By Michael A. Lesser, Esq. 

Posted on Oct 2, 2013

The Securities and Exchange Commission (“SEC”) just announced an award of more than $14 million to a single whistleblower whose information led to an SEC enforcement action that recovered substantial investor funds. This is the largest award to date under the SEC’s enhanced whistleblowing provisions established under the Dodd-Frank Act in 2011. The whistleblower program rewards high-quality original information that results in an SEC enforcement action with sanctions exceeding $1 million. Awards to the whistleblowers providing the tips can range from 10 percent to 30 percent of the money the SEC collects.

Yesterday’s award heralds a new focus by the SEC to combat serious financial fraud. For months, news concerning the whistleblowing program speculated that the SEC would be announcing several large whistleblower awards. The $14 million award to the anonymous whistleblower may be the first of a growing number of successful enforcement actions. The SEC is heavily focused on certain kinds of fraud, including insider trading, fraud by publicly traded companies, fraud by brokers and investment advisors, ponzi schemes, and any other fraudulent schemes affecting investors and the securities markets. In addition, the SEC has enforcement authority under the Foreign Corrupt Practices Act (the FCPA), which prohibits publicly-traded companies from bribing foreign officials, and whistleblowers with information concerning FCPA violations are also eligible for awards. Although cases differ, the SEC uses the following factors to determine the amount of the reward to the whistleblower in a successful case: (1) the significance of the information provided by the whistleblower; (2) the degree of assistance provided by the whistleblower; and (3) the interest of the SEC in deterring violations of securities laws. Whistleblower claims can be filed anonymously and whistleblowers are not required to have worked at the company that committed the SEC violation.

In this case, the whistleblower provided original information and assistance that allowed the SEC to investigate an enforcement mater more quickly than otherwise would have been possible. The SEC brought the enforcement action against the perpetrators of the fraud less than 6 months after the whistleblower’s tip.

Thornton Law Firm represents whistleblowers who file tips under the SEC’s whistleblowing provisions. If you have questions about SEC whistleblowing, contact us here or call us at

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