On September 24, the U.S. Securities and Exchange Commission (SEC) announced a whistleblower award of approximately $36 million. The award was issued to a whistleblower who provided information and assistance that contributed to the success of enforcement actions carried out by both the SEC and another federal agency.
According to the SEC, “the whistleblower provided crucial information on an illegal scheme to the SEC’s and the other agency’s staffs, which included multiple meetings and the identification of key documents and witnesses.”
However, according to the award order, in determining the size of the award the SEC did account for the fact that the whistleblower “unreasonably delayed reporting to the Commission
for over five years.”
Through the SEC Whistleblower Program, qualified whistleblowers are entitled to a monetary award of 10-30% of funds recovered by the government. The SEC weighs a number of factors in determining the exact percentage of an award. The most commonly cited factors include the timeliness of the disclosure and the degree of further assistance provided by the whistleblower.
“Today’s whistleblower brought valuable new information to the attention of the SEC and to another federal agency, greatly assisting ongoing investigations,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “Whistleblowers can act as a springboard for an investigation or, like here, they can propel forward an already existing investigation.”
In addition to the $36 million award, the award order details two award denials. The denied individuals both submitted award applications for the same covered action as the awarded whistleblower. The SEC determined that the information provided by both individuals did not lead to the successful enforcement action. It noted that one of the individual’s information “was already known to the staff and focused on an entity that was not charged in the Covered Action.” The other individual’s award application was denied in part because they “did not voluntarily provide information to the Commission as defined by Rule 21F-4(a) of the Exchange Act because the staff requested materials from [the individual] approximately five years before he/she provided the whistleblower submission to the Commission.”
The 2021 fiscal year has been a record year for the SEC Whistleblower Program. Since the fiscal year began on October 1, 2020, the SEC has awarded over $500 million to over 100 individuals. Previously the record for money awarded to whistleblowers in a single year was the $175 million awarded in the 2020 fiscal year.
Earlier this month, the SEC also surpassed the $1 billion mark in total money awarded to whistleblowers in the history of the whistleblower program. In a press release announcing that milestone, SEC Chair Gary Gensler stated: “Today’s announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws. The assistance that whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets.”