On December 7, the U.S. Securities and Exchange Commission (SEC) announced whistleblower awards totaling nearly $3 million issued to five individuals. The awards stem from three separate enforcement actions which relied on information provided by whistleblowers.
In the first order, the SEC awarded a company insider who provided the SEC with information “that would have been difficult to detect in the absence of the tip” and provided substantial assistance to the SEC’s investigation. The whistleblower was issued a nearly $1.8 million award.
In the second order, the SEC awarded a total of approximately $750,000 to two whistleblowers. The first whistleblower, who was awarded $500,000, made a whistleblower disclosure to the SEC which led to the opening of an investigation. The second whistleblower, who was awarded $250,000, provided new information “that resulted in the inclusion of additional allegations in the covered action.” Furthermore, both whistleblowers provided additional assistance to the SEC’s investigation.
Notably, the SEC claims that in awarding the first of these two whistleblowers it “exercised its discretion to waive the TCR filing requirement.” Under the rule changes made to the SEC Whistleblower Program in September 2020, whistleblowers are required to file a formal whistleblower tip (TCR) within 30 days of contacting the SEC or they are automatically disqualified from receiving a whistleblower award. By waiving the requirement in this instance, the SEC demonstrated their commitment to rewarding deserving whistleblowers.
In the third order, the SEC jointly awarded nearly $400,000 to two individuals. These whistleblowers provided analysis which led to the opening of an investigation. In addition, the whistleblowers provided ongoing assistance to the SEC’s investigation.
“Today the Commission issued awards to multiple whistleblowers whose information and assistance proved critical to several enforcement matters,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “In the first quarter of FY2021, the SEC has made whistleblower awards of almost $170 million to 17 individuals, which is already near the record dollar amount reached last fiscal year.”
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.
As noted by Norberg, these awards continue a record start to the 2021 fiscal year by the SEC Whistleblower Program. Since the fiscal year began on October 1, the SEC has awarded almost $170 million to 17 individuals. In the 2020 fiscal year, the SEC issued whistleblower awards totaling approximately $175 million, the most in program history.
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.