SEC Issues $26M in Whistleblower Awards Over One-Month Period

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In a clear sign of the increased awareness – and effectiveness – of the SEC’s whistleblower program, the SEC awarded five whistleblowers a total of over $26 million for their assistance in four separate enforcement actions between May 13 and June 9.

  • May 13, 2016: the SEC awarded $3.5 million to a whistleblower who provided useful information in an ongoing investigation. Notably, the information the whistleblower provided did not cause the Commission to open a new line of inquiry; rather, the information “significantly contributed” to the ongoing investigation by focusing the Commission on a particular issue and providing additional settlement leverage during its negotiations with the company.
  • May 17, 2016: the Commission announced an award of $5-$6 million (its third highest in history) to a “former company insider” who provided a detailed tip which, according to the Commission, “led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower’s information.”
  • May 20, 2016: the Commission jointly awarded more than $450,000 to two individuals for a tip that led to the opening of a corporate accounting investigation and for their assistance as the investigation proceeded.
  • June 9, 2016: the SEC awarded $17 million – the second largest award in the history of the whistleblower program – to a “former company employee” who provided a tip which, according to the SEC, “substantially advanced the agency’s investigation and ultimate enforcement action.”

Andrew Ceresney, Director of Enforcement for the SEC stated that when employees – who are often well-positioned to identify wrongdoing – “report specific and credible tips to us, [the SEC] will leverage that inside knowledge to advance [its] enforcement of the securities laws and better protect investors and the marketplace.”

These awards reaffirm the SEC’s intent to encourage whistleblowers to come forward and provide useful information – and show that the program is gaining momentum. The SEC’s whistleblower program has now awarded more than $85 million to 32 whistleblowers since the program’s inception in 2011 as part of Dodd-Frank. Whistleblowers may be eligible for such an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action. These awards can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million. Payments are made out of an investor protection fund established by Congress that is financed through monetary sanctions paid to the SEC as a result of securities law violations.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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