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SEC Denies Enforcement Action For Failure To Timely File Claim

The SEC recently denied a whistleblower claimant a Commission enforcement action award because the claimant did not file the award claim with the SEC’s Office of the Whistleblower timely. The Securities Exchange Act requires whistleblowers to file award claims within ninety calendar days of a Notice of Covered Action, which is a notice posted by the SEC to notify claimants of enforcement actions that are eligible for whistleblower awards. However, the SEC can waive the ninety-day requirement if the claimant can demonstrate that the untimely filing was the result of extraordinary circumstances. To show that circumstances are extraordinary the claimant must show that the failure to timely file resulted from circumstances beyond the control of the claimant. Examples include attorney misconduct or serious illness.

In this case, the claimant argued that the extraordinary circumstance exception was warranted because the claimant provided information to the SEC that directly led to the enforcement action and was unaware of the whistleblower program until after charges were filed against the Defendants. The SEC determined that these justifications did not warrant the exception because the claimant failed to show that providing the SEC information that led to a monetary recovery caused the untimely award claim filing. Secondly, the SEC determined that reopening the claims process after the deadline to file a response to a Notice of Covered Action had passed would ultimately be unfair to other potential claimants with competing claims and would lead to an unworkable system.

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies.