The Securities and Exchange Commission announced this week that it has awarded its first whistleblower payout to a former company officer. The redacted order indicates that the former officer will receive an award between $475,000 and $575,000 for reporting high-quality, original information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million. The identity of the officer and the nature of the enforcement action were redacted by the Commission to protect the anonymity of the whistleblower, as required by law.
While the SEC has publicized other significant whistleblower awards over the last two years, this particular announcement serves as an alarm bell of sorts to internal gatekeepers and decision makers responsible for handling allegations of misconduct. The Commission normally will not consider information provided by officers, directors, trustees, or partners who learn about a fraud through another employee reporting the misconduct to be original information derived from independent knowledge or independent analysis. But, an exception exists under Rule 21F-4(b)(4)(v)(C) for reporting information to the Commission more than 120 days after other responsible compliance personnel possessed the information and failed to adequately address the issue.
In the SEC press release accompanying the order, SEC representatives made clear that they will continue to entertain tips from corporate employees at all levels:
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