Search Site
Menu
Whistleblower Receives SEC Awards Despite Being Culpable, Delaying Evidence

In late July, the Securities and Exchange Commission (SEC) announced it would pay $1.7 million to a whistleblower who provided important information to the agency. This was despite the fact that the whistleblower had some culpability in the fraud, delayed the reporting of that fraud to the SEC and failed to comply with a Dodd-Frank Act rule that requires all whistleblowers to submit inside information in writing in some circumstances.

The case is important because it is an example of just how far courts will go to report whistleblowers, even if those whistleblowers are partially responsible for the wrongdoing they report.

The SEC wrote in its order that in determining an appropriate award percentage for the whistleblower, it considered the fact that the whistleblower had an unreasonable delay and was partially responsible. However, the SEC would have otherwise had a very difficult time uncovering this serious incidence of multi-year fraud, and the delay was at least partially mitigated because the whistleblower alerted the SEC to the fraud before the whistleblower and its accompanying protections were established by Dodd-Frank.

Therefore, it is possible the whistleblower could have earned more money had he acted more quickly, but the agency was willing to look past his culpability and delay because of the quality of information provided and the serious nature of the wrongdoing it uncovered.

Culpable whistleblowers might not receive money in the future

There are some potential changes on the horizon for culpable whistleblowers. In June, the House of Representatives passed the Financial CHOICE Act, which would prohibit culpable whistleblowers from being granted any type of financial award under Dodd-Frank.

The SEC’s whistleblower program overall, however, does not appear to be in any danger under the Trump administration.

For more information and guidance on how to proceed with an SEC whistleblower claim, contact an experienced Dallas attorney at Whistleblower Law for Managers.

 

Honors
Our Office
  • Dallas Office
    4514 Cole Ave
    #600
    Dallas, Texas 75205
    Phone: 214-306-8045
    Fax: 469-729-9926
Testimonials
  • "Steve Kardell was terrific in representing me in some very adversarial discussions with Citigroup and also later represented me in my testimony before the Financial Crisis Inquiry Commission."  -Richard Bowen, Citigroup Whistleblower

  • "Never thought my career would end like it did after 30 years of service. I was part of the first round of the so called reduction of force. I asked myself how can I be part of this with 30 years of seniority. How did they pick these 90 plus employees? Now, the culture of this organization made you question every decision they made. It wasn’t what you knew it’s was a culture of who you know. Nonetheless, I did not accept their severance package. I immediately starting looking for an attorney who would take on my case. After the initial call to Steve I had hope again. He was open and honest about everything and reassured me he would do his best for me, and he did. I had an awesome outcome. Thanks Steve you’re the best."  -S.S.

  • "Reaching out to Steve Kardell was the best decision I made. His ability to provide immediate insight and direction was very powerful, and a huge relief during a very stressful time period. For anyone struggling with a whistleblower situation, I would highly recommend at least speaking with Steve. After a 10 minute call with him, I had a better understanding of what I was dealing with. Even better, he gave me some immediate hope. In the end Steve did a better job than I thought was possible. Steve was able to get in contact with people in my organization, that I didn’t have access to. Because of his years of experience, he already has contacts in many organizations in Dallas. The entire situation was handled peacefully. I was impressed by his ability to “keep the peace”–rather than creating a battle with the organization. The reason I didn’t reach out to a lawyer initially, was because I thought it would mean an immediate end to any hope of a positive relationship with the company. Steve was able to address my concerns, and in the end I was able to continue to work for them."  -KS

FOLLOW US
Facebook Twitter Linkedin RSS Feed JD Supra