August 4, 2021

Volume XI, Number 216

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Whistleblower Awards from the U.S. Securities and Exchange Commission

The U.S. Securities and Exchange Commission (SEC), continues to reward whistleblowers who provide key information leading to a successful enforcement action. Since the beginning of May 2021, the SEC has already conferred two substantial whistleblower awards. 

As a refresher, in order to receive an award from the SEC, a whistleblower’s information must be “[o]riginal, timely, and credible” and “lead[] to a successful SEC enforcement action.” For example, in the SEC order of May 10, 2021, two claimants were awarded approximately $22 million in total. One claimant received almost $18 million for alerting the SEC about violations and providing continued assistance throughout the investigation, including while under hardship. The second claimant, reporting the activity several years later, supplemented the information provided by the first claimant, including information regarding compliance which was ultimately used during settlement negotiations. This whistleblower was awarded over $4 million.

Most recently, on May 12, 2021, the SEC awarded one claimant $3.6 million and rejected the claim of another purported whistleblower. The whistleblower claimant who received an award provided information that caused the SEC to initiate the inquiry and was instrumental in providing additional information and assistance throughout the investigation. The other claimant, by contrast, failed to show that their information caused the opening of the investigation or advanced its progress. Although this claimant provided a flash drive of files during the investigation, these files were not used in the successful resolution of the enforcement action. The SEC further denied this claimant’s contesting of the preliminary determination that no award was warranted.

These awards serve as an import reminder for companies that these types of significant incentives to report on company misconduct are real and recurring. They reinforce the importance of an effective compliance program – including a reporting platform so that issues may be properly escalated, investigated, and remediated.

© 2021 BARNES & THORNBURG LLPNational Law Review, Volume XI, Number 144
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About this Author

John Heinz Indianapolis Lawyer Barnes and Thornburg LLP
Associate

Dedicated to providing top-notch representation for his clients, John Heinz advises and advocates for a range of litigation clients.

John assists with legal research, analysis and virtually all forms of litigation-related drafting, including briefs, motions and discovery. 

Before joining the firm full-time, John was a law clerk with Barnes & Thornburg and with the Indiana State Public Defender’s office. He also held internships with the Marion County Public Defender’s Office, the Marion County Prosecutor’s Office...

317-231-6403
Tabitha K. Meier, Barnes Thornburg, Indianapolis, Corporate Law Attorney
Partner

Tabitha K. Meier is a partner in Barnes & Thornburg’s Indianapolis office, a member of the firm’s Litigation Department and co-chair of the Compliance Practice Group. Ms. Meier’s national and international practice is focused on compliance, specifically in advising companies on the development and deployment of effective compliance programs in their businesses, including risk assessment, training, policies and procedures, and investigations – all informed by a thorough understanding of the business environment.

317-231-7326
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