Whistleblowers (known as “relators” in qui tam lawsuits) are awarded a whistleblower reward based on a percentage of the money recovered by the government when those recoveries are due to a qui tam lawsuit or claims made under the SEC, CFTC or IRS whistleblower programs.
Phillips & Cohen has earned their clients more than $1.1 billion in whistleblower rewards as a result of our successful cases.
There are several US laws that offer whistleblowers significant monetary rewards for reporting fraud and financial misconduct. The process for obtaining a whistleblower reward and the amount depend on whether the whistleblower cases are qui tam lawsuits or submissions made to the Securities and Exchange Commission (SEC) whistleblower program, a similar whistleblower program at the Commodity Futures Trading Commission (CFTC) or the IRS whistleblower program.
The False Claims Act, the SEC, the CFTC and the IRS have separate criteria for whistleblower rewards. In all cases, the reward is a percentage of the amount recovered by the government and varies by the type of case and other factors, as explained below.
Whistleblower rewards under the False Claims Act
- The whistleblower (known as the “relator” in qui tam cases) may receive a reward of 15 percent to 25 percent of what the government recovers, if the government joins the qui tam case.
- If the government declines to join the qui tam lawsuit and the whistleblower proceeds against the defendant anyway, the relator is entitled to a reward of 25 percent to 30 percent of the recovery that the government receives.
- The actual whistleblower reward depends on many factors, including:
- How extensive and detailed the information provided by the whistleblower was about the fraud.
- Whether the fraud involved a significant safety issue.
- The quality and amount of assistance the whistleblower and the whistleblower’s lawyer provided in the case.
In qui tam cases, the reward for the “relator,” or whistleblower, is calculated based on the amount the government recovers, rather than the amount the government lost. Under the False Claims Act, the government may collect “trebled damages” – meaning it may recover up to three times the amount of money it lost to the fraud. In cases that settle before trial, the settlement is typically less than three times the loss.
Whistleblower rewards under the SEC whistleblower reward program
- The whistleblower may receive a reward of 10 percent to 30 percent of what the government recovers, if the SEC recovers more than $1 million.
- The SEC may increase the whistleblower award based on many factors, such as:
- How important the information that the whistleblower provided was to the enforcement action.
- The assistance that the whistleblower and the whistleblower’s attorney provided in the investigation and any enforcement proceedings.
- The value of the case in deterring other securities law violations.
The SEC also says it may increase the award if the whistleblower first reported possible securities violations through a company’s internal compliance system.
However, whistleblowers should be aware that they might not be protected from job retaliation if they report internally before going to the SEC as a result of a recent Supreme Court decision. To protect themselves, individuals should consult with an attorney before reporting securities violations internally.
For more information, visit our SEC whistleblower reward program page.
Whistleblower rewards under the CFTC whistleblower reward program
- The whistleblower is entitled to a reward of 10 percent to 30 percent of what the government recovers, if the CFTC recovers more than $1 million.
- A whistleblower award from the CFTC also may be based on enforcement actions brought by certain other government entities, such as the Department of Justice and the Federal Energy Regulatory Commission, that are related to the CFTC whistleblower case.
To learn more, visit our CFTC whistleblower awards program page.
Because the quality and amount of assistance provided by the whistleblower and their attorneys are factors in determining awards, individuals who are considering blowing the whistle should carefully consider their decisions about whom to hire as their lawyers. See “Tips for Choosing a Whistleblower Lawyer” for factors to consider.
Phillips & Cohen will provide a free, confidential review of your case without any obligation. Get in touch, using our contact page.