On June 9, the SEC announced that it had just awarded $17 million to a whistleblower who had come forward to provide information aiding the agency in an enforcement action. That award is the second-largest whistleblowing award since the SEC began its whistleblowing program in 2011, with a September 2014 award of $30 million to a single whistleblower being the only award that was higher.
This large $17 million award appears to be part of a much larger trend of the SEC providing significant awards to whistleblowers who have brought information to the SEC that helps the commission open and investigate enforcement actions. The SEC announced that, in just the month leading up to its June 9 press release, it had awarded a total of $26 million to five different whistleblowers, with an average award of $5.2 million per whistleblower. Given that the SEC has awarded a total of 32 awards over the five years of the program, making five awards in a single month suggests the SEC is continuing to ramp up its whistleblower program.
The Stories Behind the Awards
The SEC whistleblower laws require that the SEC maintain the anonymity of the whistleblowers who have received the awards, and to not provide any details that could point to their identity, thus little is known about the five individuals who received the large awards over the past month. But this anonymity is a strong selling point of the whistleblower program as it allows employees and insiders in the financial world to securely and safely provide information to the SEC in its enforcement efforts and be handsomely rewarded for their without giving up their identity or actions and exposing them to potential retaliation from employers and industry players.
How the SEC Calculates Awards
In general, SEC whistleblowing awards are calculated based on the amount of money that the SEC obtains in penalties and fines from the target of the enforcement action that the whistleblower assisted in bringing. The awards will range from between 10% to 30% of the monies that are recovered in the enforcement action, when those amounts exceed $1 million.
Given the fact that the SEC routinely extracts penalties and fines from financial wrongdoers well in excess of $1 million – and often ranging in the tens and hundreds of millions – it is no surprise that we see such large awards being paid out to whistleblowers. All in all, the SEC has awarded $85 million to 32 different whistleblowers over the five years the program has been in place, with an average award of $2.66 million per whistleblower.
Obtaining Your Own SEC Whistleblower Award
The SEC is actively looking for more individuals to bring information to it which can be rewarded with a whistleblowing award, but there are a couple important factors to keep in mind. In order to be eligible for a whistleblower award, you must voluntarily provide unique information to the SEC that helps in bringing an enforcement action. “Voluntarily” means the information cannot have been previously requested by the SEC or other regulatory body. “Unique” means the information cannot be information the SEC already has access to, such as through information provided through another employee or competitor. Thus it is important to act quickly or risk losing out on potential awards.
Bringing whistleblower information to the SEC can be a long, complex process, but it can also be tremendously lucrative, and the right thing to do to help keep our financial markets fair.To learn more about how Kriendler & Associates can help in your SEC whistleblower matter, see here.
