SEC awards two whistleblowers a combined $54 million
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SEC awards two whistleblowers a combined $54 million

| Sep 20, 2018 | Qui Tam Cases

It has been reported that the Securities and Exchange Commission awarded two major whistleblowing payouts earlier this month. The agency granted one whistleblower $39 million. Another informant received $15 million. The SEC awarded these two for information leading to the discovery of a major violation of SEC rules.

The $39 million award was the second largest since the program was implemented under the Dodd-Frank Act in 2010. While both claimants requested higher amounts, their requests were denied.

Under the Dodd-Frank Act, the SEC formed an investor protection fund. This fund pays any whistleblower whose information leads to a discovery of wrongdoing. Fines levied at violators of SEC laws fully finance this protection fund. Taxpayers or investors do not pay any part of a whistleblower reward.

As previously noted, there may be changes coming to the whistleblower provision of the Dodd-Frank Act. The SEC has requested the agency to award more frequent smaller payments to informants. As it currently stands, whistleblowers can earn 10 percent to 30 percent of any penalties that are higher than a million dollars.

One of the informants was initially denied any reward, as they only spoke to officials after the government approached them. Usually, the SEC will not award a whistleblower who provides information only after they know the agency is investigating.

However, in this case, they found that the informant was unaware of the information critical to the SEC when first questioned. The individual immediately came forward once they learned of the critical information.

While we were not part of this settlement, the case demonstrates how important timing is to a whistleblower’s chance at any reward. Those with crucial information need to come forward with it as soon as possible or risk losing any potential future payment.

If you have considered reporting on company wrongdoing to the SEC, it’s important to be fully aware of the protections and limitations of the Dodd-Frank Act. An attorney with experience defending the rights of whistleblowers can help.