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Home Corporate Dodd-Frank

SEC Tackles Coronavirus Frauds

Ben KostyackbyBen Kostyack
April 24, 2020
in Dodd-Frank, News
Reading Time: 5 mins read
SEC Says Employees Protected For Internal Whistleblowing

U.S. Securities and Exchange Commission building in Washington, D.C. September 4, 2014. Photo by Diego M. Radzinschi/THE NATIONAL LAW JOURNAL.

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In a major breakthrough protecting the public from coronavirus fraudsters, the U.S. Securities and Exchange Commission announced that it opened numerous investigations into companies (including small companies that sell “microcap” stocks at low prices) suspected of engaging in fraudulent promotions related to the prevention, detection or cure of the coronavirus. The SEC has already suspended 23 companies from trading on Wall Street due to suspected frauds.

“Whistleblowers will play a central role in protecting the public from outrageous and dangerous fraud schemes designed to profit from the coronavirus crisis illegally. Several laws protect employees who report coronavirus fraud. The Dodd-Frank Act’s whistleblower provisions enable the SEC to obtain insider information essential to holding people who engage in securities frauds accountable,” said Stephen M. Kohn, a partner at the qui tam law firm of Kohn, Kohn and Colapinto. Kohn serves as the Chairman of the Board of Directors of the National Whistleblower Center and is the author of The New Whistleblower’s Handbook.

“Every individual with knowledge of coronavirus frauds can file whistleblower claims anonymously and confidentially with the SEC or the Commodity Futures Trading Commission, depending on the nature of the fraud. The IRS whistleblower program and federal and state False Claims Acts also provide whistleblowers with powerful tools to help prosecute anyone ripping off taxpayer monies to profit from the COVID-19 crisis,” Kohn explained

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Under the Dodd-Frank Act’s whistleblower provisions, any individual can report frauds that may violate securities laws related to the coronavirus pandemic. If the SEC successfully prosecutes a fraudster, the whistleblower can be entitled to a reward of between 10-30% of the monies collected by the SEC. The law also permits whistleblowers to obtain rewards based on “related actions,” i.e., prosecutions initiated by other law enforcement agencies based on the information provided to the SEC. Since 2011, the SEC has paid whistleblowers over $400 million in rewards.

In addition to opening numerous investigations and taking prompt enforcement actions, the SEC published a COVID-19 “response” page and a web page dedicated to securities violations and requirements concerning COVID-19.

The suspended companies include:

Predictive Technology Group, Inc. (4/21/2020)

Spectrum DNA, Inc. (4/21/2020)

SCWorx Corp. (4/21/2020)

PreCheck Health Services, Inc. (4/16/2020)

Bravatek Solutions, Inc. (4/15/2020)

BioXyTran, Inc. (4/15/2020)

Signpath Pharma, Inc. (4/15/2020)

Applied BioSciences Corp. (4/13/2020)

Arrayit Corporation (4/13/2020)

Solei Systems, Inc. (4/10/2020)

Roadman Investments Corp. (4/10/2020)

Parallax Health Sciences, Inc. (4/10/2020)

Turbo Global Partners, Inc. (4/9/2020)

BioELife Corp. f/k/a U.S. Lithium Corp. (4/8/2020)

Key Capital Corporation (4/7/2020)

Prestige Capital Corp. (4/7/2020)

Wellness Matrix Group, Inc. (4/7/2020)

Sandy Steele Unlimited Inc. (4/3/2020)

No Borders, Inc. (4/3/2020)

Praxsyn Corporation (3/25/2020)

Zoom Technologies, Inc. (3/25/2020)

Eastgate Biotech Corp. (2/24/2020)

Aethlon Medical, Inc. (2/7/2020)

“Employees at any of these companies can confidentially provide evidence to the SEC and qualify for whistleblower rewards,” Kohn said. “Whistleblowers can obtain rewards if they triggered these investigations or if they contribute to the ongoing SEC investigations,” Kohn explained. Kohn worked with staff at the Senate Banking Committee in helping to draft the whistleblower protection provisions. He represents several clients who have filed claims under the Dodd-Frank Act. One of his clients obtained one of the largest awards publicly announced by the SEC.

Tags: Coronavirus WhistleblowerDodd-Frank ActSEC WhistleblowerSEC Whistleblower program
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Ben Kostyack

Ben Kostyack

Ben Kostyack is an Assistant News Editor for Whistleblower Network News. He writes about breaking whistleblower news, and False Claims Act whistleblowers, SEC whistleblowers, IRS whistleblowers, FCPA whistleblowers, and CFTC whistleblowers. Ben has a degree in Journalism with a minor in Economics from the University of Massachusetts Amherst. He was a communications intern at the whistleblower law firm Kohn, Kohn and Colapinto during the summer of 2018.

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Leaders Call for Reinstatement of Navy Captain Whistleblower Who Warned of Coronavirus Outbreak

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