$14 Million Award Signals SEC Is Embracing Its Whistleblower Program

Young law Group, Philadelphia. On October 1, 2013, the Securities and Exchange Commission (“SEC”) announced the payment of a $14,000,000 award to an, as yet, anonymous whistleblower, whose information led to the recovery of significant funds.  The award, the largest to date issued by the SEC, is a significant victory in the fight against securities fraud.  While the details of the case are sparse, given the mandatory award structure, described below, the SEC likely recovered up to $140,000,000 in sanctions and penalties against an individual or organization that violated the nation’s securities laws.

Frustrated by a culture of risky and irresponsible behavior of Wall Street, Congress passed The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) in 2010.  This sweeping legislative reform included substantial incentives and protections designed to encourage individuals, with knowledge of securities violations, to bring tips to the SEC.  To help facilitate this goal, Dodd-Frank also created the SEC’s Office of the Whistleblower, which processes information from whistleblowers and pays rewards in the event of a successful SEC recovery.  Whistleblowers, whose original information leads to sanctions over $1,000,000, receive a mandatory award of ten to thirty percent of the SEC’s entire recovery.  A key component of the SEC Whistleblower program is that whistleblowers can remain anonymous, if they so choose, so long as they are represented by counsel.

“Our whistle-blower program already has had a big impact on our investigations by providing us with high quality, meaningful tips” SEC Chairman Mary Jo White said in a statement. “We hope an award like this encourages more individuals with information to come forward.”

The SEC’s whistleblower program is still in its infancy and prior to this recent announcement, award payments have been relatively small.  In fact, before the SEC’s October 1st announcement, the largest award payment to date was $125,000.  However, this recent award is extremely promising to whistleblower advocates, as it indicates the SEC’s intent to fully utilize this invaluable tool in its enforcement arsenal.  No doubt, further announcements of even larger whistleblower awards are to come.

Young Law Group, P.C., represents whistleblowers in the United States and abroad, in a variety of cases, including IRS Whistleblowers, False Claims Act (Qui Tam), and SEC related fraud.  For a free confidential consultation with one of our SEC whistleblower attorneys, please call Eric L. Young, Esquire at (215) 367-5151 or email to eyoung@young-lawgroup.com.