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What's Different About the Latest SEC Whistleblower Award?

August 1, 2017

On Thursday, 2 days after announcing a $2.5 million whistleblower award to an employee of a domestic government agency (not a financial regulator or a law enforcement agency) – which happens to be the first-ever award to a government employee - the SEC approved a special $1.7 million whistleblower award to a corporate insider who provided the agency with critical information to help stop a fraud that would have otherwise been difficult to detect. 


What makes the $1.7 million award so unusual is that the SEC had to waive certain requirements in order to approve the award. According to the SEC Order:


  • The corporate whistleblower in this case initially contacted the SEC before passage of Dodd-Frank in 2010 - when the whistleblower program was created. This cutoff has cost other tipsters the chance to receive awards.


  • The corporate whistleblower seemingly resolved the first issue by continuing to provide useful information to the SEC after passage of Dodd-Frank. However, ...


  • ... a second new issue arose because the ‘ongoing’ information was not submitted “in writing” – as required during the year between the law’s passage and its August 2011 effective date. [Rule 21F-9(d) of Dodd-Frank].


  • The corporate whistleblower resolved this second issue by resubmitting the information in a format that the Enforcement staff requested.


Similar circumstances surrounded a whistleblower award announced by the SEC in January. That award, for more than $5.5 million to another whistleblower, was issued to an informant who also began working with the SEC before Dodd-Frank, and who continued to assist the agency after the law’s passage. And, the information that the tipster provided after Dodd Frank was not provided in writing - “an omission which might normally require an award denial,” the SEC said in its order.


However, just like with the $1.7 million award, the SEC found the whistleblower qualified for a bounty nonetheless because the information apparently was then submitted “in the format that the enforcement staff expressly requested.”