On March 24, the U.S. Securities and Exchange Commission (SEC) granted a whistleblower award to an individual who voluntarily provided original information which led to four successful enforcement actions, despite the fact the whistleblower missed the award claim filing deadline for two of the actions.

Through the SEC Whistleblower Program, qualified whistleblowers are eligible to receive monetary awards of 10-30% of the sanctions collected in connection with their disclosure when their information contributes to an enforcement action where the SEC is set to collect at least $1 million. Based on the current collections, the whistleblower was only awarded $4,000 at this time.

According to the award order, the whistleblower “alerted the Commission to the misconduct which prompted the opening of the investigation and then provided ongoing assistance.”

To receive a whistleblower award, an individual must submit a completed Form WB-APP to the Office of the Whistleblower within 90 days of the posting of a Notice of Covered Action for the relevant enforcement action.

According to the SEC, the whistleblower submitted their award claim for one covered action 1 approximately three weeks after the filing deadline submitted their award claim for the second covered action one day after the filing deadline.

However, the SEC decided to exercise its general exemptive authority under Section 36(a) of the Exchange Act to waive the filing deadline. Section 36(a) provides the Commission with broad authority to exempt any person from a rule or regulation if such an exemption is “necessary or appropriate in the public interest” and “consistent with the protection of investors.”

“Specifically, for Covered Action 1, we find that the following facts warrant the exercise of our Section 36(a) discretionary authority to waive the 90-day deadline for filing award applications: (1) Claimant was on active military duty during the 90-day window for filing claims; (2) the circumstances of the Claimant’s military assignment limited his/her ability to effectively communicate with his/her counsel; (3) Claimant made reasonable efforts to submit an award application once he/she resumed normal communications; (4) Claimant would be otherwise meritorious; and (5) the Commission has not already issued a final order adjudicating claims in Covered Action 1.”

“We also believe that the exercise of our discretionary authority under Section 36(a) to waive the 90-day filing deadline with respect to Covered Action 2 is warranted under the unique facts and circumstances. Specifically, the record supports the conclusion that Claimant’s counsel attempted to fax the award application to OWB on the filing deadline calendar date, but that the fax failed to go through because of apparent technical issues with the Commission’s ability to receive faxes beyond a certain size. We further note that Claimant’s counsel promptly contacted the OWB regarding the failed attempt to fax the application and succeeded in filing the application the next calendar day.”

The SEC does warn, however, that they “do not expect to routinely exercise such exemptive authority to waive the requirements under Rules 21F-10(a) and (b) to timely file an award application. The filing deadline serves important programmatic interests and will be typically enforced absent the unique facts and circumstances presented here.”

Established in 2010 with the passage of the Dodd-Frank Act, the SEC Whistleblower Program has now awarded a total of more than $2.2 billion to 444 individuals.

In FY 2024, the SEC Whistleblower Program received a record 24,980 whistleblower tips and awarded over $255 million, the third highest annual amount. According to SEC Office of the Whistleblower’s annual report, the most common fraud areas reported by whistleblowers in FY 2024 were Manipulation (37%), Offering Fraud (21%), Initial Coin Offerings and Crypto Asset Securities (8%), and Corporate Disclosures and Financials (8%).

Whistleblowers looking to blow the whistle on securities fraud may do so anonymously, but must be represented by a whistleblower attorney.

“Whistleblowers play a valuable role in helping to protect the U.S. financial markets by bringing the Commission information about potential securities law violations,” Creola Kelly, Chief of the SEC Office of the Whistleblower, said in the office’s 2024 annual report.

Geoff Schweller also contributed to this article.