Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

In August 2013 the SEC whistleblower claims review staff issued a preliminary determination and recommended a whistleblower claim be denied. Although the record demonstrated that the claimant provided original information to the SEC that led to the successful enforcement of a covered action, the preliminary determination recommended that the claimant’s claim be denied because the information did not appear to have been “voluntarily” provided because of a prior inquiry into the matter conducted by a self-regulatory organization, or SRO.

The whistleblower submitted a response to the preliminary determination and the SEC reconsidered and reversed its decision. It was then found because of “materially significant extenuating circumstances” it was appropriate in the public interest and consistent with the protection of investors to waive the “voluntary” requirement of Rule 21F-4(a) on the unique facts of this award claim.  See the award here.

The SEC determination doesn’t say how much the award was, but the SEC issued a press release on the determination touting a $400,000 award to a claimant who reported internally before providing information to the SEC. According to the determination:

  • prior to the enactment of the Dodd-Frank whistleblower award program and the concomitant anti-retaliation protections, the claimant was working aggressively internally at [Redacted] to bring the securities law violations to the attention of appropriate personnel and to obtain corrective action for the benefit of investors;
  • the SRO inquiry originated from information a third party provided to the SRO that in part described Claimant’s role in identifying the issue that gave rise to the violations and [– ] effort to obtain corrective action;
  • claimant was led to believe by [Redacted] early on during the SRO inquiry that [Redacted] had provided the SRO with all of the materials that claimant had developed for his use in internal efforts to obtain corrective action; and
  • claimant’s persistent efforts in reporting to the Commission once [—] learned that the SRO inquiry had been closed and that would not protect investors from future harm [Redacted] internal efforts would not protect investors from future harm.


Stinson Leonard Street LLP provides sophisticated transactional and litigation legal services to clients ranging from individuals and privately held enterprises to national and international public companies. As one of the 75 largest firms in the U.S., Stinson Leonard Street has more than 520 attorneys and offices in 14 cities, including Minneapolis, Mankato and St. Cloud, Minn.; Kansas City, St. Louis and Jefferson City, Mo.; Phoenix, Ariz.; Denver, Colo.; Washington, D.C.; Decatur, Ill.; Wichita and Overland Park, Kan.; Omaha, Neb.; and Bismarck, N.D.
The views expressed herein are the views of the blogger and not those of Stinson Leonard Street or any client.