Monetary Sanctions and Awards

For the first time, there are meaningful monetary incentives for individuals to come forward and report possible securities violations.

Although federal programs that provide monetary awards for whistleblowers have been around since the Civil War, for the first time, the Dodd-Frank Wall Street Reform and Consumer Protection Act authorized the payment of monetary awards to individuals who report violations of the federal securities laws to the SEC. Under the Act, the SEC is required to pay eligible whistleblowers 10-30% of the monetary sanctions collected as a result of a successful SEC enforcement action or actions in which the sanctions exceed $1 million. If this threshold is met, whistleblowers may also be eligible for additional awards based upon the monetary sanctions collected in related actions brought by other regulatory and law enforcement organizations.

To determine the amount of a whistleblower award, the SEC will consider a variety of factors. Certain criteria may increase an award, such as the significance of the information provided by the whistleblower, the assistance provided by the whistleblower, the law enforcement interest in making an award, and the participation of the whistleblower in internal compliance systems. Other factors may decrease an award, such as the culpability of the whistleblower, unreasonable reporting delay by the whistleblower, and interference with internal compliance and reporting systems by the whistleblower.

Monetary awards may be substantial. To put this in context, consider that in Fiscal Year 2011 alone, the SEC secured $2.8 billion in monetary sanctions. In several cases, sanctions exceeded $100 million. Significantly, these figures do not include the monetary sanctions collected in related enforcement actions by other regulatory and law enforcement organizations, such as the Department of Justice.

To ensure that adequate funds are available to pay whistleblower awards, Congress has established a replenishing Investor Protection Fund, which at the close of Fiscal Year 2012 had a balance in excess of $450 million.

In an effort to better advise our clients, Labaton Sucharow has conducted an exhaustive proprietary analysis of SEC enforcement actions since 2002. As a public service, some of this important information has been made available to the general public in a first-of-its-kind searchable SEC Sanctions Database
 
Please note, whistleblowers may also be eligible for other federal and state whistleblower award programs.

To learn more about available monetary awards or to request a case evaluation, potential whistleblowers may contact our Whistleblower Representation Team in any number of ways – by telephone, email, or electronic submission through this website. All initial consultations and case evaluations are free, confidential and protected by the attorney-client privilege. During any initial consultation, although it is strongly encouraged, individuals are not required to provide personal identifying information or the names of possible securities violators. For international whistleblowers, language translation services are available upon request.

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Website Editor &
SEC Whistleblower Advocate

Jordan A. Thomas jthomas@labaton.com

212-907-0836

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