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Takeaways from the Latest Whistleblower Awards

    Client Alerts
  • September 29, 2014

Two recent awards by the SEC are noteworthy reminders that it continues to vigorously implement its whistleblower bounty program and that companies must be vigilant when dealing with internal complaints.

A whistleblower refresher…

The Dodd-Frank Act created the whistleblower bounty program by adding Section 21F to the Securities Exchange Act of 1934. The SEC is now authorized to pay awards to persons who voluntarily provide original information about securities violations that lead to a successful SEC enforcement action resulting in monetary sanctions of more than $1 million. Awards may range from 10% and 30% of the amount recovered, with the actually percentage determined in the SEC’s discretion.

First ever award to a compliance employee…

A few weeks ago the SEC awarded more than $300,000 to an employee who performed internal audit and compliance duties for the company in question. This is noteworthy because internal audit and compliance employees are generally excluded from the SEC’s whistleblower program under the theory that they are not typically sources of “original information.”

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