Largest SEC whistleblower award, $114 million, explained

The largest SEC whistleblower award to date – $114 million – went to a single whistleblower. Phillips & Cohen partner Sean McKessy explains the factors behind the record whistleblower award. Mr. McKessy was the founding chief of the SEC’s Office of the Whistleblower and now represents SEC whistleblowers.

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Transcript:
The SEC recently awarded a single unnamed whistleblower 114 million dollars, which is the largest SEC whistleblower award so far.

That’s more than twice the prior record for a SEC award paid to a single whistleblower, which was 50 million dollars.

How was an individual whistleblower become entitled to get such a large SEC award?
There are a number of contributing factors:

First, the fraud uncovered and reported by the whistleblower was massive.
Under the Dodd-Frank Act, the SEC awards whistleblowers an amount equal to 10 to 30% of the collected monetary sanctions.

If you do the math, the fraud had to be of an extraordinary scale and resulted in massive fines against the wrongdoer.

Second, the whistleblower was able to collect rewards based on the SEC’s enforcement actions as well as another regulator’s actions

Under the whistleblower program, the 10-30% reward amount can be bolstered by the actions of other regulators’ actions.

the SEC whistleblower information led to enforcement actions by the SEC and another government
Third, the SEC highlighted the whistleblower’s extraordinary level of assistance to the SEC. The level of assistance by the whistleblower and the whistleblower’s lawyer is a factor that the SEC considers in its decision on whistleblower awards.

There was clearly significant and extraordinary cooperation on the part of the whistleblower.

Finally, the whistleblower was the only one who provided information that led to the enforcement actions. The 10-30% award issued as a reward is case-specific, meaning that is there are multiple whistleblowers, the total reward would need to be divided amount them.

This record-breaking reward shows that the SEC will make big awards to whistleblowers who provide information about significant violations.