SEC Increases Whistleblower Award

• Date: 01 September 2014
• DOI: http://doi.org/10.1002/jcaf.21995
• Author: Robert W. Rouse
• Published date: 01 September 2014

85

© 2014 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.21995

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Robert W. Rouse

SEC Increases Whistleblower Award

America has escaped the

winter of 2013–14, and now

dormancy within the federal

government has now shown

signs of activity.

SEC BOOSTS WHISTLEBLOWER

AWARD

In May, the Securities and

Exchange Commission (SEC/

Commission) announced an

additional $150,000 payment

to recipient of the first whistle-

blower award.

The individual, whom the

SEC did not identify in order

to protect confidentiality, has

now been awarded a total of

nearly $200,000 since the ini-

tial award was made in August

2012. The person helped the

SEC to stop a multimillion-

dollar fraud by providing docu-

ments and other significant

information that allowed its

investigation to move at an

accelerated pace and prevent

the fraud from ensnaring addi-

tional victims.

The award represented 30%

of the amount collected in the

SEC enforcement action against

the perpetrators and was the

maximum percentage payout

allowed under the law. The

additional payout comes after

the SEC collected an additional

$500,000 from one of the defen-

dants in the case.

Sean McKessy, chief of the

Commission’s Whistleblower

Office, commented, “This latest

payment shows that the SEC’s

aggressive collection efforts pay

dividends not only for harmed

investors but also for whistle-

blowers. … As we collect addi-

tional funds from securities law

violators, we can increase the

payouts to whistleblowers.”

The SEC expects to collect

additional funds from defen-

dants in this case, as some are

making payments under a peri-

odic payment schedule ordered

by the court.

The 2010 Dodd-Frank Act

authorized the SEC to reward

individuals who offer high-

quality original information that

leads to an SEC enforcement

action in which more than $1

million in sanctions is ordered.

Awards can range from 10% to

30% of the money collected.

The Dodd-Frank Act

included enhanced antiretali-

ation employment protections

for whistleblowers and provi-

sions to protect their identity.

The law specified that the SEC

cannot disclose any informa-

tion, including information the

whistleblower provided to the

SEC, which could reasonably be

expected to directly or indirectly

reveal a whistleblower’s identity.

The SEC has now estab-

lished a website to aid in this

effort. Visit www.sec.gov/whistle-

blower to access the program.

HP CHARGED WITH FCPA

VIOLATIONS

The SEC also charged

Hewlett-Packard with Foreign

Corrupt Practice Acts violations.

The registrant paid $108 mil-

lion to settle civil and criminal

charges in the case. The charges

involved subsidiaries in three

different countries that made

improper payments to govern-

ment officials to obtain or

retain lucrative public contracts.

Hewlett-Packard agreed to settle

the SEC’s charges and a paral-

lel criminal case brought by

the U.S. Department of Justice

(DOJ).

The SEC’s order found that

the Palo Alto, California–based

technology company’s subsid-

iary in Russia paid more than $2

million through agents and vari-

ous shell companies to a Russian

government official to retain a

multimillion-dollar contract.

The company’s subsidiary pro-

vided gifts and cash bribes worth

more than $600,000 to a Polish

government official to obtain