Latest SEC tipster award highlights risk for hedge funds and private equity firms
The Securities and Exchange Commission (SEC) has issued its second-ever whistleblower award. The award went to three anonymous individuals, each of whom will receive five per cent of the monetary sanctions ultimately collected in a case against hedge-fund manager Locust Offshore Management and its chief executive officer, Andrey Hicks, who allegedly defrauded investors of $2.7m (£1.7m), and who have been ordered to pay $7.5m in disgorgement and penalties.
Prior to the 12 June announcement, the whistleblower programme had yielded only one far more modest award, in 2012, for $50,000 in connection with a Ponzi scheme in Texas. However, Stephen Cohen, associate director of the SEC’s Division of Enforcement, was recently quoted saying that in the next few months the programme would produce ‘incredibly impactful cases’ with ‘some extremely significant whistleblower awards’.
The Hicks award may signal the first of many whistleblower awards involving investment managers of hedge funds and private equity firms…
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