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SEC announces whistleblower awards totaling over $6.9 million
On December 1, the SEC announced a joint award of over $6 million to two whistleblowers whose information and assistance led to a successful SEC enforcement and related actions. According to the redacted order, the information led to “actions related to a complex [redacted] scheme involving multiple individuals and tens of millions of dollars in ill-gotten gains.” Moreover, the whistleblowers “substantially assisted” the SEC and another agency by “submitting information and documents, participating in interviews, and identifying key individuals involved in the misconduct.”
Earlier on November 19, the SEC announced a whistleblower award of over $900,000 in connection with an ongoing overseas securities investigation. According to the redacted order, the whistleblower provided “significant and timely information” to the Commission, which expanded and expedited the investigation and resulted in Commission charges. Additionally, the whistleblower “identified alleged violations that were occurring overseas, some of which would have been difficult to detect in the absence of [the whistleblower’s] information.”
The SEC has now paid a total of $728 million to 118 individuals since the inception of the program.
SEC awards $1.1 million to whistleblower
On November 13, the SEC announced a whistleblower award of over $1.1 million in connection with a successful enforcement action. According to the redacted order, the whistleblower provided information to the agency during an active investigation that led the SEC to inquire into different conduct. Additionally, the whistleblower “provided exemplary and continuing assistance” to the SEC, saving the agency time and resources. Lastly, the information and assistance was “critical” in order for the SEC to “bring an emergency action before assets could be dissipated.”
The SEC has now paid approximately $720 million to 113 individuals since the inception of the program.
SEC issues two separate whistleblower awards totaling over $4.3 million
On November 5, the SEC announced two separate whistleblower awards totaling over $4.3 million. According to the first redacted order, the SEC awarded a whistleblower more than $3.6 million for (i) providing information that alerted enforcement staff to misconduct occurring abroad that would otherwise “have been difficult to detect”; (ii) providing “substantial and ongoing assistance” to enforcement staff, including traveling to another country to meet with staff in person at the whistleblower’s own expense and providing “extensive supporting documentation”; and (iii) suffering hardships due to the whistleblowing. The SEC further noted in the order that while the whistleblower’s “ministerial role in the underlying misconduct” was considered, the Commission did not reduce the award for culpability as the whistleblower “took exceptional steps to report the misconduct from abroad and provided extraordinary assistance.”
In the second redacted order, the SEC awarded $750,000 to a whistleblower for providing significant information that led to a successful enforcement action. According to the SEC, while the covered action was already open when the whistleblower provided the original information, the whistleblower’s information caused enforcement staff to investigate different conduct, which ultimately formed the basis for the covered action. The whistleblower also met with Commission staff in person and explained “the likely mechanics of the fraudulent scheme.”
The SEC has now paid approximately $719 million to 112 individuals since the inception of the program.
SEC issues two separate whistleblower awards totaling over $38 million
On November 3, the SEC announced a more than $28 million whistleblower award in connection with a successful enforcement action. According to the redacted order, the whistleblower (i) first reported the information internally, which prompted an internal investigation; (ii) saved the SEC time and resources; and (iii) assisted the SEC with testimony and provided identification of a key witness.
Earlier on October 29, the SEC announced an award of over $10 million to a whistleblower in connection with a successful enforcement action prompted and aided by the whistleblower. The SEC notes that the individual provided “substantial ongoing assistance to [the] SEC,” including “more than a dozen communications with the staff” that helped the SEC “decipher communications, and distill[] complex issues.” According to the redacted order, the individual first raised concerns about the conduct internally, but “after determining the [c]ompany would not remedy the problem,” the individual brought the information to the SEC. The SEC denied two other claimants related to the enforcement action, concluding that the other claimants were not eligible for the award because either (i) the information was not used in and had no impact on the enforcement action; or (ii) there was no record of communications with the claimant and the agency.
The SEC has now paid approximately $715 million to 110 individuals since the inception of the program.
Whistleblower receives record $114 million award
On October 22, the SEC announced a more than $114 million award to a whistleblower in connection with successful agency enforcement action. The SEC’s press release states that the award “consists of an approximately $52 million award in connection with the SEC case and an approximately $62 million award arising out of the related actions by another agency.” The award is the highest award issued to date by the SEC. The SEC also noted that, “[a]fter repeatedly reporting concerns internally, and despite personal and professional hardships, the whistleblower alerted the SEC and the other agency of the wrongdoing and provided substantial, ongoing assistance that proved critical to the success of the actions.” The redacted order determining the whistleblower award further states that the whistleblower voluntarily provided significant information. The SEC also denied award applications submitted by three other claimants, citing determinations made by the Claims Review Staff that “their information did not ‘lead to’ the success of the Covered Action,” and that, among other things, the submitted information did not relate to the SEC’s charges and was not used by staff in the enforcement action.
The SEC has now paid approximately $676 million to 108 individuals since the inception of the program.
SEC issues $800,000 whistleblower award after reconsideration
On October 15, the SEC announced a more than $800,000 award to a whistleblower in connection with two successful agency enforcement actions, after a request for reconsideration. According to the redacted order, the whistleblower contested a preliminary denial and after review, the SEC determined the whistleblower satisfied the program requirements by “author[ing] information containing a detailed analysis that alerted Commission staff to the underlying securities violations.” The order notes that the whistleblower did not provide any further assistance beyond the initial tips.
The SEC has now paid a total of $562 million to 107 individuals since the inception of the program.
