SEC Awards $400,000 to Whistleblower Culpable In Fraudulent Scheme

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On November 23, 2021, the SEC issued an award of $400,000 to a whistleblower who voluntarily provided the SEC with original information that assisted the agency in bringing a successful enforcement action that resulted in the termination of an ongoing Ponzi-like scheme.

This award is notable in that the claimant received an award even though they were found to be partially culpable in the fraudulent scheme.  The order granting the award noted that “[w]hile Claimant was not charged in the matter, the record reflects that Claimant became aware of” the scheme, but also recognized several mitigating factors, including that the claimant “was unaware of certain fraudulent aspects of the investment scheme, and took some steps to help remediate the harm.”  The SEC concluded that the award “strikes the appropriate balance between Claimant’s significant contributions to the success of the Covered Action and Claimant’s level of culpability.”

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