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SEC Announces Whistleblower Award in First Retaliation Enforcement Action

May 5, 2015

Author: Christine B. Hawes.

The SEC recently announced its first award under the Dodd-Frank anti-retaliation regulations.  The whistleblower alleged that he was demoted and stripped of his authority after his employer, Paradigm Capital Management, Inc., learned that he complained to the SEC that Paradigm engaged in improper trading practices.  The whistleblower will receive $600,000.  This amount equals 30 percent of the total amount recovered by the Commission, which is the maximum allowed under the Dodd-Frank Act.

In June 2014, Paradigm agreed to settle the SEC charges of retaliation and violation of trading rules for approximately $2.2 million. At that time, the SEC did not announce an award for the whistleblower. The decision to now award the maximum amount allowed by statute was based, at least in part, on the SEC’s finding that the whistleblower “suffered unique hardships” because of his report to the SEC.

Christine B. Hawes
Counsel – Washington, D.C.
Phone: +1.202.624.2968