On June 14, the U.S. Securities and Exchange Commission (SEC) issued $3 million in whistleblower awards to two individuals who provided information and assistance that led to a successful enforcement action. The whistleblowers made separate disclosures which both contributed to the same enforcement action.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information which leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government.
“Today’s whistleblowers played an instrumental role in helping the SEC bring this important action,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “The first whistleblower provided information early in the investigation and helped SEC staff develop its case and focus its resources, while the second whistleblower helped staff uncover misappropriated funds and fraudulent transfers.”
According to the award order, in addition to making initial disclosures, both whistleblowers “provided ongoing assistance to Enforcement staff through multiple interviews and document productions.” The level of additional assistance that the whistleblower provides is one of the most common factors the SEC cites in whistleblower award determinations. The other most common factor is the promptness of the disclosure.
The two awards continue a record fiscal year for the SEC Whistleblower Program. Since the fiscal year began on October 1, 2020, the SEC has awarded approximately $370 million to 66 individuals – both fiscal year records. Overall, the SEC has awarded more than $932 million to 172 individuals since issuing its first award in 2012.
Notably, the record year has also been a transitional period for the SEC. The first several months of the fiscal year overlapped with the end of former SEC Chair Jay Clayton’s tenure. Clayton left the agency in December after several years of expansion for the SEC Whistleblower Program. Before stepping down, Clayton referred to the whistleblower program as “a critical component of the Commission’s efforts to detect wrongdoing and protect investors and the marketplace, particularly where fraud is well-hidden or difficult to detect.”
Gary Gensler was confirmed as the new Chair of the SEC in April 2021. Before his confirmation, Gensler pledged strong support for the SEC Whistleblower Program. In a series of written answers to questions filed by Senator Chuck Grassley (R-IA), Gensler stated: “If confirmed to lead the SEC, I will build on the work of past Chairs to ensure continued strength in the whistleblower program.”