On June 4, 2020, the US Securities and Exchange Commission announced the award of $50 million to an individual whistleblower who, according to the SEC, voluntarily provided detailed firsthand observations of misconduct by a company, which resulted in a successful enforcement action. According to media reports, the whistleblower, a former trader at a major bank, cooperated with authorities for nearly ten years in currency trading investigations that resulted in a $714 million payment by the bank for allegedly defrauding pension funds through the use of unfavorable exchange rates.
The SEC found the award amount appropriate because (i) the information furnished by the whistleblower was “highly significant,” and included first-hand observations of previously unknown misconduct; (ii) the whistleblower laid out in detail substantial aspects of the scheme, and provided a roadmap for the investigation, and; (iii) the information provided by the whistleblower enabled the SEC to bring an enforcement action that returned a significant amount of money to those harmed by the company’s misconduct.
A second claimant’s award request was denied on the grounds that the claimant was not a whistleblower within the meaning of Section 21F(a)(6) of the Exchange Act and Rule 21F-2(a) thereunder, and that the claim had not been filed within ninety days of the Notice of Covered Action in the matter.
Since the inception of the whistleblower program in 2012, the SEC has awarded over $500 million ($100 million in the current fiscal year) to 83 individuals. Fifty million dollars is the largest award ever given; the next largest was $39 million awarded in 2018. Awards to whistleblowers are paid out of an investor protection fund financed from monetary sanctions paid to the SEC.
June 12, 2020