On November 23, the U.S. Securities and Exchange Commission (SEC) issued a $400,000 whistleblower award to an individual who provided the agency with information that led to both a successful SEC enforcement action and a Related Action by another federal agency.
Through the SEC Whistleblower Program, qualified whistleblowers are entitled to a monetary award of 10-30% of funds recovered by the government when the sanctions that the government recovers exceed $1 million. The SEC weighs a number of factors in determining the exact percentage to award a whistleblower.
According to the award order, in this case the SEC “positively assessed the following facts: (1) Claimant’s information alerted Enforcement staff to the potential wrongdoing, which, in part, prompted Enforcement staff to open the investigation; (2) Claimant provided significant ongoing assistance to Enforcement staff during the investigation that saved Commission time and resources; (3) there are high law enforcement interests here as money was returned to harmed investors; (4) Claimant’s information and cooperation helped the Commission to shut down an ongoing Ponzilike scheme preying on retail investors and obtain emergency relief in the action.”
In contrast, the SEC negatively assessed the fact that the whistleblower was culpable in the fraudulent scheme. However, the SEC does note that “Claimant was unaware of certain fraudulent aspects of the investment scheme, and took some steps to help remediate the harm.” The award order states that the final award percentage “strikes the appropriate balance between Claimant’s significant contributions to the success of the Covered Action and Claimant’s level of culpability.”
On November 15, the SEC Whistleblower Program released its Annual Report to Congress for the 2021 fiscal year. The report details a record-shattering fiscal year for the agency’s highly successful whistleblower program. During the 2021 fiscal year, the SEC Whistleblower Program received a record 12,200 whistleblower tips and issued a record $564 million in whistleblower awards to a record 108 individuals. Over the course of the year, the whistleblower program issued more awards than in all previous years combined.
Individuals considering blowing the whistle on securities law violations to the SEC should first consult an experienced SEC whistleblower attorney to ensure they are fully protected and qualify for the largest award possible.