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What factors does the SEC consider when determining the amount of an SEC Whistleblower Award? - Chapter 14

Many factors affect the amount of an award. The SEC may increase the amount of an award based on the following factors:

  1. The significance of the tip to the success of any proceeding brought against wrongdoers. A tip’s significance depends on, for example:

    • the nature of the reported information, including whether the information’s reliability and completeness allowed the SEC to conserve resources; and

    • the degree to which the information supported one or more successful claims brought by the SEC or related actions brought by other regulatory or law-enforcement authorities.

  2. The extent of the assistance that you and your legal representative provided in the SEC action or related action. Considerations include:

    • whether you provided ongoing, extensive, and timely cooperation and assistance;

    • the timeliness of your initial report to the SEC or to your employer;

    • the resources conserved because of your assistance;

    • whether you appropriately encouraged or authorized others, who might otherwise not have participated in the investigation or related action, to assist SEC staff;

    • your efforts to remediate the harm caused by the violations; and

    • any unique hardships you experienced as a result of blowing the whistle.

  3. The SEC’s law-enforcement interest in deterring the specific violation. Consider factors such as:

    • how much an award enhances the SEC’s ability to enforce the federal securities laws and protect investors;

    • the degree to which an award encourages the submission of high-quality information;

    • whether the specific violation is an SEC priority; and

    • the dangers of the specific violation to investors.

  4. Whether, and the extent to which, you participated in your company’s internal compliance and reporting systems. Think about:

    • whether you reported internally before, or at the same time as, you reported to the SEC; and

    • whether you assisted any internal investigation concerning the violation.

Conversely, the SEC may reduce the amount of an award based on these considerations:

  1. If you participated in, or were culpable for, the securities-law violation(s) you reported. Consider the following:

    • your role in the violation;

    • your education, training, experience, and position of responsibility at the time the violation occurred;

    • whether you acted knowingly and intentionally;

    • whether you financially benefitted from the violation;

    • whether you committed a violation in the past;

    • the egregiousness of the underlying violation; and

    • whether you knowingly interfered with the SEC’s investigation of the violation.

  2. If you unreasonably delayed reporting the violation(s) to the SEC. This determination is based on:

    • whether you failed to take reasonable steps to report or prevent the violation from occurring or continuing;

    • whether you were aware of the violation but reported to the SEC only after learning of an investigation into the misconduct; and

    • whether there was a legitimate reason for you to delay reporting the violation.

  3. If you interfered with your company’s internal compliance and reporting systems. Consider whether you knowingly:

    • interfered with your company’s reporting systems to prevent or delay detection of the violation; or

    • made materially false statements, or provided false documents, to hinder your company’s ability to detect, investigate, or remediate the violation.

To learn more about the SEC Whistleblower Program, download the eBook SEC Whistleblower Program: Tips from SEC Whistleblower Attorneys to Maximize an SEC Whistleblower Award.

© 2020 Zuckerman Law

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About this Author

Jason Zuckerman, Whistleblower Litigation Attorney, Washington DC  Law Firm
Principal

Described by the National Law Journal as a “leading whistleblower attorney,” Jason Zuckerman litigates whistleblowe r retaliation, whistleblower rewards, wrongful discharge, and other employment-related claims. His practice focuses on representing senior executives and senior professionals in high-...

(202) 262-8959
Matthew Stock, CPA, Auditor, Zuckerman Law Firm
Certified Public Accountant

Matthew Stock is the Director of the Whistleblower Rewards Practice at Zuckerman Law. He is an attorney, Certified Public Accountant, Certified Fraud Examiner and former KPMG external auditor. Mr. Stock has audited a broad range of industries, both domestically and internationally, including large public companies and financial institutions. As an auditor, Mr. Stock developed an expertise in financial statement analysis and fraud recognition.

At Zuckerman Law, Mr. Stock leverages his experience as an attorney, CPA, CFE and external auditor to assist whistleblowers investigate and disclose complex financial frauds to the government. His practice focuses on representing whistleblowers in rewards cases at the SECCFTCDOJ and IRS. In addition, Mr. Stock assists whistleblowers in Sarbanes-Oxley whistleblower retaliation cases, analyzing a wide range of accounting issues, including financial statement fraudinadequate internal controls, and issuer disclosure violations.

202-930-5901