On February 26, the U.S. Securities and Exchange Commission (SEC) Office of the Whistleblower posted sixteen new Notices of Covered Actions (NCAs). Each NCA relates to a specific SEC enforcement action and signals that individuals may now submit whistleblower award claims for these actions. Whistleblowers have until May 27, 2021 to apply for an award for these newly posted NCAs — to apply, they must submit a completed Form WB-APP to the Office of the Whistleblower.
The newly posted NCAs relate to a wide variety of enforcement actions. One NCA covers charges against Deutsche Bank for violations of the Foreign Corrupt Practices Act (FCPA). According to the SEC, between 2009 and 2016, Deutsche Bank “knowingly and willfully conspired” to falsify records in order to conceal bribes made to foreign officials, their relatives, and their associates. Deutsche Bank agreed to pay $43 million to settle the SEC’s charges. In addition, Deutsche Bank paid $87 million to settle FCPA charges by the U.S. Department of Justice (DOJ).
The other newly posted NCAs cover a range of corporate fraud and misconduct. One NCA relates to a case in which the SEC charged an advisory firm for disclosure failures and misleading statements to clients regarding investment advice. The firm, Voya Financial Advisors, Inc., agreed to pay approximately $23 million in disgorgement and penalties to settle the charges.
Another NCA covers a case in which the SEC halted a $207 million Internet-based Ponzi scheme. According to the SEC, “Traffic Monsoon LLC and Charles Scoville, the company’s only member operated an Internet-based Ponzi scheme that they falsely represented to investors was an advertising company.” The SEC claims that Traffic Monsoon recruited more than 162,000 investors around the world, primarily in the U.S., India and Russia. Traffic Monsoon allegedly presented itself as a highly successful combination Internet traffic exchange and pay-per-click program but in reality, more than 99% of its revenue was derived from new investor funds. Scoville is to pay the SEC $5 million dollars.
By posting an NCA, the SEC is not making any determination that the relevant case was aided by a whistleblower tip. Rather, the SEC posts an NCA for any enforcement action that results in monetary sanctions exceeding $1 million.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC original information that 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, “all payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.”
As of late, the SEC has issued whistleblower awards at a record rate. Since the 2021 fiscal year began on October 1, 2020, the SEC has awarded approximately $197 million to 36 whistleblowers – a record for the total dollar amount awarded to whistleblowers in a fiscal year.