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SEC Whistleblower Program & CFTC Whistleblower Program

How Whistleblowers in Qui Tam, IRS, and SEC Whistleblower Cases Must Protect Email Communications

December 18, 2011
Michael Sullivan

At the Healthcare Fraud Institute this past week, I was asked to address what steps whistleblowers should take to ensure confidentiality of emails with their lawyers. Although qui tam cases under the False Claims Act were the focus of our discussion, the same principles apply to tax whistleblowers and SEC whistleblowers.

Potential whistleblowers should never use their company’s email system, or any email account shared with or accessible to another person, for communicating with their attorney or for gathering information or evidence to report to the government.

Although the law encourages whistleblowers to report fraud, whistleblowers can create unnecessary problems for themselves by not following this rule.

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Qui Tam Whistleblower Cases, and the New Financial Whistleblower Programs by the SEC, CFTC, and IRS To Be Discussed at Whistleblower law Symposium

September 26, 2011
Michael Sullivan

Every two years, attorneys prosecuting or defending qui tam whistleblower cases under the False Claims Act and other whistleblower laws gather for the Whistleblower Law Symposium.

We have written much about “qui tam” whistleblower cases under the False Claims Act. Since last year’s passage of the Dodd-Frank law, whistleblowers who help expose (1) violations of the securities laws or (2) commercial bribery of foreign government officials, now can receive rewards of 10-30% of money sanctions imposed under the new SEC Whistleblower Program. The new IRS Whistleblower program pays whistleblowers 15-30% of amounts recovered. These cases also help stop fraud against taxpayers and investors.

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How the New CFTC Whistleblower Rules Will Operate

August 5, 2011
Michael Sullivan

When the CFTC announced its final whistleblower rules yesterday, it answered many questions about how the new CFTC whistleblower program will work.

David Meister, the CFTC’s Director of the Division of Enforcement, provided this summary according to the unofficial transcript our firm prepared of yesterday’s CFTC public meeting:

The Commission will pay awards to eligible whistleblowers who provide original information to the Commission leading to a successful Commission enforcement action and the imposition of monetary sanctions in excess of $1 million.

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CFTC Announces Final Whistleblower Rules, Rejects “Mandatory Internal Reporting” by Whistleblowers

August 4, 2011
Michael Sullivan

The final whistleblower rules of the Commodities Futures Trading Commission (CFTC) are being announced now at a CFTC open meeting. Like the SEC, the CFTC has rejected any provision that whistleblowers be required first to report internally the violations in question, but will treat internal reporting as a “positive” consideration in its awards.

The alternative pushed by business would have required all CFTC whistleblowers first to risk career suicide by reporting the boss’s wrongdoing to the boss himself.

Industry’s approach would have made the Commission the laughing stock of law enforcement, since no rational person with a career and a mortgage would risk reporting even major fraud with that requirement.

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Progress with Dodd-Frank’s Whistleblower Programs: CFTC and SEC Working to Deter the Next Big Schemes to Harm Investing Public

July 21, 2011
Michael Sullivan

Too often missing in today’s discussions of Dodd-Frank’s one-year anniversary is appreciation of efforts by CFTC and SEC leadership to build from scratch the effective new whistleblower programs mandated by Dodd-Frank.

With scant resources, each agency is creating an essential mechanism to protect today’s investors from the next fraudulent scheme.

Let’s start with the CFTC. When I met with Chairman Gary Gensler and his CFTC staff in March to discuss the CFTC’s proposed whistleblower rules, I was struck by Chairman Gensler’s focus on what improvements could be made to its “draft” commodities whistleblower rules.

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SEC Charges FCPA Bribery Scheme–Feds Collect $15 Million

July 13, 2011
Michael Sullivan

The SEC Whistleblower Program encompasses not only classic securities violations, but also violations of the Foreign Corrupt Practices Act (“FCPA”), a topic we have followed closely.

This past week, the SEC filed and settled an FCPA case against Armor Holdings, Inc., and collected more than $5.6 million, while the Department of Justice added almost $10.3 million in criminal fines.

