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Whistle blowing, pay-outs and the SEC

Author: Azizur Rahman  21 October 2021
2 min read

Money Talks

Last month, the SEC announced a $110 million whistleblower pay-out, the second largest in the agency’s history. The nine-figure sum brought the US regulator’s total payments to whistleblowers past $1 billion over the last decade.

Many of those rewarded under the SEC’s whistleblower program are located overseas—the SEC has disclosed that it has received enforcement tips from individuals in over 130 different countries. The $1 billion milestone is a reminder that substantial monetary benefits are available to those with information that could lead to a successful enforcement action against a company based or listed in the US.  Because most other countries—including the UK—do not offer financial incentives to whistleblowers that are remotely comparable to those in the US, the SEC’s program remains, by far, the most potentially lucrative avenue for whistleblowers to pursue.  


The SEC’s whistleblower program revolves around the US’s premier anti-bribery law, the Foreign Corrupt Practices Act (FCPA). While this statute can be violated by “corrupt” payments to a foreign public official, its “books and records” provisions can be violated without any direct evidence of bribery. These provisions give the SEC a much easier case to make out, since they call for strict liability, and require only that a company with shares listed on a US exchange failed to implement internal controls sufficient to identify and prevent potential FCPA violations. This gives the SEC considerable scope for targeting companies for large monetary penalties, especially those based overseas. Unlike the FCPA’s bribery provisions, the books and records offense applies only to “US issuers,” which includes foreign companies that only list American depositary receipts (ADRs). This allows the SEC to cast its net far and wide for FCPA violations. 

With such an extensive reach, the SEC actively encourages potential whistleblowers to submit information on misconduct by US issuers—along with their subsidiaries and third-party agents—regardless of where in the world it may occur. “Original information” that leads to a monetary penalty of over $1 million can lead to a whistleblower pay-out of between 10 and 30%.   


To receive the maximum award possible, whistleblowers have to supply as much detailed information as they can, including documents and witness statements if this is possible. As noted above, it has to be original information – meaning that it cannot be known to law enforcement agencies already – and it needs to be reported to the SEC at the earliest possible opportunity.

Such conditions from the SEC are understandable. After all, it will have much less use – and will, therefore, be unlikely to pay sizeable amounts – for vague, inaccurate or misleading information. SEC investigators will show a similar lack of enthusiasm for information that it or another enforcement agency already possesses. A whistleblower that has sat on information that it could have disclosed to the SEC months or even years earlier is also unlikely to convince the agency that they deserve a large pay-out; although much will obviously depend on the precise nature of what is finally being divulged .

The critical initial goal for whistleblowers who are looking to be rewarded is to create a detailed submission that makes it easy for the SEC to see why there is a strong legal and factual basis for an FCPA violation. The SEC receives thousands of whistleblower submissions each year and, to stand a chance of theirs turning into an investigation, whistleblowers need to quickly capture an SEC enforcement attorney’s interest and provide credible reasons why the case is worthy of further attention. Only a small percentage of whistleblowers receive monetary awards—to join this relatively select group, careful attention must be paid to how and when incriminating information is disclosed to the SEC. 

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Azizur Rahman

Senior Partner

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Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.

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