Interview on the SEC Whistleblower Program: Rising Claims in 2019?

In this audio post, Justin Kudler interviews Thomas Sporkin about the SEC Whistleblower Program and potential rising claims resulting from this area. Tom is a partner at Buckley LLP in Washington, DC.  Before joining Buckley, Tom held several positions at the SEC, including serving as Chief of the Office of Market Intelligence, where he oversaw the formation of the Whistleblower Program.

As Justin introduces in the interview, the SEC’s Whistleblower Program hopes to find people who know of possible securities law violations, and is authorized to reward those people with monetary awards.  The program recently published its annual report to Congress for Fiscal Year 2018, and it contains some interesting information. For example, the SEC has awarded over $326 million to 59 whistleblowers since the beginning of the program approximately 7 years ago, and it awarded more than $168 million to 13 individuals in Fiscal Year 2018.  With these types of numbers, it is fair to speculate that claims in this area could be rising.

Listen to the interview in full below, and read the full SEC Whistleblower Report to Congress here. Thank you to both Justin and Tom for their time and expertise.

justin.headshotJustin Kudler is Assistant Vice President, Claims at AXA XL in Hartford, where he handles professional liability claims under directors and officers, errors and omissions, and other insurance policies issued to financial institutions and publicly traded companies.  Before joining AXA XL in 2006, Justin defended individuals in Securities and Exchange Commission investigations, as well as litigated complex insurance matters and securities and consumer class actions, at a major Boston law firm.  He also has represented plaintiffs in federal securities class actions.  Justin recently co-authored an article for the Third Quarter 2018 edition of the PLUS Journal on federal judicial vacancies, and he regularly speaks at industry conferences and writes articles on insurance, claims, securities, and class action issues.

Sporkin_Thomas_bioTom Sporkin is a partner at Buckley LLP where he represents individuals and entities in matters before the Securities and Exchange Commission.  Prior to joining Buckley Firm, Tom spent 20 years with the Division of Enforcement of the SEC, where he was one of the leaders who oversaw its Dodd-Frank whistleblower rule-writing and subsequent launch of its Office of the Whistleblower. Tom was also Chief of the Office of Market Intelligence, where he had primary responsibility for vetting all whistleblower tips and other intelligence received by the SEC, and oversaw a multidisciplinary staff of more than 50 senior enforcement attorneys, accountants, market-surveillance specialists, and analysts tasked with investigating potential violations of the federal securities laws. Today, Tom specializes in representing executives who report matters to the SEC pursuant to the whistleblower rules, and helps companies deal with sensitive whistleblower issues.

Kerman’s Korner: Top 3 Takeaways from 2018

kermanskorner-01315662xae57eKerman’s Korner continues its annual tradition of recapping the top three things Jeremy learned from client interactions in the last year.  2018 was a good year for helpful tips!  Previous episodes of Kerman’s Korner can be found at:

PLUS Journal Addition: Alabama Supreme Court and “Duty to Advise”

The 2019 Q1 edition of the PLUS Journal is now available, and today we have a guest post from one of the authors, Peter Biging. This post is an addition to his article featured in the Q1 issue of the PLUS Journal, available here.

biging, peterPeter J. Biging is a partner in the law firm Goldberg Segalla, LLP, where he heads up the firm’s New York metro area Management and Professional Liability practice.  He is also Vice Chair of the firm’s nationwide M & PL practice group.  Peter can be reached at  Peter was assisted in the preparation of this article by Ryan McNagny, a commercial litigation and professional liability associate in the firm’s Manhattan office.  Portions of the content of this article will also appear in the American Bar Association TIPS Journal Year in Review Winter issue, covering a broad range of professional liability and D&O developments in 2018.

As a supplement to the Insurance Agents/Brokers E&O 2018 Year in Review article published in the PLUS Journal’s 1st Quarter issue, it should be noted that just before the article was sent out for publication, the Alabama Supreme Court issued what could turn out to be an important decision on the “duty to advise.”  See Somnus Mattress Corp. v. Hilson, 2018 WL 6715777 (Ala. Sup. Ct. Dec. 21, 2018).   In its decision, the Alabama Supreme Court affirmed an Alabama Circuit Court decision dismissing claims on summary judgment against an insurance agent for alleged negligence in failing to advise a mattress manufacturer to purchase business interruption loss coverage. The plaintiff manufacturer argued that the agent should be held responsible for the uninsured loss he suffered following a fire that destroyed a mattress factory, and ultimately ended up putting the manufacturer out of business.  In affirming the dismissal, the Court held that an insurance agent/broker generally does not have a duty to advise and cannot be deemed to have assumed a duty to advise absent evidence either that (1) the insurance agent/broker misrepresented the coverage in a manner that the insured could not have known from a reading of the insurance policy, or (2) the agent/broker and insured were in a “special relationship.”

Without setting any bright line rules for when a special relationship may arise, the Court took note of decisions in other states discussing when a “special relationship” can be found, and in so doing appears to have implicitly accepted the following as bases for finding of a special relationship:

  • Where the agent/broker has entered into an express agreement to provide coverage advice
  • Where there has been a long established relationship between the insured and the agent/broker of entrustment from which it clearly appears the agent/broker appreciated the duty of giving advice to the insured client, and the client’s reliance upon same
  • Receipt of compensation by the agent/broker for consultation and advice separate and apart from receipt of commissions on premiums paid
  • The offering of expertise with regard to a question of coverage where the insured relied on the agent/broker’s expertise in making a coverage decision
  • Where an ambiguous request has been made for coverage that requires a clarification

See id. at *7-9.  Because it found that none of “the types of elements that trigger such a duty were . . . present in this case,” id. at *10, the Court concluded that no basis existed for finding the defendant insurance agent owed a duty to advise the plaintiff to purchase business interruption coverage arising from fire loss.

This decision could prove to be significant.  While the Alabama Supreme Court did not lay out its professed standard for when a special relationship can be found to exist, in engaging in an examination of and discussion of the grounds other courts have relied upon for finding of a special relationship, it can be argued that the Court implicitly adopted these standards for use by Alabama state courts going forward.

Read Peter’s article in the PLUS Journal here.