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Harry Cassin
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How whistleblowers get top dollar from the SEC

The SEC now pays for information about securities law violations — including the FCPA — leading to a recovery of at least $1 million. The whistleblower reward can be from 10% to 30% of the recovery — a big range that’s entirely within the SEC’s discretion.

How does the SEC decide who gets more or less? It uses seven factors, four on the plus side and three on the negative side.

The four factors that can increase an award are: (1) the significance of the information provided by the whistleblower,(2) the assistance provided by the whistleblower, (3) any law enforcement interest that might be advanced by a higher award, and (4) the whistleblower’s participation in internal compliance systems – as in, if you reported on a company that you currently or used to work for, did you report internally first, and did you participate in any internal investigation.

The three factors that can decrease the percentage of an award are (1) culpability, (2) an unreasonable reporting delay by the whistleblower, and (3) interference with internal compliance and reporting systems.

Even if of all three negative factors apply, the SEC says, whistleblowers can still earn an award higher than the 10% minimum. So the four positive factors can outweigh the three negative ones.

The key for whistleblowers, according to the SEC, is prividing ‘specific, credible, and timely information.’ Said another way, the easier a whistleblower makes the enforcement job for the SEC, the more money the agency will hand out as a reward.

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Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.

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