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SEC Awards $700,000 Whistleblower Award to Company Outsider 

The SEC approved a $700,000 whistleblower award to a company outsider that “conducted a detailed analysis that led to a successful SEC enforcement action.”  The SEC’s Enforcement Director, Andrew Ceresney, explained, “The voluntary submission of high quality analysis by industry experts can be every bit as valuable as firsthand knowledge of wrongdoing by company insiders.”  Sean X. McKessy, Chief of the SEC’s Office of the Whistleblower, said that the SEC welcomes “analytical information from those with in depth market knowledge and experience that may provide the springboard for an investigation.”

OUR TAKE: Now registrants must worry about outsiders reviewing their actions and using the SEC’s whistleblower framework to collect big awards.  Although we don’t think Congress intended this type of back-door private right of action, the SEC apparently welcomes third party information and claims.