On September 30, 2013, the last day of the fiscal year, the SEC awarded more than $14 million to a tipster who provided details that led to a substantial recovery of investments in an enforcement action.  Though only the third SEC whistleblower award since the bounty program was started, our readers know this award confirms a long-held prediction that larger awards were just a matter of time. 

Latest Award Dwarfs Prior SEC Payouts

The SEC’s first whistleblower award in August 2012 was $50,000.  In August and September of 2013, the SEC gave awards in a sham hedge fund case that is expected to hover around $125,000.  This third award is much more substantial.  As SEC Chair Mary Jo White stated:  “Our whistleblower program already has had a big impact on our investigations by providing us with high quality, meaningful tips.  We hope an award like this encourages more individuals with information to come forward.”

Why Is The Payout So Big?

The September 30 Order noted that the whistleblower’s original information led to successful enforcement of the SEC whistleblower regulations.  It emphasized that the sizeable award to the anonymous tipster recognized (1) the significance of the information that the Claimant provided to the SEC; (2) the manner in which Claimant assisted the SEC in the action; and (3) the enforcement interest in deterring violations by granting awards.

Implications

It is quite likely that this award will lead to an influx of additional tips.  Will the SEC have sufficient resources to handle it?  Will the quality of tips rise or fall?  Will employers take heed and step-up their compliance programs and create incentives for internal reports?  Is this an anomaly or are awards of this magnitude around the corner?  Stay tuned.

Posted in SEC
Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice.…

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Whistleblower, Restrictive Covenant and Trade Secret Practice. Steven’s national practice focuses on defending companies in federal and state courts and arbitration against claims of: discrimination, retaliation and harassment, including claims brought by high-level executives; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations (including class, collective and PAGA actions).

Illustrating his versatility, Steven has successfully handled bench and jury trials in multiple jurisdictions (e.g., Illinois, California, Florida and Texas); defended one of the largest Illinois-only class actions in the history of the federal courts in Chicago; and prevailed following his oral arguments before the Seventh Circuit and state appellate courts. Steven brings his litigation experience to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He was also named as One of the Top 10 Impactful Labor & Employment Lawyers in Illinois for 2023 by Business Today. He is a Fellow of the College of Labor and Employment Lawyers. Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Chambers also reports that “He is someone who can navigate the twists and turns of litigation without difficulty. Steven is great with brief-writing, crafting arguments, and making sure the client is always happy.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC, and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

Read more about Steven J. Pearlman
Show more Show less
Related Posts
SEC Awards Two Whistleblowers More Than $98 Million
August 23, 2024
SEC Announces $37 Million Award to Whistleblower
July 30, 2024
SEC Announces $18 Million Award to Whistleblower
August 29, 2023