On May 27, the U.S. Securities and Exchange Commission (SEC) issued a $4.2 million whistleblower award to an individual who alerted the SEC to certain securities laws violations, which led the agency to open an investigation.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information which 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’s award order, the whistleblower “learned of the wrongdoing over time, and when [they] had gathered enough information, [they] made a detailed and credible report to the Commission.” Furthermore, the whistleblower “also provided substantial assistance by meeting with investigative staff multiple times, identifying key players, and providing additional helpful information and documents.”
“Whistleblowers may be uniquely positioned to provide the kind of information and assistance that can prove instrumental to the successful resolution of an enforcement action,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “Whistleblowers play a critical role in helping the SEC detect securities laws violations and better protect investors.”
The award order also outlines an award denial for an individual who submitted a whistleblower award claim for the same Covered Action. According to the order, the claimant was ineligible for an award because the record “conclusively shows” that the claimant’s information did not lead the SEC to open an investigation nor did it significantly contribute to the success of the Covered Action.
According to the award order, enforcement staff responsible for the Covered Action provided a sworn declaration confirming that they received no information from, and had no communications with, the denied claimant. The claimant did submit a disclosure to the SEC. However, the Office of the Whistleblower confirmed in another sworn declaration that the claimant’s tip was closed with a disposition of “No Further Action” and was not forwarded to enforcement staff.
The 2021 fiscal year has been a record year for the SEC Whistleblower Program. Since the fiscal year began on October 1, 2020, the SEC has awarded approximately $343 million to 54 individuals – both fiscal year records.
In April, Gary Gensler was confirmed as the new Chair of the SEC. Prior to his confirmation, Gensler pledged his support for the SEC Whistleblower Program. That same month, Pasquinelli took over as Acting Chief of the Office of the Whistleblower following the departure of longtime Chief Jane Norberg.