July 3, 2022

Volume XII, Number 184

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July 01, 2022

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SEC Awards Four Whistleblowers $3.5 Million for Contributing to SEC Enforcement Action and Related Action by Other Agency

On May 6, the U.S. Securities and Exchange Commission (SEC) issued $3.5 million in whistleblower awards to four individuals who provided information which contributed to the success of an SEC enforcement action and a related enforcement action by another agency.

“Credible and specific tips of securities laws violations, whether from corporate insiders or members of the public, strengthen the Commission’s enforcement program,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “Today’s whistleblowers provided valuable information that assisted the Commission’s investigation.”

Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recouped by the government. Under the Dodd-Frank Act’s (DFA) related action provision, when the information provided to the SEC by a whistleblower also leads to a successful enforcement action by another agency, the whistleblower is entitled to an award based on the money recovered in this “related” enforcement action.

Three of the whistleblowers filed a joint disclosure which caused the SEC to open an investigation. The whistleblowers also provided the information to the agency which carried out the related action. According to the award order, “there were no negative factors at issue in [the whistleblowers’] submission” and the whistleblowers “alleged retaliation and other hardships as a result of [the] reporting.”

The fourth whistleblower made a disclosure independently. The SEC initially denied the whistleblower’s award claims on the grounds that their disclosure did not constitute “original information” because they “provided publicly available information, quoting from public documents and referring to changes in the price of the Company’s stock.”

However, the SEC reversed the denial after the whistleblower appealed the decision. According to the award order, the whistleblower “provided new evidence showing that his/her information constituted ‘original information’ by showing that it was derived from ‘independent analysis.’” The order further states that the whistleblower’s information “was the result of unusual effort and intensive research over the course of many weeks, and developed through a detailed analysis of publicly-available information.”

The individual whistleblower was not awarded for the related action by the other agency, however. While the whistleblower’s information “revealed allegations that were not previously known to Commission staff,” the allegations concerned only the SEC’s enforcement action and not the other agency’s.

Overall, the SEC has awarded approximately $1.3 billion to 273 individuals since issuing its first award in 2012. Individuals considering blowing the whistle to the SEC should first consult an experienced SEC whistleblower attorney in order to ensure they are fully protected and qualify for the largest possible award.

Geoff Schweller also contributed to this article

Copyright Kohn, Kohn & Colapinto, LLP 2022. All Rights Reserved.National Law Review, Volume XII, Number 126
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About this Author

Mary Jane Wilmoth Whistleblower Attorney Kohn Kohn & Colapinto Law Firm
Managing Partner

Mary Jane Wilmoth is the firm’s managing partner. She litigated cases involving whistleblower protection for environmental and nuclear industry whistleblowers, and Qui Tam/False Claims whistleblowers. Ms. Wilmoth joined the firm in 1992 and worked on cases and hearings that involved complex nuclear and environmental regulations. In her efforts to uphold such safeguards in the American workplace, she has helped to strengthen whistleblower rights in licensing and...

202-342-6980
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