In the Matter of the Claim for Award
A former compliance employee received over $9 million from the SEC as a whistleblower award for providing original, critical information about financial misconduct that triggered a successful enforcement action, after internally reporting the issue and waiting over 120 days before disclosing it to the Commission.
The SEC awarded a whistleblower over $9 million, representing a percentage of monetary sanctions collected in a covered enforcement action, after determining the information provided was original and highly significant. The claimant, a former employee with compliance or internal audit duties, qualified under the 120-day internal reporting exception by first raising concerns internally and then waiting more than four months before reporting to the SEC. The Commission credited the whistleblower for enabling the investigation, providing ongoing assistance, aiding investor restitution, and strengthening deterrence, with no disqualifying culpability or delay found.
The SEC awarded a whistleblower over $9 million for providing original, critical information that led to a successful enforcement action, though the specific entity or individual accused of fraud remains redacted. The claimant, a former employee whose principal duties involved compliance or internal audit responsibilities, initially reported the misconduct internally to their supervisor and waited at least 120 days before disclosing the information to the Commission, thereby qualifying under the exception to the general disqualification rule. The Claims Review Staff determined the information was original, highly significant, and directly instrumental in triggering the investigation and supporting the charges brought by the SEC. The whistleblower provided ongoing, detailed assistance throughout the enforcement process, including multiple meetings with Enforcement staff, and their actions contributed to the recovery of millions of dollars for harmed investors. The SEC found no evidence of unreasonable delay, culpability, or interference with internal compliance systems, and instead emphasized the whistleblower’s strong internal reporting efforts and the substantial law enforcement value of their cooperation. The claimant did not contest the Preliminary Determination, and the award was finalized in full under Rule 21F-6, reflecting the SEC’s commitment to incentivizing responsible internal and external reporting of securities violations.
Extracted insights
- $9.00M $9 million $1M–$10M
- person Claimant
- person claimant receive whistleblower award
- person claims review staff
- person covered action
- person preliminary determination
- Claims Review Staff issued Preliminary Determination
- Preliminary Determination recommended Claimant receive whistleblower award
- Claimant provided original information to the Commission
- Commission enforced Covered Action
- Award would result in payment of over $9 million
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 97879 / July 12, 2023 WHISTLEBLOWER AWARD PROCEEDING File No. 2023-74 In the Matter of the Claim for Award in connection with Notice of Covered Action ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award in the amount of percent ( %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”), which would result in a payment of over $9 million. 1 Claimant provided 1 Claimant was a at the time Claimant obtained the information. As a result, the CRS considered whether Claimant’s information was “original information”. Under Rule 21F-4(b)(1), “[i]n order for [a] whistleblower submission to be considered original information, it must,” among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1). In turn, Rule 21F-4(b)(4)(iii)(B) provides that, unless an exception applies, “[t]he Commission will not consider information to be derived from [a whistleblower’s] independent knowledge or independent analysis” if the whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities,” 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). The CRS preliminarily determined that Rule 21F-4(b)(4)(iii)(B) did not apply here to disqualify Claimant’s information from treatment as original information pursuant to the 120-day exception in Rule 21F-4(b)(4)(v)(C), 17 C.F.R. § 240.21F-4(b)(4)(v) (C), because Claimant reported the information internally to his/her supervisor and then waited at least 120 days to report the information to the Commission. The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.2 In determining the amount of award to recommend for the Claimant, we considered the following factors set forth in Rule 21F-6 of the Exchange Act as they apply to the facts and circumstances of the Claimant’s application: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the law enforcement interest in deterring violations by granting awards; (4) participation in internal compliance systems; (5) culpability; (6) unreasonable reporting delay; and (7) interference with internal compliance and reporting systems. In making this preliminary recommendation, we considered, among other things, that the Claimant provided highly significant and detailed information that alerted Enforcement staff to the underlying conduct, prompting the opening of the investigation; his/her information bears a close nexus to the charges brought by the Commission in the Covered Action; he/she provided critical and ongoing assistance throughout the investigation, including meeting with Enforcement staff multiple times; Claimant repeatedly raised concerns internally; and that millions of dollars have been returned to harmed investors as a result of the Claimant’s information and assistance. Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent (%) of the monetary sanctions collected in the Covered Action. By the Commission. 2 See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 97879 / July 12, 2023 WHISTLEBLOWER AWARD PROCEEDING File No. 2023-74 In the Matter of the Claim for Award in connection with Notice of Covered Action ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award in the amount of percent ( %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”), which would result in a payment of over $9 million. 1 Claimant provided 1 Claimant was a at the time Claimant obtained the information. As a result, the CRS considered whether Claimant’s information was “original information”. Under Rule 21F-4(b)(1), “[i]n order for [a] whistleblower submission to be considered original information, it must,” among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1). In turn, Rule 21F-4(b)(4)(iii)(B) provides that, unless an exception applies, “[t]he Commission will not consider information to be derived from [a whistleblower’s] independent knowledge or independent analysis” if the whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities,” 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). The CRS preliminarily determined that Rule 21F-4(b)(4)(iii)(B) did not apply here to disqualify Claimant’s information from treatment as original information pursuant to the 120-day exception in Rule 21F-4(b)(4)(v)(C), 17 C.F.R. § 240.21F-4(b)(4)(v) (C), because Claimant reported the information internally to his/her supervisor and then waited at least 120 days to report the information to the Commission. The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.2 In determining the amount of award to recommend for the Claimant, we considered the following factors set forth in Rule 21F-6 of the Exchange Act as they apply to the facts and circumstances of the Claimant’s application: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the law enforcement interest in deterring violations by granting awards; (4) participation in internal compliance systems; (5) culpability; (6) unreasonable reporting delay; and (7) interference with internal compliance and reporting systems. In making this preliminary recommendation, we considered, among other things, that the Claimant provided highly significant and detailed information that alerted Enforcement staff to the underlying conduct, prompting the opening of the investigation; his/her information bears a close nexus to the charges brought by the Commission in the Covered Action; he/she provided critical and ongoing assistance throughout the investigation, including meeting with Enforcement staff multiple times; Claimant repeatedly raised concerns internally; and that millions of dollars have been returned to harmed investors as a result of the Claimant’s information and assistance. Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent (%) of the monetary sanctions collected in the Covered Action. By the Commission. 2 See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).