On April 9, the U.S. Securities and Exchange Commission (SEC) issued a $2.5 million whistleblower award to an individual who provided the SEC with information and additional assistance that greatly contributed to a successful enforcement action.
“The whistleblower in this matter provided key evidence that supported charges related to a breach of fiduciary duties owed to investors,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. Norberg is stepping down from her post this month after a highly successful tenure. “This award highlights the impact whistleblower information has on the SEC’s ability to enforce the federal securities laws and the value whistleblowers can offer to the investing public,” Norberg said.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC with 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.
In the award order, the SEC notes three positive factors it weighed when determining the award amount. In this case, the SEC assessed that the whistleblower provided additional ongoing assistance to SEC Enforcement staff beyond their original disclosure, reported the violations internally as well as to the SEC, and that there was “substantial law enforcement interest” in the matter. These are among the most commonly referenced factors in SEC award orders.
This award continues a record fiscal year for the SEC Whistleblower Program. Since the 2021 fiscal year began on October 1, 2020, the SEC has awarded approximately $202 million to 41 individuals. The previous records for total amount awarded and number of individuals awarded were both set in the 2020 fiscal year, when the SEC awarded approximately $175 million to 39 whistleblowers.
The confirmation vote for Gary Gensler, President Biden’s nominee to be the Chair of the SEC, is scheduled for the week of April 12. Recently, Gensler pledged strong support for SEC whistleblowers. In a series of written answers to questions filed by Senator Chuck Grassley, 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.”