On January 14, the U.S. Securities and Exchange Commission (SEC) announced a $600,000 whistleblower award issued to an individual whose disclosures and assistance helped lead to a successful SEC enforcement action. With this award, the SEC Whistleblower Program surpassed last year’s record for total amount awarded in a fiscal year.
According to the SEC’s Final Order, the awarded whistleblower “provided new, detailed, and highly valuable information and substantial assistance during the course of an open investigation.” The whistleblower met with SEC enforcement staff multiple times and provided critical investigative leads.
Since the 2021 fiscal year began on October 1, 2020, the SEC has awarded over $176 million to 28 individuals. This is a new record for the total dollar amount awarded to whistleblowers in a fiscal year. The previous record was set in the 2020 fiscal year when the SEC awarded approximately $175 million to 39 individuals.
“The whistleblower met with staff multiple times and provided substantial assistance to the investigation that led to the SEC’s enforcement action,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “We hope these awards continue to encourage individuals with information regarding possible securities laws violations to report to the Commission.”
The Final Order for this award also outlines an award denial for a second claimant related to the same enforcement action. The SEC determined that there was no nexus between this claimant’s disclosure and the covered enforcement action. According to the order, “Claimant 2’s tip contains no allegations about the Respondents charged in the Covered Action, and the record is clear that the Enforcement staff responsible for the Covered Action did not receive Claimant 2’s information directly or indirectly through other Enforcement staff.” The claimant argued their disclosure, while not directly related to the Respondents charged in the Covered Action, was in the “pool of operative facts” that the SEC would use when launching investigations into the particular forms of “novel conduct” detailed in the disclosure. However, the SEC ruled that just because the claimant previously filed a disclosure “does not mean that Claimant 2 is then eligible for every future enforcement action involving similar securities law violations.”
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.”
Since issuing its first award in 2012, the SEC has awarded more than $738 million to 134 whistleblowers. 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.