SEC Awards Whistleblower $14 Million Under Dodd-Frank

On September 30, 2013, the Securities and Exchange Commission (SEC) announced the largest award to date under the Dodd-Frank Act’s whistleblower provisions.  Under the Dodd-Frank Act whistleblowers who provide original information regarding the violation of one or more statutes or rules administered by the SEC, which results in a total recovery to the SEC of more than $1,000,0000.00, are entitled to an award of between 10% and 30% of the amount recovered.  Regarding this latest award, which is only third such award to date, the SEC announced that “because the Claimant voluntarily provided original information to the Commission that led to the successful enforcement of” an action regarding violations of statutes and rules administered by the SEC, the Claimant was entitled to an award in excess of $14,000,000.00.


While the amount of this recent award is remarkable, this announcement is also important for another reason.  It is a direct example of the Dodd-Frank Act’s anonymous reporting and whistleblower protection provisions.  The SEC’s announcement of the latest award does not reveal the claimant’s name or the offending entity against whom the recovery was made.  Instead, pursuant to the Dodd-Frank Act’s anonymity provision, which allows a whistleblower to anonymously submit original information through an attorney and still remain eligible for an award, and its confidentiality provision, the whistleblower remains nameless.


Such anonymity ad confidentiality provisions are extremely important to the current and future success of the Dodd-Frank Act.  The fact is that most whistleblowers face retaliation when they expose another’s wrongdoing.  The majority of whistleblowers are employed by the very company whose illegal they are exposing, which makes them vulnerable to attacks on their very livelihood.  The unfortunate consequences of blowing the whistle were often personal and professional ruin.  The Dodd-Frank Act’s anonymity and confidentiality provisions are a good first step in reducing such adverse consequences.