A media outlet, Financial Planning, is predicting that a pair of SEC whistleblowers will share an award of approximately $70.6 million out of the $307 million in regulatory fines against JPMorgan in 2015. Another outlet, Advisor Hub, put the number at $61 million instead. Either award amount would be the largest in the history of the SEC whistleblower program to date.
Criminal fines and civil forfeitures are collected proceeds under Internal Revenue Code section 7623(b), the mandatory tax whistleblower program, according to a recent decision by the U.S. Tax Court. The opinion paved the way for an award of $17.8 million to a pair of whistleblowers.
The U.S. Commodity Futures Trading Commission has issued its third award in the last year and fourth overall to CFTC whistleblowers pursuant to the terms of the Dodd-Frank Act. The decision was approved last week and the press release issued by the commodities regulator today.
The SEC whistleblower program seems to be hitting its stride recently, with five whistleblowers awarded more than $26 million over the past month. The latest reward was $17 million, the second largest to date, for a detailed tip by a former company employee that substantially advanced a government investigation.
The Securities and Exchange Commission on Friday announced an award of $3.5 million to a whistleblower that bolstered an existing investigation. The government has now paid $62 million to 28 whistleblowers since the SEC whistleblower program was opened in 2011.
Multiple whistleblowers appear the norm these days in securities lawsuits, if the two most recent award determinations are any indication of the success of the Dodd-Frank whistleblower program. Yesterday, the Securities & Exchange Commission released a reward determination authorizing payment of $1.8 million to one individual and $130,000 to be split between two other whistleblowers.
Bloomberg has reported the enforcement action and recipient of the first case of a reward for independent analysis by a SEC whistleblower (announced January 2016). The financial professional discovered a stock exchange data feed operating in violation of Regulation NMS on the day of the Flash Crash (May 6, 2010). The Securities and Exchange Commission, per its policy, did not identify the individual’s name or the specific enforcement action when it announced the whistleblower award.
The U.S. Commodity Futures Trading Commission (CFTC) announced it will make its second whistleblower award yesterday in a press release. The amount will be approximately $290,000. As expected, no details about the nature of the case resulting in the award were released.
The CFTC whistleblower program was created under Dodd-Frank, so it is only about five years old. Dodd-Frank recently celebrated its fifth birthday and it is nice to see another win under the belt of the commodities regulator.
The CFTC has trailed the SEC program in both the number of tips and awards. The first and only prior reward was issued to a CFTC whistleblower last year in May (2014) for the amount of $240,000. This summer, the Director of the Whistleblower Office at the CFTC told Law360 in an interview that the number and size of awards was expected to increase as the CFTC would soon be handing out big payouts for big enforcement actions.
The SEC program has issued awards to nearly 20 whistleblowers so far with payouts ranging from several hundred thousand dollars to a high of $30 million. There have been four international whistleblowers who have received awards and I believe two compliance officers.
The CFTC has received approximately 10% of the tips that have been received by the SEC but they have been praised as high quality. The CFTC only regulates pursuant to the Commodity Exchange Act whereas the SEC has more roles, including the Securities Act, the “Exchange Act”, the ’40 Act and the Investment Advisers Act.
In part because of the success of the Dodd-Frank program, Congress is considering adding whistleblower incentives to other areas, such as auto safety. A House Subcommittee solicited testimony last week on the bill which passed the Senate unanimously and is now under consideration in the House. Partner Eric Young, a whistleblower attorney here at McEldrew Young Purtell Merritt, recently authored a piece on the legislation as it relates to Volkswagen which was published in TheHill.
Our CFTC whistleblower attorneys can assist you with answers to questions about this information as well as assistance reporting violations of the Commodity Exchange Act to the U.S. Government. To speak to an attorney, fill out our contact form or call 1-800-590-4116.
After years of facing criticism for its handling of the IRS program and a dearth of rewards, two law firms have now announced payouts in the last month by the IRS whistleblower program. Both have expressed optimism that the Internal Revenue Service is starting to get on track with the investigation and payment of rewards based on tax whistleblower tips.
Unlike the SEC, the IRS does not typically announce payouts due to privacy issues. Instead, it issues an annual report to Congress which details the number of tips received and the number of payouts annually. The one exception was the $104 million award to Brad Birkenfeld, which the IRS confirmed pursuant to a waiver signed by Birkenfeld.
The most recent announcement involves the payout of rewards to three clients of a local Philadelphia law firm in cases of corporate tax fraud. The rewards were paid out under section 7623(b), which is the mandatory whistleblower reward program developed in 2006-2007 at the direction of Congress. The rules were finalized last year.
The latest announcement indicated that their three clients helped the IRS acquire more than $48 million for the U.S. Treasury because of the information provided about the tax noncompliance. The IRS program pays between 15 and 30 percent to eligible whistleblowers as a reward.
In a letter this summer to Senator Chuck Grassley concerning the IRS program sent from IRS Commissioner John Koskinen, former Director Stephen Whitlock estimated that 6 to 12 awards would be paid out in FY2015. Prior to this year, there had only been 12 payouts under the mandatory program. However, the office has repeatedly emphasized that process can take 5 to 7 years to reach a successful enforcement action and whistleblower reward.
If you have questions about this or another aspect of the IRS whistleblower program rewards, feel free to contact one of our tax whistleblower attorneys via our contact form or by calling 1-800-590-41
It has been some time since we have seen whistleblower attorneys make an announcement concerning an award by the Internal Revenue Service. However, we saw one today as a tax whistleblower received an award of $11.6 million dollars under the program.
The press release stated that the whistleblower wished to remain anonymous and that the individual was able to help the IRS recover tens of millions of dollars for the U.S. Treasury. The release identified the IRS as being interested in hearing information about corporate tax shelters and illegal offshore accounts.
The announcement is the first that has come since the new Director of the IRS Whistleblower Office, Lee Martin, took over. His predecessor, Stephen Whitlock, was the first director of the office and only recently moved to head the Office of Professional Responsibility.
The IRS whistleblower program, pursuant to section 7623(b), pays a mandatory reward of between 15 and 30 percent of the total proceeds collected by the IRS as a result of the information from an eligible person. Eric Young in our office represented the first individual to receive a reward under section 7623(b), which was put in place by Congress in 2006.
The IRS program has been criticized in the past few years by Senator Chuck Grassley and others for the limited number of awards that have been paid out based on information about tax evasion or noncompliance. However, the IRS has insisted over the past few years that there are more awards coming – it simply takes five to seven years to analyze, investigate, enforce and for appeal deadlines to pass.