SEC’s Office of the Whistleblower Ends 2017 With a Bang

Saul Ewing Arnstein & Lehr LLP

Just in time for the holiday season, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) has brought joyful news to three whistleblowers who will receive substantial awards of over $8 million each to two whistleblowers, and over $4 million to another.  The awards announced in late November and early December 2017 follow the release by the Office of the Whistleblower (“OWB”) of the 2017 Annual Report to Congress (the “Report”). That Report notes that the SEC had, until the time of the Report, “ordered wrongdoers in enforcement matters involving whistleblower information to pay over $975 million in total monetary sanctions, including more than $671 million in disgorgement of ill-gotten gains and interest.”  This is a substantial record of recovery.

As for the whistleblowers, prior to the announcement of the most recent awards in late November and December, the Report noted that in the past fiscal year (October 2016 to October 2017), “the SEC ordered whistleblower awards totaling nearly $50 million to 12 individuals,” while in the years since the first award issued in 2012, the SEC had awarded $160 million to 46 individuals.  In FY 2017, awards were the result of a total of over 4,400 tips. 

As Jane Norberg, Chief of the OWB has noted, “the promise of monetary awards,” along with “provisions to safeguard whistleblower confidentiality, and enhanced anti-retaliation protections,” are strong drivers of whistleblower interest and will likely continue to incentivize the reporting of tips for years to come.

Background to the Dodd-Frank Whistleblower Program

The Dodd-Frank Act of 2010 included Section 21F (“Securities Whistleblower Incentives and Protections”), which directs the SEC to issue monetary awards to individuals who voluntarily provide original information leading to successful enforcement of monetary sanctions of over $1 million. The awards are between 10 and 30 percent of collected monetary sanctions, and are paid out of the Investor Protection Fund, which is funded by the payment of monetary sanctions by securities law violators so as not to diminish the financial recoveries of victims.

Whistleblowers may contact the SEC via a hotline, online portal, fax number, or  mailing address.  The OWB is currently tracking over 700 matters from tips received.

Significantly, tips have poured in to the SEC from all over the world, including from as many as 72 foreign countries in FY 2017 alone, and from 114 foreign countries during the lifetime of the program.  Indeed, nine prior award recipients were foreign nationals or residents at the time they made their tips.  The implications of this broad reach are particularly significant for any company with foreign exposure, including interface with foreign government officials, given the potential for liability under the Foreign Corrupt Practices Act.

The SEC adopted rules to implement Section 21F.  Among other things, the rules recognize the appropriateness of internal reporting by whistleblowers to their employers’ compliance function.  (A pending U.S. Supreme Court case, Digital Realty Trust, Inc., v. Somers, which we have covered here, considers whether internal whistleblowers who do not also report to the SEC are entitled to the Dodd-Frank Act’s anti-retaliation protections.)

Recent Awards Among the Highest

FY 2017 included three of the top ten awards granted whistleblowers to date – i.e., awards of $20 million (November 2016), $7 million (January 2017), and $5.5 million (January 2017).  This makes the most recent awards at the start of FY 2018 even more notable.  Indeed, the awards of over $8 million to each of two whistleblowers on November 30, 2017 increase the median and mean amounts that the SEC has awarded.  And, if those awards are counted separately (rather than as a single award of $16 million) the award of $4.1 million on December 5, 2017 is no longer among the top ten.

The Orders awarding these sums – although heavily redacted – offer some insight into the SEC’s reasoning in granting awards.

The Award Order of November 30, 2017, announcing the two largest awards of the 2017 calendar year ($8 million each)

Whether viewed as two separate awards of approximately $8 million each, or as a combined award of approximately $16 million, the award announced in the Award Order of November 30, 2017 is the largest awarded during the 2017 calendar year and among the highest since the program began in 2012.  See SEC Release No. 82181, Whistleblower Award Order, File No. 2018-2 (Nov. 30, 2017).

As notable as the justification offered for granting the award to two claimants however, is the explanation the SEC provided for denying awards to several others.  This is discussed below.

Justification for two awards of over $8 million each in November 2017

According to the Award Order, Claimant 1 voluntarily provided original information to another government agency before the SEC learned of the information, which the SEC deemed to be the voluntary provision of original information to the SEC.  Although the precise nature of the allegations are redacted from the Order, the Order does credit Claimant 1 with providing the “allegation [that] would become the focus of staff’s Investigation and the cornerstone of the Commission’s subsequent action against the Company.”  Furthermore, Claimant 1 “communicated with Enforcement staff approximately 5-6 times during the Investigation, and provided additional, critical information that advanced the Investigation, including the identification of potentially relevant documents and witnesses.”

