On September 6, the SEC issued awards totaling more than $54 million to two whistleblowers who provided critical information and continued assistance to the agency in an enforcement action. This large award follows another composite mega-award of $83 million to three whistleblowers in a single enforcement action on March 19, 2018.
The September 6 award of $39 million to one claimant constitutes the second-largest award in the SEC whistleblower program’s history. The agency awarded the second whistleblower $15 million. Jane Norberg, Chief of the SEC’s Office of the Whistleblower, stated that whistleblowers “serve as invaluable sources of information, and can propel an investigation forward by helping [the SEC] overcome obstacles and delays in investigation.”
The SEC granted the $39 million award to the first whistleblower, despite finding that the claimant unreasonably delayed reporting the misconduct to the agency. In doing so, the agency determined that the claimant provided it with a “wealth of documents” which saved the agency time and resources and cited several other factors mitigating the reporting delay. The agency awarded $15 million to the second whistleblower, despite finding that the claimant’s submission was not voluntary because the claimant made the whistleblower submission more than one year after an investigative interview of the claimant related to the same subject matter of the tip. The SEC, acting in its discretionary authority however, granted an exemption to its rule that the submission must be voluntary because the claimant promptly provided important new information helpful to the agency.
Both whistleblowers also filed claims for additional payments based on related actions brought by other regulatory and enforcement agencies. The SEC may make awards based on related action claims if the original information provided to the agency also led to a successful enforcement action by that other agency. However, the SEC denied both related action claims.
While the number of awards issued by the SEC over the past year remains small, the magnitude of those awards provides a continuing incentive to whistleblowers and their attorneys to continue to file tips with the SEC under the Dodd-Frank bounty program. SEC awards are paid out of an investor protection fund financed by monetary sanctions paid to the agency by securities law violators. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Awards can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million. With these recent awards, the agency has now granted more than $320 million to 57 individuals since issuing its first award in 2012.