On September 17, the U.S. Securities and Exchange Commission (SEC) announced it was awarding nearly $250,000 to joint whistleblowers whose whistleblower tip led the SEC to open an investigation. The SEC specifies that the whistleblowers first reported their concern internally before alerting the SEC.
“The whistleblowers’ information alerted Commission staff to the potential securities violations and prompted the staff to open an investigation,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “While the case was largely built through the investigative efforts of the Commission staff, this award highlights the importance of receiving that initial tip that can break open the case.”
According to the SEC’s Order Determining Award Claim, the whistleblowers were rewarded jointly because they jointly filed their whistleblower tip and provided substantively the same information. The Order further explains the factors the SEC assessed in determining the award amount. Positively assessed factors include the fact that the whistleblowers’ tip prompted the SEC to open an investigation and that there are “high law enforcement interests” in the case. Factors assessed which limited the amount of the whistleblowers’ award include the facts that “many of their allegations did not directly relate to the Commission’s charges in the Covered Action, and the case was largely built through the investigative efforts of Commission staff.”
The whistleblower reward continues the record setting pace of whistleblower rewards granted this year. According to the SEC, it “has made whistleblower awards to 29 individuals during this fiscal year – the highest in any fiscal year to date.” Overall, the SEC has awarded approximately $521 million to 96 individuals since the first award was granted in 2012. Earlier this year, the SEC broke another record when it awarded a record-setting $50 million whistleblower reward.
Qualified SEC whistleblowers, individuals who voluntarily provide original information which leads to a successful enforcement action, are entitled to a monetary reward of 10-30% of funds recouped by the government. The SEC Whistleblower Program additionally provides anti-retaliation protections to whistleblowers, including confidentiality. Thus, the identities of the whistleblowers will not be revealed.
On September 23, the SEC will vote on controversial changes to its whistleblower program. Whistleblower advocates warn that a number of the changes, including the implementation of a “soft cap” on the largest whistleblower rewards, would greatly undermine the success of the program.