WASHINGTON, DC, March 28, 2022 – Sean McKessy, the primary architect of the US Securities and Exchange Commission whistleblower program who now represents whistleblowers in private practice, has won an SEC award for a whistleblower client.
The SEC last Friday awarded a client of McKessy, the founding Chief of the SEC Office of the Whistleblower, $1.25 million for information and assistance that led to a significant enforcement action involving a high-profile participant in the financial industry.
“My client alleged significant misrepresentations in the marketing of financial services,” said McKessy, who is a partner at Phillips & Cohen LLP. “He tried to get the problems fixed internally, but was rebuffed.”
“When it became clear that the company was going to continue to ignore the alleged securities violations, my client contacted us to help him file a whistleblower claim with the SEC and advocate on his behalf,” McKessy said. “Although others at the company were aware of the problems, he was the only one to step forward.”
The Dodd-Frank Act requires the SEC to protect the identities of whistleblowers. Phillips & Cohen’s client prefers to remain anonymous.
The whistleblower provided extensive information about alleged violations to the SEC, which prompted an investigation. During the SEC investigation, the whistleblower identified key witnesses and helped the SEC analyze important documents and highlight important issues.
The SEC hired McKessy as Chief of the Office of the Whistleblower in 2011 to build and run the SEC whistleblower program that Congress had authorized as part of the Dodd-Frank Act in 2010. He led the effort to establish the procedures and the policies that guide the SEC whistleblower program, including how the whistleblower office assesses and reviews whistleblower tips, evaluates whistleblower award claims and makes whistleblower award recommendations to the Commission.
While at the SEC, McKessy took a lead role in the SEC’s efforts to protect whistleblowers using Dodd-Frank’s anti-retaliation provisions. He also encouraged enforcement actions against employers that tried to prevent employees from reporting wrongdoing to the SEC through employment agreements and other means.
McKessy left the SEC in 2016 and joined Phillips & Cohen, which is the most successful law firm representing whistleblowers under government reward programs. The firm’s cases have helped recover more than $12.8 billion for the government and investors. The SEC has made 11 awards to whistleblowers represented by Phillips & Cohen, including a $37 million whistleblower award in February. Last week’s whistleblower award is the first made to one of McKessy’s clients.
“The award is a gratifying result and affirms my decision to continue to advocate on behalf of whistleblowers after I left the SEC,” McKessy said. “My deep familiarity with how the SEC Office of the Whistleblower operates and how SEC investigations and enforcement actions are conducted continues to be helpful for those heroic individuals who decide to blow the whistle.”
Prior to his five-year stint as Chief of the SEC’s Office of the Whistleblower, McKessy served as corporate secretary for Altria Group Inc. and AOL Inc. and as securities counsel for Caterpillar Inc. He also worked at the SEC previously as an enforcement attorney for three years.
How the SEC whistleblower program works
The SEC whistleblower program, created by the Dodd-Frank Act, offers confidentiality, certain protections against job retaliation, and rewards in cases where monetary sanctions exceed $1 million. Whistleblower rewards range from 10% to 30% of the amount the government collects, based on certain factors, such as the significance of the whistleblower’s information and the level of assistance the whistleblower and their attorney provide in the case.
The SEC has ordered monetary sanctions totaling nearly $5 billion in enforcement actions due to whistleblowers. It has paid whistleblowers rewards totaling approximately $1.2 billion to 256 individuals since 2012.