SEC’s Whistleblower Program Reaches New Heights

Employment Law
 

The Securities and Exchange Commission (SEC) announced an award to an overseas whistleblower, with the $500,000 payout bringing the total amount awarded under the program to roughly $385 million.

In recent months, the agency has issued record-setting awards—$50 million for two individuals, the highest amount handed out to date, along with another $33 million for a third whistleblower—and paid the first award under the “safe harbor” of the Exchange Act Rule 21F-4(b)(7) for an individual who reported information to the SEC after first reporting it to another agency.

The total $385 million paid out since the SEC issued its first award in 2012 has been awarded to 65 individuals, including the overseas whistleblower.

According to the agency’s order, the $500,000 award was appropriate because the “Claimant’s tip was the first information on the charged misconduct that the Commission received; Claimant expeditiously reported to the Commission and pointed Enforcement staff to an important witness; and without Claimant’s tip, the violations at issue would have been difficult to identify and prove, in part because the misconduct occurred abroad,” the SEC wrote. “We also took into account that Claimant was not in a position to provide continuing assistance, and other witnesses provided the information to substantiate Claimant’s tip.”

The whistleblower award program has reached an important milestone, Jane Norberg, chief of the SEC’s Office of the Whistleblower, said in a statement. “With recent actions, more than $2 billion in monetary sanctions have been ordered against wrongdoers based on actionable information received by whistleblowers. This represents the direct and important role that whistleblowers, like the overseas whistleblower being awarded today, have in enforcement actions and the protection of investors.”

To read the order determining the whistleblower award claim, click here.

To read the SEC press release, click here.

Why it matters: The SEC’s whistleblower program continues to grow and expand, not just in the amount paid out to claimants but in the breadth of the program. Last year, the agency asked for input on a proposal that would permit awards based on deferred prosecution agreements and nonprosecution agreements with the Department of Justice or a state attorney general, grant the agency the ability to adjust an award percentage upward under certain circumstances, and adopt a uniform definition of “whistleblower” in response to the U.S. Supreme Court’s opinion in Digital Realty Trust, Inc. v. Somers.