On July 17, 2015, the SEC announced a whistleblower award of more than $3 million to a "company insider" whose information assisted the SEC in unveiling a "complex fraud." This payout (which is the SEC's third largest) follows the SEC's announcement in April that it awarded a Compliance Officer a whistleblower bounty of approximately $1.5 million.
Although the SEC's Order did not reveal specific information about the "complex fraud" that it was able to "crack" based on the information provided by the whistleblower, the agency's release stated that "the whistleblower's specific and detailed information comprehensively laid out the fraudulent scheme which otherwise would have been very difficult for investigators to detect," and that "[t]he whistleblower's initial tip also led to related actions that increased the whistleblower's award." Interestingly, the Order notes that the SEC denied issuing a bounty award to a second claimant because that claimant "did not provide information that led to the successful enforcement..."
The SEC has issued relatively few whistleblower payouts (18) since the inception of the Dodd-Frank bounty program in 2011. Nevertheless, to date, the SEC has paid out over $50 million to whistleblowers, including an award of more than $30 million in September 2014 and a more than $14 million award in September 2013. Thus, while some have raised questions about the bounty program given that thousands of complaints have yielded only 18 payouts thus far, the potential for a large payday remains an attractive incentive for whistleblowers to provide information to the SEC. Therefore, we expect that the number of complaints filed with the SEC will only increase with the announcement of this latest multi-million dollar award.
SEC Pays More Than $3 Million Whistleblower Award
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