SEC Whistleblower Awards Break Records in 2018
The Securities and Exchange Commission (SEC) announced awards under its whistleblower program to individuals who provide credible information related to serious securities laws violations as authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. This year’s monetary awards have the distinction of being the highest payouts since the agency began prosecuting whistleblower cases. In all, the SEC has paid at least $320 million to 57 whistleblowers since 2011. Whistleblowers are entitled to receive between ten and thirty percent of the monetary sanctions assuming the penalty is higher than $1 million. Payments to informants are made from an account that is comprised of funds collected by the SEC.
On March 9, 2018, the agency confirmed that two whistleblowers will share nearly $50 million with a third whistleblower receiving more than $33 million. The total award of $83 million is the largest SEC award in history under its whistleblowing program. The SEC stated that the award was based on information it received about securities violations from two claimants that resulted in a successful enforcement action. The informants’ participation in the enforcement action included attending meetings, submitting relevant documents, and identifying witnesses. The criteria for obtaining an award is that the whistleblower’s information leads to a successful outcome against the perpetrator.
Subsequently on September 6, 2018, the SEC announced its second largest payout of $39 million to one whistleblower. Another whistleblower was awarded $15 million bringing the total award to $54 million. Both the March and September awards surpass the previous top award of $30 million paid in 2014.
Another important takeaway from the recent SEC announcement is that whistleblower lawsuits are not limited to United States residents; individuals living outside the United States are also eligible to initiate actions to report wrongdoing by corporate entities. One of the informants who collected an award in 2018 was located overseas, demonstrating the reach of the SEC’s whistleblower enforcement authority. On September 24, the SEC announced that the overseas company insider would receive approximately $4 million for information that prompted an investigation and led to an enforcement action by the agency. The SEC noted that the whistleblower’s information directly led to the success of the case. In 2017, the SEC awarded a foreign national working abroad $4.1 million for sharing information related to an extensive securities violations scheme that continued over the span of several years. The recipient of the $30 million award in 2014 was also living overseas.
The SEC has jurisdiction throughout the world to enforce compliance with federal securities laws and initiate whistleblower cases where such rules have been violated. Some of the securities violations that the SEC typically prosecutes include: (i) Ponzi or Pyramid schemes, (ii) defrauding investors or charging excessive brokerage or advisory fees, (iii) insider trading, (iv) market manipulation schemes, (v) improper securities offerings, (vi) making misleading statements about a company, (vii) bribery, (ix) accounting fraud, and (x) other deceptive practices involving securities.
If you have knowledge that a corporation has engaged in a violation of securities laws, give us a call at 1-800-988-8005 today for a free consultation and case review with an experienced whistleblower attorney.