Notably, between July 21, 2010 (the effective date of the Dodd-Frank Act) but prior to August 12, 2011 (the effective date of the whistleblower rules) Claimant 1 informed the SEC of misconduct, but did not provide the information in writing.  While reports during this period are ordinarily required to be in writing, the SEC exercised its discretion to waive the requirement in this case, citing “unusual circumstances,” namely, the facts that:  (1) Claimant 1 was already cooperating with the SEC prior to July 21, 2010; (2) the SEC itself had requested that Claimant 1 provide the information orally; and (3) the information was deemed reliable.

The second awardee, Claimant 2, provided the SEC with original information through the SEC’s on-line Tips, Complaints, and Referrals (“TCR”) system.  Evidently due to Claimant 2’s own “extensive experience” in a particular area that is redacted from the Order, the SEC concluded that an award was appropriate because Claimant 2’s “submissions and assistance enabled the Enforcement staff to more fully and quickly understand the misconduct and to assess the legal consequences.”  In addition, Claimant 2 retained an expert from an unidentified firm who supplemented Claimant 2’s tip with an expert report.  In sum, given the significance of the information that Claimant 2 provided, and the fact that Claimant 2 directly (and indirectly through the retained expert) “provided continuing and helpful assistance to the Enforcement staff during the Investigation that saved a substantial amount of time and resources in the Investigation,” Claimant 2 also received an award.

Justification for denying awards to expert consultants

Of those claimants denied an award – Claimants 3, 4, 5, 6, and 7 – the SEC addressed at length the submissions of Claimants 3 and 4, who were experts that Claimant 2 had retained to assist in writing the expert report provided to the SEC.  The SEC concluded that the award applications of Claimants 3 and 4 were “inextricably intertwined with” Claimant 2’s application.

The SEC determined that Claimants 3 and 4 did not provide information to the SEC in the form and manner required under the rules.  In addition, since only individuals are entitled to awards, Claimants 3 and 4, in their role as firm representatives, were not considered “individuals.”  Furthermore, the SEC concluded that the information provided was neither original, nor led to the success of the Covered Action.  The SEC noted that experts “retained by and working on behalf of a whistleblower” cannot be sources of original information developed in “the context of that contractual relationship.”  The SEC further concluded that experts retained by whistleblowers “should be deemed to have forfeited and waived any subsequent claim to being the original source of that information if such information was previously provided to the Commission by or on behalf of the whistleblower who retained the expert.”

Finally, the SEC noted that experts cannot “piggyback off of the contributions” of the original source, in this case Claimant 2.  Instead, “they must demonstrate that something unique about their submission of information made an additional significant contribution to the success of the Covered Action,” which in this case Claimants 3 and 4 could not do.

The Award Order of December 5, 2017, announcing a $4.1 million award

On December 5, 2017, the SEC issued a Final Order awarding the Claimant approximately $4.1 million. While the SEC valued the information coming from “a former company insider who both alerted the Commission to a widespread, multi-year securities-law violation, and continued to provide important information and assistance throughout the Commission’s investigation,” the SEC noted that “these positive award considerations are somewhat offset by the Claimant’s unreasonable delay in reporting the misconduct to the Commission.”  See SEC Release No. 82214, Whistleblower Award Order, File No. 2018-3 (Dec. 5, 2017) at 2.  Nonetheless, the SEC found mitigating the facts that the delay occurred prior to establishment of the whistleblower program, and that the whistleblower was a foreign national who may not have been afforded the anti-retaliation protections of the Act, which the U.S. Court of Appeals for the Second Circuit has said have no extraterritorial application.  See Liu v. Siemens AG, 763 F.3d 175 (2d Cir. 2014).


Whatever 2018 holds in store, it is clear that the size of whistleblower awards, and the public notice that comes from them, will continue to strongly incentivize individual whistleblowers both in the United States and abroad.  The implications for companies are no less significant, and may well counsel in favor of more proactive self-disclosures.

Given the U.S. Department of Justice’s formalization of the “FCPA Pilot Program” in the new FCPA Corporate Enforcement Policy that is now a part of the U.S. Attorney’s Manual, the incentives for companies to voluntarily disclose FCPA problems has increased.  Under that recently announced policy, voluntary self-disclosure, full cooperation, and remediation, will generally entitle a company who blows the whistle on itself to a presumptive declination in a FCPA prosecution, barring aggravating factors.

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.

© Saul Ewing Arnstein & Lehr LLP | Attorney Advertising

Written by:

Saul Ewing Arnstein & Lehr LLP

Saul Ewing Arnstein & Lehr LLP on:

Readers' Choice 2017
Reporters on Deadline

Related Case Law

"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:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.