As discussed here by Compliance Week's Joe Mont, the SEC charged proxy adviser Institutional Shareholder Services yesterday for failing to safeguard the confidential proxy voting information of clients. The agency alleged that a former ISS employee  

provided a proxy solicitor with material, nonpublic information revealing how more than 100 ISS institutional shareholder advisory clients were voting their proxy ballots. In exchange for voting information, the proxy solicitor provided the ISS employee with meals, expensive tickets to concerts and sporting events, and an airline ticket. The breach was made possible in part because ISS lacked sufficient controls over employee access to confidential client vote information, as this employee gathered the data by logging into the ISS voting website from home or work and using his personal e-mail account to communicate details to the proxy solicitor.

ISS agreed to settle the SEC's charges by paying $300,000 and retaining an independent compliance consultant.

According to an announcement today by a D.C.-based whistleblower law firm, the SEC's case against ISS was made possible by a whistleblower who provided the SEC with critical information. David J. Marshall of the law firm Katz, Marshall & Banks, LLP stated today that his whistleblower client "saw an illegal scheme that harmed investors. He reported the scheme to his supervisors and then to the SEC, and that prompted the commission to bring charges.”

Notably, the whistleblower who went to the SEC about the conduct by the ISS employee will not receive an award under the SEC's Dodd-Frank whistleblower program because the resulting enforcement action did not result in more than $1 million in sanctions. The New York Post reports that the whistleblower was formerly with proxy solicitor Georgeson Inc., but was fired after exposing the scheme. SEC officials declined to comment to the NY Post on whether the agency was investigating Clark's firing, but the SEC has made it clear recently that it is looking for potential retaliation cases it can bring under Dodd-Frank to send a message that such conduct will not be tolerated.