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Huge whistleblower payout: SEC awards ‘company insider’ $17 million

The Securities and Exchange Commission awarded $17 million to a whistleblower Thursday, the second biggest payment since its whistleblower program began nearly five years ago.

The award went to a former company employee whose detailed tip “substantially advanced the SEC’s investigation and ultimate enforcement action,” the agency said.

The biggest award so far was more than $30 million in 2014. A 2013 award topped $14 million.

Whistleblowers can be eligible for awards when they voluntarily provide the SEC with “unique and useful information that leads to a successful enforcement action.”

Awards can range from 10 percent to 30 percent of recoveries when amounts collected are more than $1 million.

Andrew Ceresney, chief of the SEC’s enforcement division, said Thursday:

Company insiders are uniquely positioned to protect investors and blow the whistle on a company’s wrongdoing by providing key information to the SEC so we can investigate the full extent of the violations.

The whistleblower’s information enabled the SEC enforcement staff to save time and resources and gather strong evidence supporting the case, Ceresney said.

Four others made whistleblower claims in the the case announced Thursday. The SEC denied their claims.

In the past month, five SEC whistleblowers have received awards totaling more than $26 million.

By law, the SEC protects the confidentiality of whistleblowers and doesn’t  disclose information that might directly or indirectly reveal a whistleblower’s identity.

On May 20, the SEC awarded more than $450,000 jointly to two individuals. Their tip led the SEC to open a corporate accounting investigation and for their help once the investigation was underway.

On May 17, the SEC awarded between $5 million and $6 million to a whistleblower whose information led the SEC to uncover securities violations which would have been “nearly impossible to detect” without the company insider’s help.

On May 13, the SEC awarded a whistleblower more than $3.5 million for producing evidence against his or her company during an ongoing investigation “that strengthened the SEC’s case.”

The SEC has now awarded more than $85 million to 32 whistleblowers since the whistleblower program started in 2011.

The agency received more than 4,000 tips last year.

None of the whistleblower awards so far appear related to FCPA violations.

The SEC’s June 9, 2016 Order Determining Whistleblower Award Claim (Release No. 78025) is here (pdf).

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He’ll be the keynote speaker at the FCPA Blog NYC Conference 2016.

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