2 min read.Updated: 16 Sep 2021, 06:29 PM ISTMENGQI SUN, The Wall Street Journal
With the latest awards, the SEC whistleblower program has provided more than $1 billion in awards
The U.S. Securities and Exchange Commission awarded about $114 million in total to two whistleblowers, including one who provided independent analysis to the regulator that helped substantially advance investigations, the SEC said.
With the latest awards, the SEC whistleblower program has paid out more than $1 billion to 207 whistleblowers since issuing its first award in 2012, the agency said. That marks a milestone for the SEC whistleblower program created by the 2010 Dodd-Frank Act.
The SEC announced the awards Wednesday but didn’t name the cases involving two companies that the awards are connected to and didn’t identify the tipsters, in keeping with its policy.
Under the program, a whistleblower can receive an award totaling between 10% and 30% of the fines levied in SEC civil enforcement actions or a related agency’s actions stemming from a tip, assuming the fines total more than $1 million.
“Today’s announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate and prosecute potential violations of the securities laws," SEC Chairman Gary Gensler said in a statement.
Reaching the $1 billion mark is significant for a whistleblower award program that was only implemented in 2011, said Erika Kelton, a partner at law firm Phillips & Cohen LLP who represents whistleblowers. “Because it is that kind of headline-grabbing number, I do think that would generate and encourage more people to step forward," she said.
The awards and the milestone are another reminder that companies need to commit to compliance and ensure they address issues raised internally, according to Gregory Keating, a whistleblower defense attorney for employers at law firm Epstein Becker & Green PC. “For employers, this is a clarion call that you need to embrace best practices and training," he said.
The SEC awarded about $110 million in total to a whistleblower that voluntarily provided “independent analysis" to the SEC and another agency, which led to successful enforcement actions.
The $110 million award stands as the second-largest one in the SEC program’s history. Last October, the SEC awarded more than $114 million to a person whose information helped the SEC and another agency bring successful enforcement actions against a company.
Another whistleblower received about $4 million for providing original information to the SEC that led to a successful enforcement action. The SEC said the information was much more limited in comparison to the information provided by the other whistleblower.
The awards come as the SEC said last month that it would look into revising two amendments to its whistleblower award rules that were adopted in 2020, adding that in the interim it would largely pause enforcement of parts of the two amendments. Potential revisions would be designed to address concerns that the amendments could discourage whistleblowers from coming forward.
Mr. Gensler said at the time that one amendment could be used by a future commission to lower an award because of its size. Another amendment could prevent the SEC from making an award in related enforcement actions brought by other law-enforcement and regulatory authorities if another whistleblower award program might also apply to the action, he said.