On December 22, the U.S. Securities and Exchange Commission (SEC) announced a $1.6 million whistleblower award issued to an individual who provided the SEC with information which played a significant role in a successful enforcement action. The award continues a record-setting start to the 2021 fiscal year for the SEC Whistleblower Program.
According to the SEC, the awarded whistleblower voluntarily provided “critical information about an ongoing fraudulent scheme” and offered ongoing assistance to the SEC’s investigation into the manner.
“Today’s award demonstrates the value of whistleblowers to the SEC’s enforcement efforts,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “We hope that this award encourages others with information regarding possible securities laws violations to report to the Commission.”
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government. According to the SEC, “all payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.”
This is the second SEC whistleblower award issued this week and the fifteenth issued in the 2021 fiscal year. The 2020 fiscal year was a record-setting year for the SEC Whistleblower Program. The year saw record figures for the number of whistleblower tips received, the number of whistleblower award claims processed, the number of whistleblowers rewarded, and the total dollar amount of whistleblower awards issued. The SEC awarded approximately $175 million to 39 individuals in fiscal year 2020. Through the first quarter of the 2021 fiscal year, the SEC is on pace to shatter those figures. Since the fiscal year began on October 1, the SEC has awarded approximately $174 million to 22 individuals.
In the past few weeks, the SEC has announced that both Chairman Jay Clayton and Director of the Division of Enforcement Stephanie Avakian will be stepping down at the end of 2020. Both Clayton and Avakian pointed to the success of the SEC Whistleblower Program as highlights of their tenures at the SEC.
Since issuing its first award in 2012, the SEC has awarded more than $736 million to 128 individuals. In addition to whistleblower awards, the SEC Whistleblower Program provides anti-retaliation protections to whistleblowers. These include confidentiality. Thus, the SEC does not disclose any information that may reveal a whistleblower’s identity.