SEC Waives Eligibility Requirement for Whistleblower, Awards $400,000

Mary Jane Wilmoth

Published On: September 5th, 2014

Company Failed to Address Fraud Internally

On July 31, 2014, the Securities and Exchange Commission announced an award of more than $400,000 for a whistleblower who reported a fraud to the SEC after the company failed to address the issue internally.

The whistleblower’s claim for an award was denied in the Preliminary Determination because the information did not appear to have been “voluntarily” provided within the definition of Rule 21F-4(a)(ii). However, the agency later determined that based on the relevant events, which it considered to be “materially significant extenuating circumstances,” a waiver to be “appropriate in the public interest and consistent with the protection of investors.”

This whistleblower provided the agency with specific, timely, and credible information that allowed for a more rapid investigation than otherwise would have been possible.The whistleblower had tried on several occasions and through several mechanisms to have the matter addressed internally at the company.

“The whistleblower did everything feasible to correct the issue internally. When it became apparent that the company would not address the issue, the whistleblower came to the SEC in a final effort to correct the fraud and prevent investors from being harmed,” said Sean McKessy, chief of the SEC’s Office of the Whistleblower. “This award recognizes the significance of the information that the whistleblower provided us and the balanced efforts made by the whistleblower to protect investors and report the violation internally.”

Learn more about whistleblower awards at our Whistleblower Protection Resources section.

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.