The Securities and Exchange Commission (the “SEC”) announced that it was awarding a whistleblower more than $2.2 million on April 5, 2018 using the “safe harbor” provision of the Securities Exchange Act of 1943.
The whistleblower, a former company insider, first reported the information to another federal agency and later provided the same information to the SEC. The information helped the SEC open an investigation that led to an enforcement action.
While not the highest amount awarded to a whistleblower by the SEC, the award is significant as it is the first award paid under the “safe harbor” of The Securities Exchange Act of 1934 Rule 21F-4(b)(7). The rule treats whistleblower information as though it had been submitted to the SEC at the same time that it was submitted to another federal agency as long as that same whistleblower information was submitted to the SEC within 120 days of first filing.
In this particular case, the whistleblower voluntarily reported information to a federal agency covered by the rule. The federal agency then referred the matter to the SEC. The SEC then opened an investigation. Within 120 days of the initial report to the covered federal agency, the whistleblower reported that same information to the SEC and later provided substantial cooperation in the investigation. While the information was reported to the SEC after it had already opened its investigation, the SEC treated the submission as though it had been made when the whistleblower provided the information to the other federal agency.
The safe harbor rule is an important aspect of the whistleblower program. A whistleblower may know something is awry but not know which federal agency he or she should report. Additionally, a whistleblower may report the information to multiple agencies. This whistleblower award shows the safe harbor rule in action and evidences that whistleblowers can still receive awards as long as they report their information to the SEC within the 120-day safe harbor period in addition to the other eligibility criteria for an award.
Scott L. Silver, managing partner of the Silver Law Group, was an early proponent of the legislation and authored a primer on the SEC Whistleblower Program. Our legal team includes David R. Chase, a former SEC prosecutor now working to protect whistleblowers.
Silver Law Group and The Law Firm of David R. Chase are committed to the protection of whistleblowers through the whistleblower claim process and can prosecute your whistleblower claims. If you have questions about your legal rights as a whistleblower, please contact Scott Silver of the Silver Law Group for a free consultation at firstname.lastname@example.org or toll free at (800) 975-4345.