Program Fundamentals

Monetary Awards

Under the SEC Whistleblower Program, the Commission 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 law enforcement and regulatory organizations.

Awards can be quite substantial. To put this in context, in recent years, the SEC annually secured more than $4 billion in monetary sanctions. Every year, sanctions in some enforcement actions exceed $100 million. More information about monetary sanctions in SEC enforcement actions can be found in Labaton Sucharow’s proprietary sanctions database. 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 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 reporting 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.

Since SEC whistleblowers may also be eligible for other federal and state whistleblower award programs, at no cost to our clients, we regularly coordinate our legal work with lawyers who concentrate in other areas of whistleblower law.

To ensure that adequate funds are available to pay whistleblower awards, Congress has established a replenishing Investor Protection Fund, which at the close of FY 2016 had a balance in excess of $365 million.

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