On April 25, the U.S. Securities and Exchange Commission (SEC) issued $6 million in awards to two groups of whistleblowers, comprised of five total individuals. The two groups of whistleblowers provided information and assistance which assisted the SEC in the same investigation.
According to the award order, the first group “provided staff with key documents that led the staff to seek additional documents from the respondent, which formed the core of the Commission’s case.” Furthermore, this group of whistleblowers provided ongoing assistance over the course of the SEC’s investigation. The group provided documents which helped the SEC understand the respondent’s business practices.
The second group provided the SEC with information that included first-hand accounts
of the respondent’s wrongdoing. The second group was “familiar with the respondent’s systems and business processes” and was also “interviewed by the staff and provided continuing assistance, including on-the-record testimony,” according to the award order.
“Whistleblower tips are an integral component of the Commission’s enforcement program,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “Today’s whistleblowers provided credible information and assisted an ongoing investigation.”
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.
Overall, the SEC has awarded approximately $1.2 billion to 268 whistleblowers since issuing its first award in 2012. The success of the program has been consistently heralded by agency officials over the past decade. At National Whistleblower Day 2021, SEC Chair Gary Gensler stated that the agency’s whistleblower program “helps us be better cops on the beat, execute our mission, and protect investors from misconduct.”
One issue that has hindered the otherwise successful program, however, are delays in the issuance of whistleblower awards. On March 31, Senators Chuck Grassley (R-IA) and Elizabeth Warren (D-MA) introduced the SEC Whistleblower Reform Act of 2022 in order to further strengthen the highly successful program by ensuring that award claims are processed by the agency in a more timely manner. The bill also bolsters the program’s anti-retaliation protections.
“This law is urgently needed,” said leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto. “Whistleblowers who have been fired often have to wait over four years for any compensation. This amendment closes that painful loophole.”