Notable SEC Whistleblower Awards

Right from the day they were announced by the Securities and Exchange Commission (SEC), the SEC Whistleblower Awards Program has been drawing international attention due to its success. The resounding success of the program likely stems from the fact that enforcement actions resulting from tip offs to the program have resulted in more than $975 million in financial remedies.

While there were other whistleblower programs existing before, none of them have enjoyed the kind of success that has been enjoyed by these awards. The program has been designed in such a way that it would incentivize whistleblowers, which could lead to sharing of credible information regarding wrong doings with the concerned authorities.

Effectiveness of the Awards

While there have been many other similar such initiatives that have been launched in the past, none of them have been able to match the success of these awards. According to experts, this is because of the fact that the identity of the whistleblower remains anonymous.

In fact, when the SEC whistleblower works with a lawyer, his or her identity is not known even to the SEC until such time that a reward is finalized. Even after the reward is determined, the identity of the whistleblower is never made public. The fact that their personal identity would not be revealed could be emboldening individuals to come forward and report wrongdoings.

The second key factor that has made the awards such a success are the financial incentives on offer. The Securities and Exchange Commission has awarded over $162 million to whistleblowers since the program started back in 2011.

In fact, in 2016 there were new records set as the SEC announced more than $57 million in awards. That year also saw the announcement of six of the top ten awards announced during the program’s entire history.  In 2017, the SEC announced an award of nearly $4 million to a whistleblower. Similarly, there was an instance of a $30 million award to someone living in a foreign country that was announced, which also shows the program’s global reach.

Finally, 2016, also saw $22.4 million awarded to a Monsanto whistleblower, the largest yet awarded to a US citizen.

One more important reason that the program has been a success is because the SEC stands firmly behind the whistleblowers. It ensures that companies don’t stop whistleblowers from reporting certain financial wrongdoings. The fact that the SEC is standing firmly behind them has acted as a major motivating factor for individuals to come forward and report incidents. The SEC has also been known to take stringent action against organizations that use confidentiality agreements to punish whistleblowers. The SEC also ensures that whistleblowers are protected from retaliatory actions. For example, the SEC had ordered International Game Technology to pay a $500,000 penalty for terminating the employment of a whistleblower.

The Office of the Whistleblower (OWB) also operates an exclusive hotline where whistleblowers or would-be whistleblowers can clarify any doubts about the program. Apart from the whistleblowers, their attorneys or other members of the public can also call and clarify any doubts or seek any information regarding the program. The messages could be left on the hotline. The OWB attorneys would return messages within twenty-four business hours.

You can learn more about the effectiveness of the awards program by visiting “One billion reasons why the SEC whistleblower reward program is effective” at https://www.forbes.com/sites/realspin/2017/07/18/one-billion-reasons-why-the-sec-whistleblower-reward-program-is-effective/#4bed44f93009.

The Whistleblower Process

The whistleblower process starts with what is known as an intake and triage stage. During this stage, the whistleblowers submit their complaint to the SEC. The officials there then determine whether further investigations are warranted. Complaints can be submitted either over the SEC’s online portal or through mail or fax.

The second phase consists of the investigation staff tracking the details of the particular case. They also document the whistleblower’s cooperation as part of the process. Detailed documentation is important because all the information is required for process of the final processing of the whistleblower awards.

The final phase consists of the whistleblower claiming an award. The whistleblower would receive a monetary award when financial sanctions to the tune of over $1 million are ordered against a company.

To leanr the detail about the awards process you can check out “SEC Office of the Whistleblower” at https://en.wikipedia.org/wiki/SEC_Office_of_the_Whistleblower.

Factors Considered for Calculating Award Amount

There are several factors that are looked into by the SEC that help them determine the amount of the award. The unique facts and circumstances in each of the cases is thoroughly analyzed in the whole process. The ultimate determination of the award amount could depend on various factors. For example, the significance of the information provided by the SEC whistleblower and how useful it was against wrongdoers is a crucial factor considered. The extent of assistance provided by the whistleblower during the investigation is another important factor that is considered.

Not many are aware but the SEC may also reduce the amount of the award based on certain factors. For example, if the whistleblower himself or herself is culpable for securities law violations in the case that he or she reported, this could result in the amount being reduced. It could also be reduced if it was found that the whistleblower had unreasonably delayed reporting the violations to the authorities.