SEC Makes $50M Whistleblower Reward: LARGEST AWARD TO DATE
The SEC today announced a $50 million whistleblower award, the largest award to date to a single individual whistleblower under the SEC Whistleblower Program. This tops the $54 million award to two whistleblowers in September 2018 and the $50 million award to two whistleblowers in March 2018. It brings the total amount of awards under the program to more that a half-billion dollars. And it is just the latest in a flood of awards the SEC has doled out over the last several months.
The string of SEC whistleblower payouts since January has included awards of $2 million on May 4, $18 million on April 28, $5 million on April 20, $27 million on April 16, $2 million on April 3, $450,000 on March 30, $570,000 on March 24, $1.6 million on March 23, $2 million on March 8, $7 million on February 28, and $277,000 and $45,000 on January 22. That is 12 awards in only 5 months, by far the most prolific stretch of awards since the agency issued its first award under the program in 2012.
In announcing this latest award, the SEC went out of its way to highlight the critical role whistleblowers play in the SEC enforcement regime. According to SEC Whistleblower Chief Jane Norberg, “Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors.” This has been a constant refrain from an agency that has repeatedly demonstrated its support and appreciation for whistleblowers.
The surge of SEC whistleblower awards has been accompanied by a surge of SEC whistleblower complaints. As the Wall Street Journal reported on Monday, the SEC received roughly 4,000 tips, complaints and referrals of possible corporate wrongdoings from mid-March to mid-May. This is a 35% bump from the same period last year and has led to hundreds of new investigations.
Some of this increase might be attributed to COVID-related activity and the fact that so many people are working from home, out from under the watchful — and for some menacing — eye of their employers. But there would seem to be little doubt the spike in whistleblower activity is also a function of the surfeit of awards the SEC has been rolling out along with the clear signaling by the agency that it wants to hear from whistleblowers.
Under the SEC program, whistleblowers can receive an award of 10 to 30 percent of the money the SEC recovers from a successful enforcement action to which the whistleblower contributed original, timely and material information. The money does not come from amounts to be paid to harmed investors but from a special fund Congress established to reward whistleblowers.
With this most recent award, like with all awards, the SEC has withheld the identity of the whistleblower along with the substance of the whistleblower’s complaint and the company that was the target of the SEC’s ensuring enforcement action. The SEC never discloses this information, consistent with its strong commitment to maintaining the confidentiality of all whistleblowers.
So the bottom line for would-be whistleblowers, the SEC has made it very clear — stay-at-home orders or not — it is very much open for business. If you believe you might have useful information regarding potential securities fraud violations and would like to speak to an experienced member of the Constantine Cannon whistleblower lawyer team, please do not hesitate to contact us.
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