On October 29, the U.S. Securities and Exchange Commission (SEC) issued a whistleblower award for over $2 million to an individual who provided the agency with original information. The whistleblower’s information was used in a successful enforcement action by the U.S. Department of Justice (DOJ).
Qualified SEC whistleblowers are entitled to monetary awards of 10-30% of the funds recovered by the SEC in actions connected with their disclosure. Furthermore, the SEC pays related action awards when a whistleblower’s information is also used in an enforcement action by another agency.
According to the SEC, the whistleblower in this case had previously received a whistleblower award for the SEC’s enforcement action connected to their disclosure. The whistleblower became eligible for the related action award based on a 2020 SEC rule amendment clarifying the related action provisions of the Dodd-Frank Act.
“The SEC’s whistleblower rule amendments make clear that non-prosecution and deferred prosecution agreements entered into by the DOJ are related actions upon which whistleblowers may receive awards,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “Today’s award demonstrates the SEC’s commitment to award whistleblowers not only for their contributions to a successful SEC enforcement action but also for their contributions to qualifying related actions.”
According to the award order, the whistleblower “provided information that prompted the opening of the DOJ and SEC investigations” and “provided extensive, ongoing assistance in the investigations.”
The 2020 SEC whistleblower rule amendments went into effect on December 7, 2020. On February 23, 2021 the SEC issued its first related action award for a non-prosecution agreement or deferred prosecution agreement by the DOJ. In that case, the SEC awarded more than $9.2 million to a whistleblower.
Since issuing its first award in 2012, the SEC has awarded approximately $1.1 billion to 224 individuals. Individuals considering blowing the whistle to the SEC should first consult with an experienced SEC whistleblower attorney to ensure they are fully protected and qualify for the largest award possible.