On November 28, the U.S. Securities and Exchange Commission (SEC) issued a $20 million whistleblower award to an individual whose disclosure contained “new and critical information that led to the success of an enforcement action,” according to the SEC.
“Today’s whistleblower played a crucial role in the ultimate success of the enforcement proceeding,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “Whistleblowers can help advance existing investigations in meaningful ways when their information saves the agency time and resources, and when their contributions allow SEC staff to better understand complicated issues.”
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC with original information that leads to a successful enforcement action, are entitled to an award of 10-30% of the sanctions collected by the SEC in the case. The SEC weighs a number of factors in determining the exact percentage to award a whistleblower.
In this case, the SEC “considered that the whistleblower provided significant information and continuing assistance that helped Enforcement Division staff more quickly and efficiently investigate complex issues,” according to the agency’s press release.
However, according to the award order, the SEC also negatively assessed the facts that the whistleblower “was involved for a short period and at the direction of his/her supervisor in the conduct underlying part of the Covered Action” and “delayed reporting for over two years after being involved in such conduct.”
According to the SEC Whistleblower Office’s Annual Report to Congress for the 2022 Fiscal Year, since the SEC Whistleblower Program was established in 2010, “[e]nforcement 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.”
Individuals considering blowing the whistle to the SEC should first consult an experienced SEC whistleblower attorney in order to ensure they are fully protected under the Dodd-Frank Act and qualify for the largest possible award.
Geoff Schweller also contributed to this article.