On June 21, the U.S. Securities and Exchange Commission (SEC) announced nearly $5.3 million in whistleblower awards. The awards stem from two separate enforcement actions and were issued to individuals who voluntarily provided the SEC original information which contributed to the success of the enforcement actions.
Through the SEC Whistleblower Program, qualified whistleblowers are entitled to a monetary award of 10-30% of funds recovered by the government. In addition to monetary awards, the SEC Whistleblower Program offers anti-retaliation protections to whistleblowers. One of the protections is confidentiality; thus, the SEC does not disclose any identifying information about award recipients.
In connection with the first enforcement action, the SEC awarded an individual whistleblower nearly $4 million. The whistleblower’s disclosure led the SEC to open an investigation into misconduct, which in turn led to a successful enforcement action.
According to the award order, in addition to the original disclosure, the whistleblower also “provided extraordinary assistance to Enforcement staff, including: (1) participating in hours of telephonic interviews and exchanging more than 125 emails with staff; (2) providing documents and explaining their significance to staff; and (3) identifying key witnesses.”
In connection with the second enforcement action, the SEC awarded approximately $1.3 million to multiple whistleblowers. One whistleblower received a $1 million award while two others received a joint award of $270,000. Both the joint whistleblowers and the individual whistleblower provided information that led to the opening of investigations which then contributed to the successful enforcement action. However, the SEC determined that the individual whistleblower’s disclosure covered a wider breadth of misconduct and that the individual whistleblower was thus deserving of a larger award percentage. The award order also notes that the individual whistleblower “provided substantial, ongoing assistance that saved the Enforcement staff considerable time and resources.” The degree of additional assistance is a common factor cited by the SEC in award determinations.
“These whistleblowers provided critical information that alerted Commission staff of the violations,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “Their information and continuing assistance played a key role in the successful resolution of the actions.”
The awards continue a record fiscal year for the SEC Whistleblower Program. Since the fiscal year began on October 1, 2020, the SEC has awarded approximately $375 million to 72 individuals – both fiscal year records. Overall, the SEC has awarded more than $937 million to 178 individuals since issuing its first award in 2012.
Gary Gensler, who was confirmed as the Chair of the SEC in April, will be delivering keynote remarks at the National Whistleblower Center’s annual National Whistleblower Day celebration. Before his confirmation, Gensler pledged strong support for the SEC Whistleblower Program.