On October 15, the U.S. Securities and Exchange Commission (SEC) announced an $800,000 whistleblower award issued to an individual whose disclosure instigated an SEC investigation, which led to two successful enforcement actions.
“The whistleblower provided the Commission with a detailed analysis that alerted staff to the underlying securities violations,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “Today’s award again demonstrates the Commission’s commitment to awarding individuals who provide high-quality independent analysis that leads to successful enforcement actions.”
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.
This is the first award issued in the 2021 fiscal year. Last fiscal year was a record-setting year for the SEC Whistleblower Program. In the 2020 fiscal year, the SEC issued 39 individual awards of approximately $175 million. In June of 2020, the SEC issued a $50 million whistleblower award, the largest in program history.
At the end of the 2020 fiscal year, Stephanie Avakian, Director of the Division of Enforcement, stated: “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. We remain committed to rewarding the valuable contributions of whistleblowers in a timely and efficient manner.” Avakian previously lauded the success of the whistleblower program in a September speech.
Since issuing its first award in 2012, the SEC has awarded over $562 million to 107 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. No money has been taken or withheld from harmed investors to pay whistleblower awards.”
In addition to whistleblower awards, the SEC Whistleblower Program provides anti-retaliation protections for whistleblowers, as mandated by the Dodd-Frank Act. These protections include confidentiality. Thus, the SEC does not disclose any information that may reveal a whistleblower’s identity.