SEC Awards $1.9 Million to Whistleblower for Independent Analysis


On April 13, the U.S. Securities and Exchange Commission (SEC) issued a $1.9 million whistleblower award to an individual who used “specialized access and expertise” to identify violations of U.S. securities laws.

Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are entitled to monetary awards of 10-30% of the funds collected by the SEC in the action.

The SEC determined that the whistleblower’s independent analysis of facts qualified as “original information.” According to the award order, “‘Independent analysis’ is defined under the Whistleblower Rules as one’s own ‘examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.’”

The order explains that the whistleblower “provided original information by using his/her specialized access and knowledge to evaluate the facts in a [Redacted] case against the Company and its executives to identify potential violations of the U.S. securities laws. As such, Claimant was able to provide an evaluation, assessment, or insight beyond what would be reasonably apparent to the Commission from the publicly available information.”

In determining the exact percentage to award the whistleblower, the SEC also considered that “Claimant used specialized access and expertise, Claimant expended efforts to identify the violations, Claimant’s tip alerted Enforcement staff to the alleged violations, and the conduct would have been difficult to detect in the absence of Claimant’s information.”

In 2020, the SEC changed its rules to heighten the criteria for “independent analysis” to qualify as “original information.” Prior to the rule change, six U.S. Senators sent a letter to the SEC opposing the rule change, stating that the “proposal would permit the SEC to create an insurmountable hurdle for a whistleblower to establish original information based on ‘independent analysis.’”

Overall, the SEC has awarded over $1.3 billion to over 300 whistleblowers since it was established in 2010.

Further Reading:

The SEC’s Award Order

What is the SEC Whistleblower Program?

More SEC Whistleblower News on WNN

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