Record Breaking SEC Whistleblower Award

June 19, 2023

The Securities and Exchange Commission (SEC) recently made history by awarding the largest ever whistleblower award of nearly $279 million to an anonymous whistleblower, exceeding the previous record of $114 million issued in October 2020. This ground-breaking award reinforces the powerful incentives for whistleblowers to come forward with information about potential securities law violations. Furthermore, it reflects the SEC’s whistleblower program’s resounding success, which has greatly benefited investors in the long term and also underscores how through the use of an SEC whistleblower attorney, an individual stands to obtain a large award for reporting the culpable conduct, and still will be able to stay anonymous. 

“I applaud the SEC for bestowing the largest whistleblower award in the program’s history and holding a corporate entity accountable for allegedly engaging in bribery. This SEC award sends a strong message to potential whistleblowers that their bravery and willingness to expose securities violations can result in holding corporations accountable for misconduct while rewarding well-placed sources who provide information but can still remain in the shadow with their SEC whistleblower law firm.”- Jason T. Brown, head of the whistleblower law firm Brown, LLC and former FBI Special Agent.

What This Means for Whistleblowers

The SEC whistleblower program is alive and well and well-placed sources could obtain stratospheric awards if they present the information to the SEC in the right manner. To report securities violations to the SEC one must use their TCR portal and with an attorney have the added benefit of potentially staying anonymous. In addition to anonymity the use of an SEC Whistleblower Law Firm is critical in evaluating and presenting the matter to the SEC who receives a large volume of tips. It’s important to methodically present the case as succinctly as possible and ground it in the regulations and statutes tightly with the fact pattern. You only have one chance to make a first impression and no matter how solid your information is, if its not presented in the right manner, it may not be considered.  

The Importance of Whistleblowers in Securities Law Enforcement

The whistleblower’s ongoing assistance in the record-breaking SEC whistleblower award, including multiple interviews and written submissions, was critical to the success of the SEC’s enforcement actions. While the whistleblower’s information did not trigger the Commission’s initial investigation, it did significantly broaden the scope of the misconduct charged, and incisively helped establish the proofs and rebut what was presumably attempts by the company to contain and minimize their exposure for their misconduct. This is an important point, because although the government’s investigation may have pre-dated the source providing the information, since the source was so integral to the expansive investigation, there was extensive credit given to their participation. This is in contrast to individuals who wish to participate after being contacted by an SEC investigator who then wants to blow the whistle, who may not receive any credit for their information.  That’s why it’s important to not wait too late.  Look to your left and look to your right, because if you have the goods and don’t blow the whistle they might have already done so, and this case also has two subsequent filers who filed their TCRs after the initial complaint and who were awarded nothing (and currently appealing the result to the Circuit).  Whistleblowers play a vital role in upholding the integrity of the financial system while also safeguarding the investments of innocent individuals. The SEC aims to create an environment that empowers individuals to come forward and expose misconduct by offering large incentives of up to 30% of the recovery. 

Whistleblowers can provide information to the SEC on a variety of subjects, including:

  • Insider trading 
  • False or misleading information given to the investors
  • Manipulation of the market
  • Churning
  • Not giving the best execution price
  • Destruction of Audit Trails
  • Failure to maintain Audit Trails
  • Clauses that seek to stifle cooperation with the SEC or other regulatory agencies
  • Other securities laws violations
  • Other actions in which the interest of the client are placed deferential to the firms
  • Kickbacks or bribes to induce business
  • Ponzi schemes

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    SEC Whistleblower Program

The SEC Whistleblower Program was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. By offering monetary rewards in exchange for information, the program encourages people to report securities fraud to the SEC. Furthermore, by retaining the services of an SEC whistleblower attorney, the insider may be able to remain anonymous from beginning to end.  Over the years, SEC whistleblowers have received in aggregate over a billion dollars in whistleblower awards.

The SEC Whistleblower Program also includes strong anti-retaliation safeguards for whistleblowers. These safeguards are intended to protect whistleblowers from retaliation for reporting wrongdoing. If a whistleblower believes they have been subjected to retaliation, they can file a complaint with the Securities and Exchange Commission through a whistleblower law firm. One natural facet of protection is anonymity with the use of an SEC law firm.   If the SEC finds that the whistleblower has been retaliated against, it has the authority to take action against the employer, including:

  • Requiring the reinstatement of the whistleblower
  • Requiring the employer to pay back pay to the whistleblower
  • Requiring the employer to pay the whistleblower’s legal fees
  • Imposing monetary sanctions on the employer

Eligibility for SEC Whistleblower Awards

To be eligible for a whistleblower award, individuals must voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblowers must also adhere to the filing requirements outlined in the whistleblower rules. The monetary sanctions collected by the SEC must exceed $1 million for a whistleblower award to be granted, and the award amount can range from 10 to 30% of the funds collected.

SEC Violation to Look Out For

Here are some examples of the kind of conduct the SEC is looking for:

  • Ponzi schemes include Ponzi schemes, Pyramid schemes, and High-Yield Investment Programs
  • Theft or misappropriation of funds or securities
  • Manipulation of a security’s price or volume
  • Insiders trading
  • Unregistered or fraudulent securities offering
  • False or misleading statements about a company (including false or misleading SEC reports or financial statements)
  • Illegal naked short selling
  • Bribery or improper payments to foreign officials
  • Fraud in municipal securities transactions or public pension plans
  • Initial Coin Offerings (ICOs) and cryptocurrency
  • Other securities-related  fraudulent conduct

Report SEC Fraud Anonymously 

Maintaining confidentiality is critical for the SEC in order to ensure a steady flow of whistleblowers. Without the anonymity provisions, individuals who fear retaliation and possess highly valuable information may choose to withhold it, thus hindering the disclosure of crucial details. Through the SEC Whistleblower Program, individuals can report securities fraud anonymously through an experienced SEC whistleblower attorney. While the SEC is dedicated to safeguarding your identity to the fullest extent possible, anonymity is not always guaranteed. Therefore, it is crucial to consult with a SEC whistleblower attorney.

Why Work with an SEC Whistleblower Law Firm

Given the substantial financial rewards available through the SEC Whistleblower Program, individuals considering reporting potential securities law violations may benefit from seeking legal representation from an SEC whistleblower law firm. These firms experienced in assisting whistleblowers in navigating through the complexities of the whistleblower program and maximizing their chances of receiving an award.

An experienced SEC whistleblower law firm can guide individuals through the process, ensuring that their disclosures meet the program’s requirements and are submitted in a timely and effective manner. They can also provide valuable advice on maintaining confidentiality and protecting against potential retaliation. With their expertise in securities laws and regulations, these firms can help whistleblowers build a strong case and present compelling evidence to the SEC, increasing the likelihood of a successful enforcement action and, consequently, a substantial whistleblower award, although nothing is ever guaranteed.