Today, the U.S. Securities and Exchange Commission (SEC) announced two whistleblower awards totaling $114 million. The two awards, which were for $110 million and $4 million respectively, were issued to individuals who provided information which led to a successful SEC enforcement action and related actions by another agency.
With the awards, the SEC has now awarded over $1 billion to whistleblowers. The $110 million award is also the second largest award in agency history. In the decade since its establishment, the SEC Whistleblower Program has proven to be an invaluable tool in the SEC’s enforcement efforts.
“Today’s announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws,” said SEC Chair Gary Gensler. “The assistance that whistleblowers provide is crucial to the SEC’s ability to enforce the rules of the road for our capital markets.”
“The whistleblower program has been instrumental to the success of numerous enforcement actions since it was instituted a decade ago,” said SEC Director of Division of Enforcement Gurbir S. Grewal. “We hope that today’s announcement encourages whistleblowers to continue to come forward with credible information about potential violations of the securities laws.”
“Whistleblowers can play an extraordinary role in helping the SEC ferret out wrongdoing,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “Whistleblowers may provide critical information based on their own independent analysis that facilitates the SEC’s investigation and the successful resolution of the enforcement action.”
The $110 million award includes both an approximately $40 million award for an SEC enforcement action as well as approximately $70 million in related action awards for enforcement actions by another agency. The whistleblower provided the SEC with significant independent analysis that, according to the SEC, “substantially advanced the SEC’s and the other agency’s investigations.” Because the whistleblower’s information contributed to the success of another agency’s enforcement actions, the whistleblower qualified for related action awards under the Dodd-Frank Act (DFA).
Under the DFA, individuals who provide the SEC with original information that leads to a successful SEC enforcement action are entitled to a monetary award of 10-30% of the sanctions collected. Furthermore, whistleblowers are entitled to awards of 10-30% of the sanctions collected in related actions carried out by other agencies when the whistleblower’s disclosure contributed to their success.
The $4 million award was issued to a whistleblower whose information contributed to the success of the SEC action but not the related actions. According to the SEC, the whistleblower “voluntarily provided original information that led to the successful enforcement action, but this information was provided to the SEC after the staff had opened an investigation and undertaken significant investigative steps, and was much more limited as compared to the information and assistance provided by the first whistleblower.”
In addition to monetary awards, the SEC Whistleblower Program offers anti-retaliation protections to whistleblowers. One of these protections is confidentiality; thus, the SEC does not disclose any identifying information about award recipients. By consulting with a SEC whistleblower attorney before contacting the SEC, a whistleblower can help ensure their confidentiality is fully protected and that they qualify for the highest possible award.