SEC Whistleblower Receives $1 Million Award for Tip That Opened Investigation

On January 30, the U.S. Securities and Exchange Commission (SEC) awarded $1 million to a whistleblower whose “tip was the initial source of the underlying investigation and caused the opening of the investigation,” according to the award order.

Qualified SEC whistleblowers are entitled to monetary awards through the SEC Whistleblower Program. To qualify for an award an individual must voluntarily provide the SEC with original information that leads to a successful enforcement action. Awards are for 10-30% of the sanctions collected in the enforcement action.

In determining the exact percentage to award a whistleblower, the SEC weighs a number of factors. In this case, the SEC positively assessed the fact that the whistleblower “provided the Commission’s investigative staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses, and helping staff understand complex fact patterns and issues related to the matters under investigation.”

The SEC’s award order also outlines an award denial for a whistleblower award claim filed for the same enforcement action. The SEC denied the claimant because they did not file their award claim within the required timeframe. Individuals looking to file a claim have only ninety days from when the SEC posts a Notice of Covered Action for the case.

While the SEC does have the authority to waive the 90-day filing requirement, it determined that the claimant “has failed to meet the demanding standard for showing that there were extraordinary circumstances beyond [their] control that caused the failure to file his/her award claim by the deadline.”

Overall, the SEC has awarded more than $1.3 billion 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.