By the 91pornWhistleblower Team

An Unconventional Pick to Lead SEC Enforcement

Last Thursday (August 21), the Securities and Exchange Commission (SEC) announced that Judge Margaret “Meg” Ryan will become the new SEC Director of Enforcement.¹  She will take over for Acting Enforcement Director Sam Waldon, who will return to his prior post of SEC Chief Counsel.  Judge Ryan’s appointment is a strong indication the agency will continue on a reined-in path of more targeted SEC enforcement.

No doubt, the agency has significantly scaled back its enforcement activity with the change in Administration.  In some areas — like crypto, ESG, and FCPA (foreign bribery) enforcement — there seems to be little SEC enforcement at all.  But with the more bread-and-butter areas of securities regulation — like insider trading, market manipulation, and investor fraud — it appears to be business as usual for the SEC.

We can assume Judge Ryan’s appointment to the SEC’s top cop position will further solidify the SEC’s more targeted enforcement approach.  Though some have questioned whether given her lack of enforcement experience, it means the SEC is going to slim down its enforcement activity even further.

Questions About Judge Ryan’s Relevant Experience

The Financial Times, for example, questioned Judge Ryan’s lack of experience in securities law and financial crime, or in serving in any prior prosecutorial positions.  The paper remarked that she may “prove an able enforcement head regardless, but this looks very much like the kind of appointment you make if you don’t actually want an awful lot of enforcement.”²

Judge Ryan’s background and lack of prosecutorial experience seems to be a question many have raised in trying to weigh the significance of her selection to such a prominent enforcement role.  But there also seems to be a broad consensus that she is highly capable and credentialed.

Judge Ryan’s Impressive Credentials

Judge Ryan has been a long-standing judge of the United States Court of Appeals for the Armed Forces, nominated to the court in 2006 by President George W. Bush.  She currently is a lecturer on military law and justice at Harvard Law School, and has had prior stints at the Notre Dame and George Washington University law schools.

Before becoming a judge, she was a partner at two prominent law firms (Wiley Rein and Bartlit Beck) and before that, served as a law clerk to Justice Clarence Thomas of the Supreme Court and Judge J. Michael Luttig of the Fourth Circuit.

Judge Ryan also served as a judge advocate in the Marine Corps, an active-duty Marine Corps communications officer, and an aide-de-camp to Marine Corps Commandant General Charles C. Krulak.  She received a B.A. cum laude in political science from Knox College and a J.D. summa cum laude from Notre Dame Law School, where she graduated first in her class.

The SEC’s More Focused Enforcement Approach

In announcing Judge Ryan’s appointment, SEC Chair Paul Atkins pointed to her “decades of experience as a respected judge and practitioner of the law.”  More notably, he made it clear what he expects will be the SEC’s enforcement focus under Judge Ryan: “leading the Division guided by Congress’ original intent: enforcing the securities laws, particularly as they relate to fraud and manipulation.”  A not-so-subtle jab at the Democratic-led SEC, which many Republicans believe had acted too aggressively and often outside its jurisdictional reach.

For her part, Judge Ryan seems like-minded in this more constrained and targeted enforcement approach.  She stated she is looking forward to taking up the enforcement mantle “to ensure that the Division is true to the SEC’s mission in taking action on behalf of investors harmed by those who break the securities laws and providing an effective deterrent against fraudulent and manipulative activities in our financial markets.”

What Judge Ryan’s Appointment Means for SEC Whistleblowers

It is not clear what all this means for the SEC’s incredibly successful Whistleblower Program, which brings in thousands of tips a year and has led to billions of dollars in securities fraud recoveries.  Since the program’s inception in 2011, the SEC has made more than $2 billion in whistleblower awards to roughly 450 individuals who provided information that led to a successful securities fraud enforcement action.

91pornwhistleblower partner Gordon Schnell notes there has been a relative slowdown in SEC whistleblower awards this year, but he doesn’t necessarily attribute it to a lack of agency support for the program.  “There has been a clear drop off in awards this year,” Schnell says, “but in our dealings with the agency we have not seen any change in attitude towards our clients or the inside information they provide.”

