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SEC Awards $18 Million to a Whistleblower—the 9th Largest Award in Program’s History

On April 28th, the Securities and Exchange Commission (SEC) announced its 81st whistleblower award. The $18 million award, which was granted to a securities industry insider who provided critically important information that helped to prompt an investigation and enforcement action, is the 9th largest in the nearly decade long history of the program. Below, our Miami investment fraud attorneys discuss the award issued by the SEC.

Five Factors in Awarding Whistleblower Compensation 

As with other securities-related whistleblower awards, only a limited amount of information about this case is being released to the public. The SEC is committed to protecting the confidentiality of whistleblowers—helping to ensure that insiders can disclose material information without the fear of facing retribution within the industry. In this case (Whistleblower Award Proceeding File No. 2020-17), the SEC highlighted five broad factors that it used to make its determination in favor of the whistleblower. 

  1. Significant Information: First and foremost, the information provided by the whistleblower was deemed to be ‘significant’—it alerted the agency to possible fraud that otherwise may not have been discovered. Soon after, the SEC conducted a full-scale investigation.
  2. Continued Assistance: During the course of the investigation, the SEC noted that the whistleblower provided additional assistance to the agency. The individual helped staff members understand the fraud and put the circumstances in the proper context.
  3. Enforcement Action Was Successful: The investigation led to successful enforcement action. Many millions of dollars were recovered on behalf of retail investors. SEC whistleblower awards are between 10 percent and 30 percent of the value of recovery—depending on the extent of the contribution. Notably, the money comes from a fund, not from the pockets of affected investors.
  4. Several Internal Reports Were Made: The whistleblower made at least three different complaints within the company. The agency supports insiders working within their company to resolve matters at the lowest possible level when reasonable.
  5. Whistleblower Suffered Hardships: The SEC also noted that the whistleblower suffered professional hardships in trying to report the misconduct to upper management. Unfortunately, retaliation against whistleblowers remains a serious problem in the securities industry. This is why confidentiality is so important.

If you are a securities industry insider and you want to disclose fraud or misconduct to federal regulators, you can do so without immediately disclosing your identity. By working through an experienced Florida SEC whistleblower attorney, you can make an anonymous initial disclosure and still retain the right to recover compensation if your information leads to successful enforcement action. 

Call Our South Florida SEC Whistleblower Lawyers for Help

At ​Carlson & Associates, P.A., our Florida securities industry whistleblower attorneys are experienced, diligent advocates for clients. If you are considering making a protected disclosure to federal regulators, we are prepared to help.

To request a completely confidential, comprehensive initial consultation with an experienced attorney, please call our Miami office today. We represent clients throughout Southeastern Florida, including in Miami-Dade County, Martin County, Broward County, and Palm Beach County.

Resources:

sec.gov/rules/other/2020/34-88759.pdf

sec.gov/news/press-release/2020-98

https://www.carlson-law.net/florida-broker-suspended-for-forging-client-signatures-initial-to-transfer-funds/

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