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Harry Cassin
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SEC changes mind, awards whistleblower $400,000

The Securities and Exchange Commission said Thursday it awarded more than $400,000 to a whistleblower who reported a fraud to the SEC after the company failed to address the issue internally.

According to the final award order, the SEC’s claims review staff recommended denial an award to the whistleblower in August 2013. The staff said the information wasn’t “voluntarily provided.”

The claimant appealed, submitted supporting documents including a chronology, and convinced the SEC that he or she was entitled to an award.

The SEC didn’t provide more information about the whistleblower or the company he or she worked for.

“By law,” the agency said, “the SEC must protect the confidentiality of whistleblowers and cannot disclose any information that might directly or indirectly reveal a whistleblower’s identity.”

The SEC said Thursday:

This whistleblower provided the agency with specific, timely, and credible information that allowed for a more rapid investigation than otherwise would have been possible. The whistleblower had tried on several occasions and through several mechanisms to have the matter addressed internally at the company.

The SEC’s whistleblower program rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million. 

Whistleblower awards can range from 10 percent to 30 percent of the money collected in a case. 

Last year, the SEC awarded a whistleblower $14 million for information that led to an enforcement action that ended an investment fraud and recovered “substantial investor funds.”

In June this year, two SEC whistleblowers split evenly more than $875,000 for their tips that helped the agency bring an enforcement action.

In Thursday’s release, the SEC said, “The whistleblower did everything feasible to correct the issue internally.”

“When it became apparent that the company would not address the issue, the whistleblower came to the SEC in a final effort to correct the fraud and prevent investors from being harmed,” according to Sean McKessy, chief of the SEC’s Office of the Whistleblower. 

The SEC said last year it received 3,238 whistleblower tips and complaints, up from 3,001 in 2012.

There were 149 FCPA tips in fiscal year 2013, up from 115 in 2012. There haven’t been any reported FCPA whistleblower payouts under Dodd-Frank.

“This award recognizes the significance of the information that the whistleblower provided us and the balanced efforts made by the whistleblower to protect investors and report the violation internally,” McKessy said Thursday.

The SEC’s Office of the Whistleblower was authorized by the Dodd-Frank Act and set up in August 2011.

A copy of the SEC’s July 31, 2014 release is here.

A copy of the SEC award order in the case is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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