On September 30, the U.S. Securities and Exchange Commission (SEC) announced whistleblower awards totaling $5 million issued to four individuals. The four awards stem from three different orders and cap off the most prolific fiscal year in the history of the SEC Whistleblower Program. This year, the SEC made a record-setting 39 individual awards of approximately $175 million.
In the first order, the whistleblower was granted a nearly $2.9 million award for alerting the SEC to hard-to-detect violations. According to the SEC, “the whistleblower provided critical information and supporting evidence that conserved SEC time and resources.”
In the second order, the whistleblower was awarded more than $1.7 million. The whistleblower, a former company insider, provided extensive assistance to the SEC’s investigation in addition to filing the initial disclosure.
In the third order, two whistleblowers were awarded nearly $400,000. The whistleblowers jointly provided a tip and subsequently gave continued assistance to the investigation. For example, the whistleblowers met with SEC staff and helped them understand key documents and identify witnesses. The whistleblowers additionally reported the misconduct internally and “suffered personal hardships as a result of the reporting.”
“Today marks the end of a record-setting year for the whistleblower program. We’ve made significant strides to further streamline and accelerate the evaluation of claims under the rules, substantially increasing the rate at which whistleblower claims are evaluated and awards are issued,” said Stephanie Avakian, Director of the Division of Enforcement. “We remain committed to rewarding the valuable contributions of whistleblowers in a timely and efficient manner.” On September 18, Avakian made a speech entitled “Protecting Everyday Investors and Preserving Market Integrity: The SEC’s Division of Enforcement” in which she lauded the success of the whistleblower program.
“The awards issued in the last month demonstrate the variety and breadth of tips received from whistleblowers,” added Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “Award recipients in the last month include company outsiders who provided independent analysis, international whistleblowers who shone a light on hard to detect overseas conduct, and company insiders who provided critical information and substantial assistance that helped the Commission better protect investors and the marketplace. And today, the four individuals awarded each provided the tip that sparked the opening of the case.”
Under the Dodd-Frank Act, qualified SEC whistleblowers, individuals who voluntarily provide original information that leads to a successful enforcement action, are entitled to monetary awards of 10-30% of the funds collected by the government. All awards are funded by an investor protection fund entirely financed through monetary sanctions paid by securities law violators. Since issuing its first award in 2012, the SEC has awarded approximately $562 million to 106 individuals.
In addition to monetary awards, the SEC Whistleblower Program provides anti-retaliation protections to whistleblowers. These protections include confidentiality provisions. The SEC thus does not disclose any information that may reveal a whistleblower’s identity.