On October 30, the U.S. Securities and Exchange Commission (SEC) Office of the Whistleblower posted nineteen new Notices of Covered Actions (NCAs). Each NCA relates to a specific SEC enforcement action and signals that individuals may now submit whistleblower award claims for these actions. Whistleblowers have until January 28, 2021 to apply for an award for these newly posted NCAs by submitting a completed Form WB-APP to the Office of the Whistleblower.
The nineteen NCAs touch on a wide variety of cases of corporate fraud and misconduct. One NCA relates to a $6.1 million settlement regarding charges of conducting an unregistered initial coin offering (ICO) of digital asset securities. Another NCA covers the SEC’s $18 million settlement with BMW for charges that BMW disclosed “inaccurate and misleading information about BMW’s retail sales volume in the U.S. while raising approximately $18 billion from investors in several corporate bond offerings.” By posting an NCA, the SEC is not making any determination that the relevant case was aided by a whistleblower tip. Rather, the SEC posts an NCA for any enforcement action that results in monetary sanctions exceeding $1 million.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government. 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 has had a record-setting start to the 2021 fiscal year. Since the fiscal year began on October 1, the SEC has issued approximately $154 million to six whistleblowers. In the 2020 fiscal year, the SEC issued whistleblower awards totaling approximately $175 million, the most in program history. The SEC is currently on pace to break that record within the first two months of this fiscal year.
Last month, Whistleblower Network News analyzed a month’s worth of SEC whistleblower award orders to understand the most important factors in the SEC’s award determination process. The two most referenced factors in the orders were the timeliness of the whistleblower’s disclosure and the degree of further assistance offered by the whistleblower. Notably, in one September award order the SEC stated that they “preliminarily determined to deny Claimant 3’s award claim on the alternative ground that it was submitted after the 90-day deadline for submitting claims for the Covered Action.”