The Securities and Exchange Commission has announced a $600,000 reward for a whistleblower for the first time in a retaliation claim. The whistleblower, a former hedge-fund trader for Paradigm Capital Management, faced retaliation for reporting his concerns about conflicts of interest.
The whistleblower received the maximum 30 percent share of the amounts collected in the case. After reporting misconduct to the Securities and Exchange Commission, the whistleblower was demoted and otherwise marginalized at the company. He later resigned. He provided key information to the Securities and Exchange Commission regarding the treatment he faced, and the Securities and Exchange Commission concluded that Paradigm’s actions were retaliatory. Paradigm Capital Management and its owner, Candice King Weir, paid $2.2 million in a June settlement.
The 2010 Dodd-Frank Wall Street reform law gave the SEC new powers to protect whistle-blowers from being retaliated against by their employers for reporting misconduct. The SEC’s whistleblower program rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million. 17 whistleblowers have received over $50 million total since the program’s origin, although this was the first retaliation case.
Retaliation against whistleblowers is entirely unacceptable,” said Sean McKessy, chief of the SEC’s Office of the Whistleblower. “My hope is that the award today encourages potential whistleblowers to come forward in light of our demonstrated commitment to protect them against retaliatory conduct and make significant financial awards to whistleblowers who suffer employment hardships as a result of reporting possible securities law violations.”
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