SEC Announces Third Whistleblower Award to Individual in Compliance-Related Role


On March 30, 2020, the SEC announced a rare award in the amount of $450,000 to a whistleblower having compliance-related functions.  The SEC whistleblower program, which was established in 2011, allows the SEC to provide monetary awards to individuals who voluntarily report high-quality, original information to the SEC that leads to an enforcement action where over $1,000,000 in sanctions is ordered.  The awards can range between 10% and 30% of the money collected.  

According to SEC Rules and the Order, “original information” typically excludes information that the whistleblower obtained by being “[a]n employee whose principal duties involve compliance or internal audit responsibilities…” (the “Compliance Officer Exclusion Rule”).  However, an exception applies if the whistleblower waits at least 120 days after providing the information to the company’s audit committee, chief legal officer, chief compliance officer or a supervisor, or if the whistleblower received the information under circumstances indicating that any of the foregoing parties was already aware of the information.  In this instance, the whistleblower first reported certain information to the whistleblower’s supervisor and then waited more than 120 days to report the same information to the SEC.  The rest of the information that led to the successful enforcement action would have been known to the whistleblower’s supervisor at the time.  Accordingly, the SEC concluded that the whistleblower had satisfied the 120-day exception to the Compliance Officer Exclusion Rule.  

In announcing the award, Jane Norberg, Chief of the SEC’s Office of the Whistleblower, stated “[t]o ensure that important information about securities law violations is reported to the SEC when appropriate corrective action is not taken by the company, the rules permit awards to compliance professionals in limited circumstances.”  This is the SEC’s third ever whistleblower award to an individual who had compliance or internal audit responsibilities.
 

About Faruqi & Faruqi, LLP

Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour, personal injury and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Delaware, Georgia and Pennsylvania.

Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, direct purchasers, consumers and employees.

To schedule a free consultation with our attorneys and to learn more about your legal rights, call our offices today at (877) 247-4292 or (212) 983-9330.

About Nina Varindani

Nina Varindani is a Partner in Faruqi & Faruqi, LLP's New York office and focuses her practice on securities litigation and shareholder derivative litigation, representing investors in federal and state class action and derivative lawsuits, books and records demands and litigation demands.

Tags: faruqi & faruqi, investigation, news, litigation, settlement notice, case, faruqi law, faruqi blog, faruqilaw, Nina M. Varindani, derivative litigation Nina Varindani Nina Varindani
Partner at Faruqi & Faruqi, LLP

New York office
Tel: (212) 983-9330
Fax: (212) 983-9331
E-mail: nvarindani@faruqilaw.com

Finding us

Our Offices


Our offices are nationwide. If you have any questions about a case or our firm, please contact us.

New York

685 Third Avenue 26th Floor
New York, New York 10017
(212) 983-9330
(877) 247-4292
(212) 983-9331

California

10866 Wilshire Boulevard Suite 1470
Los Angeles, California 90024
(424) 256-2884
(424) 256-2885

Delaware

3828 Kennett Pike Suite 201
Wilmington, Delaware 19807
(302) 482-3182
(302) 482-3612

Georgia

3975 Roswell Rd Suite A
Atlanta, Georgia 30342
(404) 847-0617
(404) 506-9534

Pennsylvania

1617 JFK Boulevard, Suite 1550
Philadelphia, Pennsylvania 19103
(215) 277-5770
(215) 277-5771

Faruqi & Faruqi office in New York, New York

Faruqi & Faruqi office in Los Angeles, California

Faruqi & Faruqi office in Wilmington, Delaware

Faruqi & Faruqi office in Atlanta, Georgia

Faruqi & Faruqi office in Philadelphia, Pennsylvania