The SEC awarded $3.8 million to a whistleblower for providing information that led to a successful enforcement action.
According to the SEC, the whistleblower provided novel information that aided the SEC in stopping an ongoing fraud scheme. However, the SEC said that, despite the significance of the information provided, the whistleblower's assistance was (i) "discrete and narrow in scope" and (ii) limited, as the whistleblower lacked firsthand knowledge of the fraud and could not provide further assistance to the SEC beyond the initial tip.
Since issuing its first award in 2012, the SEC has awarded nearly $505 million to 87 whistleblowers.
Commentary
Not only did the whistleblower's information help stop an ongoing fraud, but it also helped secure the return of millions of dollars to impacted investors. In what continues to be a record-setting year for SEC whistleblower awards, companies should take note not only of the SEC's continued focus on protecting retail investors, but also the massive incentives that exist for whistleblowers to come forward given that the SEC is continually and handsomely rewarding such behavior. Firms should ensure they have (i) proper channels for reporting misconduct internally, and (ii) mechanisms for investigating and remediating problematic behavior.
Primary Sources
- SEC Press Release: SEC Issues $3.8 Million Whistleblower Award
- SEC Order Determining Whistleblower Award Claim: File No. 2020-23
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
