March 20, 2018

SEC Makes Largest-Ever Whistleblower Awards

By the C|C Whistleblower Lawyer Team

The Securities and Exchange Commission yesterday announced its highest-ever Dodd-Frank whistleblower awards.  According to the SEC press release trumpeting the landmark awards under the SEC whistleblower program, two whistleblowers will share nearly $50 million, and a third whistleblower will receive more than $33 million.  The previous high was a $30 million award in 2014.

Consistent with its strong commitment to maintaining the confidentiality of whistleblowers who report to the agency, the SEC did not disclose the identity of the whistleblowers or reveal the parties or misconduct involved.  However, according to Reuters, the law firm representing the whistleblowers said the awards related to the 2016 settlement with Bank of America’s Merrill Lynch brokerage unit concerning the misuse of customer funds.  Merrill Lynch paid $415 million to settle those charges, apparently admitting to misusing customer cash by holding up to $58 billion a day in a clearing account when it should have been held in reserve.

In announcing the record awards, SEC Whistleblower Chief Jane Norberg emphasized the importance of whistleblowers to the SEC and the hope these awards would encourage more whistleblowers to stand up and be heard:

These awards demonstrate that whistleblowers can provide the SEC with incredibly significant information that enables us to pursue and remedy serious violations that might otherwise go unnoticed.  We hope that these awards encourage others with specific, high-quality information regarding securities laws violations to step forward and report it to the SEC.

Since issuing its first award in 2012, the SEC has awarded more than $262 million to 53 whistleblowers.  The payments come from an investor protection fund established by Congress financed through monetary sanctions.  The money does not come from harmed investors.  Whistleblower awards under the SEC program range from 10 to 30 percent of the money the SEC collects (for recoveries that exceed $1 million).

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