SEC Whistleblower Awarded More Than $2.1 Million
Potential Award Reduced by Unreasonable Ten-Month Delay in Reporting
Washington, DC. On April 12, 2018, the Securities and Exchange Commission (SEC) announced a whistleblower award of more than $2.1 million to a whistleblower whose information led to multiple, successful enforcement actions. The SEC determined that the whistleblower’s information “strongly supported the findings” in these actions. A former company insider, the whistleblower also provided ongoing assistance to the SEC’s staff during the investigation.
The whistleblower’s delay in reporting the information to the SEC was found to be unreasonable in this instance. Pursuant to Exchange Act Rule 21F-6(b)(2), an unreasonable reporting delay may decrease the amount of a whistleblower’s award. Notably, the award determination order revealed the delay to be approximately ten months. Because SEC award orders are often heavily redacted to protect whistleblowers, it can be difficult to ascertain what constitutes an unreasonable reporting delay. The SEC has indicated before that even a delay “limited in duration” may be unreasonable given the circumstances, but it did not reveal the duration of the delay in that case. Although the “unreasonable reporting delay” factor continues to be somewhat ambiguous in award determination orders, those with knowledge of potential securities violations are reminded not to sit on the information they have. Promptly reporting information to the SEC could yield a higher award and stem further harm to investors.
According to yesterday’s announcement, the SEC has awarded nearly $90 million to whistleblowers in the past month. To date, that figure exceeds $266 million. “As these awards demonstrate, we continue to receive high-quality information from whistleblowers, which we use to detect and prosecute securities violations and safeguard investors,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.
