Lure of Record Whistleblower Awards Leads to Frivolous Claims

The Securities and Exchange Commission (SEC) has barred two people from participating in its whistleblower award program, to which, it said, they had filed hundreds of frivolous award applications over the course of three years. The regulator said the applications never bore any relation to the charges in the underlying enforcement actions for which they were applying.

The SEC said the processing of the frivolous claims “consumed considerable staff time and resources and has hindered the efficient operation of the whistleblower program.” It also said the two people, whose names were not revealed, were warned repeatedly to stop submitting the abusive filings but refused to do so. The punishments were handed out pursuant to amendments made to the whistleblower program rules last year that were intended to allow the program to operate more effectively and efficiently, and to focus on good faith whistleblower submissions.

“Frivolous award applications hamper our ability to efficiently process awards to meritorious whistleblowers who come forward with helpful information intended to assist law enforcement,” Emily Pasquinelli, acting chief of the SEC’s Office of the Whistleblower, said in a statement. “Today’s permanent bars send an important message that frivolous award filers will not be tolerated.”

Under the whistleblower program, people who voluntary submit high-quality information that leads to the success of an enforcement action may apply for an award. They are encouraged to apply for awards only where there is a connection between their tip and the charges in the enforcement action. And the SEC regularly doles out multimillion dollar awards to whistleblowers.

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During the fiscal year that ended Sept. 30, 2020, the SEC awarded a record $175 million to 39 whistleblowers. That was a record in terms of both the highest dollar amount and the highest number of individuals awarded during any fiscal year. The regulator also issued the largest single whistleblower award in its history, last year, of approximately $114 million. Further, the regulator collected just under $3.6 billion in disgorgement of ill-gotten gains and $1.1 billion in penalties, in fiscal year 2020, for a record combined total of $4.68 billion.

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Tags: Emily Pasquinelli, enforcement action, frivolous claims, SEC, whistleblower program

Bruce H. Cundick, who led the Utah Retirement System (URS) pension to grow from about $13 billion to about $43 billion (as of June 30), is retiring after more than 20 years. Former Oregon State Treasury CIO John D. Skjervem has been named his successor, effective Nov. 8, according to a URS press release.

During Cundick’s tenure, the fund returned a yearly average of more than 7.8%, outperforming more than 90% of similar-size public pension funds, according to investment consulting firm Callan.

“URS retirees may not know his name, but Bruce Cundick played a vital role in their lives,” said URS Executive Director Daniel D. Andersen in a statement. “We’ve been fortunate to have Bruce, not only for his investing expertise, but also his skill in creating and leading a world-class investment team. He’s truly a giant in his industry, and his contributions and commitment to our mission have been immeasurable.”

Cundick was named to the CIO Power 100 List in 2019 by this magazine, which recognized him for his innovation and influence, collaboration, and talent development. Under his leadership, URS has received frequent investment industry accolades for prudent fund management and innovation. In 2018, the American Investment Council ranked URS third among 163 U.S. public pension plans for 10-year private equity returns.

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“I’m grateful for the wonderful staff that I worked with,” Cundick said. “Our portfolio is a success because of their dedication and expertise. I wish them the best and am excited for them to continue to build on the accomplishments we achieved together.”

After a nationwide search led by Michael Kennedy at the global organizational consulting firm Korn Ferry, Skjervem was selected after several qualified candidates were interviewed. From 2012 through 2020, Skjervem, known for his high returns, led a 60-member team responsible for Oregon’s $111 billion financial and real asset investment program, including the state’s $82 billion public employee retirement fund. More recently, he served as the advisory firm CEO for Alan Biller and Associates Inc., involved in all aspects of the firm’s $131 billion investment consulting practice.

“I’m delighted and honored to join URS in an investment leadership role and look forward to extending the exemplary record Bruce and his staff have compiled during his long and distinguished tenure,” Skjervem said in a statement.

Prior to his tenure in Oregon, Skjervem was an executive vice president at Northern Trust, where he held a variety of portfolio management and leadership positions, including chief investment officer for the firm’s $180 billion wealth management division.

“We feel very fortunate to have John,” Andersen said. “He brings a wealth of experience and expertise from both public pension funds [and] private sector money management. We’re confident he can help us take our investment program to the next level.”

URS serves more than 240,000 current and past Utah public employees by administering their retirement benefits and managing the pension fund that pays them. URS paid more than $1.8 billion in pension payments in 2020, the vast majority of which remained in the Utah economy, according to a press release from URS.