SEC Announces $4.5M Whistleblower Award

In a Securities and Exchange Commission (SEC) whistleblower case that resulted in a company probe and two successful enforcement actions, the regulator has awarded $4.5M to the individual who stepped forward to provide the key information. This person is the 62nd one to receive an SEC whistleblower award since the Commission began granting them in 2012.

According to the regulator, the whistleblower provided an anonymous tip internally to the company about the alleged wrongdoing, as well as a similar tip to the SEC within 120 days. The information compelled the company to conduct its probe into the misconduct allegations and then report them to the Commission and to a second agency. After the company concluded its investigation, it notified both agencies of the outcome.

While the SEC didn’t provide specifics about the whistleblower case—it refrains from doing so in order to protect the confidentiality of any informants/claimants—The Wall Street Journal identified the claimant as an ex-Brazilian orthopedic surgeon who brought up concerns about an alleged kickback scam run by a subsidiary of Zimmer Biomet Holdings.

It was in 2017 that the medical device maker settled for $30M probes by the Commission and the US Justice Department alleging that it may have violated the US Foreign Corrupt Practices Act. This resolution came five years after Biomet, in 2012, paid $22M to resolve allegations that it and its subsidiaries had bribed doctors in different countries in order to win business.

The SEC’s Whistleblower Award program grants whistleblowers 10-30% of penalties imposed/paid when their original tips prove key in a successful enforcement probe resulting in at least $1M in sanctions. According to the WSJ, the tipster’s $4.5M award is about 15% of how much the DOJ and the SEC collected in their resulting cases.

To date, the SEC has issued about $381M in whistleblower awards.

CFTC Issues $1.5M Whistleblower Award

The SEC is not the only regulator to announce a whistleblower award this month. The US Commodity Futures Trading Commission on May 6 said that it was issuing $1.5M to an individual for providing information that resulted in both a successful CFTC and a related action by another federal regulator. The whistleblower reportedly reported the concerns internally before notifying the CFTC.

To date, the regulator has awarded over $85M to whistleblowers, while related enforcement actions have resulted in over $675M in sanctions. Like with the SEC, whistleblowers can be entitled to receive 10-30% of sanctions collected. Meantime, employers are prohibited from retaliating against whistleblowers or doing anything to stop them from notifying the CFTC about any concerns of possible wrongdoing. The identities of whistleblowers and the specifics of their claims are kept confidential, again for their protection.

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