SEC LogoAfter awarding the second-ever whistleblower bounty award pursuant to Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) in connection with SEC v. Andrey C. Hicks and Locust Offshore Mgmt., LLC., No.  1:11-cv-11888-RGS (D. Mass. 2011), the SEC announced that the three whistleblowers were being awarded additional funds based on assets collected by the Justice Department in U.S. v. Andrew C. Hicks, No. 11-mi-1147-RBC (D. Mass. 2011) (press release can be accessed here).  The two cases constituted “related actions” because they were based on the same original information.  The SEC’s determination to award an additional bounty based on the related criminal action is likely to lead to more whistleblower tips.


In October 2011, the SEC filed an enforcement action against the defendants in Locust alleging fraud in connection with the offer and sale of securities.  Based on the same facts and circumstances, also in October 2011, the U.S. Attorney for the District of Massachusetts charged Andrey C. Hicks with wire fraud, attempting to commit wire fraud, and aiding and abetting wire fraud.  In March 2012, the U.S. District Court for the District of Massachusetts entered judgment in favor of the SEC after a default judgment was entered against the defendants.  The sanctions totaled approximately $7.5 million.  On June 12, 2013, the SEC announced an award to three of the four tipsters who provided tips in the action of 5% each of the monetary sanctions collected.  The award to each whistleblower on the amount collected was $376,808.76, with a potential aggregate award of $1,130,426.28.  On June 28, 2013, the SEC approved an award of 5% to each whistleblower of the money collected in the related criminal action.

In December 2012, Hicks pled guilty to five counts of wire fraud and was sentenced to 40 months in prison.  In addition, Hicks consented to the forfeiture of his interest in property previously seized by the Justice Department.  Approximately $170,000 had been administratively forfeited.  These funds, according to the SEC, were deemed “collected” for purposes of issuing a whistleblower award and therefore the three whistleblowers were entitled to 5% each of the amount collected, or $8,500 each.  Additionally, the value of the assets seized from Hicks totals approximately $845,000, and thus the whistleblowers are expected to receive 5% each ($42,250)—a total of 15% of the amount seized ($126,750).

The additional whistleblower award based on the assets seized in the criminal action are provided pursuant to Rule 21F-3(b) under the Securities Exchange Act of 1934, 17 C.F.R. § 240.21F-3(b).  Agencies that fall under the “related action” include an Attorney General of the United States, an appropriate regulatory authority, self-regulatory organization, or state attorney general in connection with a criminal case.  17 C.F.R. § 240.21F-3(b). 


This additional whistleblower award based on the related action is significant, particularly given that it illustrates the close interaction between the SEC and the Justice Department in pursuing civil and criminal actions and the likelihood that a willingness to pursue actions across agencies is likely to lead to higher awards, and in turn, encourage more tips.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.