Recently in Whistleblower Program Category

April 22, 2015

Compliance Officer Receives Million Dollar Whistleblower Award

Today, the Securities and Exchange Commission ("SEC") announced a whistleblower award in excess of a million dollars to a compliance officer who provided information to the SEC after his employer failed to take steps to prevent harm to investors. Whistleblower awards typically range between 10 to 30 percent of the money collected in a successful enforcement action involving penalties of more than $1 million.

Currently, the SEC has paid more than $50 million to 16 whistleblowers who provide the SEC with unique and useful information that leads to a successful enforcement action.

January 1, 2015

SEC's Securities Fraud Whistleblower Program Paying Off

Thumbnail image for whistle.jpgOn September 22, 2014 the Securities and Exchange Commission (SEC) announced a $30 million dollar securities fraud whistleblower award, their largest award since the program started in 2011. The award is more than double the amount of the previous highest award of $14 million. The tipper is the fourth person from a foreign country to receive an award from the Whistleblower program. Because the whistleblower engaged a lawyer to file his or her claim, under the SEC Whistleblower rules, the tipper will remain anonymous and their name will be omitted from all documents or information that could potentially reveal his or her identity. Although the SEC does try to protect the identity of all tippers, those who bypass using a lawyer to file their claim run the risk of having their identity revealed in certain circumstances.

In 2014 the SEC received more than 3,620 tips and paid out more than $1.9 million in whistleblower awards. The amount of awards ranged from $150,000 to $875,000 and included awards to whistleblowers that received their initial award in previous years but were entitled to more because the SEC or criminal authorities were able to collect additional money from the defendants. The amount of tips has increased dramatically since the start of the program and, with this $30 million dollar award, the incentive for whistleblowers continues to grow.

August 21, 2012

Securities Fraud Whistleblower Receives $50,000 Reward

Thumbnail image for whistle.jpgToday, the Securities and Exchange Commission (SEC) issued their first payout under the year old Whistleblower Program established by the SEC to prevent securities fraud. The recipient of the first payout will receive $50,000, which represents 30% of the amount collected by the SEC. Rewards can range between 10 - 30% depending upon a variety of factors. The recipient of the $50,000 reward has elected to remain anonymous. The SEC denied an award request from a second individual was declined after the SEC determined that the information provided did not contribute significantly to the SEC's investigation. Although this is a relatively small award, it is hoped that more individuals will be encouraged to report securities fraud as larger rewards get reported.

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June 1, 2012

Securities Fraud Whistleblower Payout Expected

In May 2011, the California Securities Fraud Lawyer Blog reported on the Securities and Exchange Commission's (SEC) new whistleblower program that went into effect August 12, 2011. On that effective date, the Commission posted 170 actions taken since July 21, 2010 covered by the whistleblower program. Covered actions are those that result in sanctions exceeding $1 million. Charles Schwab & Co., Inc., Citigroup Inc., Dell Inc., General Electric Co., J.P. Morgan Securities LLC, and UBS Financial Services Inc. were among those against whom covered action had been taken. The actions included findings of insider trading, misstatements related to sub-prime mortgage backed securities, misstatements in financial statements to the public, bribes to foreign national for consideration, and misleading statements regarding collateralized debt obligations.

In a number of releases, the Commission reiterates that the status of any particular action as covered is not determinative of whether it resulted from a whistleblower tip nor that any award will be paid to a whistleblower in connections with the action.

While the program has now been in place nearly a year, it has yet to award any payouts; there is speculation that may soon change. The timing of the payout process is the likely reason why no payouts have been made. The process allows whistleblowers to apply for an "incentive award" within 90 days of an action being posted on the Commission's site. While the processing time for an initial application is not available, once a determination is made, if it is adverse to the applicant, that individual (individually or through counsel) has an additional 60 days to appeal the decision. Thus, it is conceivable that an appealed claim for an incentive award may take up to six months or longer before a final determination is made.

According to its fiscal year 2011 report, the Office of the Whistleblower received 334 tips. If the trend continues, fiscal year 2012, which ends September 31, should see significantly more tips because the program was only operational for the final 7 weeks of FY 2011.

To be eligible for an award, individuals must provide original information to the SEC that leads to the successful enforcement of an action that is subsequently listed on the Commission's Office of the Whistleblowers site.

Click here for all blog postings related to the SEC's Whistleblower Program.

May 31, 2011

So you want to be a whistleblower?

Click here for answers to frequently asked questions about the SEC's new securities fraud whistleblower program. The new rules will not become effective until 60 days after they've been published in the Federal Register.

May 25, 2011

SEC Approves Final Rules For Securities Fraud Whistleblower Program

Thumbnail image for whistle.jpgToday, the Securities and Exchange Commission (SEC) approved final rules to create a securities whistleblower program to reward individuals who provide the SEC with tips that lead to a successful enforcement action. The new rule will become effective 60 days after they are submitted to Congress or published in the Federal Register. Click here for updated blog posts and information about the new Securities Fraud Whistleblower Program.

November 3, 2010

SEC Proposes New Whistleblower Program Rules

On November 3, 2011, the Securities Exchange Commission (SEC) issued proposed rules in an effort to clarify the terms and procedures for recovering rewards under the new securities fraud whistleblower program. The SEC is seeking comments on the proposed rules through December 17, 2010. Please check back for updates and information about the whistleblower program on this blog.

Click here for all securities fraud whistleblower program blog posts.

July 21, 2010

SEC Launches Securities Fraud Whistleblower Program

whistle.jpgThe Securities and Exchange Commission (SEC) introduced a new securities fraud whistleblower program on July 21, 2010, in an attempt to curb federal securities law violations pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. In an effort to encourage members of the public to report securities law violations, the program offers whistleblowers financial rewards and protection from employer retaliation. To be entitled to an award, which can be as much as 10 percent to 30 percent of the amount collected by the government, eligible whistleblowers must be in compliance with the program's rules and requirements which require that the whistleblower voluntarily provide original information that leads to a successful enforcement action. Under the Act, any whistleblower who wants to file a claim anonymously must be represented by legal counsel. The SEC is expected to issue final regulations for the program within the next 270 days.

Click here for more blog postings about the "Securities Whistleblower Program"