A whistleblower who sued the Securities and Exchange Commission over its lengthy delay in resolving the application for an award got an answer from the SEC before the court could rule in the lawsuit.
Though it remains unclear what actually caused the SEC to rule on the case when it did, the timing suggests the lawsuit may have spurred the agency to action.
In October 2012, an anonymous individual filed for a whistleblower reward, saying information he provided to the SEC in 2011 led to an SEC enforcement action against a publicly traded company that paid the government well over $1 million in penalties.
Three years later, the whistleblower still had not heard from the SEC on whether he would receive an award. So on Dec. 10, the whistleblower filed a writ in the D.C. Circuit Court of Appeals requesting the court order the SEC to decide whether he would receive an reward or not.
Before the court had an opportunity to rule on the lawsuit, the agency issued its preliminary determination on the whistleblower award. Neither court documents nor the whistleblower’s attorney would say whether the determination was favorable or not.
The SEC whistleblower program arose as part of the Dodd-Frank Wall Street Reform legislation of 2010. Whistleblowers that provide the SEC with original information about securities law violations that leads to an enforcement action resulting in over $ 1 million in penalties are entitled to a reward of between 10 percent and 30 percent of the recovery. In addition to potential monetary rewards, the program allows whistleblowers to file their complaints anonymously and provides job protection.
Phillips and Cohen partner Erika Kelton noted in the National Law Journal that the whistleblower’s court filing “might have the impact of speeding things up” because “other whistleblowers who are facing a prolonged wait time for a preliminary determination are probably going to be considering this option.”