On October 22, the U.S. Securities and Exchange Commission (SEC) announced a whistleblower award of over $114 million, the largest award in the history of the SEC Whistleblower Program. The award is for more than double the amount of the next highest award paid to an individual.
The award was issued to a whistleblower whose information and assistance led to the SEC’s successful enforcement action and successful related actions by other agencies. Approximately $52 million of the award stems from the SEC case, while the additional $62 million stems from the related actions.
Qualified SEC whistleblowers, individuals who provide original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recouped by the government. The SEC Whistleblower Program also issues related action awards when a whistleblower’s information leads to successful enforcement actions by other agencies. These awards are also for 10-30% of the funds recouped.
This record-setting award comes almost one month to the day after the SEC approved rule changes to the whistleblower program. Notably, the final approved changes did not include a previously proposed rule, which would have automatically reduced the largest whistleblower awards.
“This is a great step forward. It is proof that the SEC understands the importance of paying large rewards to incentivize whistleblowers to step forward and deter future wrongdoing,” said whistleblower attorney Stephen M. Kohn, partner at qui tam whistleblower firm Kohn, Kohn & Colapinto and Chairman of the Board of the National Whistleblower Center.
“Today’s milestone award is a testament to the Commission’s commitment to award whistleblowers who provide the agency with high-quality information,” said SEC Chairman Jay Clayton. “Whistleblowers make important contributions to the enforcement of securities laws, and we are committed to getting more money to whistleblowers as quickly and as efficiently as possible.”
“The actions of the whistleblower awarded today were extraordinary,” added Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “After repeatedly reporting concerns internally, and despite personal and professional hardships, the whistleblower alerted the SEC and the other agency of the wrongdoing and provided substantial, ongoing assistance that proved critical to the success of the actions.”
This record-setting award comes after the end of a record-setting fiscal year for the SEC Whistleblower Program. In the 2020 fiscal year, the SEC issued 39 individual awards of approximately $175 million. Since issuing its first award in 2012, the SEC has awarded approximately $676 million to 108 individuals. According to the SEC, “all payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.”
The SEC Whistleblower Program also provides anti-retaliation protections to whistleblowers, including confidentiality. Thus, the SEC does not disclose any information that may reveal a whistleblower’s identity.