Substantial evidence supported the Securities and Exchange Commission’s (SEC) denial of three applications for whistleblower awards following a successful commission action enforcing the security laws, the 8th U.S. Circuit Court of Appeals ruled on August 22.
On Sept. 7, 2018, the commission filed a civil enforcement action against several defendants alleging that they perpetrated “highly profitable ‘pump-and-dump’ schemes by artificially inflating the stock price” of their companies.
The commission alleged that Barry Honig led the scheme, which involved other defendants, all of whom would acquire large quantities of the issuer’s stock at steep discounts and then engage in illegal promotional activity and manipulative trading to artificially boost each issuer’s stock price and to give the stock the appearance of active trading volume.
A final judgment against the defendants included over $11 million in sanctions.
In 2019, the commission’s Office of the Whistleblower (OWB) posted a notice inviting claimants to submit whistleblower award applications and five individuals submitted claims.
One claimant, Daniel Fisher, was awarded 30 percent of the monetary sanctions. Fisher was a co-founder of Biozone Pharmaceuticals, a company at the center of the SEC’s investigation.
The other applications were denied. Three of the claimants appealed: Lee Michael Pederson, John Amster and Robert Heath, but the commission entered a final order affirming the denial.
All three appealed to the...
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