The SEC announced today that it issued a sizable whistleblower award to a former corporate officer. The SEC stated that while corporate officers and directors are typically not eligible under the Dodd-Frank whistleblower statute to receive awards, the statute carves out an exception if an officer reports information concerning misconduct to the SEC more than 120 days after other responsible compliance personnel at the company possessed the information and failed to adequately address the issue. The award announced today was the first issued to a corporate officer by the agency under that exception.
In the case announced today, the SEC awarded the corporate officer between $475,000 and $575,000 for information that resulted in a successful enforcement action. Andrew Ceresney, Director of the SEC’s Division of Enforcement, stated that the officer in question "should be commended for stepping up to report a securities law violation when it became apparent that the company’s internal compliance system was not functioning well enough to address it.”
Sean McKessy, Chief of the SEC’s Office of the Whistleblower, added that the case demonstrated that "companies must have rigorous internal compliance programs that adequately address and remedy potential violations voiced by their employees as well as by their officers, directors, or other individuals.”
In August 2014, the SEC announced a similar type of award to a whistleblower employee who was in the internal audit and compliance areas of a company. In that case, the employee reported wrongdoing to the SEC after the whistleblower's company failed to take action when the whistleblower reported it internally. The SEC noted that the August 2014 award was the "first award for a whistleblower with an audit or compliance function at a company."