The SEC awarded over $4.5 million to a whistleblower for information provided in connection with an SEC case and related action.
The SEC disclosed that the whistleblower sent an anonymous tip to the company alleging significant wrongdoing, and subsequently submitted the same information to the SEC. The provided information prompted the company to review allegations of misconduct and led the company to report the allegations to the SEC and another agency. As a result of the self-reporting by the company, the SEC opened its own investigation into the alleged misconduct. When the company completed its internal investigation, the results were reported to the SEC and the other agency.
The SEC stated that since 2012, it has awarded approximately $381 million to 62 individuals. The SEC said that whistleblowers may be eligible for an award if they voluntarily provide the SEC with original, timely and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.
Commentary / Lex Urban
While not as large as the massive whistleblower awards given in March 2019, this is the first time an award is being given based on a provision of the rules that credits a whistleblower with information provided by a company to the SEC after an internal investigation. A whistleblower is credited with this information if the internal investigation was initiated in whole or in part in response to information originally provided by the whistleblower to the company. The whistleblower still must report that same information to the SEC within 120 days, but if the whistleblower does so, then the additional information provided by the company to the SEC is also attributed to the whistleblower when the SEC considers an award. The goal of the provision is to incentivize internal reporting by whistleblowers, as companies are often in the best position to initially investigate allegations of wrongdoing and consider self-disclosure, which can make for more efficient SEC investigations.
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