Today the SEC announced that it will pay $30 million to a whistleblower in the largest award ever doled out by the agency. (See the SEC announcement here, and The Wall Street Journal’s coverage here.)
This news is monumental and will send shock waves around the financial world—along with gut checks within compliance and legal departments. The dollar level is more than double the previous highest award and may have been even higher if the whistleblower had not delayed providing the information to the SEC.
In its Order Determining Whistleblower Award Claim, the agency actually defends its decision on the final award amount (assuming it was lower than it would have been) saying that: “In reaching the award determination, we have considered the significance of the information provided by Claimant, the assistance that Claimant provided, and the law-enforcement interests at issue. We also have considered Claimant’s delay in reporting the violations, which under the circumstances we find unreasonable.”
Who knows what this award could have been?
To add even further interest to the case, the award will go to a foreign whistleblower, all while the U.K. and other countries are taking a position against the paying of bounties.
There is much misguided belief that the phenomenon of whistleblowing is uniquely American, and that it does not culturally “fit” outside the U.S. This award is a wake-up call that, while whistleblowing may be culturally distasteful in many parts of the world, foreign countries and companies are not immune. Non-U.S. employees may start to “export” their reports to regulators in the countries who are paying up. And there is nothing like a $30 million dollar wealth-building announcement to spread the word and raise awareness—quickly. This news doubles up as impactful global marketing to employees around the world.
I predict there is more to come—much more to come—both from within the U.S. and abroad. The balance of the SEC’s whistleblower account as of the end of 2013 was $453,429,825.58. To state the obvious, there is a plenty of money available to pay out. (See the SEC’s 2013 Annual Whistleblower Report to Congress.)
The need has never been greater to invest in and continually improve internal reporting systems that cover a full range of intake—from hotline to web reports, to open-door reporting with both managers and HR. The greatest asset to any organization is early knowledge and early detection. Add in a vigilant “speak up” culture where employees feel empowered and obligated to surface concerns, and you have a preventative force that outweighs the value of any legal defense.
Ethics and compliance hotline data that is carefully tracked, reviewed, benchmarked and presented with context often provides the early warning signs needed to detect, prevent and resolve problems. Download our latest benchmarking reports here.