The SEC issued awards totaling almost $5.3 million to four whistleblowers for providing original information that led to two separate successful enforcement actions.
In the first action, the whistleblower was awarded nearly $4 million for furnishing the SEC with "extraordinary assistance" including (i) taking part in hours of phone interviews and exchanging over 125 emails with staff, (ii) providing staff with documents and (iii) singling out key witnesses.
In the second action, three individuals were awarded a total of nearly $1.3 million for providing the SEC with information that led to its opening of an investigation. The first individual received an award totaling nearly $1 million for providing the SEC with specific information concerning the alleged conduct that played a critical role in the success of the enforcement action. The other two individuals split an award totaling nearly $270,000 for providing information regarding the alleged violations, but not any original investigative leads.
The SEC has now awarded approximately $937 million to 178 individuals since issuing its first award in 2012.
Commentary Lex Urban
Another record-setting year for the SEC's Whistleblower program chugs along as whistleblowers continue to be a valuable source of intel and assistance for enforcement actions. Most importantly, the whistleblower in the first action put themselves at "personal and professional risk" by continuingly reporting their concerns internally in an attempt to remedy the misconduct. This demonstrates the importance of companies having adequate internal reporting mechanisms for suspected misconduct, and procedures for addressing those claims. Anonymous internal reporting options managed by an independent third-party (or internal function separate from the business) give companies the option to self-report and substantially reduce possible penalties.
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