On February 13, the U.S. Securities and Exchange Commission (SEC) issued a $3 million award to a whistleblower whose information led to the success of both an SEC enforcement action and a related action by another agency.
Qualified SEC whistleblowers, individuals who voluntarily provide the SEC with original information that leads to successful enforcement action, are entitled to awards of 10-30% of the funds recovered by the government in the enforcement action.
Under the SEC Whistleblower Program’s related action rules, in certain cases whistleblowers are also entitled to awards based upon recoveries made in action taken by agencies other than the SEC if the whistleblower’s information contributes to the success of that “related” action.
According to the SEC’s award order, the whistleblower “voluntarily provided the same original information to the Commission and to the criminal authorities.” This information “helped the Enforcement staff understand the mechanics of the fraudulent offering scheme” and the whistleblower “provided critical and substantial ongoing assistance throughout the investigation, communicating with Enforcement staff on multiple occasions that conserved time and resources and helped the Commission identify previously unknown entities and individuals involved in the fraud.”
In determining that the whistleblower qualified for a related action award, the SEC found that “the Related Action has a more direct or relevant connection to the Commission’s whistleblower program than to another whistleblower program…This is because the Related Action primarily charged the defendant with securities fraud,” according to the award order.
In recent weeks, the SEC has issued a number of whistleblower awards, including a $28 million award issued on January 24 and a $18 million award issued on January 19.
In Fiscal Year 2022, the SEC awarded approximately $229 million to over 100 whistleblowers. That year the agency also received a record 12,300 whistleblower tips.