On August 29, the U.S. Securities and Exchange Commission (SEC) issued two separate whistleblower awards: for $1.5 million and $600,000 respectively.
Through the SEC Whistleblower Program, qualified whistleblowers are entitled to awards of 10-30% of the sanctions collected by the SEC in the case connected to their whistleblowing. To qualify for an award, an individual must voluntarily disclose original information to the SEC that contributes to the success of an enforcement action.
The $1.5 million award was issued to a whistleblower who reported concerns internally before blowing the whistle to the SEC, prompting the opening of an investigation which culminated in a successful enforcement action.
According to the award order, the whistleblower “provided helpful information that saved Commission staff time and resources, including providing ongoing assistance over the course of the investigation, identifying potential witnesses, and assisting with staff with document requests.”
The $600,000 award was issued to a whistleblower who “provided substantial, ongoing assistance that included providing key evidence to support the Covered Action,” according to the award order.
The SEC further notes that “there was a substantial law enforcement interest in the information provided by Claimant given that it related to a type of violation that is often difficult to identify and assess.”
In Fiscal Year 2022, the SEC “awarded approximately $229 million in 103 awards, making FY 2022 the Commission’s second highest year in terms of dollar amounts and number of awards,” according to the Whistleblower Office’s Annual Report to Congress.
The report also states that “Enforcement actions brought using information from meritorious whistleblowers have resulted in orders for more than $6.3 billion in total monetary sanctions, including more than $4.0 billion in disgorgement of ill-gotten gains and interest, of which more than $1.5 billion has been, or is scheduled to be, returned to harmed investors.”
Introduced in March, the bipartisan SEC Whistleblower Reform Act of 2023 addresses a few issues currently affecting the SEC Whistleblower Program, including the lack of anti-retaliation protections for internal whistleblowers. Former Commissioner of the SEC Allison Herren Lee, who currently serves as Of Counsel for Kohn, Kohn & Colapinto, penned an article calling for the passage of the bill.
Kohn, Kohn & Colapinto also recently launched an index tracking all the award orders issued by the SEC Whistleblower Program.