sec whistleblowing in silicon valley

When an individual or corporation is engaging in securities fraud, and you become aware of such violations, you might be able to win an award if you come forward and report your tip to the U.S. Securities and Exchange Commission (SEC).

Becoming a whistleblower isn’t easy, but it’s the right thing to do when investors, your colleagues, and the public are at risk. Below, we discuss why whistleblowers often don’t report the information they have, and what criteria you need to meet to be eligible for an award.

Why Whistleblowers Don’t Come Forward

Often, when an individual has blown the whistle, their employer finds out, and the whistleblower is often subjected to retaliation. Retaliatory action might consist of the creation of a hostile work environment, demotion, harassment, intimidation, termination, and slander of the whistleblower’s professional reputation.

Fortunately, there are a number of whistleblower protections, including the Dodd-Frank Act and Sarbanes-Oxley Act, which strictly prohibit employers from retaliating against employees they suspect of whistleblowing.

In fact, if your employer does retaliate against you, you can file a claim against them that will allow you to recover damages, including double back pay, damage to your reputation, emotional distress, and a reinstatement to your position, if you were terminated.

What’s more, you have the option of reporting your tip anonymously if you are represented by an SEC whistleblower lawyer. This way, the chances of your employer finding out you blew the whistle are minimal. Eventually, if you are going to be issued a whistleblower award, the SEC will need to know who you are so they can provide you with your award.

You Could Win an Award

Before you can be eligible for a whistleblower award, you’ll need to meet very specific requirements as outlined by the SEC. They include the following:

  • Your tip must be given voluntarily.
  • The information you provide must be original, meaning you discovered your tip from a non-public source.
  • The SEC must be able to take enforceable action against the violator.
  • The sanctions recovered by the SEC must be greater than $1 million.

Once you meet the above criteria, you will be entitled to anywhere between 10 and 30 percent of the recovered sanctions, depending on how valuable your tip was to the success of the SEC’s investigation. For example, if the SEC is able to recover $25 million and they wouldn’t have been able to without you, you could receive up to $7.5 million as your award.

Your SEC whistleblower lawyer in Silicon Valley will review the details of your tip to determine what you can expect to happen moving forward, and whether you’ll be entitled to an award.

Consult a Silicon Valley SEC Whistleblower Lawyer

If you’re ready to take a chance and blow the whistle on fraudulent activity within your workplace, you can report your tip to the SEC anonymously when you work with an experienced Silicon Valley SEC whistleblower lawyer at Meissner Associates.

All prospective whistleblowers can schedule a confidential tip assessment today by completing the secure contact form we’ve included at the bottom of this page or by calling our office at 1-866-878-9123.

“Pharma Bro” Martin Shkreli Convicted for Securities Fraud

Martin Shkreli, probably the most hated CEO in America, was recently convicted by a jury for two counts of securities fraud and one count of conspiracy to commit securities fraud.

Shkreli rose to infamy when he created Turing Pharmaceuticals and bought the rights to the HIV drug Daraprim. Soon after and without apparent justification, he increased the price of the drug from $13.50 per pill to $750 per pill.

His unrepentant and often smug attitude afterward earned him the nickname of “Pharma Bro,” but it was his history of questionable business practices prior to the Daraprim incident that got him into legal trouble.

Shkreli’s Ponzi Scheme

Shkreli managed two hedge funds: MSMB Capital and MSMB Healthcare. He got off to a bad start right away by lying about the net worth of the funds to lure in investors. He reportedly claimed that the value was around $100 million dollars at a time when it was closer to a mere $300.

Unfortunately for Shkreli, he didn’t manage his investors’ money very well and made a series of bad trades that resulted in substantial net losses. While he apparently originally relied upon the recruitment of new investors to keep the hedge fund above water, eventually this proved impossible to maintain.

Not wanting to fall short of the promises he’d made to the members of his hedge fund, Shkreli reportedly used funds from the pharmaceutical company Retrophin—of which he was the CEO at the time—to pay off the MSMB investors, as well as some of his own personal debts.

