On March 25, the U.S. Securities and Exchange Commission (SEC) announced a whistleblower award of $1.25 million. The whistleblower voluntarily provided the SEC with original information that caused the agency to open an investigation into the alleged misconduct. The whistleblower did not receive the statutory maximum award amount, however, because of an unreasonable delay in reporting the misconduct to the SEC.
According to the award order, in addition to providing “specific and credible information,” the whistleblower “provided continuing, extensive assistance, including helping Commission staff identify witnesses, understand critical documents and terminology, and focus the investigation on key issues, saving Commission time and resources.”
“Today’s award underscores the SEC’s commitment to rewarding meritorious whistleblowers who provide valuable information that advances the agency’s enforcement efforts,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “This whistleblower provided high-quality information and exemplary cooperation.”
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 rule, there is a presumption of a statutory maximum award of 30% in cases where the award would be less than $5 million and where no negative factors are present.
The SEC determined that this presumption did not apply in this case because the whistleblower unreasonably delayed in reporting the misconduct to the agency. According to the award order, the whistleblower “waited about a year and a half after internally reporting and approximately three years after first having concerns, to submit information to the Commission.”
Under the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and thus does not disclose any identifying information about award recipients.
Since issuing its first award in 2012, the SEC has awarded approximately $1.2 billion to 256 individuals. In fiscal year 2021, the agency shattered records by awarding approximately $564 million to 108 individuals.