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SEC’s $279 million whistleblower award is largest ever
On May 5, the SEC announced the Commission’s largest-ever award—nearly $279 million—awarded to a whistleblower for providing information and assistance leading to the successful enforcement of SEC and related actions. The SEC noted that this award is more than double the previous record-holding $114 award issued in October 2020. According to the redacted order, the whistleblower voluntarily provided original information, which caused enforcement staff to expand the scope of the investigation and saved the SEC significant time and resources. The whistleblower also provided substantial ongoing assistance, including providing multiple written submissions, communications, and interviews, the SEC said, finding also that the whistleblower satisfied the requirements under Rules 21-F-3(b)(1) for related actions awards as the related successful enforcement actions were partly based on the same information provided to the Commission. However, in the same order, the SEC affirmed denial of two other claimants’ award claims after determining, among other things, that the individuals did not submit information leading to the successful enforcement of the covered action.
SEC awards whistleblowers more than $12 million
On March 31, the SEC announced awards totaling more than $12 million to two whistleblowers whose information and assistance led to a successful SEC enforcement action. According to the redacted order, the first whistleblower prompted the opening of the investigation and provided information on violations that would otherwise have been difficult to detect, including by identifying key witnesses and helping enforcement staff understand complex fact patterns and issues concerning the matters under investigation. This information was also used to create an investigative plan and craft initial document requests. Citing the first whistleblower’s persistent efforts to remedy the issues, and the fact that the information was received several years before the second whistleblower’s information, the SEC said the first whistleblower will receive more than $9 million. The second whistleblower will receive $3 million for submitting important information “as a percipient witness” during the course of the investigation on topics that went beyond what the first whistleblower had been able to provide.
SEC awards whistleblowers $28 million
On January 24, the SEC announced awards totaling nearly $28 million to joint whistleblowers whose information and assistance led to successful SEC enforcement actions. According to the redacted order, the joint whistleblowers’ provided information that prompted the opening of the SEC staff’s investigation and significantly contributed to the success of the action through substantial analysis and ongoing assistance. The SEC also noted that the joint whistleblowers’ actions helped result in the return of millions of dollars to harmed investors.
SEC awards whistleblowers approximately $18 million
On January 19, the SEC announced three whistleblower awards totaling approximately $18 million to claimants who provided information and assistance that led to a successful enforcement action. According to the redacted order, the first whistleblower voluntarily provided detailed and significant information that prompted the opening of an investigation into a fraudulent scheme and had a significant impact on the overall success of the enforcement action. The whistleblower’s assistance saved staff time and resources, the SEC said, adding that the second and third whistleblowers voluntarily provided timely information later in the investigation that also significantly contributed to the enforcement action’s success.
SEC issues $5 million whistleblower award
On January 13, the SEC announced an award totaling nearly $5 million to a whistleblower whose new information and assistance led to a successful SEC enforcement action. According to the redacted order, the whistleblower provided substantial ongoing information that helped SEC staff shape its investigative strategy, identify witnesses, and draft document and information requests, which saved staff time and resources during the investigation.
SEC awards whistleblower $37 million
On December 19, the SEC announced an award totaling nearly $37 million to a whistleblower whose new information and assistance led to a successful SEC enforcement and related action. According to the redacted order, the whistleblower was the initial source of the company’s internal investigation, as well as the source for investigations by the SEC and another agency. The order also noted that although the company reported the alleged conduct, the whistleblower received credit for initiating the investigations because the whistleblower provided the same information to the SEC within 120 days of providing it internally.
SEC issues $20 million whistleblower award
On December 12, the SEC announced an award totaling nearly $20 million to a whistleblower whose new information and assistance led to a successful SEC enforcement action. According to the redacted order, the whistleblower provided new information, met with SEC staff multiple times, and cooperated in the investigation, which allowed SEC staff to more quickly and efficiently investigate complex issues.
