On April 25, the U.S. Securities and Exchange Commission (SEC) issued a $2.5 million whistleblower award to an individual who voluntarily disclosed original information which led to a successful enforcement action.
Through the SEC Whistleblower Program, eligible whistleblowers are entitled to monetary awards of 10-30% of the funds collected in the action connected with their disclosure.
According to the SEC’s award order, “After internally reporting concerns, Claimant submitted a tip to the Commission that prompted the opening of the investigation and thereafter provided continuing assistance to the staff.”
The SEC order further clarifies that while the whistleblower learned of the misconduct in a role where their principal duties involve compliance or internal audit responsibilities, they were eligible for an award because “Claimant reported the information internally to Claimant’s supervisor and to the Chief Compliance Officer or its equivalent, and then waited at least 120 days to report the information to the Commission.”
SEC Rule 240.21F-4(b)(4)(iii)(B) provides for this 120-exception for compliance and audit 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.
“Year after year, the SEC Whistleblower Program continues to build on its immense success,” said whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto. “The information and assistance provided by whistleblowers play an integral role in the Commission’s enforcement results.”
On March 15, Senators Chuck Grassley (R-IA) and Elizabeth Warren (D-MA) introduced the SEC Whistleblower Reform Act of 2023 in order to further strengthen the highly successful SEC Whistleblower Program. The bill bolsters the Dodd-Frank Act’s anti-retaliation protections and ensures that the agency processes award claims in a more timely manner.
According to Allison Herren Lee, former SEC Commissioner and currently Of Counsel at KKC, the SEC Whistleblower Reform Act of 2023 “will help ensure that the SEC Whistleblower Program remains an indispensable tool in the Commission’s efforts to police wrongdoing and protect investors.”
National Whistleblower Center (NWC) is calling for the immediate passage of the SEC Whistleblower Reform Act. NWC has set up Action Alert calling on whistleblower supports to join them in urging Congress to pass the bill and protect internal corporate whistleblowers.
Join NWC in Taking Action:
Protect Internal Corporate Whistleblowers
Further Reading:
SEC Whistleblower Program had a Record-Setting 2023 Fiscal Year
