The SEC gives first whistleblower award under this provision of the whistleblower rules, which was designed to incentivize self-reporting by whistleblowers who also report to the SEC within 120 days
Washington, D.C. May 24, 2019. The Securities and Exchange Commission reports today that it awarded more than $4.5 million to a whistleblower whose tip triggered the company to review the allegations as part of an internal investigation and subsequently report the whistleblower’s claims to the SEC and another agency.
The whistleblower reported wrongdoing internally by sending an anonymous tip to the company and submitted the same information to the SEC within 120 days of reporting it to the company. The report led the company to start an internal investigation, the results of which it self-reported to the SEC.
The SEC reports this marks the first time it has paid a whistleblower award under this provision of the whistleblower rules, which was designed to incentivize self-reporting by whistleblowers who also report to the SEC within 120 days.
“In this case, the whistleblower was credited with the results of the company’s internal investigation, which were reported to the SEC by the company and led to the Commission’s resulting enforcement action and the related action,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “The whistleblower gets credit for the company’s internal investigation because the allegations were reported to the Commission within 120 days of the report to the company.”
Potential whistleblowers thinking of reporting securities fraud internally to their company should be aware that in Digital Realty Trust, Inc. v. Somers, decided on Feb. 21, 2018, the U.S. Supreme Court ruled that employees who report corporate fraud to their supervisors, via compliance programs and even to a corporate audit committee could be fired at will and have no protection whatsoever under the Dodd-Frank Act’s anti-retaliation provision. The Dodd-Frank anti-retaliation rules only extend to corporate whistleblowers who report violations of securities laws directly to the SEC.