On July 27, 2017, the SEC announced another whistleblower award of more than $1.7 million to a private sector employee who provided the SEC with information that helped stop a continuing fraud it identified as being “hard to detect.” As a result of the SEC’s investigation, millions of dollars were returned to the undisclosed private company’s investors, who, according to the SEC, would have been harmed as a result of the fraud.
This award is significant in that it was made to the whistleblower, despite the whistleblower having some culpability in the fraud and unreasonably delaying the reporting of the fraud. In its order, the SEC wrote that it balanced the whistleblower’s role in reporting the multi-year fraud with the whistleblower’s unreasonable delay and culpability. The delay, according to the SEC, was somewhat mitigated by the fact that the whistleblower had first reported the fraud to the SEC prior to the establishment of the whistleblower program and its protections. With respect to the culpability, the SEC described the whistleblower’s culpability as “limited.” As we have noted previously, the Financial CHOICE Act of 2017 would prohibit culpable whistleblowers from receiving any monetary award under the Dodd-Frank whistleblower program.
As of the publication of this award, the SEC announced that it has awarded approximately $158 million to 46 whistleblowers pursuant to its whistleblower award program.