The U.S. Securities and Exchange Commission (SEC) announced whistleblowers awards totaling approximately $22 million issued to two anonymous individuals who provided information to the Commission of an ongoing fraud occurring at a financial services firm.
Due to the highly sensitive nature of the information at hand, the SEC leaves out any company names in all public documents.
According to the SEC award order, Claimant 1 was a whistleblower whose initial tip “contributed substantially” to the Enforcement staff in their investigation into securities frauds. Claimant 1 also suffered hardships during the reporting process but made persistent efforts to identify key witnesses in the case and detailed the complex schemes used by the fraudsters.
Claimant 1 received a whistleblower award of approximately $18 million.
The award order concluded that although Claimant 2 was a helpful whistleblower, their reporting came years after Claimant 1’s initial filing, resulting in a reduction to Claimant 2’s award. Even after Claimant 2 provided information and documents detailing more of a “complete picture” for Enforcement staff, Claimant 1 remained the main source of information.
Claimant 2 received a whistleblower award of approximately $4 million.
SEC whistleblowers who wish to remain completely anonymous and confidential in their proceedings must file a Form TCR (Tip, Complaint, Referral) with the assistance of a whistleblower attorney.
This way, the SEC can maintain a point-of-contact with the attorney, who will correspond with the Commission until the investigation is over.
If the SEC sanctions a culpable party for $1 million or more, the whistleblower must file a new form, known as a WB-APP, in order to request an award.
The SEC will then determine the amount for the award. Eligible SEC whistleblowers will receive an award ranging between 10-30% of the monies collected from the enforcement actions.
The SEC Whistleblower Program has now awarded almost $838 million to 156 whistleblowers since the program’s inception in 2010. Both U.S. citizens and non-U.S. citizens can file reward claims with the SEC.
All payments granted to whistleblowers are made out of an investor protection fund established by Congress that is funded entirely by the monies collected through successful enforcement actions made by the SEC.
“This case demonstrates once again the value of the whistleblower program in helping to protect investors, and the Commission’s continued commitment to rewarding individuals who provide high-quality tips,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower. “The reporting of credible information by these whistleblowers and their subsequent cooperation with the staff’s investigation allowed the Commission to better understand complex transactions related to the matters under investigation.”
