SEC Whistleblower Program Protects Clients Who Report Violations
Jordan Thomas recently led his team at Labaton Sucharow LLP to secure a substantial award for a client who reported a transgression in a very high-profile case. This is the second largest SEC whistleblower award given to date.
Labaton Sucharow LLP is the nation’s first practice to exclusively dedicate itself to represent SEC (Securities and Exchange Commission) whistleblowers. This case in question was awarded more than $17 million to a client who exposed a significant transgression in the financial services industry.
It is the second largest award from the SEC Whistleblower Program, now in its 6th year. This program allows whistleblowers to receive between 10 and 30 percent of the total awards won in a successful enforcement action.
This whistleblowing client provided great information that led to authorizations against a major company in the market. This client, as with most cases, chose to remain anonymous to avoid possible retaliation. The SEC does not reveal cases where the whistleblowers played a role to help prevent revealing the identity of the whistleblower.
- Thomas, who led the team on this case, also represented the first person of a public company to receive a whistleblower award and worked on the first case where the SEC charged an employer with performing a form of retaliation against a whistleblower.
The SEC Whistleblower Program has unique protections and incentives for eligible clients. Clients, including the one in this particular case, can report any possible federal violations anonymously with added employment protections. They also have an opportunity to gain substantial money from the case. Congress has even established an Investor Protection Fund that ensures adequate funds are available and currently has a balance of over $400 million.
In 2010, Congress enacted the Dodd-Frank Wall Street Reform and also the Consumer Protection Act, which was the largest overhaul of financial regulation since the Great Depression. As part of the Dodd-Frank Act, the whistleblower program was created to entice people to report violations to the SEC.
As part of the rules, the SEC is required to pay these whistleblowers the 10-30% of the sanctions, as stated before, but only if the case is won and the sanctions exceed $1 million. If those requirements are met, they may also be eligible for other awards based on the money collected in related actions by other law enforcement agencies. The Act also prohibits and will prosecute any retaliation against SEC whistleblowers.