SEC Awards $5 Million to Whistleblower
The SEC awarded $5 million to a whistleblower for providing information that led to a successful enforcement action.
According to the SEC, the whistleblower provided extensive assistance to the investigation by (i) reporting information to the SEC Office of Compliance Inspections and Examinations regarding the alleged violations immediately upon learning of them, which eventually led to a referral to the SEC Division of Enforcement for further investigation, and (ii) providing a critical document used as evidence of potential wrongdoing. The SEC also noted that the whistleblower suffered "unique" hardships (including employment termination) for reporting the alleged violations internally.
Commentary
This is another example of a company not taking whistleblower concerns seriously and paying the price. In this case, the whistleblower was fired soon after raising concerns internally with the individual's supervisor. This is not a sound risk management practice for potential misconduct. It also exposes the company to a retaliation enforcement action.