The SEC awarded a total of $3 million to five whistleblowers for providing original information that led to three separate successful enforcement actions.
The first whistleblower provided a detailed tip on the alleged wrongdoing that would have been difficult to detect, and "extraordinary assistance" to the SEC. The whistleblower was awarded $1.8 million.
According to the second SEC Order, two whistleblowers provided original information that helped to secure the successful action. The first whistleblower received $500,000 for providing the initial tip that caused the SEC to open the investigation. The second whistleblower subsequently submitted new information that "resulted in the inclusion of additional allegations in the covered action" and received $250,000.
In the third action, two whistleblowers were jointly awarded $400,000 for providing original analysis that prompted the opening of the investigation.
The SEC has awarded approximately $731 million to 123 individuals since issuing its first award in 2012. Almost $170 million of that amount has been awarded in the last ten weeks.
Commentary
The record-setting pace for whistleblower awards continues full steam ahead as SEC enforcement continues to rely heavily on whistleblowers for actionable intelligence. The first whistleblower received the largest award of the five, likely because his assistance helped the SEC return money to harmed investors. That outcome underscores the agency's commitment to protecting Main Street investors.
Notably, the whistleblower was also a company insider who reported the misconduct internally in an unsuccessful effort to remedy the issue. This is another example of companies having the opportunity to investigate the alleged misconduct themselves before government involvement and consider self-disclosure. However, without proper infrastructure for investigating and remediating problematic behavior, companies lose the opportunity to even consider these options.
Primary Sources
- SEC Order Determining Whistleblower Award Claim: File No. 2021-12
- SEC Order Determining Whistleblower Award Claim: File No. 2021-13
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