Schnell believes the staffing reductions at the agency combined with a more streamlined enforcement focus is what is primarily behind the reduced attention to whistleblowers.  According to Schnell, he expects the number and size of awards to pick up in the coming months as the agency brings more enforcement actions once it adjusts to its new leadership and priorities.

Schnell believes Judge Ryan will continue the agency’s strong tradition of supporting and embracing whistleblowers.  “We have not slowed down in our whistleblower filings,” Schnell notes, “we are just trying to align our submissions with the SEC’s newly-stated priorities of zeroing in on straight out securities fraud and manipulation.”

If you would like to learn more about Constantine Cannon’s success in representing SEC whistleblowers, the SEC Whistleblower Program, or what it means to be a whistleblower more broadly, please don’t hesitate to contact us.  We will connect you with an experienced member of the 91pornwhistleblower team for a free and confidential consultation.

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Sources:

¹ See

² See

Read Judge Meg Ryan Named SEC Director of Enforcement — What It Means For SEC Whistleblowers at constantinecannon.com

The Securities and Exchange Commission (SEC) recently issued its to Congress detailing the results of the SEC Whistleblower Program over the past fiscal year.  Under the SEC’s program, individuals who provide information to the agency concerning potential securities violations that leads to a successful enforcement action may receive up to 30% of any government recovery.

Here are the highlights of this year’s whistleblower results:

• • The SEC made roughly $255 million in awards to 47 whistleblowers, the third highest annual amount for the Program.

• • The SEC made a $98 million award (August 23) to two whistleblowers, the fifth largest award for the Program.  Rounding out the remaining top 5 awards this past year were two $37 million awards (July 17 and 26); a (December 22); and a $24 million award (August 26).

• • The SEC received roughly 25,000 whistleblower TCR submissions, but roughly 14,000 of them came from two individuals.  The same two whistleblowers accounted for roughly 7,000 of the 18,000 whistleblower submissions made in FY 2023.

• • The SEC brought 11 enforcement actions for impeding whistleblowers from reporting to the SEC, including through restrictive employment and severance agreements.  This represents the largest number of enforcement actions the SEC has brought in this area, and more than double the number the SEC brought last year.  One of them (against JPMorgan Securities) resulted in an $18 million penalty, the largest to date in this area.

• • 18 of the whistleblowers who received awards were outsiders with no employment connection to the target company.  In this vein, the SEC highlighted how whistleblowers under the Program need not be company insiders but “can also be individuals outside the organization, including, for example, investors or potential investors, competitors, or market observers.”

• • 11 of the SEC awards were based at least in part on the whistleblower’s independent analysis, which the SEC described as involving an “examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.”

• • 27 whistleblowers who were awarded this fiscal year caused the Commission to open an investigation or examination that led to an enforcement action, and 20 significantly contributed to an investigation that was already open.

• • A portion of the awards made to 7 whistleblowers were based on recoveries from enforcement actions other federal agencies brought based on information the whistleblowers provided the SEC.

• • The SEC reduced 3 whistleblower awards for what the agency considered an unreasonable delay in reporting, stressing “the importance of timely reporting, which allows the Commission to act quickly to protect investors, to gather evidence before it becomes harder to access, and to bring claims for relief before they are time-barred.”

• • The SEC reduced 3 whistleblower awards due to the whistleblower’s participation in or benefit from the underlying misconduct.

• • The highest number of foreign whistleblowers came from Canada, the United Kingdom, India, Australia, and Germany.  The highest number of US whistleblowers came from South Carolina, Florida, California, Texas, and New York.

With these whistleblower payouts, the total SEC whistleblower award tally to date now exceeds $2.2 billion to 444 individual whistleblowers since the Program’s inception in 2011.  The SEC Program remains strong with the agency firmly committed to its continued success.  Hopefully, this commitment does not waver with the new Administration and the new Chair soon to be appointed to replace current Chair Gary Gensler, who recently announced his departure from the agency in January.

So if you think you might have information on potential securities violations or would like to learn more about what it means to be a whistleblower under the SEC Program, please do not hesitate to contact us.  We will connect you with an experienced member of the 91pornWhistleblower Team for a free and confidential consult.

Read SEC Issues Annual Whistleblower Report Showing Continued Strength of Whistleblower Program at constantinecannon.com