Latest SEC Bounty to Attract Outside Whistleblowers

March 1, 2016

Jordan A. Thomas says latest SEC bounty is the first of many to attract whistleblowers

Eric Scott Hunsader, who revealed himself as the tipster who gave the Securities and Exchange Commission (SEC) information it needed to bring its landmark 2012 enforcement action against the New York Stock Exchange, said he was surprised when the agency called him last summer to tell him that he was in line for a bounty. He said he didn't know of the whistleblower program at the time he tipped off the agency, and only submitted a claim for an award when someone else suggested it to him, even though he wasn't sure he qualified for it.

"To me, I wasn't technically a whistleblower, I was just somebody from the industry," Hunsader said.

The fact that the SEC saw otherwise is likely to encourage other outside experts to come forward with data and analysis that uncovers securities law violations, from trading rule violations to major accounting gaffes.

"This is the first, but there will be many more to come," said Jordan Thomas, a former SEC enforcement official who chairs Labaton Sucharow LLP's whistleblower representation practice. "They just haven't had adequate incentives and protections to come forward."