past year, whistleblower clients of LabatonSucharow have been very satisfied with payments and have not had to appeal Commission decisions. Their partners have served for decades in senior positions at the SEC and DOJ during both Republican and Democratic administrations. In addition, for the most part, white-collar law enforcement has crossed party lines.
Given its early success and clear evidence for long-term potential, as well as low operational costs, the SEC Whistleblower Program needs little to no modifications. Some industry experts posit that corporate penalties may be reduced, which can decrease whistleblower payments because they are based on monetary sanctions collected by the Commission. LabatonSucharow closely follows these developments, and will publicly advocate for the rights of SEC whistleblowers now and in future debates.
Here are a few highlights of LabatonSucharow’s success:
- Client tips have led to more than $1 billion in monetary sanctions levied by the SEC, approximately 25% of the Commission’s total annual sanctions.
- Twelve percent of their clients live outside the US.
- While they have represented only 9% of successful whistleblowers, the clients’ bounties add up to 17.5% of the total awarded by the SEC.
- Clients have reported on numerous entities, including public companies, banks, asset managers, broker-dealers, hedge funds, rating agencies, and accounting firms.
- Twenty-eight percent of clients are not employed by defendant companies.
LabatonSucharow combines market-leading securities enforcement expertise and advanced assessment tools to provide SEC whistleblowers with counsel that is helpful and strategic. Over the past year, the SEC has given clients the maximum whistleblower threshold ($1 million) in over 50% of the cases. In addition, LabatonSucharow acts on behalf of the world’s largest institutional investors in their securities litigation practice. Their SEC whistleblower clients are diverse and represent a range of industries and countries worldwide.
On behalf of these prominent global institutional investors, the firm has taken on many entities in Corporate America, recovering billions and advancing corporate governance reform. For example, client leads have led to SEC enforcement actions against JP Morgan and Merrill Lynch, which amount to combined settlements of over $720 million. LabatonSucharow encourages financial markets to operate with transparency, justice, and accountability.
Usually, clients are senior executives that have plenty to lose. Or, they might be well-informed individuals who have information on significant securities violations. While the majority of their clients choose to remain anonymous, the firm can glean specific data points based on their reports, which provide insight into the practice. As you may see, hiring an attorney from LabatonSucharow can only benefit the whistleblower.
LabatonSucharow uses state-of-the-art research tools, for instance, the SEC Sanctions Database. This database is able to analyze SEC press and litigation releases, and administrative summaries that describe successful enforcement actions that have occurred since the Sarbanes-Oxley Act, a movement to cut corporate crime. This act led to creating monetary sanctions that exceeded $1 million. The law firm also monitors regions, offices, investigative teams, violation types, leadership priorities, and enforcement policies.
LabatonSucharow refers to their clients as “fearless” and people “Refusing to be silenced or marginalized. They are the change agents who when they see something they say something.”
The number of SEC Whistleblower that are investigated annually is undisclosed, however, the Commission initiates about 1,000 new investigations from all sources. Only a small number of those lead to SEC enforcement. An even smaller number yields monetary sanctions of more than $1 million. For prospective SEC whistleblowers, the firm recommends creating the highest-quality submission.
Although LabatonSucharow has a positive record for whistleblower clients, none have been denied, they still stay on top of and analyze all SEC denial orders. Over the past 18 months, the most common reason for denial is as follows:
- The information didn’t lead to a successful enforcement action
- Information was unoriginal according to rules
- Application missed the deadline of filing within 90 days
The Commission considers many factors when deciding on the monetary compensation for whistleblowers, based on the 10-30% of sanctions collected. The following criteria may increase a payment:
- The relevance of the information provided by whistleblower
- The assistance provided by the whistleblower
- Whether or not law enforcement wishes to compensate the whistleblower
- How much the whistleblower participates in internal reporting
Usually, SEC investigations can take as long as four years. There are factors, however, that influence how expeditiously the investigation is completed. For example, 1) whether the infraction is a recurring violation or poses an imminent threat to investors; 2) whether the entities and individuals being investigated cooperate; 3) the number of SEC staff assigned to the case; 4) the sheer amount of evidence the SEC staff must collect and review; 5) whether international locations and witnesses exist; and 6) whether the investigation requires collaborating with other law enforcement professionals and/or regulatory authorities.
LabatonSucharow very carefully selects their cases. Annually, they only accept about a dozen SEC whistleblower cases. The SEC will post a Notice of Covered Action on their website after an enforcement action that exceeds $1 million in monetary sanctions has been announced. This is when the 90-day deadline begins for the SEC whistleblowers—they must mail or fax SEC Form WB-APP, the application for compensation, to the SEC.
If the enforcement action is successful, and compensation is possible, the SEC staff will contact the whistleblower or their lawyer. SEC whistleblowers are then responsible for watching the SEC Notices of Covered Actions and meeting the appropriate deadlines. Due to the serious nature of the cases, LabatonSucharow will also monitor the notices and file the appropriate applications for compensation. Some factors may decrease compensation, including any responsibility attributed to the whistleblower, unreasonable delays in reporting, interference with internal compliance, and reporting systems.
If after all of this information, you’re still not convinced, please visit the LabatonSucharow, SEC Whistleblower attorney website and see for yourself how they can help you. They proudly state, “While some may discredit them [our clients] and others may abandon them, we proudly protect and fight for those others call rebels, troublemakers, and outsiders.”