SEC Awards Another Whistleblower $37 Million
Last Friday (July 26), the Securities and Exchange Commission (SEC) announced a whistleblower award of more than $37 million. It comes less than two weeks after the SEC announced another $37 million award. Prior to that, it had been several months since the agency had issued any whistleblower awards, a relative dry spell for an agency that up to that point had been extremely prolific in its whistleblower payouts.
As is always the case, the SEC did not identify the whistleblower or the specifics of the enforcement action the whistleblower prompted. The SEC takes pains to protect the confidentiality of the whistleblowers who make submissions under the SEC Whistleblower Program. It even allows whistleblowers to remain anonymous under the Program and communicate with the agency exclusively through their attorneys. This strict commitment to whistleblower confidentiality is a big reason why the SEC Program has been so successful.
The SEC Order accompanying the SEC press release on this most recent award, although heavily redacted, provides a little more detail on the basis for the SEC’s award. Most notably, the whistleblower reported their concerns internally to their company before going to the SEC. In fact, the whistleblower persisted so much in reporting the misconduct internally that the company ultimately conducted its own investigation and eventually reported the results to the SEC. This is what caused the agency to open the investigation.
The SEC credited the whistleblower with causing the agency to open the investigation even though it was the company’s self-reporting that was the actual catalyst. The SEC also credited the whistleblower with directly helping the agency even after it opened the investigation, finding the whistleblower’s assistance was the “foundation” for the agency’s investigative without which the SEC “would not have learned the full context and dimension of the Firm’s misconduct.”
The SEC also considered the whistleblower’s assertions of retaliation, including receiving a negative performance review and a reduced bonus for reporting internally. As SEC Whistleblower Chief Creola Kelly stressed in announcing the award: “Today’s whistleblower learned of misconduct and made the difficult decision to report their concerns. This individual, who was retaliated against for their whistleblowing activity, played a crucial role in the ultimate success of the enforcement proceeding.”
The SEC Whistleblower Program remains a model for other agencies to follow, with more than a billion dollars in whistleblower awards and billions more in associated government recoveries. The SEC has made it clear, in both word and deed, that whistleblowers have become a critical part of its enforcement scheme.
If you think you might have information on potential securities fraud, please don’t hesitate to contact us and we will connect you with an experienced member of our whistleblower team for a free and confidential consultation.
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