On August 26, the U.S. Securities and Exchange Commission (SEC) announced $24 million in whistleblower awards, issued to two individuals who voluntarily provided original information that led to the success of an SEC enforcement action as well as a related action by another agency. 

“Today’s awards highlight the incredible public service provided by whistleblowers,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “The information would have been difficult to obtain in the absence of the whistleblowers as it pertained to conduct occurring abroad.”

Through the SEC Whistleblower Program, qualified whistleblowers are eligible to receive awards of 10-30% of the sanctions collected in an SEC enforcement action aided by their disclosure. Under the program’s related action provisions, qualified whistleblowers are also eligible for awards based on the sanctions collected in other agencies’ enforcement actions, if the information they proceeded to the SEC also contributed to their success.

The SEC weighs a number of factors in determining the exact percentage to award whistleblowers, including the significance of the information, the degree of further assistance, culpability and any unreasonable delay in reporting.

In this case the SEC awarded one whistleblower $4 million and the second whistleblower $20 million. According to the award order, the first whistleblower’s tip caused the opening of an investigation but “he/she had limited knowledge of the schemes and his/her information was general and/or incorrect in several respects.” The SEC also notes that the first whistleblower unreasonably delayed in reporting, waiting two years to contact the Commission after raising concerns internally. 

The SEC explains that the second whistleblower’s information “played a more significant role in the investigation” as it “expanded the investigation to include [REDACTED], provided important information about key witnesses and their roles in the schemes, and allowed the staff to save time and resources.”

Furthermore, the second whistleblower “met with Enforcement staff on numerous occasions and staff relied heavily on [his/her] information and assistance during the course of the investigation.”

Notably, the SEC explains that the second whistleblower falls under the officer exclusion of SEC Rule 21F-4(b)(4)(iii)(A) which disqualifies individuals who learn of the misconduct because they are “an officer, director, trustee, or partner of an entity and another person informed [them] of allegations of misconduct.” Despite falling under this category, the second whistleblower was indeed eligible because they first reported internally and then waited 120 days before contacting the Commission.

On August 23, the SEC awarded more than $98 million to whistleblowers, surpassing more than $2 billion in overall whistleblower awards since the SEC Whistleblower Program was established in 2010.

The program has continued to grow in recent years. In Fiscal Year 2023, the program received a record 18,000 whistleblower tips.