SEC Whistleblower Office Posts New Notices of Covered Actions

SEC Whistleblower

On April 30, the U.S. Securities and Exchange Commission (SEC) posted nine new Notices of Covered Actions (NoCAs). Each NoCA relates to a successful enforcement action and signals that individuals may now file whistleblower award claims for those cases.

The newly posted NoCAs cover a wide range of enforcement actions and highlight the numerous types of corporate fraud and misconduct for which individuals can be awarded for blowing the whistle. One NoCA is for an enforcement action in which the SEC charged three Texas-based oil and gas companies and their principals with an $11.7 million offering fraud for oil drilling and operations projects. The SEC alleges that the companies and their CEO and President “sold unregistered securities and made numerous misleading statements to over 150 investors concerning the use of investor proceeds; including false information about prospect wells; false statements about sales commissions; and false guarantees regarding the comingling and loaning of funds.”

Another NoCA covers a case where the SEC “charged a former microcap company CEO and a boiler room operator with defrauding seniors and others who were pressured to invest in a pair of penny stock companies and promised lucrative profits.” The SEC alleges that this fraudulent scheme defrauded several hundreds of investors across the country out of a total of approximately $20 million.

A third NoCA refers to a case in which the SEC charged a United Kingdom citizen and French resident with operating a Ponzi scheme which allegedly raised more than $9 million from investors. This NoCA underscores the global reach of the SEC and its whistleblower program. Individuals do not need to be U.S. citizens or residents to qualify for whistleblower awards, nor do the entities they blow the whistle on need to be U.S.-based. According to the SEC, the whistleblower program has received whistleblower tips from individuals in approximately 130 countries. Additionally, in the 2020 fiscal year, 19 whistleblower award recipients “were foreign nationals or residents of foreign countries at the time they submitted their tips to the Commission.”

Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government. By posting an NoCA, the SEC is not making any determination that the relevant case was aided by a whistleblower tip. Rather, the SEC posts an NoCA for any enforcement action that results in monetary sanctions exceeding $1 million.

Whistleblowers have until July 29, 2021 to apply for an award for these newly posted NoCAs by submitting a completed Form WB-APP to the Office of the Whistleblower.

The 2021 fiscal year has been a record year for the whistleblower program. Since FY2021 began on October 1, 2020, the SEC has awarded approximately $255 million to 45 individuals – both fiscal year records. Overall, the SEC has awarded approximately $816 million to 153 individuals since issuing its first award in 2012. In addition to monetary awards, the SEC Whistleblower Program offers anti-retaliation protections to whistleblowers.

Gary Gensler was confirmed as the new Chair of the SEC on April 14. Before being confirmed as Chair, Gensler pledged his support for the agency’s whistleblower program. In a series of written answers to questions filed by Senator Chuck Grassley (R-IA), Gensler stated: “If confirmed to lead the SEC, I will build on the work of past Chairs to ensure continued strength in the whistleblower program.”


SEC Office of the Whistleblower: Notice of Covered Actions

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