SEC Issues Over $40 Million in Whistleblower Awards
On October 15, the U.S. Securities and Exchange Commission (SEC) announced whistleblower awards totaling over $40 million. The awards, which relate to two separate enforcement actions, were issued to three whistleblowers who each voluntarily provided the SEC with original information that led to a successful enforcement action.
In connection with one enforcement action, the SEC awarded two whistleblowers $32 million and $8 million respectively. The first whistleblower received a much larger award because the SEC determined that they “contributed substantially more to the success of the Covered Action” than the second whistleblower, according to the award order.
The first whistleblower’s disclosure led the SEC to open an investigation into difficult-to-detect misconduct. The whistleblower provided additional assistance throughout the investigation and helped SEC staff understand complex fact patterns. The second whistleblower submitted a disclosure after the investigation had already been opened but was “a valuable first-hand witness” and “gave the staff a more complete picture” of the misconduct, according to the award order.
A key factor in the SEC’s decision to grant the whistleblowers awards of differing sizes was the timeliness with which they made their disclosures. According to the award order, the first whistleblower “persistently alerted the Commission to the ongoing abusive practices for a number of years before the investigation was opened.” The second whistleblower, on the other hand, “delayed reporting to the Commission for several years after becoming aware of the wrongdoing.”
“Today’s whistleblowers underscore the importance of the SEC’s whistleblower program to the agency’s enforcement efforts,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “These whistleblowers reported critical information that aided the Commission’s investigation and provided extensive, ongoing cooperation that helped the Commission to stop the wrongdoing and protect the capital markets.”
In a separate award order, the SEC awarded $300,000 to a whistleblower who “alerted Enforcement staff to the potential wrongdoing, prompting the opening of the investigation.” The whistleblower “also provided significant ongoing assistance to Enforcement during the investigation that saved time and resources that helped shut down an ongoing fraudulent scheme.”
Qualified SEC whistleblowers are entitled to awards of 10-30% of the funds recovered by the government in the connected enforcement action. The SEC also offers anti-retaliation protections to whistleblowers, including confidentiality. Whistleblowers who make their disclosures with the help of an SEC whistleblower attorney may remain anonymous.
Geoff Schweller also contributed to this article.