On May 6, 2022, the Securities and Exchange Commission (SEC) announced that it had granted whistleblower awards totaling nearly $3.5 million to four claimants who provided information in connection with a successful SEC enforcement action.
Three of the claimants jointly provided original information that caused the SEC to open the investigation that led to the successful SEC enforcement action, and that also caused another undisclosed agency to open a separate investigation that led to a successful enforcement action. These joint claimants allegedly suffered retaliation and other hardships as a result of providing this information. The award of over $2.8 million to the joint claimants consisted of a percentage of the monetary sanctions imposed by (i) the SEC in the successful enforcement action and (ii) the undisclosed agency in its separate successful enforcement action. The SEC found that the joint claimants qualified for this “related action” award under SEC rules because the separate successful enforcement action was based on the same original information that had been voluntarily provided to the SEC and because the information provided had led the SEC to obtain monetary sanctions totaling more than $1 million.
The fourth claimant—who provided information separately from the three joint claimants—initially had been denied an award because the SEC had preliminarily determined that the claimant failed to provide “original information” within the meaning of the Exchange Act’s whistleblower provisions. Upon reconsideration and new evidence presented by the claimant, the SEC determined that the claimant’s information “was the result of unusual effort and intensive research over the course of many weeks, and developed through a detailed analysis of publicly-available information,” and as result of this “independent analysis” the claimant had “revealed allegations that were not previously known” to the SEC. As a result, the SEC found that the claimant had provided original information that led to the successful SEC enforcement action and that a whistleblower award of more than $600,000 was appropriate. The SEC did not grant any “related action” award to the fourth claimant, as it found that that the information provided by this claimant “did not significantly contribute” to the undisclosed agency’s action.
Since the whistleblower program began in 2012, the SEC has awarded approximately $1.3 billion in awards to 273 individuals.