New Rule Allows Whistleblower a $2.2 Million Payday

whistleblower

Whistleblower laws in the United States can be complex. Failure to follow all of the appropriate filing procedures or not being the first to report fraud can result in a person being disqualified from receiving the benefit of the federal whistleblower reward program. One of the most frustrating of these rules prohibited an award if a whistleblower reported a problem to the wrong agency, even if their reporting set the wheels in motion for an investigation and successful legal action. To address this, a new safe-harbor rule was passed, allowing a 120-day window in which wrongdoing can first be reported to another federal agency and then to the SEC. This change has now seen its first real-world impact, as a former company insider who reported wrongdoing to an agency other than the SEC — and who then also filed it with the SEC within 120 days — was rewarded with $2.2 million.

The tip provided by the whistleblower, in this case, was filed with one federal agency, which had passed it off to the Securities and Exchange Commission (SEC). The SEC had already set off an investigation by the time the whistleblower also reported it to them, but because the second report was made within the 120-day window, the whistleblower’s action counted. The tipster was also noted for having cooperated with the SEC in their investigation.

Whistleblowers Have Received More than $264 Million

The Securities and Exchange Commission’s whistleblower program has proven to be a remarkable success for both that agency and those who have been courageous enough to report wrongdoing. Since 2012 there have been 54 people whose tips have resulted in successful investigative actions and penalties, and more than $264 million has been distributed to those tipsters. The whistleblower guidelines permit whistleblower rewards of between 10% and 30% of the money that is assessed in a penalty as long as the penalty exceed $1 million. Those whistleblowers remain anonymous, with the SEC barred from revealing any information that might point to who they are. The safe harbor rules were specifically created to offset the complexities of the original rules. According to Jane Norberg, chief of the SEC’s Office of the Whistleblower, “Whistleblowers, especially non-lawyers, may not always know where to report, or may report to multiple agencies.”

Author: Terri Oppenheimer

Terri Oppenheimer

Terri Oppenheimer is an independent writer, editor, and proofreader. She graduated from the College of William and Mary with a degree in English. She specializes in providing content for websites and finds tremendous enjoyment in the things she learns while doing her research. Her specific areas of interest include health and fitness, medical research, and the law.