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SEC Awards $30 Million to Overseas Whistleblower

Last week, the SEC announced its largest-ever whistleblower award -- more than $30 million. Indeed, the SEC order in the case indicates that the final award could be as high as $35 million, depending on the amount of sanctions recovered.  This is more than double the SEC’s largest previous whistleblower award of $14 million. The SEC’s whistleblower awards range between 10 and 30 percent of the monetary sanctions recovered in the enforcement action. In its order in this case, the SEC redacted the actual percentage it applied, but the whistleblower complained that the percentage the SEC used was less than usual, which suggests that the underlying financial penalties may have been in the range of $150 million to $350 million.

In addition to its sheer magnitude, the SEC’s award is notable for a couple of other reasons. First, the SEC’s announcement states that this is “the fourth award to a whistleblower living in a foreign country, demonstrating the program’s international reach.” To date, more than a quarter of the SEC's whistleblower awards have gone to overseas residents.  Second, in the SEC's announcement Director of Enforcement Andrew Ceresney also states that the whistleblower provided “information about an ongoing fraud that would have been very difficult to detect” otherwise, thereby suggesting that the whistleblower program is increasing the SEC’s investigatory reach.

The SEC’s whistleblower program offers monetary awards to eligible individuals who provide original information about violations of the federal securities laws resulting in a Commission enforcement action involving more than $1 million in sanctions. For more background about the SEC's whistleblower program, check out some of our recent posts, here and here.

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Chip Phinney