Multiple Securities Fraud Convictions

Due to Shkreli’s infamy as the “Pharma Bro,” prosecutors in the recently concluded Retrophin case had a notoriously difficult time finding unbiased jurors. Many candidates reacted negatively to Mr. Shkreli’s perpetual smirk and look of disdain, saying that he looked “evil,” “like a snake,” and worse.

Eventually a suitable jury was found to consider eight counts of criminal acts against Mr. Shkreli, acquitting him of five but convicting him of three. Reportedly, Shkreli responded in character, rolling his eyes disdainfully at the jury as the guilty verdicts were read.

For the three counts he was found guilty of, Shkreli could face as much as twenty years in prison.

He currently awaits sentencing.

SEC Whistleblower Attorneys

Meissner Associates is known for helping whistleblowers expose corporate and securities fraud. Martin Shkreli put his hedge fund investors at risk, defrauding them through his use of a Ponzi scheme. He also put the employees and investors of Retrophin at risk by using company funds to pay off his other debts.

If you’ve encountered securities fraud, whether through your work, investing, or independent analysis, you might be eligible to become a whistleblower and claim an award. To find out, submit a free, confidential tip through the form below. Alternatively, you can also call us at 1-866-764-3100.

 

Can Insider Trading Fraud Happen at a Distance?

We’re currently following a case that raises several issues about the definition of insider trading violations. If a person passes information to another person who then also passes it along, but neither use it directly for personal gain, can the first tipster be held accountable when the person at the end of the chain uses that information to profit from the market? Does that still constitute a fraud conspiracy, even though some of those involved never met and did not directly profit from the scheme?

This case might answer those questions, and it’s also a good example of how a potential whistleblower can act from within any of a number of different entities associated with a fraud charge.

Medicare Reimbursements at the Center

The case focuses on the alleged actions of a political intelligence consultant whose role was to help his client, a hedge fund, make better decisions about healthcare investments.

That consultant previously worked for the Centers for Medicare and Medicaid Services (CMS) and still had contacts there, specifically a senior staffer with detailed inside knowledge about potential and planned changes to Medicare reimbursements. Those reimbursement changes, if known in advance, could allow traders to cash in on expected increases or decreases in the stock price of affected companies.

And that’s just what is alleged to have happened. A CMS staffer passed information to the consultant, who shared it with traders at the hedge fund, who in at least two instances in 2012 and 2013 made trades that quickly netted more than $3.5 million for the fund.

Did They Do It for Gain?

If there will be difficulty in proving insider trading, it will be because neither the CMS staffer nor the consultant made any trades based on the information. The CMS employee received no gain from sharing the information, outside of discussions about a potentially lucrative new job in the future. The consultant also saw no immediate benefit but ultimately received more than $250,000 in consulting fees for his services.

The case law isn’t definitive but suggests that, as long as the initial disclosure was improper and given for benefit, or that a secondhand user of the information knew or suspected that the information passed to him resulted from a beneficial relationship, then an insider trading charge would be appropriate.

Where’s the Whistleblower?

It’s not known if there was a whistleblower in this case, but, based on our experience, we suspect there was. If you take the time to read the full indictment, it’s easy to believe that a whistleblower could have helped break this case. One defendant seems to have been especially sloppy with the inside information he received, in some cases sharing it both with other defendants and with multiple clients, as well as boasting of his access to otherwise secret information.

Within a few weeks of one of the suspected trades, a document written by that defendant had reached CMS staffers, who discussed the potential criminal acts that could have been involved in getting and using the information in it. They also recognized that the info came from within their agency.

Any one of many people involved—at the hedge fund, at another client, or at CMS—could have put some pieces together and called the Securities and Exchange Commission (SEC) to report the suspected fraud.

The SEC Will Pay for Your Help

Since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, more attention has been paid to enforcing the regulations governing the United States’ financial system and in going after violators. A key approach has been expanding the role of whistleblowers—those who report fraudulent activity to regulators.

Not only are many more people eligible to act as whistleblowers, but whistleblower protections and the rewards for information leading to a successful prosecution have increased. Since 2011, more than $154 million has been awarded to whistleblowers on nearly $1 billion in fines and other penalties.