The SEC charged that Armor Holdings, Inc. engaged in a bribery scheme to sell body armor to U.N. peacekeeping missions. The Commission also alleged that Armor Holdings violated the federal securities laws’ books and records and internal controls provisions by failing to account properly for commissions in 2001-2007.

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Why the SEC Whistleblower Rules Show A New Seriousness About Using Valuable Whistleblower Information

June 1, 2011
Michael Sullivan

The suspense over the final SEC whistleblower rules ended with the SEC’s release of its final whistleblower rules last week. The CFTC is to follow suit soon in announcing its own commodities whistleblower rules.

We have followed the SEC rules’ development, after being part of the small group of pro-whistleblower attorneys who met with the Commissioners and staff and urged changes to the draft rules to make them effective.

In January, I had the opportunity to visit with SEC Chairman Mary Schapiro,
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Offshore Alert Conference: Protecting Whistleblowers from Criminal and Civil Liability

March 8, 2011
Michael Sullivan

Of interest to whistleblowers reporting fraud under the False Claims Act, the IRS Whistleblower Program, or the brand new SEC Whistleblower and CFTC Whistleblower Programs is an upcoming presentation, “Avoiding the Mistakes of the UBS/Birkenfeld Case: Protecting Whistleblowers from Criminal and Civil Liability.”

This discussion is part of a fascinating gathering this April in South Beach–the OffshoreAlert Conference. As the brochure promises:

Where else could tax collectors mingle with tax minimizers, asset tracers with asset protectors, regulators with the regulated, whistleblowers with their former employers and crooks with prosecutors?

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SEC Whistleblower Office Has First Director–Sean McKessy

February 18, 2011
Michael Sullivan

Just as we have followed closely the development of the IRS Whistleblower program since Congress authorized it in December 2006, we are watching the birth of the new SEC Whistleblower program. In 2010’s Dodd-Frank Financial Reform law, Congress mandated the creation of what could be the first meaningful SEC and CFTC Whistleblower programs.

Today, the SEC took a major step in announcing the first head of the nascent SEC Whistleblower Office: Sean McKessy, a former Senior Counsel in the SEC’s Division
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SEC Resolves FCPA Case With Maxwell Technologies, Inc. Alleging Millions in Bribes to Chinese Officials

January 31, 2011
Michael Sullivan

As we have discussed previously, bribery of foreign government officials is the subject of many cases filed by the SEC under the Foreign Corrupt Practices Act. Those cases, which often bring significant recoveries, will increase in number as a result of rewards to whistleblowers under the new SEC Whistleblower program that we have followed.

The SEC today announced the successful conclusion of an FCPA investigation of Maxwell Technologies, Inc. The SEC announced it had filed a “settled” case through which Maxwell agreed to
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Register for 2024 “Whistleblower Law Symposium”–Live Event (Virtually) on March 13

March 11, 2024
Michael Sullivan

For many years, Michael Sullivan of our firm and his colleague Jim Breen have organized the “Whistleblower Law Symposium.” It has consistently received high marks from participants.

This year’s Symposium will be available either in-person or online on Wednesday, March 13, starting at 815 am EDT. It offers 7.5 CLE hours, including 1 Ethics hour and 4 Trial Practice hours. Cost is $279.

You can register (and see the full Agenda) here: atlantabar.org/…. Topics include:

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Wall Street Journal Begins Examining IRS Violations Exposed by Mormon Whistleblower Regarding Ensign Peak Advisors, Inc.

June 30, 2023
Michael Sullivan

After reporting on the SEC’s investigation and findings of 20 years of “misstatements” by the LDS Church and Ensign Peak Advisors, Inc., the Wall Street Journal‘s Jonathan Weil again reports on facts revealed by our SEC and IRS whistleblower submissions on behalf of our client, David Nielsen. Mr. Nielsen exposed violations of law relating to a what he called a “clandestine hedge fund” affiliated with the Mormon Church, in his recent appearance on 60 Minutes.

Turning to IRS violations, this WSJ article addresses in part why, “[o]n its 2007 return, Ensign Peak put down ‘1,000,000’ for its total assets. The real number was about $38 billion, an Ensign Peak document shows.”

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On 60 Minutes, LDS Church admits “bailout” of for-profit business by Ensign Peak – which shows Ensign Peak cannot be tax-exempt.

