A whistleblower who provided original information about securities violations to the SEC was awarded $600,000 after their disclosure and further assistance contributed to the success of an enforcement action.

Key Takeaways

• Through the SEC Whistleblower Program, qualified whistleblowers are eligible to receive between 10-30% of the funds collected in connection with their disclosure
• The awarded whistleblower’s disclosure caused the SEC to open an investigation
• The whistleblower provided further assistance to the SEC, including numerous interviews
• As part of the SEC’s confidentiality protections, it does not disclose any identifying information about award recipients

On June 11, the U.S. Securities and Exchange Commission (SEC) issued a final order awarding $600,000 to an individual who provided the Commission with information and assistance which contributed to the success of an enforcement action.

Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information which leads to a successful enforcement action, are eligible to receive monetary awards of 10-30% of the funds collected by the government in the enforcement action connected with their disclosure.

According to the SEC, in this case “The record demonstrates that Claimant voluntarily provided original information to the Commission that caused the staff to open the investigation, and that the Commission’s findings in the successful enforcement action were based, in part, on Claimant’s information.”

The SEC also notes that after filing their initial disclosure, the whistleblower uncovered and reported further violations and the Commission was thus “able to expand the successful enforcement action accordingly.”

In determining the exact percentage to award an eligible whistleblower, the SEC weighs a number of factors, including significance of the information, further assistance provided, culpability and unreasonable delays in reporting.

In this case, the SEC positively noted that the whistleblower “provided more than limited assistance, as [they] gave numerous interviews to Commission staff” and “also provided significant information and details about the violations and relevant individuals.”

Through the SEC Whistleblower Program, if a whistleblower is represented by an attorney they may report anonymously. As part of its confidentiality protections, the SEC does not reveal any identifying information about whistleblowers.

Success of the SEC Whistleblower Program

Since the it was established with the passage of the Dodd-Frank Act in 2010, the SEC Whistleblower Program has received more than 80,000 whistleblower tips, awarded more than $1.9 billion to whistleblowers, and has recovered more than $6.3 billion in total monetary sanctions, including more than $4 billion in disgorgement of ill-gotten gains and interest.

According to SEC Chair Gary Gensler, the whistleblower program “has greatly aided the Commission’s work to protect investors.”

Geoff Schweller also contributed to this article.