Scott Silver, left, of Silver Law Group, and David R. Chase, right, of the law firm of David R. Chase. Courtesy photos In Defense of SEC Whistleblower Short Sellers: They Deserve to Have Their Cake and Eat It Too
The position that short sellers should be denied the benefits of their critically important whistleblowing efforts is short-sighted and contrary to the notions of our capitalistic markets. Moreover, it will serve only to disincentive a vital constituency of the SEC Whistleblower Program, which, in turn, will degrade the effectiveness of the SEC's enforcement program.
July 17, 2024 at 10:00 AM
4 minute read
Recently, criticism has been leveled against the practice of the SEC awarding bounties to short sellers who potentially financially benefit twice from blowing the whistle and reporting violations of the federal securities laws to the SEC under its whistleblower program. Under this "double dip" scenario, short sellers profit not only from successfully covering their short positions on the company they have bet against, but also from receiving anywhere between 10% to 30% of the financial payments made by that same company to the SEC on a judgment entered against it of at least $1 million.
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