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Company Pays $167.4 Million to Settle SEC Charges for Undisclosed Markups and Misleading Pricing

Potential SEC whistleblowers and new SEC whistleblower attorneys often wonder whether the SEC will be interested in the information that they have.  To give some examples of the kinds of things that the SEC investigates, I have written several posts about some types of cases brought recently by the SEC, and other posts in which I discussed statements made by SEC officials about the kinds of frauds that they are presently investigating.

  1. Undisclosed Markups & Misleading Pricing

    The SEC provided another example earlier this week, when it announced that it settled a case with State Street Bank and Trust Company for “misleading mutual funds and other custody clients by applying hidden markups to foreign currency exchange rates.”

    State Street agreed to pay $167.4 million in disgorgement and penalties to the SEC.  In addition, State Street “also agreed to pay a $155 million penalty to the Department of Justice, and at least $60 million to ERISA plan clients in an agreement with the Department of Labor.”

  2. Awards for “Related Actions”

    If there is an SEC whistleblower in the State Street case, the settlements with the DOJ and DOL could become significant.

    In general, if an SEC whistleblower(s) voluntarily provides original information to the SEC that leads to a successful covered action in which the SEC collects over $1 million, the SEC must pay the whistleblower(s) an award of 10% - 30% of the amount that it collects from the wrongdoers.

    If another designated agency brings its own successful action based on the same original information that the whistleblower(s) provided to the SEC, the SEC is supposed to grant the whistleblower(s) an award for that “related action” as well, assuming all other rules and requirements are satisfied.

    The term “related actions” encompasses only judicial or administrative actions brought by the Attorney General of the United States, an appropriate regulatory authority, a self-regulatory organization, or a State attorney general in connection with any criminal investigation, as those terms are defined in the Dodd-Frank Act and/or the SEC Rules.

    It is important to note that the SEC must bring its own covered action in which it collects over $1 million.  In other words, if the SEC only collects $900,000.00 in its own action, it will not give out an award based on either its own action or the other agency’s “related action”, regardless of how much money the other agency collected.

    The SEC has given out SEC whistleblower awards for “related actions”.  The first such award was given out in 2013.  On June 13, 2013, the SEC gave out an award in its own case; on August 30, 2013 it gave out an award for a related federal criminal case.  (See SEC Release Nos. 69749 and 70293.)

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The Pickholz Law Offices LLC is a law firm that focuses on representing clients involved with investigations conducted by the U.S. Securities and Exchange Commission, FINRA, and other securities regulators.

The Pickholz Law Offices has represented employees, officers, and others in SEC whistleblower cases involving financial institutions and public companies listed in the Fortune Top 10, Top 20, Top 50, Top 100, Top 500, and the Forbes Global 2000. We were the first law firm ever to win an SEC whistleblower award for a client on appeal to the full Commission in Washington. Inside Counsel magazine named this achievement one of the five key events of the SEC whistleblower program. Examples of the Firm’s SEC whistleblower cases are available here.

In addition to representing SEC whistleblowers, since 1995 the Firm’s founder, Jason R. Pickholz, has also represented many clients in securities enforcement investigations conducted by the SEC, FINRA, the U.S. Department of Justice and US Attorney’s Offices, State authorities, and more. Examples of some of the many securities enforcement cases that Mr. Pickholz has been involved with are available here.

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If you would like to speak with a securities lawyer or SEC whistleblower attorney, please feel free to call Jason R. Pickholz at 347-746-1222.

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The Pickholz Law Offices represents U.S. and international clients in securities and white collar cases. The Firm has helped whistleblowers report frauds to the SEC, CFTC, and IRS, and has defended clients in investigations by the SEC, CFTC, DOJ, FINRA, and other financial and securities enforcement regulators.

The Firm’s founder, Jason Pickholz, is the author of the two-volume book Securities Crimes, has appeared on tv and radio, and has taught continuing legal education courses. A former BigLaw partner, he has been representing clients in financial and securities fraud cases since 1995. In recognition of his many achievements, Mr. Pickholz was elected by his legal peers to be a Fellow of The New York Bar Foundation, an honor limited to just 1% of all attorneys in the New York State Bar Association.

Mr. Pickholz has been counsel in many high-profile cases. He was the first attorney ever to win an SEC whistleblower award on appeal to the Commission, which Inside Counsel magazine called one of the five key events in the history of the SEC whistleblower program. On the defense side, Mr. Pickholz has defended clients in the SEC’s COVID-19 investigations, the CFTC’s cryptocurrency cases, and a former US Senator, among others.

If you want to speak with a CFTC, IRS, or SEC whistleblower lawyer, or with a white collar defense lawyer, you can call the Firm at 347-746-1222.

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