A whistleblower in an FCPA case involving Teva Pharmaceuticals is now taking the SEC to federal court, claiming that the agency is taking too long to grant him a reward, according to the WSJ. The tipster filed a petition on Monday asking the court to compel the agency to make a preliminary decision within 60 days.
According to the petition, it has now been 2 years since the tipster applied for compensation from the SEC – a time period the whistleblower’s lawyers claim is “unreasonable”.
The amount of time it takes the SEC to pay out on whistleblower awards has been a growing concern among those who offer tips. Often, the SEC takes around 2 years to make a determination and awards can sometimes amount to several million dollars for large cases.
Between 2014 and 2017, the agency’s average was “more than two years” to make a determination, according to an analysis by The Wall Street Journal. This is twice as long as it took the agency in 2012 and 2013, while the program was still in its infancy. Suing the SEC to compel for an award isn’t something new: another tipster did the same in 2015 but the case was dismissed within 60 days after the SEC ultimately made a decision. In that respect, the strategy worked.
Last year, the SEC took in 5,282 whistleblower tips, an increase of 18% from a year earlier. It’s also about twice the number received in 2012, according to a report the SEC recently made to congress. There has been “a flood of requests for awards” over the last few years.
Under law, tipsters are entitled to between 10% and 30% of the monetary penalties paid by companies as a result of SEC enforcement actions. As it relates to this case, Teva wound up paying $519 million in 2016 to settle charges that it violated FCPA laws in Mexico, Ukraine and Russia.
Sean McKessy, a lawyer at Phillips & Cohen LLP, who previously served as chief of the SEC’s whistleblower office says that suing the agency may not be the best idea: “The agency often faces factors outside of its control that can delay the decisions it makes on awards. In some cases, the SEC has to make a determination on several applications for a single award.”
He continued: “If you’re going to blow up a relationship when you know you’re going to need some help from that entity in the future, it doesn’t make sense to me.”
via ZeroHedge News http://bit.ly/2PMJAdV Tyler Durden