On August 26, the U.S. Securities and Exchange Commission (SEC) granted $24 million in whistleblower awards to two individuals. One whistleblower received $4 million while the second received $20 million.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are eligible to receive monetary awards of 10-30% of the sanctions collected in the action. SEC whistleblowers are also eligible to receive awards based on related actions, actions carried out by other agencies using the same information the whistleblower provided to the SEC.
In this case, both whistleblowers voluntarily provided original information which contributed to the success of an SEC enforcement action as well as an action by another agency.
“Today’s awards highlight the incredible public service provided by whistleblowers,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “The information would have been difficult to obtain in the absence of the whistleblowers as it pertained to conduct occurring abroad.”
The SEC weighs a number of factors in determining the exact percentage to award eligible whistleblowers. These include the significance of the whistleblower’s information, the degree of further assistance provided by the whistleblower as well as negative factors such as culpability or unreasonable delay in reporting.
In its award order, the SEC explains that the second whistleblower received a larger award than the first because their “information played a more significant role in the investigation, as [the second whistleblower’s] information expanded the investigation to include [REDACTED], provided important information about key witnesses and their roles in the schemes, and allowed the staff to save time and resources.”
The first whistleblower by contrast “prompted the opening of the investigation” but “had limited knowledge of the schemes” and their information “was general and/or incorrect in several respects.”
The SEC also notes that the first whistleblower unreasonably delayed in reporting “because after raising concerns to his/her supervisor, he/she did not report the conduct to the Commission for another two years.”
The SEC Whistleblower Program was established in 2010 with the passage of the Dodd-Frank Act. The program has been an immense success. According to SEC Chair Gary Gensler, the program “has greatly aided the Commission’s work to protect investors.”
Overall, the SEC has awarded more than $2 billion to more than 400 individual whistleblowers.
The SEC Whistleblower Program had a record setting year in the 2023 Fiscal Year. The program issued nearly $600 million in whistleblower awards, the most ever in a fiscal year, including a $279 million award, the single largest award in program history. The whistleblower program also received a record 18,000 whistleblower tips over the course of the fiscal year.
Further Reading:
SEC Issues $24 Million Awards to Two Whistleblowers
SEC Whistleblower Program had a Record-Setting 2023 Fiscal Year