June 5, 2015

SEC Gives Maximum Award in First Whistleblower Retaliation Case

Holland & Knight Bulletin
Stacy Byrd Thomas

On April 28, 2015, the SEC announced that it awarded a whistleblower the maximum award of 30 percent of the amounts collected in connection with the SEC’s first anti-retaliation case. The whistleblower received more than $600,000 to compensate for the retaliation he endured as a result of providing the SEC with key information that led to the successful enforcement action against his employer.

In 2012, the whistleblower submitted a tip to the SEC alleging that his employer engaged in prohibited transactions with an affiliated broker-dealer while trading on behalf of a hedge-fund client in an effort to reduce the tax liability of investors. After the whistleblower told his employer that he reported the conduct to the SEC, his employer retaliated by removing him from his position, tasking him with investigating the conduct he reported to the SEC, changing his job function and stripping him of supervisory responsibilities.

As a result of the retaliatory actions, in 2014, the SEC initiated its first anti-retaliation action against the employer and its owner. The whistleblower’s employer and its owner settled the matter with the SEC, agreeing to pay $2.2 million without admitting or denying any wrongdoing. The SEC’s whistleblower program rewards whistleblowers with high-quality, original information that results in an SEC enforcement action with sanctions greater than $1 million. The SEC has authority to award whistleblowers between 10 percent and 30 percent of the amount collected in the case. The whistleblower received the full 30 percent available as a result of the unique hardships he faced. The SEC hopes that this award demonstrates the SEC’s support of the whistleblower program and encourages potential whistleblowers to come forward without fear of retaliation.

SEC Press Release: April 28, 2015

SEC Settlement Order  

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