On November 4, 2015, the SEC announced that it would pay a former investment firm employee a whistleblower bounty award totaling more than $325,000. Notably, the SEC’s Order indicated that the award was decreased “because after becoming aware of the wrongdoing, [the whistleblower] did nothing to report the information and did nothing to try to stop the violations from continuing to occur, which under the facts and circumstances, we find unreasonable.”
In this regard, Sean X. McKessy, Chief of the SEC’s Office of the Whistleblower, stated “This award recognizes the value of the information and assistance provided by the whistleblower while underscoring the need for whistleblowers to report information to the agency expeditiously.” Andrew Ceresney, Director of the SEC’s Division of Enforcement, added “Corporate insiders who become aware of securities law violations are encouraged to come forward without delay in order to prevent misconduct from continuing unabated while investors suffer more harm.”
Since its inception in 2011, the SEC’s whistleblower program has paid more than $54 million to 22 whistleblowers who provided the SEC with unique and useful information contributing to a successful enforcement action. The SEC’s actions with respect to this award are not unusual in that there is precedent for limiting the amount of an award based on delay. For example, last year the SEC awarded its largest bounty ever – $30 million – while proclaiming that the award could have been higher had the tipster reported the complaint sooner.