The Bank Is Open - SEC’s Investor Protection Fund Is Poised to Pay Whistleblower Bounties


The Dodd-Frank Wall Street Reform and Consumer Protection Act directs the U.S. Securities and Exchange Commission (SEC) to make monetary awards, or “bounties,” to individuals who voluntarily provide original information that leads to successful SEC enforcement actions resulting in monetary sanctions of more than $1 million. With awards in the range of 10 percent to 30 percent of the monetary sanction, the bounty for the employee can be significant, especially in light of recent SEC enforcement actions netting penalties well into the tens of millions of dollars. For example, the first round of the SEC’s Notices of Covered Actions (the mechanism by which the SEC notifies whistleblowers when to submit their claim for a bounty) references the judgment that led to the subsequent monetary penalty against hedge fund manager Raj Rajaratnam in the amount of $92.8 million. An original source in a case such as Rajaratnam has the potential to receive up to 30 percent of the SEC’s penalty.

Dodd-Frank’s whistleblower bounty provision caused quite a stir. Many predicted an onslaught of SEC enforcement activity and internal corporate investigations. To get ready, plaintiffs’ law firms established whistleblower practice groups and hired former SEC enforcement officials. Corporate firms published client alerts and held seminars. But since the promulgation of the SEC’s final rule, which was itself controversial for not requiring a whistleblower to report internally before going to the SEC, things have seemed relatively quiet on the whistleblower front. The quiet, however, is likely just the calm before the storm.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

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.

© Lane Powell PC | Attorney Advertising

Written by:


Lane Powell PC on:

JD Supra Readers' Choice 2016 Awards
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.