SEC Announces Record $30M Whistleblower Award
By the C|C Whistleblower Lawyer Team
Yesterday, the Securities and Exchange Commission announced an expected whistleblower award of more than $30 million. It will be the largest award to date under the SEC whistleblower program established in 2012 under the Dodd-Frank Act. It surpasses the $14 million award the SEC made to great fanfare roughly a year ago. The new award will also be the fourth award to a whistleblower living in a foreign country making clear that as long as the proper US nexus exists with the target company and its challenged conduct, the SEC whistleblower program is international in its reach.
As with its prior whistleblower awards — there was one in 2012, four in 2013 and nine so far this year — the SEC went out of its way to heavily hype the award and use it as a carrot to encourage other would-be whistleblowers to come forward. In the press release announcing the award, SEC Enforcement Director Andrew Ceresney said, “this record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement.” SEC Whistleblower Chief Sean McKessy strongly echoed this sentiment: “Whistleblowers from all over the world should feel similarly incentivized to come forward with credible information about potential violations of the US securities laws.” Clearly the SEC is firmly behind its still fledgling whistleblower program and a strong believer in the critical role whistleblowers can play in assisting the agency’s enforcement regime.
By law, the SEC must protect the confidentiality of the whistleblower and cannot disclose any information that might directly or even indirectly reveal the whistleblower’s identity. Accordingly, there is no information on the company that engaged in the misconduct on which the whistleblower reported. But through his or her lawyer, the whistleblower did give an idea of what his charges were about and why he stepped forward: “I was very concerned that investors were being cheated out of millions of dollars and that the company was misleading them about its actions. Deception had become an accepted business practice.” The SEC credited the whistleblower with bringing it information that it unlikely would have been able to detect on its own. And that gets right to the core of how valuable the SEC program is and why the agency continues to promote it so heavily.