What cash awards are available to SEC whistleblowers?

SEC whistleblowers may receive awards of 10% to 30% of the monetary sanctions obtained in an SEC enforcement action or a related action brought by another regulator, including self-regulatory organizations such as FINRA.

SEC regulations specify “penalties, disgorgement, and interest” as subject to a potential whistleblower award, but also include other monetary sanctions, so long as the order to pay constitutes relief for the alleged violations. For example, restitution in a related criminal proceeding or monies recovered by a receiver and returned to harmed investors may constitute monetary sanctions subject to an award.

The precise amount of an award between 10% and 30% is within the SEC’s discretion. Among other factors, the SEC considers the significance of the whistleblower’s information, the assistance the whistleblower provided, and the government’s interest in deterring future violations by providing whistleblowers incentives to come forward. Whistleblowers who are denied an award or believe the SEC did not follow the correct process can file an appeal with a United States Court of Appeals.

Where the aggregate amount recovered is $5 million or less and no negative factors exist, a whistleblower is presumptively entitled to the maximum award of 30%. That presumption may be set aside, however, where the whistleblower engaged in culpable conduct, unreasonably delayed reporting, or interfered with corporate compliance or reporting processes, among other reasons.

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