Securities Regulation Daily SEC awards compliance professional $450,000 for whistleblowing
Monday, March 30, 2020

SEC awards compliance professional $450,000 for whistleblowing

By Anne Sherry, J.D.

For the third time in the whistleblower program’s history, the SEC awarded a person with compliance- or internal audit-related responsibilities who reported misconduct internally and then waited 120 days before contacting the agency.

The SEC announced that it awarded $450,000 to a whistleblower who had a compliance-related role in his or her firm. Whistleblowers with compliance or internal audit responsibilities may be eligible for an award if they wait 120 days after reporting the misconduct internally before they take it to the SEC. This exception ensures that the Commission can learn about securities violations that remain uncorrected by the company, said Whistleblower Chief Jane Norberg (Release No. 34-88507, March 30, 2020).

Norberg added, "Here, the whistleblower made reasonable efforts to work within the company’s compliance structure [and] suffered unique hardships as a result." The nature of those hardships is redacted from the order determining the claim. According to that order, the claimant’s information was not the source of the SEC’s investigation, but rather refocused the investigation on the violations that the agency ultimately charged. The claimant also assisted in the investigation, including by meeting in person with SEC staff.

Under Exchange Act Rule 21F-4(b)(4)(iii)(B), information generally does not constitute original information if the whistleblower learned of it because his or her duties involve compliance or internal audit responsibilities. However, there is an exception if the whistleblower waits at least 120 days after reporting the information internally before reporting it to the SEC. The claimant in this case reported the information to his or her supervisor, then waited more than 120 days to report it to the SEC, satisfying the exception and becoming the third individual with compliance or internal audit responsibilities to receive a whistleblower award. With the award, the SEC has now awarded over $396 million to 77 whistleblowers.

This is Release No. 34-88507.

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