Earlier this week, the SEC approved a whistleblower award of between $1.4-1.6 million to a compliance officer. Ordinarily, the Commission will not consider information to be "derived from [a whistleblower's] independent knowledge or independent analysis" if the whistleblower "obtained the information because" the whistleblower was "[a]n employee whose principal duties involve compliance or internal audit responsibilities . . . ." 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). The case fell within an exception to the compliance-officer exclusion, because the Commission found the whistleblower reasonably believed disclosure was necessary to prevent impending conduct likely to cause substantial injury to the entity or investors. Rule 21F0-4(b)(4)(v)(A). See SEC Rel. No. 34-74781 (Apr. 22, 2015).
This is the Commission's second whistleblower award to a compliance officer. The first was allowed under a different exception, which applied because the whistleblower reported the matter internally and went to the SEC only when the entity failed to act for at least 120 days. See SEC Rel. 34-72947 (Aug. 29, 2014). Thomas K. Potter, III
(email@example.com) is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Resident in the Nashville office, Tom is licensed in Tennessee, Texas and Louisiana. He has over 28 years' experience representing financial institutions in litigation, regulatory and compliance matters. See attorney profile
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