On January 6, the U.S. Securities and Exchange Commission (SEC) issued a $5 million whistleblower award to an individual who voluntarily provided original information that contributed to the success of an enforcement action. It is the first award granted by the agency in 2023.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily report original information that leads to a successful enforcement action, are entitled to monetary awards of 10-30% of the sanctions collected in the enforcement action. The SEC also provides anti-retaliation protections to whistleblowers, including confidentiality.
According to the award order, the whistleblower “provided original information based on independent knowledge and analysis and not already known to the Commission from any other source.” The SEC determined that the whistleblower “voluntarily” provided the information despite having previously been subpoenaed by the agency because “that subpoena and the underlying investigation did not ‘relate to the subject matter of [Claimant’s] submission,’” the award order states.
In determining the exact percentage to award a qualified whistleblower, the SEC weighs a number of factors, including the significance of the information, the degree of assistance provided by the whistleblower, culpability, and the timeliness of the disclosure.
According to the award order, the whistleblower’s information “was important in that it caused staff to promptly open its investigation.” The SEC further notes that the whistleblower “also provided some additional assistance in the course of an in-person meeting and two phone calls.”
However, in contrast, the SEC negatively assessed the fact that the whistleblower unreasonably delayed in making their disclosure. “Regardless of Claimant’s motivation for submitting the tip when he/she did, we find that Claimant substantially and unreasonably delayed in reporting Claimant’s information by waiting approximately four years to provide information to the Commission and doing so only after Claimant received a subpoena from the SEC related to Claimant’s own misconduct,” the award order states.
In the 2022 Fiscal Year, the SEC issued 103 whistleblower awards totaling $229 million. Overall, the whistleblower program has awarded more than $1.3 billion to more than 300 whistleblowers.
Geoff Schweller also contributed to this article.