July 12, 2020

Volume X, Number 194

July 10, 2020

Subscribe to Latest Legal News and Analysis

July 09, 2020

Subscribe to Latest Legal News and Analysis

SEC Announces Second Largest Whistleblower Award Yet ($17M)

The SEC announced yesterday that it has awarded $17 million to a former company employee whose tip substantially advanced the SEC’s investigation and enforcement proceeding. Press Rel. No. 2016-114. The award is the second largest award by the SEC to a whistleblower since the inception of its whistleblower program nearly five years ago, trailing behind a $30 million award announced in September 2014.

No details on the underlying enforcement action have been released, but the action can be expected to bring in between $56 million and $170 million because the SEC awards whistleblowers 10 to 30 percent of the sanctions it secures. In determining the award percentage, the SEC considers the following factors:

(i) the significance of the information provided by the whistleblower; (ii) the degree of assistance provided by the whistleblower in the enforcement action or related actions; (iii) the SEC’s interest in deterring violations of the securities laws by making awards to whistleblowers; (iv) the extent to which the whistleblower participated in internal compliance systems; (v) the culpability or involvement of the whistleblower in matters associated with the SEC’s action or related actions; (vi) whether the whistleblower unreasonably delayed reporting the securities violations; and (vii) whether the whistleblower undermined the integrity of his or her entity’s internal compliance or reporting system, in cases where the whistleblower interacted with the internal compliance or reporting system.

17 C.F.R. § 240.21F-6. The award comes from an investor protection fund established by Congress that is financed through monetary sanctions paid by violators of securities laws.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume VI, Number 162

TRENDING LEGAL ANALYSIS


About this Author

Drinker Biddle’s Labor and Employment Practice provides businesses with a full range of employment-related legal services. Our clients include a broad range of foreign and domestic corporations, including industrial manufacturers, retailers, nonprofit educational and public institutions, health care organizations, financial services providers and consulting firms. For many of these clients, we serve as national counsel for labor and employment matters, especially in the retail and financial services industries. We are committed to providing real-time, real-world...

215-988-2834