SEC Awards Over $2.5 Million to Whistleblower

September 20, 2021

Today, the U.S. Securities and Exchange Commission (SEC) issued a whistleblower award of over $2.5 million to an individual who voluntarily provided the agency with original information that led to a successful enforcement action.

According to the award order, the whistleblower’s disclosure led the SEC to open an investigation into the alleged misconduct. The order notes that the whistleblower “submitted information and documents to Enforcement staff, participated in interviews with Enforcement staff, and helped Enforcement staff identify key individuals and entities involved in the investigation.” This information and assistance “helped Enforcement staff focus its investigation into the Company’s conduct and helped the Commission conserve significant time and resources,” the order states. 

Through the SEC Whistleblower Program, qualified whistleblowers are entitled to a monetary award of 10-30% of funds recovered by the government. The SEC pays awards through a fund entirely financed by monetary sanctions paid to the SEC by securities law violators.

The SEC weighs a number of factors in determining the exact percentage to award a whistleblower. These factors include the timeliness of the disclosure and the degree of further assistance provided by the whistleblower.

Last week, the SEC Whistleblower Program reached a milestone: the program surpassed $1 billion in total money awarded to whistleblowers. In a press release announcing that milestone, SEC Chair Gary Gensler stated: “Today’s announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws. The assistance that whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets.”

The SEC does not reveal the identity of awarded whistleblowers in accordance with the anti-retaliation protections of the Dodd-Frank Act. By consulting with a SEC whistleblower attorney before contacting the SEC, a whistleblower can help ensure their confidentiality is fully protected and that they qualify for the highest possible award.

Geoff Schweller also contributed to this article.

Copyright Kohn, Kohn & Colapinto, LLP 2021. All Rights Reserved.
National Law Review, Volume XI, Number 263
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