On December 7, the U.S. Securities and Exchange Commission (SEC) issued a nearly $5 million whistleblower award. The whistleblower provided the SEC with original information and assistance that led to a successful enforcement action and allowed the agency to return millions of dollars to harmed investors.
“Today’s award underscores the vital role that whistleblowers play in the SEC’s enforcement program and the protection of investors,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “Because of the information and assistance provided by the whistleblower, a significant amount of money was returned to victims of the securities laws violations.”
According to the award order, the whistleblower “quickly reported to the Commission that the defendants may have been misusing proceeds from a securities offering upon learning of the suspected misconduct.” This prompt disclosure “enabled Commission staff to more quickly and efficiently develop a case theory, subpoena important documents, investigate and establish the defendants’ misuse of offering proceeds, which ultimately became an important part of the Commission’s case against the defendants.”
The whistleblower also provided additional assistance to SEC staff in the form of interviews and financial documents related to the misuse of offering proceeds. A whistleblower’s level of ongoing assistance is one of the most common factors cited by the SEC in award determinations.
Qualified SEC whistleblowers are entitled to monetary awards for 10-30% of the funds recovered by the government in the enforcement action connected to their disclosure. The SEC determines the exact percentage of the award based upon a number of factors.
Since issuing its first award in 2012, the SEC has awarded approximately $1.2 billion to 236 individuals. The SEC Whistleblower Program set a number of records in the 2021 fiscal year. Over the course of the year, the SEC received a record 12,200 whistleblower tips and issued a record $564 million in whistleblower awards to a record 108 individuals.