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SEC issues $2.2 mln whistleblower award under ‘safe harbor’ rule

On Behalf of | Apr 16, 2018 | Qui Tam Cases

Under the Securities and Exchange Commission’s “safe harbor” rule, securities law whistleblowers can receive awards even if they submit their information to another agency, as long as they submit it to the SEC within 120 days. When they do so, the SEC will treat the information as if it had been submitted properly in the first place.

In the first-ever award under the rule, the SEC has just issued an award of $2.2 million to a whistleblower who originally made a report to another federal agency. That agency referred the matter to the SEC — and the whistleblower provided the same information to the SEC within the 120-day window. The information led to an investigation, to which the whistleblower provided “substantial cooperation” and which led to an enforcement action.

“This award shows that whistleblowers can still receive an award if they first report to another agency, as long as they also report their information to the SEC within the 120-day safe harbor period and their information otherwise meets the eligibility criteria for an award,” said a spokesperson for the SEC’s Office of the Whistleblower.

The SEC issued its first whistleblower award in 2012. Since then 54 whistleblowers have been awarded over $264 million, which is paid out of an investor protection fund financed completely by sanctions paid by securities law violators.

Securities law whistleblowers who provide high-quality, original information to the SEC can receive an award when the information leads to an enforcement action and over $1,000,000 in sanctions is ordered. These awards range from 10 to 30 percent of any money collected.

Blowing the whistle is not something that should be taken lightly, however. Although retaliation is protected by provisions of the Dodd-Frank and Sarbanes-Oxley acts, it can still be a real threat. If you are considering blowing the whistle on securities fraud or another issue, working with an attorney familiar with whistleblower protection can help you minimize the risk of retaliation and ensure you have submitted your information correctly.