The SEC recently awarded one of the largest awards since the whistleblower program’s inception.
Two insiders will share a $50 million award for their assistance in uncovering securities fraud. Neither the whistleblowers’ identities nor the company’s name have been disclosed, which is customary with SEC fraud cases. Confidentiality is essential to ensure tipsters will not be retaliated against or blacklisted by the industry.
The Commission said in a press release that the two whistleblowers “alerted SEC staff to violations that involved complex transactions” which “would have been difficult to detect without their information” and provided “exemplary assistance.” The tipsters met with SEC staff several times and provided “voluminous detailed documents.” Their information was instrumental in returning tens of millions of dollars to harmed investors, the SEC said.
The SEC said a third claimant also applied for an award, but their information did not contribute to the Covered Action investigation.
SEC Chief Jane Norberg said the award is actually the second largest in the agency's whistleblower program’s history. Over the current fiscal year, the SEC has awarded over $270 million dollars to whistleblowers, including its largest award to date, $114 million awarded last October.
Under SEC rules, to qualify for an award, a whistleblower must submit original information that causes the staff to “open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation.” The SEC stated that “none of the tips that Claimant 3 submitted to the Commission were provided to the investigative staff responsible for the Covered Action.”
Since SEC rules are particular about what kind of information can lead to an award, it is important to seek assistance from an experienced whistleblower attorney before submitting a tip.
Since 2012, the SEC has awarded over $812 million to 151 whistleblowers. The last year has seen an increase in the size of awards, and analysts forecast the trend will continue over the rest of 2021.
Under the Dodd-Frank Act, SEC whistleblower awards can range between 10 and 30 percent of any monetary recovery exceeding $1 million.