On June 30, the U.S. Securities and Exchange Commission (SEC) issued a Notice of Covered Action regarding the recent approximately $500 million settlement with an Oregon investment group. Aequitas Management LLC (Aequitas) and four affiliates settled SEC charges that they defrauded investors of hundreds of millions of dollars. The Notice serves as an announcement to individuals, who provided the SEC with information regarding this case, that they can file a claim for a whistleblower reward. SEC whistleblowers may be eligible for a monetary award of up to 30% of the over $500 million settlement.
According to the SEC, Aequitas defrauded investors into believing they were making investments in health care, transportation, and education-related endeavors. These investments were last-ditch attempts to save the failing firm. The SEC alleges that CEO Robert J. Jesenik and executive vice president Brian A. Oliver were well aware of the firm’s dire financial status but continued to solicit hundreds of millions of dollars in investments to stave off the firm’s complete collapse. Jesenik, Oliver, and affiliates allegedly kept the firm’s insolvency a secret from investors and even used new investments to repay earlier investors in a Ponzi-like manner.
The settlement enjoins the defendants from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The Aequitas entities, which are in receivership, must pay $453,000,000 in disgorgement with $87,048,072 prejudgment interest to be deemed satisfied by the amounts collected by the receiver. Jesenik and Oliver are also to pay penalties. In settling the charges, Jesenik, Oliver, and Aequiats neither confirmed nor denied the SEC’s findings.
The SEC Whistleblower Program was established in 2010 with the passage of the Dodd-Frank Act. The program has proven to be a valuable tool in fighting corporate fraud and corruption by offering monetary awards and anti-retaliation protections to whistleblowers Since March of 2020. The SEC has given out 11 awards, including the largest monetary award an SEC whistleblower has ever received.
Read the SEC’s press release: