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SEC awards $300,000 to whistleblower with internal audit and compliance role

The Securities and Exchange Commission said Friday a whistleblower award of more than $300,000 went to a company audit and compliance employee who complained to the SEC after the company didn’t act on the same information.

It’s the first award for a whistleblower with an audit or compliance function at a company, the SEC said.

The whistleblower awarded $300,000 Friday reported concerns about wrongdoing within the company, including to a supervisor. 

When the company took no action for 120 days, the SEC said, the whistleblower sent the same information to the agency. 

“The information provided by the whistleblower led directly to an SEC enforcement action,” the SEC said.

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

But the SEC mistakenly released and later redacted a reference number Friday that indicated the case for which the whistleblower received an award.

The number referred to a complaint filed by the SEC in federal court in New York on August 30, 2013 charging  Phillip J. DeZwirek with insider trading and with numerous other securities violations.

DeZwirek was former chairman and CEO of CECO Environmental Corp. and API Technologies Corp.

The SEC announced a settlement on September 3, 2013, in which DeZwirek agreed to pay more than $1.5 million to settle the SEC enforcement action.

Sean McKessy, chief of the SEC’s Office of the Whistleblower, said employees who perform internal audit, compliance, and legal functions can be eligible for an SEC whistleblower award “if their companies fail to take appropriate, timely action on information they first reported internally.”

“They often are privy to the very kinds of specific, timely, and credible information that can prevent an imminent fraud or stop an ongoing one,” McKessy said.

The SEC’s whistleblower program enacted as part of the Dodd -Frank Wall Street Reform Act rewards high-quality, original information that results in an SEC enforcement action with sanctions of more than a $1 million.

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

A copy of the SEC’s August 29, 2014 release is here.

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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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1 Comment

  1. The article says that the SEC said that this is It’s the first award for a whistleblower with an audit or compliance function at a company. Are there other cases of an award to a whistleblower with an audit or compliance function from a Bank or Financial Services Institution?


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