SEC Issues $3.5M award to Whistleblower (May 13, 2016)
The Securities and Exchange Commission reversed its prior decision that denied a whistleblower an award. The agency determined that the whistleblower provided information that ‘significantly contributed’ to the success of the matter. Initially, the agency concluded that whistleblower would not be entitled to an award because the information provided by the whistleblower did not lead to the success of the Covered Action. In particular, the agency denied that award because the claimant’s information did not cause the Enforcement Staff to open an investigation. The whistleblower information also did not cause the Enforcement Staff to inquire into the wrongful conduct in a manner that was different from the claims already under investigation.
After receiving the denial by the agency, the whistleblower filed a written response to contest the agency’s decision. Upon further review the agency reasoned that the information provided by the whistleblower significantly contributed to the success of the matter and satisified the requirements of the whistleblower program ad delineated in Rule 21F-4(c)(2). The agency stated that information provided by the whistleblower enabled the Enforcement Staff to focus on particular issues that may not have been otherwise noticeable. Additionally, the information provided by the whistleblower enabled the agency’s substantive position to be strengthened during settlement negotiations.
By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.
The SEC’s whistleblower program has now awarded more than $62 million to 28 whistleblowers since the program’s inception in 2011. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million. All payments are made out of an investor protection fund established by Congress that is financed through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards