SEC Awards $5 Million to Whistleblower Who Disclosed Misuse of Offering Proceeds

SEC Whistleblower Offering Proceeds

On December 7, the U.S. Securities and Exchange Commission (SEC) issued a whistleblower award of over $4.9 million. The awarded whistleblower disclosed information relating to the misuse of proceeds from a security offering. The SEC claims the whistleblower’s information and assistance helped it return millions of dollars to harmed investors.

“Today’s award underscores the vital role that whistleblowers play in the SEC’s enforcement program and the protection of investors,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “Because of the information and assistance provided by the whistleblower, a significant amount of money was returned to victims of the securities laws violations.”

Through the SEC Whistleblower Program, qualified whistleblowers are entitled to a monetary award of 10-30% of funds recovered by the government when the sanctions that the government recovers exceed $1 million. The SEC weighs a number of factors when determining the exact percentage for a whistleblower award.

In this case, the SEC’s award order notes four factors that were considered. First, “Claimant quickly reported to the Commission that the defendants may have been misusing proceeds from a securities offering upon learning of the suspected misconduct.”

Second, “Claimant’s information enabled Commission staff to more quickly and efficiently develop a case theory, subpoena important documents, investigate and establish the defendants’ misuse of offering proceeds, which ultimately became an important part of the Commission’s case against the defendants.”

Third, “Claimant provided additional assistance to Commission staff by participating in two interviews and providing financial documents relating to the misuse of offering proceeds.”

Fourth, “Claimant’s information and assistance helped the Commission bring the Covered Action and return millions of dollars to harmed investors.”

The SEC Whistleblower Program also offers anti-retaliation protections to whistleblowers. One such protection is confidentiality; thus, the SEC does not disclose any identifying information about award recipients. This award order also redacts information on the total amount of money recovered from the SEC’s enforcement action.

In the 2021 fiscal year, the SEC Whistleblower Program set several records. During the fiscal year, the SEC awarded approximately $564 million to 108 individuals. Overall, the SEC has awarded approximately $1.2 billion to 236 individuals.


SEC Issues Whistleblower Nearly $5 Million Award

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