On December 17, the U.S. Securities and Exchange Commission (SEC) issued an award of more than $900,000 to a whistleblower who voluntarily provided the agency with original information that led to a successful enforcement action. The SEC also denied an award application for the same enforcement action because the individual’s disclosure did not contribute to the success of the action.
Qualified SEC whistleblowers are entitled to monetary awards of 10-30% of the funds collected by the government in connection with their disclosure. The SEC Whistleblower Program also provides anti-retaliation protections to whistleblowers. One of these protections is confidentiality; thus, the SEC does not disclose any identifying information about award recipients.
According to the award order, the awarded whistleblower “provided helpful information, including documents and analysis… that caused Enforcement staff to open an investigation that led to the Covered Action and the return of money to harmed investors.” The order further notes that the whistleblower “had subsequent communications with staff through [her/his] counsel.”
The award order states that the information provided by the denied individual does not qualify for a whistleblower award “because it did not cause the Covered Action investigation to be opened or cause staff to inquire into different conduct in the Covered Action investigation.” The denied individual reportedly did not contact the SEC until six month after the investigation was opened as a result of the awarded whistleblower’s disclosure. Furthermore, the SEC claims that “investigative staff do not recall receiving the letter submitted by [the denied individual] under a pseudonym or communicating with [the denied individual] before or during the course of the investigation.”
The 2021 fiscal year was a record year for the SEC 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 should first consult an experienced SEC Whistleblower Attorney to ensure they are fully protected and qualify for the largest award possible.