Cooperation Initiative

The SEC’s Whistleblower Program Has Had A Significant Increase In Tips Since Its Infancy

Recently, Sean McKessy, chief of the United States Securities and Exchange Commission (“SEC”) Office of the Whistleblower, reported on the increase in whistleblower tips that have come rolling into his newly created department.  The SEC began monitoring these tips eight months ago when the final provisions of the Dodd-Frank Act enacted the whistleblower provisions in Section 21F of the Securities Exchange Act.  Section 21F of the Exchange Act directs the SEC to make monetary awards to whistleblowers that voluntarily provide original information that leads to successful enforcement action resulting in the imposition of monetary sanctions exceeding $1,000,000.  Qualifying whistleblowers can reap between 10 percent and 30 percent of the monetary sanctions.  READ MORE

SEC Now Awarding Cooperation Credit to Individuals

The Securities and Exchange Commission announced last week that it was awarding “cooperation credit” to an individual for his “substantial assistance” in the Commission’s investigation of his wrongdoing.  Following on a similar announcement earlier last month, this is only the second time the Commission has credited an individual under its Cooperation Initiative.

The credit was announced as part of a settlement agreement with John Cinderey, a former vice-president at San Francisco-based United Commercial Bank.  Like other executives at Commercial Bank, Cinderey was charged with violations of Section 13 of the Exchange Act for misleading auditors during the financial crisis of 2008.  Cinderey, however, was able to settle the SEC’s claims against him without admitting or denying the allegations and without paying any fine (though he was given credit for a $40,000 civil penalty paid in another parallel case brought by the FDIC).