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Miami Investment Fraud Attorney
305.372.9700
1 SE 3rd Ave # 1200
SunTrust International Center
Miami, Florida 33131

SEC Awards $50 Million to Securities Industry Whistleblower—A Record High Award

On June 4th, 2020, the Securities and Exchange Commission (SEC) announced a whistleblower award of nearly $50 million for an individual who provided detailed, first-hand information regarding serious corporate misconduct to federal regulators. As a result of the disclosure, authorities will be able to take enforcement action and recover money for investors.

The award is the largest in the entire history of the whistleblower program—more than $500 million in total compensation has now been issued to dozens of whistleblowers. Here, our Florida securities industry whistleblower lawyers offer an overview of the record high SEC whistleblower award.

Highest Ever SEC Whistleblower Award: Key First-Hand Information

In its Order Determining Whistleblower Award Claim, the SEC states that the whistleblower offered critically important information that helped spur successful enforcement action. While the SEC whistleblower program is subject to strict confidentiality rules, the agency published the following basic information about this whistleblower award:

  1. The whistleblower made a fully voluntary disclosure to the agency;
  2. The whistleblower’s information was deemed “highly” significant to the investigation;
  3. The whistleblower’s information would have otherwise been inaccessible to the agency;
  4. The whistleblower laid out a specific investigative roadmap for authorities to use; and
  5. Enforcement action was successful and a large amount of money was returned to investors.

Under securities industry rules, the SEC has discretion to award whistleblower compensation that is worth between ten percent and thirty percent of the total value of the recovery for investors. The more significant and extensive the whistleblower’s contributions, the more likely it is the agency will issue an award on the high end of the statutory range.

A Second Individual Applied for But Was Denied Whistleblower Compensation 

Beyond being the highest whistleblower award in the history of the SEC program, this case is also notable because a second person was denied compensation in relation to the same claim. As was mentioned, the confidential nature of the securities industry whistleblower process limits the amount of details that are available about the second claimant’s whistleblower claim.

That being said, the SEC does make it clear in its order that this individual was “late” in providing relevant information to the agency. More specifically, the second claimant failed to demonstrate “extraordinary circumstances” to justify the delayed action. As a consequence, the claimant was deemed not to be a whistleblower for the purpose of the statute.

Lesson: An important lesson for securities industry whistleblowers: You need to be proactive. To be eligible for whistleblower compensation, information must be provided that leads to enforcement action. If you delay taking action, a disclosure may be deemed too late to justify a whistleblower award. 

Contact Our Florida Securities Law Whistleblower Attorneys for Help

At ​Carlson & Associates, P.A., our Miami investment fraud lawyers strive to provide exceptional, results-driven representation to securities industry insiders who have information to disclose to authorities. If you have questions about your rights or your options, please contact us now. We represent securities industry whistleblowers in Miami and throughout the State of Florida.

Resources:

sec.gov/news/press-release/2020-126

sec.gov/rules/other/2020/34-89002.pdf

https://www.carlson-law.net/finra-complaint-south-florida-brokerage-firm-violated-securities-industry-rules/

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