September 28, 2021

SEC awards two whistleblowers who delayed reporting apparent violations

The US Securities and Exchange Commission recently granted whistleblower awards in two separate cases in which the claimants had delayed reporting information to the SEC for several years after they became aware of apparent wrongdoing.  

First, on September 17, 2021, the SEC announced that it had granted $11.5 million total to two claimants (who received $7 million and $4.5 million respectively) whose information and assistance had contributed to the success of an SEC enforcement action.  The SEC explained that, although both claimants had provided significant information during the investigation, the claimant who received the larger award had made the initial report that led to the SEC opening the investigation, and had thereafter provided “substantial assistance.”  By contrast, the claimant who received the smaller award had unreasonably delayed reporting for several years after becoming aware of the wrongdoing.

Second, on September 24, 2021, the SEC announced that it had granted $36 million to a claimant whose information had significantly contributed to the success of enforcement actions for both the SEC and a second, unnamed federal agency.  According to the SEC Order, the claimant’s contributions were significant and involved multiple meetings with SEC and other federal investigators during which the claimant identified key documents and witnesses that were critical to the agencies’ understanding of the illegal scheme.  However, the SEC found that the claimant was also culpable in the underlying scheme and had unreasonably delayed reporting the  existence of the scheme for over five years (but noted that the claimant did not “direct[], plan[], or initiate[]” the misconduct).  The SEC found that the $26 million award struck the appropriate balance between the claimant’s significant contributions and unreasonable delay and culpability.

To date, the SEC has awarded a total of $1.1 billion in whistleblower awards to 214 individuals since the program began in 2012.

SEC Press Release – 9/17/2021 | SEC Order | SEC Press Release – 9/24/2021 | SEC Order