On March 30, 2020, the US Securities and Exchange Commission’s Claims Review Staff (CRS) issued a $450,000 award to a whistleblower who was employed in a compliance-related position. In order for a claimant to qualify for an award, he/she must voluntarily provide original information to the SEC that ultimately leads to a successful enforcement action. Rule 21F-4 generally excludes from the definition of original information any information obtained by an individual who is employed in a compliance or internal audit position, as this type of information, by Rule, is not considered to be original information independently derived by the whistleblower. However, when an employee in compliance or internal audit reports a potential violation to the SEC at least 120 days after reporting the information to his/her supervisor or at least 120 days after the chief legal officer, chief compliance officer, or the audit committee of the company was made aware of the violation, the information can be considered original information.
In the present case, the claimant discovered the alleged securities law violations while performing compliance-related duties. However, the claimant waited more than 120 days after informing his/her immediate supervisor to share the information with the SEC, qualifying for the exception.
The CRS determined that the $450,000 award was appropriate based on the following factors. First, even though the claimant’s information was not the source of the investigation, the information redirected the SEC’s focus towards the violations that were ultimately charged in the action. Second, the claimant participated in his/her employer’s internal compliance program. Third, the claimant assisted the SEC early in its investigation, including by meeting with the SEC staff in person. Fourth, the claimant suffered “unique hardships” as a result of his/her internal reporting.
According to the SEC, this is the third whistleblower award made to a claimant in a compliance or internal audit-related position.