$20 Million Awarded To Whistleblower By SEC

On November 28th, 2022, the Securities and Exchange Commission (SEC) announced that $20 million is being awarded to a whistleblower who provided “critical information” that led to successful enforcement action. Notably, there were two separate claimants who sought whistleblower compensation in this case. The second claimant was denied. Here, our Miami SEC whistleblower lawyer discusses the latest award from the federal agency.

Claimant #1: Awarded Approximately $20 Million in Whistleblower Compensation 

The first whistleblower in this case (Claimant #1) was awarded $20 million in whistleblower compensation by the SEC. The agency determined that this individual provided original, critically important information that allowed authorities to take successful enforcement action. Additionally, the SEC notes that the Claimant #1 worked with regulators to help them more efficiently and effectively investigate and pursue the case. However, the agency also noted that Claimant #1 delayed reporting the matter for two years after becoming aware of the underlying issue. The SEC determined that whistleblower compensation was warranted, but the percentage was reduced on account of the delay in reporting.

 Claimant #2: Denied Whistleblower Compensation 

This case is especially notable because another whistleblower (Claimant #2) also sought an award for making disclosures. The SEC denied Claimant #2 any whistleblower compensation. According to the SEC, the preliminary denial of compensation was based on the fact that the agency determined that Claimant #2 did not provide any information that led to successful enforcement action in a securities fraud or investment fraud case. More specifically, the SEC emphasizes that the tip from Claimant #2 was not timely. It was submitted after enforcement action was already set to occur and it did not have any direct effect on the case. As such, the SEC determined that Claimant #2 could not qualify for whistleblower compensation. The decision demonstrates the importance of timeliness. Whistleblowers who make proactive disclosures are more likely to qualify for compensation.

 SEC Whistleblower Program Allows for Confidential Disclosures 

Congress created the SEC whistleblower program to provide a path to securities industry insiders and other people with sensitive information of fraud/misconduct to make confidential disclosures to regulators. You can anonymously report suspected securities fraud to the SEC.

The agency will only learn of your identity if you are granted whistleblower compensation. Notably, the SEC will never make a whistleblower’s identity public. Indeed, only a very limited amount of information about any particular SEC whistleblower award is ever published.

SEC whistleblower compensation is based on the extent of enforcement action. An SEC whistleblower award is between 10 percent and 30 percent of the ultimate recovery on behalf of investors. The money is paid out through an Investor Protection Fund—it does not come from investors.

 Get Help From an SEC Whistleblower Attorney

At ​Carlson & Associates, P.A., we represent whistleblowers in securities law cases. If you are preparing to make a sensitive disclosure to the SEC, our attorneys are here to help you navigate the whistleblower program. Give us a call today to set up a strictly private, no obligation initial consultation with an experienced attorney. We represent SEC whistleblowers throughout Florida.

Source:

sec.gov/news/press-release/2022-211