The US Securities and Exchange Commission has announced two whistleblower awards this week. The first is almost $2.5M to an employee of a US government agency whose tip helped instigate the regulator’s probe into the alleged misconduct. This individual provided additional help that allowed the SEC to “address” the issue and accelerate the speed of the enforcement investigation.
Two days later, the SEC announced another award, this one for over $1.7M to a company insider who handed over key information to stop a fraud that might have been hard to detect without this person’s help. As a result, investors that were harmed were able to recover millions of dollars.
To date, since the SEC instituted its whistleblower award program, 46 individuals who voluntarily gave original and helpful information leading to a successful enforcement probe have been awarded $158M. To qualify for an award, money collected from the enforcement sanctions must be more than $1M, at which point the whistleblower may be entitled to 10-30% of these funds.
The whistleblower awards do not come from the money of investors who were harmed because of wrongdoing. Instead, they come out of a fund that is paid for through the monetary sanctions that the SEC imposes on violators.
At Shepherd Smith Edwards and Kantas, LTD LLP, our securities fraud law firm believes that it is important for whistleblowers to have this reward system in place to help them as they come forward to provide this necessary information. Many whistleblowers risk losing their jobs and even being sued, which may lead to expensive legal bills as they fight litigation.
Employers (and others) are not allowed to retaliate against whistleblowers through harassment, termination, demotions, and other hostile acts. Whistleblowers can take legal action for such retaliatory acts and many have done so with successful outcomes.
That said, the SEC is required by law to protect the confidentiality of whistleblowers and dose not disclose details that could lead others to identify them.
SEC Announces Whistleblower Award of More Than $1.7 Million, SEC, July 27, 2017
SEC Announces $2.5 Million Whistleblower Award, SEC, July 25, 2017