May 16, 2023
Michael Sullivan

Regarding this past Sunday’s 60 Minutes interview of our client David Nielsen,

Mormon blows whistle on church’s alleged “clandestine hedge fund”

(https://www.cbsnews.com/60-minutes/ ):

Please see attached Statement,

which is also reprinted below.

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60 Minutes Interviews Our IRS & SEC Whistleblower Client David Nielsen: “Mormon Blows Whistle on Church’s Alleged ‘Clandestine Hedge Fund'”

May 16, 2023
Michael Sullivan

On Sunday, May 14, 60 Minutes featured an interview with our IRS and SEC whistleblower client David Nielsen.

My colleague Richard Rubin and I are proud to represent this principled whistleblower.

#cbs #60minutes #whistleblower #finchmccranie #secwhistleblower #irswhistleblower #ensignpeak

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Amid Bank Bailouts, SEC Whistleblower Improvements Urged by Senators Grassley & Warren

March 17, 2023
Michael Sullivan

In this week of new bank bailouts (following Silicon Valley Bank’s), a bipartisan group of five Senators has urged common sense improvements to the SEC Whistleblower laws. These Senators emphasize the “crucial role of whistleblowers” in protecting both investors and taxpayer funds.

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SEC Targets COVID-19 Fraud, and Its Success Will Depend on SEC Whistleblowers

June 23, 2020
Michael Sullivan

As the anxious public yearns for vaccines, treatments, and protections from the virus, the SEC has warned of a “substantial potential for fraud relating to COVID-19. The SEC’s enforcement actions against 23 companies are just the start, as more fraud will undoubtedly be uncovered.

Whistleblowers are critical to the SEC’s efforts to stop COVID-19 fraud. The SEC Office of the Whistleblower is authorized to pay monetary awards to whistleblowers whose information leads to an order of sanctions of $1 million or more.

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“The False Claims Act at 30”–What the Future Holds for Qui Tam Whistleblower Cases

September 19, 2016
Michael Sullivan

This past week our firm’s Larry D. Thompson, the former Deputy Attorney General of the United States, joined me for a panel discussion that I moderated on “The False Claims Act at 30,” at the annual Taxpayers Against Fraud Annual Conference in Washington, D.C.

Joining us on the panel were the Department of Justice’s Renee Brooker, an Assistant Director in the Civil Division with 25 years of DOJ experience; James J. (Jim) Breen, an accomplished qui tam lawyer whose cases have recovered almost $4 billion for federal and state taxpayers; and Neil Getnick, Chairman of TAF and an accomplished FCA lawyer in his own right.

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SuperLawyers Recognizes for 11th Year Finch McCranie’s Michael A. Sullivan

January 13, 2016
Michael Sullivan

We are proud to announce that Finch McCranie partner and head of its Whistleblower practice Michael A. Sullivan has been named to the “SuperLawyers” list for the eleventh consecutive year.
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Justice Department’s New Focus on Individuals’ Liability in “Yates Memo” Should Impact Qui Tam Whistleblower Cases under False Claims Act

September 10, 2015
Michael Sullivan

Yesterday the Justice Department apparently responded to the frequent lament, “Why has almost no one gone to prison for the financial crisis?” DOJ signaled that it will now look to hold responsible both culpable individuals and their companies for corporate misdeeds–both criminally and civilly.

If DOJ means what it says, this policy change is profound. It should hit corporate officers whose business models are based on fraud and false claims. It should also snare high level executives who turn a blind eye to wrongdoing, and who typically get away with it.

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SEC Whistleblower Office’s Stand Against “Silencing” Employees Through “Confidentiality” Agreements

May 28, 2015
Michael Sullivan

Sean McKessy of the SEC Whistleblower Program is right to continue his mission against muzzling whistleblowers through “confidentiality” agreements, for one simple reason:

Intimidating witnesses from reporting fraud is a form of obstruction of justice.

Although “confidentiality” agreements may appear innocent on their face, a company’s suggesting in any way that its employees refrain from reporting fraud or other violations of securities laws crosses the line. Too often, that is often the effect of these agreements–if not the intent as well.

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