On April 11, the U.S. Securities and Exchange Commission (SEC) awarded $1 million to a whistleblower whose disclosure led to the opening of an investigation which culminated in a successful enforcement action.
Through the SEC Whistleblower Program, the SEC pays monetary awards to individuals who provide original information that leads to a successful enforcement action. Awards are for 10-30% of the funds collected in the action.
According to the award order, the whistleblower’s tip was “was the initial source of the underlying investigation.” Furthermore, the whistleblower “provided the Commission’s investigative staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses, and helping staff understand complex fact patterns and issues related to the matters under investigation.” The SEC also credits the whistleblower for allowing the agency “to devise an investigative plan and to craft its initial document requests from the Firm and other entities.”
The SEC’s award order also outlines an award denial for an individual who filed a whistleblower award claim for the same enforcement action. The SEC notes that the individual did not file their whistleblower award claim within 90 days of the agency posting a Notice of Covered Action for the case, as required by Exchange Act Rule 21F-10.
The agency’s decision to not use the its authority to waive the requirement highlights the necessity of hiring an experienced SEC whistleblower attorney: “‘[A] lack of awareness about the [whistleblower award] program does not . . . rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.’”
Since the SEC Whistleblower Program was established in 2010 it has issued more than $1.3 billion in whistleblower awards to over 300 whistleblowers. According to the agency, “Enforcement actions brought using information from meritorious whistleblowers have resulted in orders for more than $6.3 billion in total monetary sanctions, including more than $4.0 billion in disgorgement of ill-gotten gains and interest, of which more than $1.5 billion has been, or is scheduled to be, returned to harmed investors.”
Geoff Schweller also contributed to this article.