The Securities and Exchange Commission this week rewarded three whistleblowers for their assistance in bringing an enforcement action against a “sham hedge fund.” The case marks the second time the Commission has awarded a whistleblower bounty since the passage of the Dodd-Frank Act.
An SEC order issued on June 12, allots each of three whistleblowers a 5 percent take from forthcoming fines that will be collected in relation to its enforcement action against Locust Offshore Management and CEO Andrey C. Hicks. Hicks and his firm are accused of having defrauded investors of $2.7 million. In March 2012, the U.S. District Court for the District of Massachusetts entered default judgments against Locust and Hicks and ordered them to pay approximately $7.5 million in disgorgement and penalties. Hicks also pleaded guilty to criminal fraud charges in 2012 and was sentenced to 40 months in prison.
