On December 1, the U.S. Securities and Exchange Commission (SEC) announced a whistleblower award of over $6 million issued to joint whistleblowers. The whistleblowers provided the SEC with information and assistance which led to a successful SEC enforcement action as well as related actions by other government agencies. The SEC noted that the whistleblowers provided substantial assistance to the SEC and another agency, including “submitting documents, participating in interviews, and identifying key individuals involved in the misconduct.”
“The whistleblowers’ information led to multiple successful government actions related to a complex scheme involving several individuals and tens of millions of dollars in ill-gotten gains,” said Jane Norberg, Chief of the Office of the Whistleblower. “Today’s award demonstrates the significant contributions whistleblowers make to investigations that can save the SEC and other government agencies substantial time and resources.”
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recouped by the government. Whistleblower award payments are made out of a fund entirely financed through monetary sanctions paid to the SEC by securities law violators.
In determining the exact percentage of an award, the SEC weighs a number of clearly designated factors. As highlighted by today’s award, the degree of further assistance provided by the whistleblower is one of the most important criteria the SEC considers. According to a WNN analysis of SEC Final Orders, the two most referenced factors are the degree of assistance and the timeliness of the disclosure.
As demonstrated by today’s award, individuals are able to jointly file whistleblower tips to the SEC and to subsequently both be eligible for an award. Notably, the Final Order for the award clarifies that considering the whistleblowers as a joint unit “has not impacted the net total award percentage to Claimants.” The Order further explains that, unless the whistleblowers make a joint request for a different allocation, each individual will receive 50% of the total award.
The award continues a record-setting pace to the 2021 fiscal year for the SEC Whistleblower Program. In the 2020 fiscal year, the SEC set records by awarding approximately $175 million to 39 individuals. Since the 2021 fiscal year began on October 1, the SEC has awarded more than $166 million to 12 individuals.
The SEC Whistleblower Program provides anti-retaliation protections to whistleblowers, including confidentiality. Therefore, the SEC does not disclose any information which may reveal a whistleblower’s identity.