Former Company Officer Earns Half-Million Dollar Whistleblower Award for Reporting Fraud Case to SEC

The Securities and Exchange Commission today announced a whistleblower award payout between $475,000 and $575,000 to a former company officer who reported original, high-quality information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million.

Officers, directors, trustees, or partners who learn about a fraud through another employee reporting the misconduct generally aren’t eligible for an award under the SEC’s whistleblower program. However, there is an exception to this exclusion that makes an officer eligible if he or she reports the information to the SEC more than 120 days after other responsible compliance personnel possessed the information and failed to adequately address the issue. This is the first SEC whistleblower award to an officer under these circumstances.

“Corporate officers have front-row seats overseeing the activities of their companies, and this particular officer should be commended for stepping up to report a securities law violation when it became apparent that the company’s internal compliance system was not functioning well enough to address it,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.

“Receiving information and cooperation from company insiders is particularly useful in the early detection of securities fraud, and we will continue to leverage whistleblower information to help combat securities law violations and better protect investors and the marketplace,” said Sean McKessy, Chief of the SEC’s Office of the Whistleblower. “Meanwhile, companies must have rigorous internal compliance programs that adequately address and remedy potential violations voiced by their employees as well as by their officers, directors, or other individuals.”

The decision to blow the whistle, or not, is always complex. It must be made with as much information as possible. The Whistleblower Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting Yourself is the essential reference guide for whistleblowers. If you are considering blowing the whistle, this is the most comprehensive guide available.