- within Intellectual Property, International Law, Litigation and Mediation & Arbitration topic(s)
The SEC awarded a record $50 million to a whistleblower for voluntarily providing information that led to a successful enforcement action.
According to the SEC, the "highly significant" information offered by the whistleblower included "first-hand observations of misconduct by the company" that was previously unknown to the staff, and the details of the scheme provided a "roadmap" for the SEC's investigation. Additionally, the SEC stated, the enforcement action brought as a result of the whistleblower's information helped return a significant portion of funds to harmed investors. The SEC weighed all of these factors when considering the appropriate award percentage for the whistleblower.
Commentary
This year's record-setting stretch of whistleblower awards continues, and this time it is to the tune of almost $50 million; the largest award ever to a single whistleblower. In this instance, the whistleblower was a company insider who had personally observed the misconduct. The SEC Order did not indicate whether the whistleblower reported internally, but this is yet another reminder to companies of the importance of having robust internal reporting mechanisms for suspected misconduct, and procedures for addressing those claims. Anonymous internal reporting options, such as a hotline or helpline, that are managed by an independent function (either a third-party or an internal function that sits outside the business), allow for the possibility of getting ahead of issues like this, and potentially having the option of self-reporting.
Primary Sources
- SEC Press Release: SEC Awards Record Payout of Nearly $50 Million to Whistleblower
- SEC Order Determining Whistleblower Award Claim: File No. 2020-20
Originally published 04 June 2020
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