SEC charges firm for whistleblower retaliation

By Staff | May 1, 2015 | Last updated on May 1, 2015
2 min read

The SEC has announced a maximum whistleblower award payment of 30% of amounts collected in connection with In the Matter of Paradigm Capital Management, Inc. and Candace King Weir, File No. 3-15930 (June 16, 2014), the SEC’s first retaliation case. The whistleblower will receive more than $600,000 for providing key original information that led to the successful SEC enforcement action. The whistleblower in this matter suffered unique hardships, including retaliation, as a result of reporting to the Commission.

Read: OSC proposes whistleblower program

The SEC charged Paradigm with retaliating against the whistleblower after the firm learned that the whistleblower reported potential misconduct to the Commission. Paradigm immediately engaged in a series of retaliatory actions against the whistleblower including removing the whistleblower from the whistleblower’s then-current position, tasking the whistleblower with investigating the very conduct the whistleblower reported to the SEC, changing the whistleblower’s job function, stripping the whistleblower of supervisory responsibilities, and otherwise marginalizing the whistleblower.

The SEC’s whistleblower program rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million. Whistleblower awards can range from 10% to 30% of the money collected in a case. The money paid to whistleblowers comes from an investor protection fund established by Congress. The fund is financed through monetary sanctions paid by securities law violators to the SEC. Money is not taken or withheld from harmed investors to pay whistleblower awards.

To date, the SEC has awarded 17 whistleblowers since its whistleblower program began more than three years ago. Payouts now total over $50 million.

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