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Volume XII, Number 145

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Crime Doesn’t Pay, but Whistleblowing Does: SEC Awards $40 Million to Four Whistleblowers

January 27, 2022. For reporting financial malfeasance and providing key evidence during investigations, the Securities and Exchange Commission awarded just over $40 million to four whistleblowers last week. Under the Dodd-Frank Act, the SEC does not release any identifying information about the whistleblowers or claimants. SEC whistleblowers are entitled to receive 10-30% of the government’s recovery when monetary sanctions exceed $1 million.

In the first order, two whistleblowers were jointly awarded $37 million, paid from the SEC and another agency’s recovery. Whistleblowers, as industry insiders with specialized knowledge, have a unique position of being able to assist investigators by interpreting evidence. The Commission considered the value of this assistance when making a determination of award in this first case.

In the second order, a whistleblower received $1.8 million. According to the order, the whistleblower “quickly reported internally the misconduct in an effort to remedy it.” SEC staff built their charges against the financial institution “directly based on Claimant’s information.” The whistleblower’s cooperation resulted in “hardships,” which the Commission recognized when determining the award.

In the third order, the whistleblower received $1.5 million. This whistleblower’s information “helped Commission staff formulate their investigative strategy and significantly contributed to the success of the Covered Action,” the order states, as well as “saved significant Commission staff time and resources.” Whistleblowers can help investigations proceed more efficiently.

The SEC has issued 11 whistleblower awards in 2022 and has awarded $1.2 billion to 245 whistleblowers since 2012. All SEC whistleblower awards are deducted from monetary sanctions that securities law violators pay to the SEC. The SEC Office of the Whistleblower needs whistleblowers to provide credible and timely tips which lead to enforcement actions.

© 2022 by Tycko & Zavareei LLPNational Law Review, Volume XII, Number 27
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About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...

202-973-0900
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