National Whistleblower Day

On June 30, the U.S. Securities and Exchange Commission (SEC) posted a Notice of Covered Action regarding action against Florida-based stock promoter Brian Robert Sodi.  The SEC settled charges that stem from Sodi’s central role in a penny stock scalping scheme.  As part of the settlement, Sodi is to pay over $1 million in disgorgement and prejudgment interest.  The Notice of Covered Action alerts eligible individuals that they can file a claim for a whistleblower award. Individuals who provide the SEC with original information that leads to a successful enforcement action are entitled to a monetary reward. Through the SEC Whistleblower Program, whistleblowers can receive a monetary award of 10-30% of the over $1 million paid in disgorgement.

According to the SEC, Sodi sent promotional materials to investors, which recommended the purchase of stocks in Southern USA Resources Inc. and Goff Corporation.  The SEC alleges that Sodi did not disclose that he had personally amassed a large number of shares in these two corporations and that he planned to sell them once his promotions caused the stock prices to rise.  This practice is a form of fraud known as scalping.  By unloading his stocks following the success of his promotional efforts, Sodi allegedly made over $1.1 million in illicit profits.  In the settlement, Sodi agreed to an injunction barring him from violating Sections 17(a) and 17(b) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. Sodi also agreed to an injunction barring him from violating Section 5 of the Securities Act and Section 13(d) of the Exchange Act and Rule 13d-1 thereunder.

“Everyday investors are the unwitting targets of scalping schemes, and we’re here to fight back for them,” said Melissa Hodgman, Associate Director in the SEC’s Enforcement Division.  “As alleged in our complaint, Sodi deviously used a foreign bank account not in his name in an effort to go undetected, but he failed to hide his illicit trading from us.”

The SEC Whistleblower Program is an essential tool in fighting corporate fraud.  Whistleblowers have provided information that has led to numerous enforcement actions since the program’s creation in 2010.  The program also ensures that SEC whistleblowers are compensated and protected. In the past decade, the SEC has paid out over $500 million in whistleblower awards and implemented anti-retaliation procedures to protect whistleblowers.

Read the SEC’s press releases on the case:

SEC Charges Penny Stock “Mailman” With Scalping Investors In Gold Mining Stocks

Brian Robert Sodi, et al. (Release No. LR-24603; Sep. 19, 2019)