On March 9, the U.S. Securities and Exchange Commission (SEC) announced an approximately $1.5 million whistleblower award. The awarded whistleblower provided the SEC with original information that led to a successful enforcement action. This is the third SEC award issued this month and continues a record-setting year for the SEC Whistleblower Program.
The whistleblower’s disclosure caused the SEC to open an investigation. According to the SEC’s award determination, the whistleblower provided multiple written submissions and helped SEC Enforcement staff identify potential witnesses. The whistleblower provided further assistance to the SEC’s investigation by meeting with Enforcement staff multiple times to explain the disclosed information.
“The whistleblower alerted the SEC to previously unknown conduct and thereafter provided multiple submissions, identified potential witnesses, and met with staff on several occasions,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “As the numerous recent awards make clear, whistleblowers like the one awarded today play an integral part in the success of the SEC’s enforcement program.”
The SEC also notes that the whistleblower reported concerns internally to their employer. The fact that a whistleblower reported concerns internally is a positive factor often cited by the SEC in award determinations. However, whistleblowers are only covered by the Dodd-Frank Act’s anti-retaliation protections if they communicate with the SEC in addition to internal reporting channels. Other positive factors commonly referenced by the SEC in whistleblower award determinations include the timeliness of the disclosure and the degree of further assistance provided by the whistleblower.
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. The SEC pays awards through a fund entirely financed through monetary sanctions paid to the SEC by securities law violators.
The SEC Whistleblower Program is in the midst of a record year. Since the 2021 fiscal year began on October 1, 2020 the SEC has awarded approximately $197 million to 37 whistleblowers – a record for the total dollar amount awarded to whistleblowers in a fiscal year.