The U.S. Securities and Exchange Commission’s (SEC) highly successful whistleblower program reached a historic milestone on September 15. The agency issued two whistleblower awards totaling $114 million and with the awards surpassed $1 billion in total money awarded to whistleblowers by the program.
“Today’s announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws,” said SEC Chair Gary Gensler. “The assistance that whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets.”
The two awards were for $110 million and $4 million, respectively. The $110 million award is the second largest in SEC history. The largest award, a $114 million award, was issued in October 2020. Thus far, the 2021 fiscal year has been a record year for the program. Since the fiscal year began on October 1, 2020, the SEC has awarded over $500 million to over 100 individuals.
“The whistleblower program has been instrumental to the success of numerous enforcement actions since it was instituted a decade ago,” said SEC Director of Division of Enforcement Gurbir S. Grewal. “We hope that today’s announcement encourages whistleblowers to continue to come forward with credible information about potential violations of the securities laws.”
“Whistleblowers can play an extraordinary role in helping the SEC ferret out wrongdoing,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “Whistleblowers may provide critical information based on their own independent analysis that facilitates the SEC’s investigation and the successful resolution of the enforcement action.”
The $110 million award was issued to a whistleblower who provided significant independent analysis. $40 million of the award stemmed from an SEC enforcement action while the rest stemmed from related actions carried out by another agency.
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 in the action. Furthermore, under the related action provisions of the Dodd-Frank Act, when the information provided to the SEC by a whistleblower also contributes to successful enforcement actions by other agencies, the whistleblower is entitled to an award of 10-30% of the sanctions in those related actions.
According to the award order, the whistleblower in this case “utilized publicly available information in a way that went beyond the information itself and afforded the Commission with important insights.” The order adds that the whistleblower’s “own examination, evaluation, and analysis contributed significant independent information that bridged the gap between certain publicly available information and the possible securities violations that the Commission and the Other Agency were investigating.”
The second whistleblower, who received the $4 million award, contributed to the success of the SEC enforcement action but not the related actions. According to the SEC, the second whistleblower’s information “was provided to the SEC after the staff had opened an investigation and undertaken significant investigative steps, and was much more limited as compared to the information and assistance provided by the first whistleblower.”
The SEC Whistleblower Program issued its first award in 2012. The program has now awarded $1,074,010,519 to 207 individuals.
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SEC Surpasses $1 Billion in Awards to Whistleblowers with Two Awards Totaling $114 Million