The SEC awarded more than $7 million to a whistleblower for providing critical information related to an enforcement action for "serious financial abuses."
According to the SEC, the whistleblower provided extensive assistance to the SEC in its investigation, including (i) identifying witnesses, (ii) explaining complex fact patterns pertinent to the investigation, and (iii) providing enough information so that the SEC was able to construct an investigation plan and compose initial document requests.
Since issuing its first whistleblower award in 2012, the SEC has granted roughly $394 million to 73 informants. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.
Commentary Lex Urban
Though not required to be eligible for an award, this whistleblower worked closely with the SEC to assist their investigation. A whistleblower's level of cooperation and assistance is a significant factor when the SEC determines the percentage of money the whistleblower receives. More importantly, the whistleblower program continues to be a significant driver of enforcement actions, and this serves as another reminder that companies should devote resources to adequately develop internal reporting and compliance mechanisms for addressing reports of potential misconduct.
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