For reporting financial malfeasance and providing key evidence during investigations, the Securities and Exchange Commission awarded just over $40 million to four whistleblowers last week. Under the Dodd-Frank Act, the SEC does not release any identifying information about the whistleblowers or claimants. SEC whistleblowers are entitled to receive 10-30% of the government’s recovery when monetary sanctions exceed $1 million.
In the first order, two whistleblowers were jointly awarded $37 million, paid from the SEC and another agency’s recovery. Whistleblowers, as industry insiders with specialized knowledge, have a unique position of being able to assist investigators by interpreting evidence. The Commission considered the value of this assistance when making a determination of award in this first case.
In the second order, a whistleblower received $1.8 million. According to the order, the whistleblower “quickly reported internally the misconduct in an effort to remedy it.” SEC staff built their charges against the financial institution “directly based on Claimant’s information.” The whistleblower’s cooperation resulted in “hardships,” which the Commission recognized when determining the award.
In the third order, the whistleblower received $1.5 million. This whistleblower’s information “helped Commission staff formulate their investigative strategy and significantly contributed to the success of the Covered Action,” the order states, as well as “saved significant Commission staff time and resources.” Whistleblowers can help investigations proceed more efficiently.
The SEC has issued 11 whistleblower awards in 2022 and has awarded $1.2 billion to 245 whistleblowers since 2012. All SEC whistleblower awards are deducted from monetary sanctions that securities law violators pay to the SEC. The SEC Office of the Whistleblower needs whistleblowers to provide credible and timely tips which lead to enforcement actions.