Whistleblowers must strictly comply with regulations and legal procedures in order to receive compensation awards. In a recent ruling, the SEC held that a whistleblower who failed to file a claim for an award on time was ineligible for compensation. In other words, if you miss the deadline, you are out of luck.<\/p>\n\n\n\n
In this recent ruling<\/a>, the whistleblower who filed a late claim argued that the SEC should excuse the untimely filing due to \u201cextraordinary circumstances.\u201d The whistleblower claimed that the information he or she offered led directly to the prosecution of fraud and that the whistleblower \u201clacked knowledge about the whistleblower program.\u201d Although the SEC may waive statutory filing deadlines, it opted to hold firm and deny the whistleblower a chance to claim an award.<\/p>\n\n\n\n In some cases, the SEC may waive the filing deadline under extraordinary circumstances. The \u201cextraordinary circumstances\u201d exception to the SEC\u2019s filing deadlines<\/a> is challenging to satisfy and only applies in limited circumstances. Among other factors, the whistleblower must demonstrate that the late filing was caused by circumstances beyond his or her control. Even if there were circumstances beyond the whistleblower\u2019s control that caused the late filing, the whistleblower must demonstrate that the whistleblower promptly arranged for the filing as soon as possible afterward.<\/p>\n\n\n\n The ruling explained that even if a whistleblower is unaware of the filing deadline, this lack of awareness does not constitute an \u201cextraordinary circumstance\u201d sufficient to waive the filing deadline. The SEC held that the whistleblower\u2019s failure to promptly file the paperwork was fatal to the claim<\/strong>. According to the SEC, the policy behind these strict deadlines is fairness to all potential whistleblowers eligible for awards and finality for the claims process. For potential whistleblowers, this ruling means that in order to successfully claim a compensation award, the SEC\u2019s rules must be strictly complied with and the Commission will not be lenient toward whistleblowers who do not comply with the statutory regulations.<\/p>\n\n\n\n Under Rule 21F-10(b) of the Securities Exchange Act, whistleblowers must fill out a special form, sign it, and submit it to the SEC\u2019s Office of the Whistleblower within 90 days of the SEC posting a so-called \u201cNotice of Covered Action.\u201d These notices are posted by the SEC<\/a> when a final judgment or order in a case results in sanctions exceeding $1 million. The $1 million calculation may include prior judgments or orders in the same case. Individuals who voluntarily offer original information to the SEC that led to the success are eligible to apply for a whistleblower compensation award.<\/p>\n\n\n\n In addition to the SEC ruling, the Commodity Futures Trading Commission (CFTC) recently paid $240,000 to a whistleblower in its first whistleblower compensation award. The CFTC\u2019s whistleblower program and the SEC\u2019s equivalent program were both established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFTC kept the whistleblower\u2019s identity confidential. According to Gretchen Lowe, the CFTC\u2019s Acting Director of the Division of Enforcement, the whistleblower offered specific, timely, and credible information that led to a successful CFTC enforcement action.<\/p>\n\n\n\nSEC waives filing deadlines in extraordinary circumstances<\/h2>\n\n\n\n
Compensation for Whistleblowers<\/h4>\n\n\n\n