SEC Awards $98 Million To Two Whistleblowers

Last Friday (August 23), the Securities and Exchange Commission (SEC) announced two awards under the SEC Whistleblower Program. The awards flow from the government’s recovery in enforcement actions brought by the SEC and another, undisclosed federal agency. One whistleblower, who the SEC credited with prompting the agency to open the investigation that led to the enforcement success, will receive $82 million. The other whistleblower, who provided information to the SEC after it opened the investigation, will receive $16 million. 

Like all awards under the program, the SEC neither identifies the whistleblower nor the associated enforcement action. This is to ensure the whistleblower identities are maintained in the strictest confidence. All we know, from the accompanying SEC Order, is the relative contributions of the two whistleblowers that led to the wide discrepancy in awards.   

The primary differentiator was that one whistleblower caused the agency to open the investigation while the other whistleblower, while helpful, did not report to the agency until more than a year later. As the SEC explained, “most of the information provided by Claimant II was already known as a result of Claimant I’s information and assistance or as a result of investigative steps already taken during the sixteen months prior to investigative staff’s receiving Claimant II’s information.” 

The SEC’s determination here reinforces a message it has repeatedly stressed to whistleblowers and their counsel—do not delay in reporting to the agency. The timeliness of the whistleblower’s submission plays a heavy factor in the SEC’s award determination. 

Under the SEC program, whistleblowers who provide information that leads to a successful SEC enforcement action can receive up to 30% of the government’s recovery (from the SEC and potentially other agencies for related misconduct). Since the program’s inception in 2012, the SEC has made more than one billion dollars in whistleblower awards. But this year has been uncharacteristically quiet for the program, which in past years has doled out awards on a monthly, and at times, even weekly basis. 

Prior to last Friday’s awards, there have been only two other awards this year. Both last month (July 26 and July 17). And both for $37 million. So for those whistleblowers currently working with the agency, and those would-be whistleblowers contemplating coming forward, these latest awards are a very welcome sign the SEC Whistleblower Program is alive and well. Or in the words of SEC Whistleblower Chief Creola Kelly in announcing these awards, the program continues to play an “integral role” in the SEC enforcement scheme. 

So, if you have information of potential securities fraud and would like to speak to an experienced member of the Constantine Cannon whistleblower team, please do not hesitate to contact us for a free and confidential consultation. You might just have what it takes to be the SEC’s next big whistleblower winner.