SEC Office of the Whistleblower Program in 2018 – Recent Case Examples and Award Information

The SEC Office of the Whistleblower administers the Securities and Exchange Commission (“SEC”) whistleblower program.  Whistleblowers are encouraged with awards ranging from 10-30% of the money collected if they come forward with information about securities fraud, violation or other wrongdoing.  Contact one of our attorneys for additional guidance.  Since 2011, the SEC has awarded more than $300 million to whistleblowers while netting the government more than $1 billion in financial remedies!

Exemplary Cases from 2018

  • Case: The most consequential case in 2018 was Digital Realty Trust, Inc. v. Somers, No. 10-1276 583 U.S. (Feb. 21, 2018) where the U.S. Supreme Court unanimously ruled that an individual must provide information relating to a securities law violation to the SEC rather than just reporting internally to have a claim under Dodd-Frank’s whistleblower protection provisions.
  • Lesson Learned: If a whistleblower has information related to a securities violation, either reach out to the SEC or notify an attorney who we can guide the whistleblower. This is so that the whistleblower retains his or her whistleblower protection under the Dodd-Frank Act.  Specifically, this is because Dodd-Frank defines a “whistleblower” as one who provides “information relating to a violation of the securities laws to the Commission.”  (15 U.S.C. §78u-6(a)(6).)

 

  • Case: Another important case was Verfuerth v. Orion Energy Sys., Inc., No. 16-cv-3502, 879 F.3d 789 (7th Cir. Jan. 11, 2018), where the court ruled that a former CEO’s complaints to board members were not protected whistleblowing under Sarbanes-Oxley (“SOX”) or Dodd-Frank.
  • Lesson Learned: SOX protects complaints about securities fraud rather than “run-of-the-mill corporate problems” and the CEO’s complaints to board members did not rise to whistleblowing because “[s]imply telling a person he might be committing fraud is not whistleblowing” and “airing concerns is not whistleblowing.” An executive who advises board members to disclose a fact that the board already knows about has not “provide[d] information” about fraud.  Rather, he has provided an opinion.

Recent Awards

In 2018, the SEC has awarded four separate sets of whistleblowers over $137 million.  See more here:
https://www.sec.gov/page/whistleblower-100million

In California alone, there have been more than 2,000 SEC related enforcement tips since 2011. According to the SEC, Whistleblower tips have also been submitted by individuals in 114 foreign countries between fiscal years 2011 and 2017. The top five were the United Kingdom (438), Canada (357), China (238), Australia (198), and India (187).