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SEC Whistleblower Program: What factors does the SEC consider when determining the amount of an SEC whistleblower award?

Criteria for Determining the Amount of an SEC Whistleblower Award

Many factors affect the amount of an award. The SEC may increase the amount of an award based on the following factors:

  1. The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:
    • the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and
    • the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.
  2. The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:
    • whether you provided ongoing, extensive, and timely cooperation and assistance (including when the whistleblower or their attorney provides industry-specific knowledge and expertise);
    • the timeliness of your initial report to the SEC or to your employer;
    • the resources conserved because of your assistance;
    • whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;
    • your efforts to remediate the harm caused by the violations; and
    • any unique hardships you experienced as a result of blowing the whistle.
  3. The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:
    • how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;
    • the degree to which an award encourages the submission of high-quality information;
    • whether the specific violation is an SEC priority; and
    • the dangers of the specific violation to investors.
  4. Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:
    • whether you reported internally before, or at the same time as, you reported to the SEC; and
    • whether you assisted any internal investigation concerning the violation.

Conversely, the SEC may reduce the amount of an award based on these considerations:

  1. If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:
    • your role in the violation;
    • your education, training, experience, and position of responsibility at the time the violation occurred;
    • whether you acted knowingly and intentionally;
    • whether you financially benefitted from the violation;
    • whether you committed a violation in the past;
    • the egregiousness of the underlying violation; and
    • whether you knowingly interfered with the SEC’s investigation of the violation.
  2. If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:
    • whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;
    • whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and
    • whether there was a legitimate reason for you to delay reporting the violation.
  3. If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:
    • interfered with your company’s reporting systems to prevent or delay detection of the violation; or
    • made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation

For more information about whistleblower rewards and bounties, contact the SEC whistleblower lawyers at Zuckerman Law at 202-262-8959.

To learn more about the SEC Whistleblower Program, download Zuckerman Law’s eBook: SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award:

SEC Whistleblower Program Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award

SEC Whistleblower Lawyers

Tips to Qualify for a SEC Whistleblower Bounty

SEC Whistleblower Bounties

 

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The SEC will consider many factors when determining the amount of an award based off the unique facts and circumstances of each case. The SEC may increase an award percentage based on the significance of the information that the whistle blower provided, the extent of the whistle blower’s assistance in their investigation, the SEC’s interest in deterring that specific kind of violation, and whether or not the whistle blower participated in the company’s internal compliance system. The SEC may also reduce an award if the individual was culpable for the specific violation or had some involvement. The SEC may also reduce it if there is unreasonable delay in reporting to the SEC. Finally, the SEC may also reduce an award if the individual impeded with the company’s internal compliance system prior to submitting information to the SEC.

Jason Zuckerman, Principal of Zuckerman Law, litigates whistleblower retaliation, qui tam, wrongful discharge, and other employment-related claims. He is rated 10 out of 10 by Avvo, was recognized by Washingtonian magazine as a “Top Whistleblower Lawyer” in 2015 and selected by his peers to be included in The Best Lawyers in America® and in SuperLawyers.

Matthew Stock is the Director of the Whistleblower Rewards Practice at Zuckerman Law. He represents whistleblowers around the world in SEC, CFTC and IRS whistleblower claims. He is also a Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor.