SEC Awards $12 Million To Three Whistleblowers

Yesterday (October 10), the Securities and Exchange Commission (SEC) announced a $12 million award to be shared among three whistleblowers “who provided critical information and assistance in an SEC enforcement action.”

The award follows a string of large whistleblower awards in July — August: August 26 ($24 million); August 23 ($98 million); July 26 ($37 million); and July 17 ($37 million). There had been no other awards this year up to that point, representing an uncharacteristic pause in the otherwise extremely active SEC Whistleblower Rewards Program.

The SEC did not identify the whistleblowers who received this latest award or the enforcement action on which they assisted. The SEC never provides these details, adhering to the agency’s strict commitment to maintaining the confidentiality of its whistleblowers. All we know is the three whistleblowers “provided the SEC significant information and extensive cooperation, which helped expand the scope of the investigation and the charges brought in the enforcement action and also saved the agency substantial time and resources.”

As further detailed in the accompanying SEC Award Order, we also know the factors the SEC considered in making its award determination:

• The whistleblowers “provided significant information and extensive ongoing assistance that contributed to an expansion of the scope of the investigation.”
• The information the whistleblowers provided “allowed the [SEC] staff to save significant time and resources.”
• The whistleblowers “met with [SEC] Enforcement staff on numerous occasions and staff relied heavily on [their] leads and assistance during the course of the investigation.”
• Two of the whistleblowers “suffered hardships as a result of their [SEC] reporting.”
• The SEC found that making the award would serve “high law enforcement interests,” likely because of the incentive it will provide future whistleblowers to come forward.

What is perhaps most notable about this most recent award is that the whistleblowers reported to the SEC after it already opened an investigation into the alleged wrongdoing. It is a point the SEC highlighted, with SEC Whistleblower Chief Creola Kelly noting the “key role” whistleblowers play “in helping the SEC hold wrongdoers accountable . . . [e]ven where an investigation is already open.”

The bottom line takeaway here is that if you have information of potential securities fraud violations, the SEC wants to hear from you.  If you would like more information about what it means to be a whistleblower or information of potential corporate wrongdoing, please don’t hesitate to contact us.  We will connect you with an experienced member of our whistleblower team for a free and confidential consult.

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