Kathy Bazoian Phelps has been a champion of investor rights and has worked in connection with enforcement cases brought by the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) seeking to halt fraudulent schemes. Kathy has substantial experience in both detecting fraud and taking steps to effectively recover funds for defrauded victims. She has been appointed by federal courts to serve as receiver appointed at the request of both the SEC and CFTC and understands the nature of the cases brought by the agencies for violations of federal statutes and fraudulent behavior.
Both the SEC and the CFTC provide financial incentives for people to submit tips when they believe violations of securities or commodities regulations are taking place. The SEC Whistleblower Program and the CFTC Whistleblower Program award whistleblowers and also protect them from improper retaliation. Since 2012, the SEC has issued more than $1 billion in awards to whistleblowers and the CFTC has issued more than $330 million since 2014.
Experienced counsel can assist in navigating both the SEC Whistleblower Program and the CFTC Whistleblower Program. Kathy can assist you in presenting your claim in a manner that provides the requisite “significant assistance” to the agencies that can justify awards.
Who Can Get an Award for Submitting a Whistleblower claim?
Anyone who provides original information that is material to a current or past fraud or violation of federal regulators can be a whistleblower. People well-situated to have this information include: (1) current or former employees of a company engaged in wrongdoing; (2) victims of a fraudulent scheme; or (3) an analyst able to demonstrate the fraud or violations. The whistleblower need not have first-hand knowledge. But having the assistance of experienced counsel will help present the strongest claim to get the attention of the regulators.
Can You Submit a Tip Anonymously?
Whistleblowers can submit tips anonymously to the SEC and CFTC if they do so through an attorney.
What are the Regulators Looking for?
The regulators can bring claims to shut down business and recover funds from companies and individuals who violate applicable regulations. The types of fraud and financial schemes that may fall into these types of violations are many, including but not limited to the following:
- Ponzi schemes
- Investment fraud
- Fraudulent securities offerings
- Fraudulent commodities offerings
- Cryptocurrency fraud
- Fraudulent Initial Coin Offerings (ICOs)
- EB-5 investment fraud
- Retail investor fraud
- Registered Investment Advisor (RIA) fraud
- Reg D fraud
- Accounting fraud
- Promissory note fraud
- Real estate fraud
- Unregistered broker-dealers
- False disclosures
What are the benefits of hiring an attorney to report fraud
Using counsel to submit a tip can greatly assist in what may be a complex and lengthy matter.
First, a whistleblower tip may be submitted anonymously to the agency if an attorney first submits the tip. The identity of the whistleblower can remain anonymous even to the agency all the way up until an award is determined. If an award is ultimately allowed, the whistleblower’s identity can continue to be anonymous to the public but will be made known to the agency simply for tax reporting purposes.
Kathy will assist a whistleblower in rounding out an investigation, in analyzing and organizing the data, and in preparing a presentation to the regulators that can greatly increase the chances that the regulator will choose to investigate the case. The tip must establish that there has been a violation of the relevant laws that warrant investigation. The submission must include specific and credible information about the alleged violations that is original information, i.e., not already known to the agency and not publicly available.
Kathy can also assist the whistleblower in determining whether they need to take any actions prior to submitting a tip.
Kathy can also assist in maximizing the size of an award. The awards can vary between 10% and 30% of monetary sanctions collected. If the agency is able to bring a successful enforcement action in excess of $1 million based on the whistleblower tip, a lawyer can assist with the preparation and submission of the application for the award, stressing factors to make the case for a high award percentage.
Kathy can also assist is determining whether a whistleblower is eligible for a “related action” award.
Finally, Kathy can assist a whistleblower even if a tip has already been submitted. The required procedures for eligibility for an award are specific and the assistance of counsel in ensuring compliance with the rules can be the difference between a substantial award or a determination of ineligibility. Additionally, if a whistleblower first learns of the required filing procedures after retaining any attorney in connection with the submission for an award, the whistleblower can remedy an error within 30 days to become eligible for an award.
If you believe that you have original information that can assist in disclosing a fraud, please contact Kathy at firstname.lastname@example.org.