SEC Press Release and White Cloud Corporation Papers

Part 1:

The following is a recent press release from the SEC. Although it seems like a good idea to reward information that leads to the discovery and punishment of financial wrongdoing, what do you think of the amount of this single award? Do you think that a whistleblower would come forward for less? Do you think there should be any modifications to this program?

Please reply to at least one of the posts by another student. Replies are part of the points awarded for the discussion assignments.

SEC Issues Record $114 Million Whistleblower Award

FOR IMMEDIATE RELEASE 2020-266

Washington D.C., Oct. 22, 2020 — The Securities and Exchange Commission today announced an award of over $114 million to a whistleblower whose information and assistance led to the successful enforcement of SEC and related actions.

The $114 million award consists of an approximately $52 million award in connection with the SEC case and an approximately $62 million award arising out of the related actions by another agency. The combined $114 million reward marks the highest award in the program’s history, and eclipses the next highest award of $50 million made to an individual in June 2020.

“Today’s milestone award is a testament to the Commission’s commitment to award whistleblowers who provide the agency with high- quality information,” said SEC Chairman Jay Clayton. “Whistleblowers make important contributions to the enforcement of securities laws and we are committed to getting more money to whistleblowers as quickly and as efficiently as possible.”

“The actions of the whistleblower awarded today were extraordinary,” added Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “After repeatedly reporting concerns internally, and despite personal and professional hardships, the whistleblower alerted the SEC and the other agency of the wrongdoing and provided substantial, ongoing assistance that proved critical to the success of the actions.”

The SEC has awarded approximately $676 million to 108 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.

As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

Part 2:

White Cloud Corporation was started by Lisa Kelton. Ms. Kelton recently passed away and was still owed $375,000 by the company at the time of her death. The executives at the corporation have been unable to locate any heirs to her assets. They have requested your assistance in determining whether it would be appropriate to derecognize the liability from the financial statements.

  • Respond to the executives, describing the applicable guidance requirements including any excerpts required to support your conclusion.
  • Describe how you located the relevant guidance, including the search method used and which section you searched within the appropriate topic.

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