SEC has “record-setting” whistleblower fiscal year
On September 30, the SEC announced six new whistleblower awards to finish a “record-setting” fiscal year. In the first announcement, the SEC details an award of nearly $30 million to two whistleblowers. The first, received approximately $22 million for providing information that led SEC staff to open and investigation and subsequently “provided substantial, ongoing assistance.” The second whistleblower received approximately $7 million for providing “additional valuable information” during the investigation.
In the second announcement, the SEC details four whistleblower awards totaling nearly $5 million. In the first order, the SEC awarded a whistleblower almost $2.9 million for alerting the agency of “alleged wrongdoing, which would have been difficult to detect in the absence of [the information.” The second order awards a whistleblower more than $1.7 million for providing “ongoing and extensive assistance” to SEC staff. And the third order, awards nearly $400,000 to two whistleblowers for providing a joint tip and “continu[ed] corporation and assistance, including having numerous meetings and discussions with staff.”
Earlier on September 28, the SEC announced an over $1.8 million award to a whistleblower in connection with a successful agency enforcement action. The whistleblower—an unaffiliated company outsider—“expeditiously reported significant information to the Commission about ongoing securities law violations.” According to the SEC, the award illustrates the important role company outsider intelligence can play in halting ongoing violations.
The SEC announced on September 25 two separate whistleblower awards, totaling over $2.5 million, for information regarding overseas conduct. The first, an award for over $1.8 million, was given to a whistleblower for taking “personal and professional risks” by using an internal compliance system at a company to report information. The tip resulted in an internal investigation, revealing overseas conduct that “would otherwise have been hard to detect.” The company then subsequently reported the findings to the SEC. The second whistleblower was awarded $750,000 for reporting concerns internally about securities violations occurring overseas that led to a successful enforcement action.
The SEC has now paid a total of $562 million to 106 individuals since the inception of the program.
SEC amends whistleblower program rules
On September 23, the SEC voted to adopt amendments to the rules governing its whistleblower program. According to the SEC, the amendments are meant to “provide greater transparency, efficiency and clarity, and to strengthen and bolster the program.” The amendments were proposed for public comment in June 2018 (covered by InfoBytes here) and have been adopted with some changes. Highlights include:
- Award Determinations. The amendments (i) add Exchange Act Rule 21F-6(c), which provides a presumption that meritorious claimants will receive the statutory maximum amount, for awards $5 million or less, where none of the negative award criteria specified in Rule 21F-6(b) are present, with certain exceptions; (ii) amend the definition of “action” to allow awards based on deferred prosecution agreements and non-prosecution agreements entered into by the DOJ or a state attorney general in a criminal case, or settlement agreements entered into by the SEC outside of a judicial or administrative proceeding that address securities law violations; and (iii) codify that a law-enforcement or separate regulatory action does not qualify as a “related action,” if there is a separate award scheme that more appropriately applies. Additional details can be found in the SEC Office of the Whistleblower’s concurrently released staff guidance regarding the process for determining award amounts for eligible whistleblowers.
- Definition of Whistleblower. The amendments establish a uniform definition of “whistleblower” that will apply to all aspects of Exchange Act Section 21F, in response to the Supreme Court's decision in Digital Realty Trust, Inc. v. Somers (as previously covered in a Buckley Special Alert).
- Increased Efficiency. The amendments (i) allow for a permanent bar of any applicant from seeking an award after that applicant has submitted three frivolous award applications; and (ii) allow for a summary disposition procedure for certain common denials.
- Others. The amendments also clarify and enhance certain policies, practices, and procedures in implementing the program, including allowing the waiver of Tip, Complaint or Referral (TCR) filing requirements if a whistleblower complies with the requirements within 30 days of (i) first providing the information; or (ii) first obtaining notice of the TCR filing requirements.
The amendments are effective 30 days after publication in the Federal Register.
SEC issues two separate whistleblower awards totaling over $2.65 million
On September 21, the SEC announced a $2.4 million award to a whistleblower in connection with a successful agency enforcement action. The SEC’s press release states that the whistleblower’s “timely submission of information” led to the initiation of an investigation and enforcement action that stopped the ongoing misconduct. The redacted order determining the whistleblower award claim states that the whistleblower’s information helped SEC staff “identify key witnesses and parties and draft targeted subpoenas, which saved the staff time and resources in conducting the investigation.”
Earlier on September 17, the SEC announced a nearly $250,000 joint whistleblower award in connection with a successful agency enforcement action. According to the SEC’s press release, the whistleblowers raised their concerns internally before reporting the potential securities violations to the SEC. According to the redacted order, the claimants’ concerns prompted enforcement staff to open an investigation. The order notes, however, that while the claimants’ information identified certain parties and transactions that were ultimately subjects of the covered action, “many of their allegations did not directly relate to the Commission’s charges” in covered action, which played a role in the SEC’s determination of the appropriate award percentage.
The SEC has now paid a total of $523 million to 97 individuals since the inception of the program.
SEC issues $10 million whistleblower award
On September 14, the SEC announced a more than $10 million award to a whistleblower in connection with a successful agency enforcement action. According to the SEC’s press release, the whistleblower’s information and assistance “were of crucial importance” to the action. The redacted order on the whistleblower award claim states that (i) the whistleblower provided “extensive and ongoing assistance,” which included “identifying witnesses and helping staff understand complex fact patterns and issues”; (ii) the SEC used the information to “craft its initial document requests” and create its investigation plan; and (iii) the whistleblower “made persistent efforts to remedy the issues, while suffering hardships.”