SEC Invokes '120-Day' Rule to Enhance Award to Internally Reporting Whistleblower Despite Digital Realty

The Securities and Exchange Commission recently approved a $4.5 million whistleblower award, the first issued under its rule governing internal whistleblowing and its first since the Supreme Court's decision last year in Digital Realty Trust, Inc. v. Somers.

Digital Realty held that employees who blew the whistle internally on potential securities violations did not qualify as a whistleblower under Dodd-Frank's anti-retaliation provisions unless they also submitted the tips to the SEC. That decision led to speculation about whether the SEC would continue to issue whistleblower awards for internal reporting. The SEC's recent award is evidence that it will continue to reward individuals who first utilize their company's internal reporting mechanisms—as long as they also provide the same information to the SEC within 120 days thereafter (and satisfy the other components of the rule).