SEC Awards a Collective $24 Million in Compensation to Two Whistleblowers
On August 26th, 2024, the Securities and Exchange Commission (SEC) announced that two whistleblowers have been awarded a collective $24 million in financial compensation. One whistleblower received $20 million and the other whistleblower received $4 million. The SEC granted one whistleblower a larger award based on the importance of their information. Here, our SEC whistleblower rights attorney discusses the matter in more detail.
The Order: $24 Million in SEC Whistleblower Compensation
The SEC has awarded approximately $24 million in whistleblower compensation to two separate people. The award comes after another agency took successful enforcement action. The first whistleblower (Claimant I) initially brought the issue to the attention of the SEC. Claimant I was awarded $4 million. The second whistleblower (Claimant II) went to the SEC later, but provided key, ongoing cooperation. Claimant II was awarded $24 million.
Whistleblower Compensation Based on Recovery—but SEC has Considerable Discretion
The SEC Whistleblower Program offers financial incentives to people who provide crucial information that helps to lead to successful enforcement action to stop securities fraud. Whistleblower compensation is closely tied to the amount actually recovered through enforcement action by the SEC or any other agency. The total whistleblower award for any given case can range from 10 percent to 30 percent of the money collected. The SEC exercises considerable discretion in determining the exact amount of these awards.
Why Claimant II Received a More Substantial Whistleblower Award
As explained, even though whistleblower award amounts are largely set by federal law, the SEC has considerable discretion in determining exactly how much a whistleblower will receive. In the SEC order Determining Whistleblower Award Claims, the agency explains why Claimant I was granted a far lower whistleblower award than Claimant II—despite being the first one who came forward to the agency. It is a useful lesson for understanding SEC whistleblower compensation. Here is an overview of the key issues that the SEC highlighted in this case:
- Claimant I: The SEC notes that Claimant I deserves credit for being the first whistleblower to come forward with a tip in this case. However, the SEC also states that Claimant I unreasonably delayed. Claimant I two years after discussing the matter internally. Further, Claimant I did not provide many helpful specifics and provided some incorrect information.
- Claimant II: Claimant II came to the SEC later, but reported the matter promptly based on their own time of knowledge. Further, the SEC states that Claimant II’s information was vital to taking successful enforcement action and that Claimant II met with agency investigators several times and provided consistent, helpful cooperation.
Speak to Our Florida SEC Whistleblower Lawyer Today
At Carlson & Associates, P.A., our SEC whistleblower rights attorney is committed to providing the absolute legal representation to clients. If you have any questions about making a protected disclosure to the SEC, we can help. Contact us today to arrange your confidential consultation with a securities fraud lawyer. We handle SEC whistleblower claims in Florida and beyond.
Source:
sec.gov/newsroom/press-releases/2024-104