Podcast Center
Video Center
Webcasts
Resource Center
Events
October 29, 2020 at 04:36 PM
Jane Norberg, the SEC’s whistleblower chief. Credit: Diego M. Radzinschi/ALM
With a more than $10 million award Thursday, the U.S. Securities and Exchange Commission ran up the score in an already record-setting year for the agency’s initiative to reward tipsters, adding to a pile of payouts that has grown against the backdrop of rule changes that have raised alarm among some whistleblower advocates.
The SEC has doled out more than 35 awards this year, including a nearly $50 million bounty in June that was topped last week by a more than $114 million payout, the highest reward in the history of the agency’s whistleblower program.
Thursday’s award went to a tipster who was credited for providing the SEC with key evidence, along with help deciphering communications, after prompting the agency to open an investigation that resulted in a successful enforcement action.
“After reporting internally and receiving no satisfactory response, the whistleblower alerted the agency to the securities violation and played a critical role during the investigation,” Jane Norberg, chief of the SEC’s whistleblower program, said.
“Today’s award demonstrates the significant contributions that whistleblowers can make to substantially assist investigations and help the commission save time and resources,” Norberg said.
For whistleblower advocates, the SEC’s stated commitment to tipsters has been belied by reforms to the awards program and other moves that could allow the commission to lower bounties.
In late September, the commission adopted reforms to the whistleblower program that included some welcome changes designed to expedite the review process for awards and, as SEC Chairman Jay Clayton put it, deliver more money to whistleblowers more quickly.
In the buildup to those reforms, the SEC determined it had discretion to lower awards based on the perceived appropriateness of the dollar amount paid to whistleblowers. Whistleblower advocates said that discretion injected uncertainty into the program and could dissuade would-be tipsters from risking their careers to come forward and report massive frauds.
Also concerning to those advocates was a provision addressing tips not from corporate insiders but from outside analysts who uncover fraud and other misconduct through sophisticated research.
