On October 18, the U.S. Securities and Exchange Commission (SEC) issued a whistleblower award of approximately $400,000. The whistleblower provided the SEC with original information that led to a successful enforcement action. However, the SEC reduced the award size because the whistleblower unreasonably delayed making their disclosure and was culpable in the misconduct.
Through the SEC Whistleblower Program, qualified whistleblowers are entitled to a monetary award of 10-30% of funds recovered by the government. In addition to monetary awards, the SEC Whistleblower Program offers anti-retaliation protections to whistleblowers. One of these protections is confidentiality; thus, the SEC does not disclose any identifying information about award recipients.
In 2020, the SEC adopted a number of rule amendments to its whistleblower program. One new rule establishes a presumption of a statutory maximum award of 30% in cases where the maximum award would be less than $5 million and where there are no negative factors present. For this award, the presumption did not apply because two negative factors, unreasonable reporting delay and culpability, were present.
According to the award order, the whistleblower’s “information was submitted approximately four years from the date on which he/she first became aware of the underlying misconduct, during which time investors continued to suffer harm.” Furthermore, the whistleblower “facilitated the underlying misconduct.”
The award order does note that in determining the award size, the SEC positively assessed the facts that “Enforcement staff was unaware of the misconduct until [the whistleblower] submitted the tip” and that the whistleblower’s “documents and assistance allowed the staff to conserve considerable resources.”
The SEC Whistleblower Program has already issued a number of awards since the 2022 fiscal year began on October 1, 2021. In the 2021 fiscal year the program awarded over $500 million to over 100 individual whistleblowers.
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