$400 Million Awarded to SEC Whistleblowers
Today, the SEC Office of the Whistleblower announced that it has issued more than $400 million in awards to whistleblowers since issuing its first award in 2012. The announcement came in connection with a $27 million award to a whistleblower who alerted the SEC to misconduct occurring, in part, overseas. According to the SEC’s order determining the whistleblower award, the whistleblower’s assistance was so critical to the success of the enforcement action that the Commission departed from its Preliminary Award Determination (which the whistleblower did not contest) to increase the size of the award. The order states:
After considering the administrative record, we choose to depart from the Preliminary Determination’s recommendation and increase the award to Claimant to Redacted of the monetary sanctions collected or to be collected in the Covered Action, for a payout of more than $27,000,000…
In reaching that determination, we positively assessed the following facts: (i) Claimant’s information was significant as it allowed Commission staff to uncover hidden conduct occurring, in part, overseas; (ii) Claimant provided a substantial amount of ongoing assistance and cooperation by meeting with staff numerous times and providing relevant documents and critical investigative leads that advanced the investigation and saved the Commission a significant amount of time and resources; (iii) Claimant’s information helped the Commission further significant law enforcement interests by enabling the Commission to bring an action addressing a particular form of misconduct Redacted ; and (iv) Claimant repeatedly and strenuously raised Claimant’s concerns internally. In determining the appropriate award percentage, we also considered whether Claimant unreasonably delayed in reporting the information to the Commission.
This award underscores the importance of assisting the SEC in a manner that maximizes the likelihood of recovering a high award percentage. Our primary tips to maximize an SEC whistleblower award are summarized in our article 5 Tips for SEC Whistleblowers and Lessons Learned from SEC Whistleblower Awards.
Since the inception of the SEC Whistleblower Program, more than $2 billion in monetary sanctions have been ordered against wrongdoers based on information provided by whistleblowers. See some of the SEC whistleblower cases that have resulted in multi-million dollar awards here.
SEC Whistleblower Program
Under the SEC Whistleblower Program, the SEC is required to issue awards to eligible whistleblowers who voluntarily provide original information that leads to successful enforcement actions with total monetary sanctions in excess of $1 million. Whistleblower awards range from 10 percent to 30 percent of the total monetary sanction collected. The largest SEC whistleblower awards to date are $50 million, $39 million and $37 million.
The SEC Whistleblower Program also protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity. Whistleblowers can even submit a tip anonymously to the SEC if represented by an attorney in connection with their tip.
Tips that Qualify for SEC Whistleblower Awards
Whistleblowers can be eligible for an award for reporting any violation of the federal securities laws that leads to a successful enforcement action in excess of $1 million. The SEC has jurisdiction over a wide range of industries and entities – both public and private. Some of the most common tips include:
- Accounting fraud;
- Investment and securities fraud;
- Insider trading;
- Foreign bribery and other FCPA violations;
- EB-5 investment fraud;
- Manipulation of a security’s price or volume;
- Fraudulent securities offerings and Ponzi schemes;
- Unregistered broker-dealers;
- Investment adviser fraud;
- Anti-money laundering (AML) violations;
- False or misleading statements about a company or investment;
- Inadequate internal controls;
- Deceptive non-GAAP financials;
- Improper revenue recognition;
- Violations of auditor independence rules;
- Misleading or incomplete cybersecurity disclosures; and
- Blockchain and cryptocurrency fraud.
For more information about the SEC Whistleblower Program, download the eBook Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award and listen the recent podcast episode of inSecurities Inside the World of Whistleblowers.
SEC Whistleblower Attorneys
If you would like more information on reporting a violation of the federal securities laws, contact an SEC Whistleblower Attorney at Zuckerman Law for a free, confidential consultation. Zuckerman Law is one of the nation’s leading law firms representing whistleblowers in whistleblower rewards and retaliation cases.
SEC Whistleblower Law Firm
How to Qualify for an SEC Whistleblower Bounty
- See our column in Forbes: One Billion Reasons Why The SEC Whistleblower-Reward Program Is Effective.
- See our column in Going Concern: Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever.
- See our post in Accounting Today: Whistleblower Protections and Incentives for Auditors and Accountants.
- See our post in The Compliance and Ethics Blog: Shkreli Trial Reveals the Challenges Faced by Compliance Whistleblowers.
Are Whistleblowers Protected from Retaliation?
Click here to learn more about anti-retaliation protections for SEC whistleblowers under the Dodd-Frank Act and Sarbanes-Oxley Act.