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Calculating The $1 Million Sanction

For a whistleblower to receive a reward under the SEC/CFTC whistleblower program, the SEC/CFTC (or other agency) must successfully recover more than $1 million in an enforcement action.  The recovery generally occurs in a single action.  However, in certain circumstances, such as when two or more actions arise out of the same facts and circumstances, the SEC/CFTC will aggregate actions to reach the $1 million threshold. In determining whether the actions arise from the same facts and circumstances, the SEC /CFTC considers such factors as the parties involved, the factual allegations, and the alleged violations of the federal securities laws.

Notably, when determining the amount of the reward, the SEC/CFTC will consider the amount of money it has collected rather than the amount of the fines ordered in the case.  This distinction is important and can have a significant impact on the whistleblower because the SEC/CFTC do not always collect the money they recover.  Consequently, whistleblowers cannot rely solely on the amount of money ordered by the SEC/CFTC in determining the size of an award.  Whistleblowers must look to how much the SEC/CFTC actually collected from the defendant.

Freiberger Haber LLP is dedicated to providing experienced, dedicated, and aggressive representation for whistleblowers looking to report violations of the federal securities and commodities laws to the SEC or CFTC.  If you have questions about your eligibility as a whistleblower under the SEC Whistleblower Program or CFTC Whistleblower Program and how the sanctions under the programs are calculated, contact Freiberger Haber LLP.

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