The Wall Street Journal speaks with Phillips & Cohen partner Erika Kelton about the role of the SEC’s disgorgement powers in driving whistleblower awards. The Supreme Court affirmed the SEC’s power to order disgorgements in its Liu v. SEC ruling this week.
Under SEC rules, whistleblowers are entitled to between 10% and 30% of monetary penalties when their tips result in a successful enforcement action and when the monetary penalties, which include disgorgement, are more than $1 million.
Disgorgement has been a significant driver of the whistleblower awards the agency has issued, said Erika Kelton, a partner and whistleblower attorney at law firm Phillips & Cohen LLP. The SEC has recouped more than $1 billion in disgorgement of ill-gotten gains and interest in enforcement actions brought with information from tipsters between 2011 and end of September, according to the SEC whistleblower program’s 2019 annual report to Congress.
Monday’s decision preserved the most important part of the disgorgement remedy and is overall a win for the SEC, said Ms. Kelton. “If the outcome had been otherwise, meaning that if [the justices had] done away with disgorgement, then it would’ve had a chilling effect on SEC whistleblowers.”
Read the entire article, “Supreme Court’s Ruling on SEC Disgorgement Could Shrink Whistleblower Awards,” on The Wall Street Journal’s website.