On November 13, the U.S. Securities and Exchange Commission (SEC) announced a whistleblower award of over $1.1 million. The awarded whistleblower provided independent analysis of publicly available material which led the SEC to look at new conduct during an investigation. According to the SEC, “the whistleblower’s information and exemplary assistance helped the agency bring an emergency action preventing further investor harm.”
This whistleblower award is significant because it affirms the SEC’s commitment to awarding whistleblowers who provide independent analysis. In September, the SEC approved rule changes to its whistleblower program including new guidance on what level of independent analysis constitutes “original information”- a whistleblower must provide original information to be eligible for an award. Whistleblower advocates worried that this guidance would allow the SEC to avoid paying awards for independent analysis. For example, before the SEC voted on the rule changes, a group of U.S. Senators sent a letter to the SEC opposing the guidance because it “would permit the SEC to create an insurmountable hurdle for a whistleblower to establish original information based on ‘independent analysis.’”
“Today’s award reflects the Commission’s commitment to award whistleblowers who provide high-quality independent analysis,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower in a press release about the award. “Whistleblowers who devote time and effort to develop unique insights may afford the Commission important information about possible securities laws violations.”
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recouped by the government. Whistleblower award payments are made out of a fund entirely financed through monetary sanctions paid to the SEC by securities law violators.
This award continues a record start to the fiscal year for the whistleblower program. Since the 2021 fiscal year began on October 1, the SEC has issued approximately $155 million to six whistleblowers. In the 2020 fiscal year, the SEC issued whistleblower awards totaling approximately $175 million, the most in program history. The SEC is currently on pace to break that record within the first two months of this fiscal year.
The SEC Whistleblower Program provides anti-retaliation protections to whistleblowers, including confidentiality. Therefore, the SEC does not disclose any information which may reveal a whistleblower’s identity.
SEC Awards Over $1.1 Million to Whistleblower for Independent Analysis