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SEC whistleblowers get awards for help with ongoing investigations

The Securities and Exchange Commission rewards whistleblowers who contribute significantly to ongoing investigations. Photo by Scott S via Flickr (CC BY 2.0).

Two of the most recent Securities and Exchange Commission whistleblower awards have gone to whistleblowers who contributed significantly to ongoing investigations.

Unlike some whistleblower programs, the SEC whistleblower program expressly provides for awards to more than one whistleblower in connection with the same action.

An SEC whistleblower was awarded $450,000 on March 30 for providing information that the SEC said “helped focus an ongoing investigation on the violations that were ultimately charged.”

A week earlier, an SEC whistleblower who provided important information that contributed to charges against one of the individuals or entities involved in a matter that the SEC already was investigating received a $94,000 award. (A different whistleblower who earlier provided information about the fraud on which the SEC investigation was based received a much larger award, $478,000.)

It is important to be the first whistleblower to provide information to the SEC about a specific matter. However, the SEC also will reward whistleblowers who provide significant information that contributes to a successful enforcement action even if other whistleblowers report related information or if the SEC already has started an investigation.

Under the SEC whistleblower provisions, with some exceptions, a whistleblower can receive an award for voluntarily providing the SEC “original information” that leads to a successful enforcement action with sanctions that exceed $1 million.

Original information is information that is derived from the whistleblower’s independent knowledge or independent analysis, is not already known to the SEC from another source – unless the whistleblower is the original source of the information – and is not exclusively derived from certain public or government sources.

SEC whistleblower rewards range from 10 percent to 30 percent of the amount collected in an enforcement action. In assessing the appropriate award amount, the SEC considers the significance of the information provided, the assistance provided to the SEC, the law enforcement interest in deterring violations by granting awards, participation in internal compliance systems, culpability, unreasonable reporting delay and interference with internal compliance.

In the case where two whistleblowers were awarded different amounts for related enforcement actions, the SEC attributed the difference to several factors: The first whistleblower’s information was significantly more important, came early in the investigation and played a critical role in developing both the covered action and related actions.

The SEC previously has made awards to multiple whistleblowers who independently make important contributions to successful enforcement actions, as well as to multiple whistleblowers who jointly submit a tip.

Since its first award in 2012, the SEC has awarded over $396 million to 77 whistleblowers.

If you are considering reporting securities law violations, you should consult with an experienced whistleblower attorney to help ensure that you report in a manner that preserves your interests in an award.

About Phillips & Cohen LLP

Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from our cases totaling over $12.3 billion. We have been recognized for our work by numerous national awards. Our attorneys and cases have been in The New York TimesThe Wall Street Journal, the Financial Times and other news media. Three of our cases were featured in the CBS series, “Whistleblower.” Phillips & Cohen’s roster includes former federal prosecutors, the first head of the SEC Office of the Whistleblower, a former deputy administrator of the Centers for Medicare and Medicaid Services, the author of a leading treatise on the False Claims Act and attorneys with decades of experience representing whistleblowers.


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