Crossing $400M Mark in Whistleblower Awards, SEC Gives More Than $27M to Tipster
"This award marks several milestones for the program," said Jane Norberg, chief of the SEC's whistleblower office.
April 16, 2020 at 01:23 PM
3 minute read
The U.S. Securities and Exchange Commission awarded more than $27 million on Thursday to a whistleblower credited with tipping the agency off to misconduct that played out partially overseas and providing critical leads in an investigation that resulted in a successful enforcement action.
The bounty was by far the largest of the nine awards issued so far this year, vaulting the SEC's program for rewarding tipsters past a notable milestone. In the decade since the Dodd-Frank financial reforms created the whistleblower program, the SEC has now doled out more than $400 million in awards.
"This award marks several milestones for the program," said Jane Norberg, chief of the SEC's whistleblower office. "This is the largest whistleblower award announced by the commission this year, and the sixth largest award overall since the inception of the program. This award also brings the total amount awarded to whistleblowers by the SEC over the $400 million mark."
Earlier this year, the SEC approved awards ranging from $45,000 to $7 million. In March alone, as the federal government operations were upended by the coronavirus outbreak, the SEC awarded four whistleblowers.
The SEC said that it has now awarded 79 whistleblowers, with bounties totaling about $425 million.
Following its standard practice, the SEC did not identify the whistleblower or the specific enforcement action that led to the award, although the order approving the more than $27 million bounty said that the tipster "repeatedly and strenuously" raised concerns about the misconduct internally. Under the SEC's whistleblower program, tipsters deemed worthy of awards are entitled to between 10% and 30% of the money collected in enforcement actions that result in more than $1 million in sanctions.
With the whistleblower awarded Thursday, the SEC appears to have been struck by the extent of the assistance. The award total reflected an increase from what an internal SEC panel had initially recommended for the tipster.
The SEC said it decided to elevate the bounty following a review of the "administrative record," which revealed a number of factors that favored a higher bounty, including the repeated efforts to blow the whistle internally. The SEC also highlighted the "substantial amount of ongoing assistance and cooperation," noting that the whistleblower met "numerous times" with enforcement staff and provided "critical investigative leads" that advanced the investigation while saving the commission time.
"This order provides a road map for whistleblowers to get a high award percentage: provide original information and substantial ongoing assistance to the SEC, including solid investigate leads," said Jason Zuckerman, a whistleblower lawyer at Washington-based Zuckerman Law.
"It also shows why companies act at their peril when they ignore internal whistleblower disclosures. This whistleblower reported internally before disclosing information to the SEC that apparently resulted in a significant enforcement action."
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