On March 11, the U.S. Securities and Exchange Commission (SEC) Whistleblower Program issued three final orders for whistleblower award applications. In one order, the SEC granted an award of approximately $14 million.
The $14 million award was issued to an individual who published an online report exposing an ongoing fraud. This report led the SEC to open an investigation which resulted in a successful enforcement action, allowing the SEC to return millions of dollars to harmed investors. Within days of posting the report, the whistleblower directly contacted the SEC about the fraud.
“Whistleblowers can play a critical role in an investigation,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “Here, the whistleblower posted a research report online outlining the allegations against the company and its officer and also, importantly, took expeditious steps to provide this information to the Commission. This case demonstrates the importance of whistleblowers reporting directly to the SEC so that the agency can promptly investigate allegations of wrongdoing.”
The $14 million award order also details an award denial for a claimant who was also involved in the online report. However, unlike the awarded whistleblower, this claimant did not contact the SEC directly. In the award order the SEC explains that the Dodd-Frank Act and whistleblower program rules “unambiguously require individuals to provide their original information directly to the Commission and in the manner prescribed by the rules, if they wish to pursue a whistleblower award.”
In another award order, the SEC issued a $38,000 award and denied a second claimant. The awarded whistleblower’s information “significantly contributed to the success of the Covered Action because it played a key role in advancing the staff’s investigation and provided the basis for some of the allegations in the Commission’s complaint.” In contrast, the denied claimant’s information was already known by the SEC at the time of their disclosure. Furthermore, the claimant learned of the misconduct in their capacity as a compliance officer and is thus excluded from award eligibility.
The final award order details three award denials. According to the SEC, none of the information provided by the claimants contributed to the success of the enforcement action.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are entitled to an award of 10-30% of the funds collected by the government. In addition to monetary awards, the SEC Whistleblower Program offers anti-retaliation protections to whistleblowers. One such protection is confidentiality; thus, the SEC does not disclose any identifying information about award recipients.
Since issuing its first award in 2012, the has awarded approximately $1.2 billion to 249 individuals. In the 2021 fiscal year, the SEC Whistleblower Program set several records. During the fiscal year, the SEC awarded approximately $564 million to 108 individuals.