Kenneth C. Oh
Counsel
212-784-6911 koh@sh-law.comFirm Insights
Comply Officer Awarded $1 Million Whistleblower Award
Author: Kenneth C. Oh
Date: May 7, 2015
Key Contacts
Back
The Securities and Exchange Commission (SEC) recently announced the whistleblower award. An award that will give more than $1 million dollars to a compliance officer who provided information resulted in an enforcement action against the whistleblower’s employer.
The whistleblower award reinforces that the SEC’s program continues to play a vital role in the agency’s ability to prosecute securities fraud. Since its inception more than four years ago, the SEC’s whistleblower program has paid more than $50 million to 16 whistleblowers who provided the SEC with unique and useful information that contributed to a successful enforcement action.
In most cases, whistleblowers can only provide tips regarding information that they learn about firsthand. Accordingly, officers, directors, trustees, or partners who learn about a fraud through another employee reporting the misconduct generally are not eligible for an award. However, there are several notable exceptions. In this case, the whistleblower relied on an exemption under which corporate officers can qualify as whistleblowers in cases where investors will be substantially harmed if a potential securities violation is not reported.
“When investors or the market could suffer substantial financial harm, our rules permit compliance officers to receive an award for reporting misconduct to the SEC,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement, in an SEC press statement. “This compliance officer reported misconduct after responsible management at the entity became aware of potentially impending harm to investors and failed to take steps to prevent it.”
This is the second whistleblower award given to compliance professional. As previously discussed on the Scarinci Hollenbeck Business Law News Blog, the SEC previously awarded between $475,000 and $575,000 to a former company officer who blew the whistle on securities fraud after her employers declined to take action. That case was the first to rely on an exemption under which compliance professionals can be compensated for providing the information to the SEC more than 120 days after other responsible compliance personnel possessed the information and failed to adequately address the issue.
Together, the SEC’s recent whistleblower awards to corporate compliance officers highlight that companies must have robust internal reporting systems in place to address complaints of misconduct. If not, corporate officers may be compelled to take their information directly to the SEC.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Author: Jesse M. Dimitro
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Author: Jesse M. Dimitro
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Author: Scarinci Hollenbeck, LLC
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
Author: Dan Brecher
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
Author: Ronald S. Bienstock
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Comply Officer Awarded $1 Million Whistleblower Award
Author: Kenneth C. Oh
The Securities and Exchange Commission (SEC) recently announced the whistleblower award. An award that will give more than $1 million dollars to a compliance officer who provided information resulted in an enforcement action against the whistleblower’s employer.
The whistleblower award reinforces that the SEC’s program continues to play a vital role in the agency’s ability to prosecute securities fraud. Since its inception more than four years ago, the SEC’s whistleblower program has paid more than $50 million to 16 whistleblowers who provided the SEC with unique and useful information that contributed to a successful enforcement action.
In most cases, whistleblowers can only provide tips regarding information that they learn about firsthand. Accordingly, officers, directors, trustees, or partners who learn about a fraud through another employee reporting the misconduct generally are not eligible for an award. However, there are several notable exceptions. In this case, the whistleblower relied on an exemption under which corporate officers can qualify as whistleblowers in cases where investors will be substantially harmed if a potential securities violation is not reported.
“When investors or the market could suffer substantial financial harm, our rules permit compliance officers to receive an award for reporting misconduct to the SEC,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement, in an SEC press statement. “This compliance officer reported misconduct after responsible management at the entity became aware of potentially impending harm to investors and failed to take steps to prevent it.”
This is the second whistleblower award given to compliance professional. As previously discussed on the Scarinci Hollenbeck Business Law News Blog, the SEC previously awarded between $475,000 and $575,000 to a former company officer who blew the whistle on securities fraud after her employers declined to take action. That case was the first to rely on an exemption under which compliance professionals can be compensated for providing the information to the SEC more than 120 days after other responsible compliance personnel possessed the information and failed to adequately address the issue.
Together, the SEC’s recent whistleblower awards to corporate compliance officers highlight that companies must have robust internal reporting systems in place to address complaints of misconduct. If not, corporate officers may be compelled to take their information directly to the SEC.