SEC issues $20 million whistleblower award
On November 28, the SEC announced an award totaling nearly $20 million to a whistleblower whose new information and assistance led to a successful SEC enforcement action. According to the redacted order, the whistleblower provided significant information and continuing assistance in the investigation that allowed SEC staff to more quickly and efficiently investigate complex issues.
2nd Circuit: Convicted SEC whistleblower cannot claim award
On November 15, the U.S. Court of Appeals for the Second Circuit denied a petition from a plaintiff to review a decision by the SEC to not grant him his whistleblower award because he pled guilty to participating in the crime he reported. According to the order, the plaintiff provided information to the SEC that assisted in a successful agency enforcement action with respect to an international bribery scheme. The plaintiff timely filed an application for a whistleblower award in connection with both the action for which he had provided information and another related action. He pled guilty to bribery charges but had not yet been sentenced. The order further noted that because of the guilty plea, the SEC determined that the plaintiff had been “convicted of a criminal violation related to” the bribery scheme that was at issue in both actions. The order noted that, generally, the SEC is required under federal law to pay a monetary award to a whistleblower when that whistleblower “voluntarily provided original information to the Commission that led to the successful enforcement” of “any judicial or administrative action brought by the Commission under the securities laws that results in monetary sanctions exceeding $1,000,000.” The order further noted that the SEC may not make an award "to any whistleblower who is convicted of a criminal violation related to the judicial or administrative action for which the whistleblower otherwise could receive an award.”
On appeal, the plaintiff argued that he was not “convicted” under 15 U.S.C. § 78u-6(c)(2)(B). The plaintiff also claimed that the fact that he had not yet been sentenced—even though a court has accepted his guilty plea—means that he had not been “convicted.” The appellate court found that he did not raise this issue before the agency and therefore it need not address the plaintiff’s argument about the meaning of “convicted.” But even if it were to excuse the forfeiture, the plaintiff’s argument would fail, the appellate court concluded. The plaintiff also argued that the bribery charges to which he pled guilty were not connected to the actions he was a whistleblower on, and that the SEC did not support its finding of a connection with any substantial evidence. The appellate court disagreed with this argument as well, stating the SEC and the plaintiff interpret the meaning of “related to” differently. The appellate court further explained that “[t]he SEC interprets the term to mean that 'the conduct underlying the criminal conviction must be connected to or stand in some relation to the Covered Action.'" The order stated, “[the plaintiff] suggests that the term requires the whistleblower to have been 'a part of the conduct underlying the ... enforcement action' and to have known about the conduct during its occurrence.’”
SEC releases enforcement results for fiscal year 2022
On November 15, the SEC announced that it filed 760 total enforcement actions in fiscal year 2022—a nine percent increase in total enforcement actions from fiscal year 2021. The fiscal year 2022 actions included: (i) 462 new, or “stand alone,” enforcement actions, a 6.5 percent increase over fiscal year 2021; (ii) 129 actions against issuers who were allegedly delinquent in making required filings with the SEC; and (iii) 169 “follow-on” administrative proceedings seeking to bar or suspend individuals from certain functions in the securities markets based on criminal convictions, civil injunctions, or other orders. The SEC also noted that the stand-alone enforcement actions in fiscal year 2022 “ran the gamut of conduct, from ‘first-of-their-kind’ actions to cases charging traditional securities law violations.” Among other things, the SEC described that money ordered in the actions, which is comprised of civil penalties, disgorgement, and pre-judgment interest, totaled $6.439 billion, the most on record in SEC history and an increase from $3.852 billion in fiscal year 2021. However, disgorgement was down 6 percent from the prior year, according to the SEC. The SEC also noted that fiscal year 2022 was its second highest year ever in whistleblower awards. According to SEC Director of the Division of Enforcement Gurbir S. Grewal, “the Enforcement Division is working with a sense of urgency to protect investors, hold wrongdoers accountable and deter future misconduct in our financial markets.”