SEC Amends Whistleblower Award Determination Rules

The Securities and Exchange Commission will change the way it determines whistleblower award amounts. In a 3-2 vote, the commissioners have approved a set of amendments to the current rules governing monetary awards made to tipsters.  

The SEC said in a statement that the amendments will increase the transparency of the award determination mechanism. SEC whistleblower awards range between 10 and 30 percent of monetary sanctions. Only tipsters whose information has led to at least $1 million in fines are eligible for awards. Since the SEC whistleblower program was launched, 97 insiders have received awards totaling $523 million.

Often criticized for taking too long to issue awards, the SEC takes several factors into account to determine their amounts, including:

  • The whistleblower's role in the investigation (the more prominent the role, the bigger the award)
  • The whistleblower's involvement in illegal schemes (direct participation in violations triggers award reduction)

Under the new rules, the Commission will be able to make speedier award determinations in the case of awards under $5 million. The SEC said in a press release that "whistleblowers with potential awards of less than $5 million (which historically have represented nearly 75% of all whistleblower awards)," may, "qualify for a presumption that they will receive the maximum statutory award amount," absent any negative factors.

In the case of awards that could potentially surpass $5 million, the SEC said they "will continue to be evaluated consistent with past practice." This means that the agency will continue to carefully evaluate positive and negative factors before making a decision. One of the proposals the commissioners rejected was an amendment that sought to reduce awards when penalties surpassed $100 million.  

According to the SEC, "The rule amendments increase efficiencies around the review and processing of whistleblower award claims and provide the Commission with additional tools to appropriately reward meritorious whistleblowers for their efforts and contributions to a successful matter." However, whistleblower advocates have argued that the new award determination rules won't increase transparency. The SEC is not required to tell tipsters which rule was applied to issue each particular award. 

According to Commissioner Allison Herren Lee, who opposed the rule amendments, they will "create different outcomes for tipsters in cases where the only difference is the size of the fine collected by the SEC."  


Steve Halperin

New York trial attorney Steve T. Halperin is a well-known litigator with extensive knowledge of whistleblower laws and the New York False Claims Act. He has 28 years of experience as one of New York’s top tier attorneys. From the Manhattan offices of HalperinBikel, Steve’s whistleblower cases can run the gamut from lawsuits against healthcare. Whistleblowers: A New Yorker’s Step By Step Guide systems and providers cheating on New York Medicaid to private companies providing worthless services, or false billings by government contractors. With hundreds of winning verdicts and favorable settlements in healthcare and corporate cases, attorney Halperin’s meticulous preparation, courtroom acuity, and client-centered professionalism create remarkable outcomes.

To contact Steve: [hidden email] or 929.290.1266
For media inquiries or speaking engagements: [hidden email]