The SEC announced yesterday that it has awarded $17 million to a former company employee whose tip substantially advanced the SEC’s investigation and enforcement proceeding. Press Rel. No. 2016-114. The award is the second largest award by the SEC to a whistleblower since the inception of its whistleblower program nearly five years ago, trailing behind a $30 million award announced in September 2014.
No details on the underlying enforcement action have been released, but the action can be expected to bring in between $56 million and $170 million because the SEC awards whistleblowers 10 to 30 percent of the sanctions it secures. In determining the award percentage, the SEC considers the following factors:
(i) the significance of the information provided by the whistleblower; (ii) the degree of assistance provided by the whistleblower in the enforcement action or related actions; (iii) the SEC’s interest in deterring violations of the securities laws by making awards to whistleblowers; (iv) the extent to which the whistleblower participated in internal compliance systems; (v) the culpability or involvement of the whistleblower in matters associated with the SEC’s action or related actions; (vi) whether the whistleblower unreasonably delayed reporting the securities violations; and (vii) whether the whistleblower undermined the integrity of his or her entity’s internal compliance or reporting system, in cases where the whistleblower interacted with the internal compliance or reporting system.
17 C.F.R. § 240.21F-6. The award comes from an investor protection fund established by Congress that is financed through monetary sanctions paid by violators of securities laws.
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