The Securities and Exchange Commission has awarded new whistleblower awards to individuals who have come forward with original and helpful information that have allowed the government to pursue significant securities cases against offenders. By law, a whistleblower is entitled to 10-30% of money garnered when a monetary sanction obtained exceeds $1.
Last week, the SEC announced that it would award between $5M-$6M to an ex-company insider who provided information about his employer’s securities violations. The SEC said that the offenses would have been nearly impossible to identify had it not been for the tip. More specifics about the case were not provided in part to protect the whistleblower’s identity.
The award is the third highest that the Commission has issued to a whistleblower since the whistleblower program when into effect in 2011. The two larger whistleblower awards include one of over $30M in 2014 and another of more than $14M in 2013.
Also last week, the SEC announced that it would jointly award over $45K to two whistleblowers for the tip they gave the regulator that compelled it to set up a corporate accounting probe, as well as for their help during the investigation.
The week before, in an unrelated case, the SEC said that the employee of a company would receiver over $3.5M for providing a tip that helped in an ongoing probe. The information provided gave additional proof of wrongdoing that helped the SEC’s investigation.
This last award was unusual in that the regulator initially denied the individual’s award but reconsidered after the claimant contested that ruling. At the time of the denial, the Claims Review Staff said that the whistleblower’s tip was not the cause of the probe nor did it play a significant part in the enforcement action’s success. The SEC had already started investigating the company in the wake of media reports of possible wrongdoing.
The SEC Enforcement Division Staff has since provided evidence showing that even though the whistleblower didn’t start the investigation with the information provided, nor was the information “substantially different” from the misconduct already alleged, the tip was a reason for the enforcement action’s success and provided the regulator greater with more leverage during settlement talks.
The Commission also said that it factored in the “unique hardships” that the claimant experienced when determining the award amount. The SEC said that because the tipster reported the misconduct, this person has not been able to find work.
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SEC Gives Whistleblower $3.5M Payout On Second Look, Law360, May 13, 2016
Two Individuals Share Whistleblower Award of More Than $450,000, SEC, May 20, 2016
SEC Awards More Than $5 Million to Whistleblower, SEC, May 17, 2016