Whistleblower Receives $9.2 Million as Cut of DoJ Prosecution

 

The SEC awarded $9.2 Million to a whistleblower whose information led to a Department of Justice prosecution agreement.  This is the first whistleblower award related to a DoJ settlement rather than an SEC enforcement action.  Last year, the SEC expanded the whistleblower program to include “related actions” such as non-prosecution and deferred prosecution agreements.  According to an SEC official, a “whistleblower’s eligibility…should not depend on the procedural vehicle a federal agency selects to resolve an enforcement matter.”  The SEC has awarded more than $750 Million to 136 whistleblowers since the program’s founding in 2011.

 

 Expanding the SEC’s snitch program to include DoJ criminal cases (where the government has much more leverage) seems to go beyond Congressional intent.   Regardless, the SEC continues to expand the whistleblower program, which we think has some significant unintended consequences including an expanding regulatory bureaucracy, specialized whistleblower plaintiffs’ lawyers, internal employee conflicts, and the chilling of information sharing.