Category Archives: Whistleblowers

In March of 2020, America has experienced the unprecedented pandemic known as the Coronavirus. The US stock market has declined by more than a 1/3 from its all-time high in February 2020. Some investors have watched their own portfolios decline by 30-50%.

In some instances, your investment losses could be normal market decreases. However, in other instances your losses could be due to mistakes made by your financial advisor. You could have been unsuitably invested in a portfolio that was too risky for you. Some of your investments could have been inappropriate. The risks of your investments may not have been accurately discussed with you. The typical American investor needs an experienced attorney to help him or her evaluate whether their losses are actionable against the advisor or firm that recommended them.

At Maddox Hargett & Caruso, P.C., we have been advising clients about their investment losses for over 30 years. We give investors free initial evaluations to help them understand the viability of their case against their financial advisor and his firm. If you are trying to understand whether your investment losses are attributable to normal stock market declines or breaches of duty by your advisor or firm, please contact us. We are here to help you make an informed decision. Call us at 317-598-2040 or check out our website at www.investorprotection.com.

In 2011, the S.E.C. created the Office of the Whistleblower to coordinate its new program, which can award 10 percent to 30 percent of any amount over $1 million recovered based on the information provided. The federal government is boasting its accomplishments in recovering money based on tips, and Congress seems poised to extend the incentives provided to those with information about unlawful activity.

The Justice Department has indicated a recovery of $5.69 billion, a record amount, in civil fraud cases under the False Claims Act in its last fiscal year. The two biggest contributors to the record recovery were $3.1 billion from banks for faulty mortgages that were federally insured and $2.3 billion for health care fraud under the Medicare and Medicaid programs.

Companies must be mindful in the way they deal with information on potential wrongdoing because of anti-retaliation protections under the Dodd-Frank Act for whistle-blowers. Thus, demoting or firing such a person can lead to a lawsuit or an S.E.C. enforcement action.

The acceptance of whistle-blowers is not restricted to false claims. The I.R.S. has amplified its program on tax cheats, and awarded one of the largest whistle-blower payouts of $104 million award in 2012 to Bradley C. Birkenfeld. His case also demonstrated the consequences of being a whistle-blower as he served nearly two and a half years in prison for his role in tax evasion schemes.

Whistle-blowing’s successful results are going to lead to new and expanded programs to encourage reporting misconduct to the government, with the incentive of a nice financial reward to spur on the informers.

The Securities and Exchange Commission (SEC) has received 3,001 tips and complaints following the creation of its Whistleblower Program one year ago. The statistics were made public yesterday in the SEC’s Annual Report on the Dodd-Frank Whistleblower Program for Fiscal Year 2012.

According to the report, tips have come from all 50 states, the District of Columbia, Puerto Rico and 49 countries. States with the highest percentage of tips include: California (17.4%), New York (9.8%), Florida (8.1%), Texas (6.3%), New Jersey (4.1%), Illinois (4%), and Pennsylvania(3.6%).

So far, the 3,000-plus tips are focused in three main areas: Corporate Disclosure and Financials (18.2%); Offering Fraud (15.5%); and Manipulation (15.2%).

The full report is available here.

This year, the SEC made its first award under the Whistleblower Program. On Aug. 21, 2012, a whistleblower who helped the SEC stop an ongoing multimillion dollar fraud received an award of 30% – the maximum percentage payout allowed by law.

In that case, the award recipient submitted a tip concerning the fraud and then provided documents and other significant information. The information ultimately resulted in a federal court ordering more than $1 million in sanctions.

The Bank of New York Mellon Corp. has reached an agreement with the state of Virginia concerning accusations that the bank charged hidden markups on currency transactions to Virginia’s employee pension fund. The deal also involves a $1.1 million payment to a whistleblower group.

Pension funds in Virginia, as well as in other states and municipalities, have accused Bank of New York and custodial bank State Street Corp. of deceiving them by using a least-favorable high or low range to price their currency trades and then pocketing the difference, according to a Nov. 9 Dow Jones Newswires story.

The whistleblower in the case is Grant Wilson, a Japanese yen trader on one of BNY Mellon’s foreign exchange desks in Pittsburgh. For the last two of the 10 years he worked with Mellon, Wilson collected information and documents to assist government investigators and a plaintiff legal group, FX Analytics, into the alleged practices at the bank. The information he provided detailed how the alleged scheme worked and how much BNY Mellon made as a result.

Wilson’s actions are among the first under a new initiative by the Securities and Exchange Commission (SEC) to incorporate whistleblowers into its securities fraud prevention strategies. The program, which was launched under the Dodd-Frank financial overhaul, rewards whistleblowers 10% to 30% of the proceeds in cases where penalties exceed $1 million. Since the program’s inception, tips from informants have surged.