The Securities and Exchange Commission (SEC) has doled out more than $40 million to four whistleblowers who provided information and assistance in three separate actions.
The SEC awarded approximately $37 million to two joint whistleblowers who the regulator said provided key evidence that contributed to the success of a covered action. The SEC also awarded approximately $1.8 million to a whistleblower who provided information that led the regulator to open an investigation and approximately $1.5 million to a whistleblower who provided new information that formed the SEC staff’s investigative strategy and “significantly contributed to the success of the covered action.”
The SEC has awarded approximately $1.2 billion to 245 whistleblowers since issuing its first award in 2012 after the whistleblower program was created by Congress in 2010. The awards given to the whistleblowers come from an investor protection fund established by Congress and are entirely financed through monetary sanctions paid to the SEC by securities law violators.
Whistleblowers are eligible for an award if they voluntarily provide the SEC with “original, timely, and credible information” that leads to a successful enforcement action. The awards range from 10% to 30% of the sanctions collected when the total fines are more than $1 million, and the exact percentage allocated is at the SEC’s discretion.
“Credible tips of securities laws violations are a valuable component of the commission’s enforcement program,” Creola Kelly, chief of the SEC’s Office of the Whistleblower, said in a statement. “The critical information provided by these whistleblowers aided the commission’s investigations and helped the commission bring these successful enforcement actions.”
The SEC’s whistleblower program had a record year in fiscal year 2021 as the regulator doled out $564 million to 108 tipsters. During the last fiscal year, the SEC also handed out the highest individual awards in the history of the whistleblower program, including a $114 million award to someone whose tip helped the successful enforcement of an SEC action and related actions by another agency, and a $110 million award to another whistleblower who provided “significant independent analysis that substantially advanced both the SEC’s investigation and another agency’s related investigation.”
For the fiscal year that ended Sept. 30, the SEC said it obtained judgments and orders for nearly $2.4 billion in disgorgement, which was a 33% drop from the previous year, and more than $1.4 billion in penalties, which was a 33% increase over fiscal year 2020. The SEC filed nearly 700 enforcement actions last year and credited the whistleblower program with being critical to the record-breaking year.
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Tags: covered action, Creola Kelly, enforcement, SEC, Securities and Exchange Commission, whistleblower program, whistleblowers