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ARTICLE · 10 MARCH 2017

SEC Reduces Whistleblower Bounty Based On Culpability And Delayed Reporting

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However, the SEC gave no information regarding the whistleblower's culpability or the extent of that culpability.

United StatesEmployment and HR
Harris Mufson
Harris Mufson
Steven Pearlman
Steven Pearlman
Amy Blackwood
Amy Blackwood
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On February 28, 2017, in an Order almost entirely devoid of detail, the SEC announced that a whistleblower will receive 20% of any monetary sanctions collected in an enforcement action commenced as a result of the whistleblower's tip. The SEC is giving this "reduced" award while acknowledging that the whistleblower (1) was "culpable" in the securities violation at issue, and (2) unreasonably delayed reporting the company's wrongdoing to the agency.

Dodd-Frank prevents the SEC from awarding bounties to whistleblowers who are criminally convicted for conduct that is the same as, or related to, the conduct that is the subject of the information they provide. However, the SEC can grant (and has granted) awards to whistleblowers who are involved in the wrongdoing but are not criminally charged, even if the whistleblower is civilly charged.

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