SEC Awards $175,000 to Whistleblower for Independent Analysis
On December 1, 2021 the U.S. Securities and Exchange Commission (SEC) issued a whistleblower award of more than $175,000. According to the SEC, the whistleblower “performed calculations and otherwise assembled information that provided important insights about the company’s conduct that was not otherwise apparent.”
The awarded whistleblower qualified for an award because they voluntarily provided original information to the SEC which led to a successful enforcement action in which the SEC collected at least $1 million. SEC whistleblower awards are for 10-30% of the funds collected in the case.
In this case, the whistleblower satisfied the original information requirement by providing independent analysis of publicly available material. According to the award order, the whistleblower’s “analysis of information from public sources revealed possible violations that were not apparent from the face of the publicly available materials.”
A 2020 rule amendment to the SEC Whistleblower Program rules established a presumption that the statutory maximum 30% will be paid to a whistleblower in cases where the award would be for less than $5 million and where no negative factors, such as culpability or unreasonable delay in reporting, were present. However, in this case, the SEC utilized its discretion to stray from the maximum award because of the whistleblower’s “limited assistance.”
According to the award order, “Claimant’s tip was one of several tips the Commission staff had received that contributed to the opening of the investigation and Claimant did not provide additional information or assistance after the initial submission of the tip.”
Since issuing its first award in 2012, the SEC has awarded approximately $1.2 billion to 234 individuals. The SEC Whistleblower Program broke several records in the 2021 fiscal year, including the largest whistleblower award in program history: a $114 million award issued in October 2020.
Individuals considering blowing the whistle to the SEC should first consult an experienced SEC whistleblower attorney to ensure they are fully protected and qualify for the largest award possible.
Geoff Schweller also contributed to this article.