When I was a legal intern at the SEC, we received a huge box one day with tons of CDs that contained recordings of internal phone conversations. Sent by an anonymous former employee of that company. 🍿
FYI in 2018 alone, the SEC awarded over $168 million to 13 whistleblowers.
FYI in 2018 alone, the SEC awarded over $168 million to 13 whistleblowers.
For some context: the whistleblower program was created in 2012. Since creation, over $326 million has been awarded.
This year, the SEC received over 5,200 whistleblower tips. The $168 million award figure this year exceeds the total amount awarded in all prior years combined.
This year, the SEC received over 5,200 whistleblower tips. The $168 million award figure this year exceeds the total amount awarded in all prior years combined.
I think @jchervinsky is 100% on point (as always!).
Startups (as a lot of crypto companies are) generally have messier operations and undocumented/ unstated internal policies and procedure. Probably tons of confidential information & documents at the hands of former employees.
Startups (as a lot of crypto companies are) generally have messier operations and undocumented/ unstated internal policies and procedure. Probably tons of confidential information & documents at the hands of former employees.
By the way, for those interested in U.S. legal/policy developments:
There was a huge spilt among U.S Circuit Courts this year over the anti-retaliation provision for whistleblowers. This provision is meant to protect whistleblowers from being fired from their company.
There was a huge spilt among U.S Circuit Courts this year over the anti-retaliation provision for whistleblowers. This provision is meant to protect whistleblowers from being fired from their company.
Some courts (second & ninth circuit) think that the anti-retaliation protection extends to those who made reportings internally as well as those to report to the SEC.
The Fifth Circuit thinks that only those to report to the SEC should be protected. The Supreme Court agreed.
The Fifth Circuit thinks that only those to report to the SEC should be protected. The Supreme Court agreed.
What does this Supreme Court case mean?
Well, it seems that if I can only be protected by reporting to the SEC (instead of just raising the flag internally), then it would make sense to do any sort of reporting (let's be honest, "snitching") to the SEC to protect myself.
Well, it seems that if I can only be protected by reporting to the SEC (instead of just raising the flag internally), then it would make sense to do any sort of reporting (let's be honest, "snitching") to the SEC to protect myself.
Definitely a super contentious result (and the downsides are numerous), but that would explain why the SEC saw such an uptick in whistleblower tips this year.
This also means that *current* employees at companies, instead of following internal reporting procedures, might find it more appealing to totally bypass that and report to the SEC directly.
I think we are going to see that uptick for crypto companies, as well.
I think we are going to see that uptick for crypto companies, as well.
P.S. if you're really trying to dig into the reasoning for this Supreme Court decision, the case name is "Digital Realty Trust, Inc. v. Somers" from February 2018. 🤓
