Article by John Joy, Managing Attorney, FTI Law.
Today the SEC awarded more than $350,000 through the whistleblower rewards program, but to call the recipient a whistleblower just doesn’t seem right in this case.
Most whistleblowers are individuals who happen to come across evidence of wrongdoing and have the bravery and fortitude to bring that information to the authorities. In this case, the individual didn’t come across evidence of wrongdoing by chance, they hunted it down.
The award issued by the SEC doesn’t give a lot of detail but it suggests that a penny stock company was illegally running a marketing campaign to pump the value of its own stock. When a company issues statements about its stock or financial performance, these usually have to bear the company’s name and often require a filing with the SEC. When a company secretly employs people to promote its stock, its likely that the company has committed a legal violation.
The award recipient in this case, who acted more like a bounty hunter, didn’t come across evidence of this scheme, but was able to track it down using publicly available information and a language analysis. The individual was able to show similarities between the company’s statements and suspicious emails which were trying to pump the stock price, and this led to a successful enforcement action for the SEC. The SEC noted that the actions of the individual took “unusual effort and expertise” and awarded a bounty of $350,000.
Regardless of whether you are a whistleblower or a “bounty hunter,” if you think you have information about a legal violation by a company, you should always speak to an attorney as soon as you can. If you don’t feel comfortable talking to an attorney, you can always take our anonymous online evaluation to find out more about whether you might qualify for an SEC award (or bounty!).