SEC Whistleblowers Receive $50 Million Payout, Second-Largest Award in Program History
Today, the U.S. Securities and Exchange Commission (SEC) announced a joint whistleblower award of $50 million to claimants whose information of highly complex illegal transactions led to successful enforcement actions.
As a result of their reporting, the whistleblowers helped in the recovery of tens of millions of dollars that were returned to harmed investors.
According to the SEC award order, Claimants 1 and 2 provided the Commission staff with highly valuable information that led to the opening of an investigation into an ongoing fraud. The fraudulent scheme, the award order continued, would have been difficult to detect without the assistance of the whistleblowers.
A third claimant was involved in the proceedings, but Commission staff determined this whistleblower was not eligible for a reward based on the fact that Claimant 3 did not provide any information that led to the success of the Covered Action.
According to the SEC, Claimant 3 did not satisfy Rule 21F-4(c)(1) because enforcement staff opened the investigation based on the tips provided by Claimants 1 and 2, not Claimant 3.
Furthermore, Claimant 3 did not satisfy Rule 21F-4(c)(2) because enforcement staff had no prior communications with this whistleblower prior to the filing of the Covered Action.
Established as part of the Dodd-Frank Act, the SEC Whistleblower Office offers financial rewards to those who provide the Commission with original information of securities fraud. SEC whistleblowers who report frauds to the Commission can become eligible for awards ranging between 10-30% of the sanctions collected from any successful enforcement actions if the monies exceed $1 million.
Since the Whistleblower Program was created, the SEC has awarded approximately $812 million to 151 individuals.
SEC whistleblowers can remain completely anonymous and confidential in their proceedings under the Dodd-Frank Act. It is best practice to contact an experienced SEC whistleblower attorney before you begin the filing of your award claim.
“Today’s award is the second largest in the history of the program, reflecting the tremendous contribution of these joint whistleblowers to our ability to recover funds for harmed investors,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “The SEC has now awarded over a quarter of a billion dollars to whistleblowers in the first seven months of this fiscal year alone, demonstrating the tremendous value of whistleblowers to our enforcement program.”
Ben Kostyack also contributed to this article.