HomeSEC Pays Whistleblower $3 Million Under Related Action Rule

SEC Pays Whistleblower $3 Million Under Related Action Rule

On February 13, the U.S. Securities and Exchange Commission (SEC) issued a $3 million whistleblower award to an individual who voluntarily provided original information that led to a successful SEC enforcement action and an enforcement action by another agency.

Through the SEC Whistleblower Program, qualified whistleblowers are entitled to monetary awards of 10-30% of the funds collected by the SEC in the enforcement action connected to their disclosure. The program’s related action rules further entitled whistleblowers to awards based upon sanctions collected in actions taken by other agencies if their information is used by that agency.

According to the award order, the whistleblower “provided highly significant information to [SEC] Enforcement staff during an existing investigation that helped the Enforcement staff understand the mechanics of the fraudulent offering scheme.” The order further states that the whistleblower “provided critical and substantial ongoing assistance throughout the investigation, communicating with Enforcement staff on multiple occasions that conserved time and resources and helped the Commission identify previously unknown entities and individuals involved in the fraud.”

In the award order, the SEC notes that it is issuing a related action award because “the Related Action has a more direct or relevant connection to the Commission’s whistleblower program than to another whistleblower program.” “This is because the Related Action primarily charged the defendant with securities fraud… similar to the Commission’s own charges in the Covered Action,” the order further clarifies.

In August 2022, the SEC amended its related action rules to allow whistleblowers to qualify for related action awards even if another agency’s whistleblower award program “as a more direct or relevant connection” to the action. The SEC is able to pay related action awards in these cases if the other program “is not is not comparable to the Commission’s program” or if the related action award would be for less than $5 million.

Since the SEC Whistleblower Program was established in 2010 it has issued more than $1.3 billion in whistleblower awards to over 300 whistleblowers. According to the agency, “Enforcement actions brought using information from meritorious whistleblowers have resulted in orders for more than $6.3 billion in total monetary sanctions, including more than $4.0 billion in disgorgement of ill-gotten gains and interest, of which more than $1.5 billion has been, or is scheduled to be, returned to harmed investors.”

Whistleblowers considering blowing the whistle to the SEC should first consult an experienced SEC whistleblower attorney to ensure they are fully protected and qualify for the largest possible award.

Share This Story, Choose Your Platform!

Latest News & Insights

  • March 24, 2023

    On March 23, leading whistleblower attorney Stephen M. Kohn of Kohn, Kohn & Colapinto was a guest on the Federal Drive with Tom Temin. Kohn spoke about recent developments in whistleblowing including the December passage of the Anti-Money Laundering (AML) Whistleblower Improvement Act and the troubling False Claims Act statistics ...

  • March 16, 2023

    On March 15, a bipartisan group of senators introduced the SEC Whistleblower Reform Act of 2023. The bill strengthens the U.S. Securities and Exchange Commission’s (SEC) highly successful whistleblower award program by addressing issues in the Dodd-Frank Act. “This is an important bill that needs to be quickly passed,” said leading whistleblower attorney Stephen M. ...

  • March 15, 2023

    This article originally appeared in JD Supra. From oustee to advocate, former FBI agent Jane Turner continues to uplift whistleblowers while sharing her personal story exposing widespread misconduct and cover-ups within the Federal Bureau of Investigation (FBI). Standing outside a Minneapolis courtroom 16 years ago, jurors hugged Turner with tears in their ...

  • March 15, 2023

    WhistleblowersUK is set to host their 1st annual Whistleblowing Awareness Week from Monday, March 20 through Friday, March 24. The event occurs in conjunction with the All Party Parliamentary Group (APPG) for Whistleblowing. Designed to bring together leading voices in the whistleblower sphere to advocate for more robust laws in the UK and beyond, ...

Subscribe for News & Resources

Receive exclusive updates and news from our firm.