On May 19, the U.S. Securities and Exchange Commission (SEC) announced a $28 million award to a whistleblower in connection with an SEC enforcement action and a related action by another federal agency. According to the whistleblower’s lawyers, the whistleblower’s disclosures led to bribery charges against Panasonic for Foreign Corrupt Practices Act (FCPA) violations.
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 a monetary award of 10-30% of funds recovered by the government. Additionally, under the Dodd-Frank Act’s (DFA) related action provisions, when a whistleblower’s disclosure to the SEC also leads to a successful enforcement action by another agency, the whistleblower is entitled to an award of 10-30% of funds recovered in that action.
In keeping with confidentiality protections, the SEC did not reveal the case for which this award was issued. However, according to the Wall Street Journal, the lawyers who represented the whistleblower have announced that the award is in connection to bribery charges against a U.S. subsidiary of Japanese electronics company Panasonic. According to the whistleblower’s lawyers, the whistleblower alerted the SEC to wrongdoing by Panasonic in countries in Asia and Europe. This prompted the SEC, as well as the U.S. Department of Justice (DOJ), to launch separate investigations into Panasonic.
In 2018, Panasonic separately settled FCPA charges with the SEC and the DOJ. According to the SEC, “Panasonic’s U.S. subsidiary, Panasonic Avionics Corp. (PAC), a provider of in-flight entertainment and communication systems, offered a lucrative consulting position to a government official at a state-owned airline to induce the official to help PAC in obtaining and retaining business from the airline.”
Furthermore, according to the DOJ, “[b]y mischaracterizing the payments made to consultants and sales agents and providing false or incomplete representations and Sarbanes-Oxley subcertifications to Panasonic about PAC’s financials and financial controls, PAC caused Panasonic to falsify its books, records, and accounts in violation of the FCPA.”
The FCPA, passed by Congress in 1977, is a U.S. anti-corruption law that prohibits the payment of anything of value to foreign government officials in order to obtain a business advantage. It also contains accounting provisions which require publicly traded corporations to make and keep books and records that accurately reflect the transactions of the corporation
“The SEC has awarded more than $900 million over the life of the program, including almost $85 million to nine individuals in this month alone, which reflects the vitality and continued success of the SEC’s whistleblower program,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower, in the press release for the $28 million whistleblower award.
The SEC has been issuing awards at a record pace recently. Since the 2021 fiscal year began on October 1, 2020, the SEC has awarded approximately $339 million to 53 individuals – both fiscal year records. Furthermore, on October 22, 2020, the SEC issued a whistleblower award of over $114 million, the largest award in the history of the SEC Whistleblower Program.
The past several weeks have been a transitory time for the SEC Whistleblower Program’s leadership positions. Pasquinelli took over as Acting Chief of the Office of the Whistleblower in April following the departure of longtime Chief Jane Norberg. That same month, Gary Gensler was confirmed as the Chair of the SEC.
Prior to his confirmation, Gensler pledged strong support for the whistleblower program. In a series of written answers to questions filed by Senator Chuck Grassley (R-IA), Gensler stated: “If confirmed to lead the SEC, I will build on the work of past Chairs to ensure continued strength in the whistleblower program.”
In addition to monetary awards, the SEC Whistleblower Program offers anti-retaliation protections to whistleblowers. These include confidentiality, and thus, the SEC does not disclose any identifying information about award recipients.