In the Matter of the Claim for an Award
A whistleblower received approximately $1.25 million—less than the statutory 30% maximum—after the SEC found an unreasonable three-year delay in reporting misconduct, despite providing original, credible information that triggered a successful enforcement action and offering extensive cooperation.
The SEC awarded a whistleblower approximately $1.25 million, representing a reduced percentage of collected monetary sanctions in a covered enforcement action. Although the whistleblower provided original, credible information that prompted the investigation, identified key witnesses, and helped interpret critical documents—resulting in a successful enforcement—their three-year delay in reporting to the Commission, after 18 months of internal reporting, triggered a negative factor under Rule 21F-6(b), disqualifying the presumption of a 30% award. The SEC declined to waive the delay criterion, citing the need to incentivize timely reporting, but acknowledged the whistleblower’s substantial assistance and absence of culpability or interference with internal compliance systems.
The SEC awarded a whistleblower approximately $1.25 million, representing a reduced percentage of collected monetary sanctions in a covered enforcement action, after determining that the claimant unreasonably delayed reporting misconduct to the Commission. Although the whistleblower first became aware of the misconduct three years prior and reported internally after 18 months, they waited until much later to submit information to the SEC, triggering a negative factor under Rule 21F-6(b) that disqualified the presumption of a 30% statutory maximum award. The Commission found no culpability or interference with internal compliance systems, and recognized the whistleblower’s critical role: their original, specific information prompted the investigation, and their extensive cooperation—including identifying witnesses, clarifying documents, and focusing the inquiry—saved significant agency resources. Despite these substantial contributions, the SEC declined to waive the delay criterion, emphasizing the importance of timely reporting to maintain the integrity and effectiveness of the whistleblower program. The final award percentage was not disclosed but was determined under Rule 21F-6(a) and (b), balancing the whistleblower’s significant assistance against the unreasonable delay. The underlying enforcement action and the entity involved were not named in the award order, which focused exclusively on the whistleblower’s claim. This case underscores the SEC’s commitment to rewarding valuable tips while upholding strict timelines to encourage prompt internal and external reporting.
Extracted insights
- $5.00M $5 million $1M–$10M
- $1.25M $1.25 million $1M–$10M
- person claims review staff
- agency continuing, extensive assistance to sec staff
- agency original information to sec
- agency reporting to sec by approximately three years
- agency Securities and Exchange Commission
- Claimant receive whistleblower award of approximately $1.25 million
- Claims Review Staff issued Preliminary Determination recommending whistleblower award
- Claimant provided original information to SEC
- Claimant unreasonably delayed reporting to SEC by approximately three years
- SEC determined Claimant unreasonably delayed in reporting
- Claimant waited about a year and a half after internal reporting
- Claimant provided continuing, extensive assistance to SEC staff
- SEC issued Order Determining Whistleblower Award Claim on March 25, 2022
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 94519 / March 25, 2022 WHISTLEBLOWER AWARD PROCEEDING File No. 2022-45 In the Matter of the Claim for an Award in connection with ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award of approximately $1.25 million, equal to percent ( %) of collected monetary sanctions in the abovereferenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination. 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. 1 Exchange Act Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30% where (1) the maximum award would be $5 million or less; (2) none of the negative award factors under Rule 21F-6(b)—i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present; and (3) the award claim does not trigger Rule 21F-16. 2 The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.” 3 The presumption, however, does not apply here because one negative factor under Rule 21F-6(b) is present with respect to the award application – unreasonable reporting delay. Based on the facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant waited about a year and a half after internally reporting and approximately three years after first having concerns, to submit information to the Commission. Moreover, the Commission has determined not to waive this criterion under Rule 21F-6(c)(1)(iii). 4 Applying the award criteria in Rules 21F-6(a) and (b) to the facts and circumstances here, the Commission finds the award percentage determination to be appropriate. 5 In coming to this determination, the Commission considered that: (i) Claimant provided specific and credible information that prompted staff to open an investigation that resulted in the Covered Action, which was based largely on conduct that was the subject of Claimant’s whistleblower submission; (ii) Claimant provided continuing, extensive assistance, including helping Commission staff identify witnesses, understand critical documents and terminology, and focus the investigation on key issues, saving Commission time and resources; and (iii) although Claimant internally reported in an attempt to stop the misconduct, Claimant unreasonably delayed in submitting information to the Commission. Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent ( %) of the monetary sanctions collected or to be collected in the Covered Action. By the Commission. Eduardo A. Aleman Deputy Secretary 3 Exchange Act Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv). 4 Exchange Act Rule 21F-6(c)(1)(iii) provides that the Commission, in its sole discretion, “may in certain limited circumstances determine to waive this criterion if the claimant can demonstrate that doing so based on the facts and circumstances of the matter is consistent with the public interest, the promotion of investor protection, and the objectives of the whistleblower program.” 17 C.F.R. § 240.21F-6(c)(1)(iii). 5 In assessing the appropriate award amount, Exchange Act Rules 21F-6(a) and (b) provide that the Commission consider: (1) the significance of information provided to the Commission; (2) the assistance provided in the Commission action; (3) 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. 17 C.F.R. § 240.21F-6(a) and (b).
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 94519 / March 25, 2022 WHISTLEBLOWER AWARD PROCEEDING File No. 2022-45 In the Matter of the Claim for an Award in connection with ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award of approximately $1.25 million, equal to percent ( %) of collected monetary sanctions in the abovereferenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination. 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. 1 Exchange Act Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30% where (1) the maximum award would be $5 million or less; (2) none of the negative award factors under Rule 21F-6(b)—i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present; and (3) the award claim does not trigger Rule 21F-16. 2 The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.” 3 The presumption, however, does not apply here because one negative factor under Rule 21F-6(b) is present with respect to the award application – unreasonable reporting delay. Based on the facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant waited about a year and a half after internally reporting and approximately three years after first having concerns, to submit information to the Commission. Moreover, the Commission has determined not to waive this criterion under Rule 21F-6(c)(1)(iii). 4 Applying the award criteria in Rules 21F-6(a) and (b) to the facts and circumstances here, the Commission finds the award percentage determination to be appropriate. 5 In coming to this determination, the Commission considered that: (i) Claimant provided specific and credible information that prompted staff to open an investigation that resulted in the Covered Action, which was based largely on conduct that was the subject of Claimant’s whistleblower submission; (ii) Claimant provided continuing, extensive assistance, including helping Commission staff identify witnesses, understand critical documents and terminology, and focus the investigation on key issues, saving Commission time and resources; and (iii) although Claimant internally reported in an attempt to stop the misconduct, Claimant unreasonably delayed in submitting information to the Commission. Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent ( %) of the monetary sanctions collected or to be collected in the Covered Action. By the Commission. Eduardo A. Aleman Deputy Secretary 3 Exchange Act Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv). 4 Exchange Act Rule 21F-6(c)(1)(iii) provides that the Commission, in its sole discretion, “may in certain limited circumstances determine to waive this criterion if the claimant can demonstrate that doing so based on the facts and circumstances of the matter is consistent with the public interest, the promotion of investor protection, and the objectives of the whistleblower program.” 17 C.F.R. § 240.21F-6(c)(1)(iii). 5 In assessing the appropriate award amount, Exchange Act Rules 21F-6(a) and (b) provide that the Commission consider: (1) the significance of information provided to the Commission; (2) the assistance provided in the Commission action; (3) 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. 17 C.F.R. § 240.21F-6(a) and (b).