Insider Trading Whistleblower Lawyer

If you’ve come across information that reveals insider trading, you may be eligible for a sizeable award if the information you provide leads to a successful SEC prosecution. But it’s important to follow the correct procedures, or you risk losing the ability to collect anything at all.

Meissner & Associates has been specializing in SEC whistleblower cases since 2001, and we are available to confidentially evaluate your information. For more information, give us a call today at 1-866-764-3100 or fill out the online contact form at the bottom of this page.

SEC Whistleblowing: Not Employment Law

When an honest person has witnessed major financial fraud, that individual has the opportunity to do the right thing by becoming a whistleblower and exposing the guilty organization to the proper authorities. Our financial system works only when everyone follows the rules, and although it may take great personal courage to speak up when you see someone else breaking the rules, that’s the only way to keep the system safe and fair.

When it’s time to blow the whistle, many people turn to an employment lawyer. But that’s not the right approach. Only an experienced SEC whistleblower attorney can provide the right representation.

Whistleblowers Don’t Sue; They Act As Witnesses

There’s confusion out there when it comes to whistleblowing, especially when it involves securities violations. Many potential whistleblowers believe—incorrectly—that when they blow the whistle on the illegal activities of an employer or former employer the case will be resolved under employment law. But when it comes to SEC violations, these cases aren’t in the realm of employment law at all.

Employment law deals with situations where an employer has acted wrongly against an employee, such as with discriminatory hiring practices, workplace harassment, or wrongful termination. In these cases, an employee usually files suit directly against an employer for the harm he or she has personally suffered.

In a whistleblowing case, the employee is not actually a party to any legal action. The lawsuit is instead filed by a government agency—the SEC—for violating the rules and causing harm to the system and many other people. The whistleblower might serve as a witness in the case, but usually his or her identity is not usually revealed. In fact, it might not be made public that a whistleblower was even involved in the SEC’s case.

Broad Economic Impact

The value of whistleblower information to the smooth functioning of the financial system can’t be overstated. When cases like this are brought, it benefits many individuals and institutions.

Often, the company involved is itself a victim, and the fraud has hurt its bottom line. Investors in a company can be directly harmed when their capital and profits are siphoned into fraudulent dealings. Some frauds can tarnish the reputation of an entire industry, harming the profitability of numerous companies, affecting many investors, and in the worst cases putting the jobs of those who work at those companies at risk (think of Enron: At least 4,000 people lost their jobs in the immediate wake of that company’s scandals).

Blowing the whistle on fraud like this not only protects companies, investors, and workers, it strengthens trust in the overall system. Financial regulators and the government gain, too, by demonstrating their effectiveness and proving to taxpayers that their involvement provides value. The only ones who lose are those caught committing the fraud.

Whistleblower Incentive

There’s one more important beneficiary: the whistleblower. Since the passage of the Dodd-Frank Act in 2010, these honest individuals—whistleblowers who recognize that integrity and fairness are the foundations of a financial system that operates on a level playing field for everyone—have had more incentive to report large frauds and crimes.

For more than twenty years, financial rewards were available to those who reported this kind of wrongdoing, but the types of fraud covered, the amount of the rewards, and the list of people who were eligible to blow the whistle were all limited. Now, many more employees are able to report this kind of wrongdoing as whistleblowers, and they can be well-compensated for their honesty: If the SEC successfully pursues a case based on the information a whistleblower provides, and more than $1 million in sanctions are obtained, the whistleblower will receive a bounty of between 10 and 30 percent of the amount.

SEC Whistleblower Attorney

At Meissner Associates, we have extensive experience representing SEC whistleblowers. We work with employment law firms, and because many know our record and reputation, when they receive an inquiry for a whistleblower case, they refer it to us.

We have experience representing clients during their dealings with the SEC Office of the Whistleblower. In fact, we’ve been representing clients in this kind of case since 2001, years before there was a dedicated office at the SEC. Our clients can count on both our experience and our dedication.

If you are considering becoming a whistleblower, or if you’ve decided that it’s time to blow the whistle, give us a call at 1-866-764-3100 or contact us online through the form below for a free tip evaluation. Regardless of how you contact us, confidentiality is strictly guaranteed.