In the Matter of the Claim for an Award
summary
The SEC awarded a whistleblower approximately $2.9 million—reduced from the statutory 30% maximum—after determining the claimant unreasonably delayed reporting securities misconduct by two years, despite providing original, critical information that enabled the enforcement action and caused no culpability or interference with internal compliance.
paragraph
The SEC awarded a whistleblower approximately $2.9 million, representing a reduced percentage of collected monetary sanctions in a covered enforcement action involving undisclosed securities violations. Although the whistleblower provided original information that was pivotal to uncovering the fraud, enabled the SEC to conserve significant investigative resources, and faced personal and professional hardships, the award was reduced due to an unreasonable two-year delay in reporting after first suspecting the violation. The Commission applied Rule 21F-6(b), finding this delay negated the presumption of a 30% statutory maximum award, even though no culpability or interference with internal compliance systems was present.
narrative
The SEC awarded a whistleblower approximately $2.9 million in connection with a covered enforcement action involving undisclosed securities violations, after determining the claimant’s original information was critical to uncovering the misconduct and enabled the agency to conserve substantial investigative resources. Although the whistleblower did not engage in culpable conduct or interfere with internal compliance systems, the Commission reduced the award because the claimant delayed reporting for approximately two years after first suspecting a securities law violation, a delay that allowed ongoing harm to investors. The Claims Review Staff had initially recommended the $2.9 million award, and the whistleblower did not contest the preliminary determination. Under Rule 21F-6(c), a 30% statutory maximum award is presumed when the award is $5 million or less and no negative factors are present, but the unreasonable reporting delay disqualified the claimant from this presumption. The Commission weighed mitigating factors—including the significance of the tip, the whistleblower’s personal hardships, and the fact that enforcement staff were unaware of the misconduct until the tip was submitted—against the negative impact of the delay. Ultimately, the SEC concluded the awarded percentage was appropriate under the unique facts and circumstances of the case, consistent with the objectives of the whistleblower program and investor protection. The underlying respondent and specific nature of the fraud were redacted in the public order.
Classified financial-fraud(confidence 65%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 67% / precision 23%. detection rule →
Statutes
15 U.S.C. § 78u-6(b)17 C.F.R. § 240.21F-4(d)17 C.F.R. § 240.21F-3(a)17 C.F.R. § 240.21F-6(c)17 C.F.R. § 240.21F-6 (a)Rule 21F-6(c)Rule 21F-6(b)Rule 21F-16Rule 21F-6
Parties
claims review staffpreliminary determinationwritten notice
Keywords
awardcommissionclaimantcovered actionexchangeredactedreportingmattersecurities exchangeunreasonable reportingreporting delayinternal compliancefacts circumstancesclaimwhistleblower
Extracted insights
Dollar amounts 2
- $5.00M $5 million $1M–$10M
- $2.90M $2.9 million $1M–$10M
Entities 3
- person claims review staff
- person preliminary determination
- person written notice
Triples 11
- Claims Review Staff issued Preliminary Determination
- Claims Review Staff recommended whistleblower award of approximately $2.9 million
- Claimant provided written notice
- Claimant does not contest Preliminary Determination
- Commission adopted recommendation of the Claims Review Staff
- Claimant provided original information to the Commission
- Rule 21F-6(c) establishes presumption of a statutory maximum award of 30%
- Commission finds Claimant unreasonably delayed in reporting
- Commission determined not to waive this criterion under Rule 21F-6(c)(iii)
- Claimant submitted tip
- Claimant's documents and assistance allowed staff to conserve considerable resources
Text layers
Extracted body text (8,070c)
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 92456 / July 21, 2021 WHISTLEBLOWER AWARD PROCEEDING File No. 2021-75 In the Matter of the Claim for an 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 approximately $2.9 million, which is equal to percent ( %) of the monetary sanctions collected, or to be collected, in (collectively, the “Covered Action”). 1 Claimant provided written notice, through counsel, that Claimant does not contest the Preliminary Determination. 2 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. 3 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. 4 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.” 5 The presumption, however, does not apply here because at least one negative factor – unreasonable reporting delay – under Rule 21F-6(b) is present. 6 Based on the unique facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant’s information was submitted approximately two years from the date on which Claimant first suspected that there could possibly be a securities law violation occurring. Further, the Commission has determined not to waive this criterion under Rule 21F-6(c)(iii). 7 Applying the award criteria in Rule 21F-6 to the specific facts and circumstances here, we find the % award determination to be appropriate. 8 In coming to this determination, we considered that (i) Enforcement staff was unaware of the misconduct until Claimant submitted the tip, (ii) Claimant’s documents and assistance allowed the staff to conserve considerable resources, (iii) the charges brought by the Commission were based in significant part on conduct 3 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). 4 Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16. 5 Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv). 6 Rule 21F-6(b) provides that in determining whether to decrease the amount of an award, the Commission will consider the following negative factors – culpability, unreasonable reporting delay, and interference with an internal compliance and reporting system. 7 Rule 21F-6(c)(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.” 8 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. Rules 21F-6(a) and (b); 17 C.F.R. § 240.21F-6(a) and (b). 2 --- page 2 --- The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award in the amount of approximately $2.9 million, which is equal to percent ( %) of the monetary sanctions collected, or to be collected, in (collectively, the “Covered Action”). 1 Claimant provided written notice, through counsel, that Claimant does not contest the Preliminary Determination. 2 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. 3 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. 4 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.” 5 The presumption, however, does not apply here because at least one negative factor – unreasonable reporting delay – under Rule 21F-6(b) is present. 6 Based on the unique facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant’s information was submitted approximately two years from the date on which Claimant first suspected that there could possibly be a securities law violation occurring. Further, the Commission has determined not to waive this criterion under Rule 21F-6(c)(iii). 7 Applying the award criteria in Rule 21F-6 to the specific facts and circumstances here, we find the % award determination to be appropriate. 8 In coming to this determination, we considered that (i) Enforcement staff was unaware of the misconduct until Claimant submitted the tip, (ii) Claimant’s documents and assistance allowed the staff to conserve considerable resources, (iii) the charges brought by the Commission were based in significant part on conduct 3 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). 4 Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16. 5 Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv). 6 Rule 21F-6(b) provides that in determining whether to decrease the amount of an award, the Commission will consider the following negative factors – culpability, unreasonable reporting delay, and interference with an internal compliance and reporting system. 7 Rule 21F-6(c)(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.” 8 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. Rules 21F-6(a) and (b); 17 C.F.R. § 240.21F-6(a) and (b). 2 --- page 3 ---
OCR text (8,070c · gpumon-ocr-api · 90% conf)
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 92456 / July 21, 2021 WHISTLEBLOWER AWARD PROCEEDING File No. 2021-75 In the Matter of the Claim for an 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 approximately $2.9 million, which is equal to percent ( %) of the monetary sanctions collected, or to be collected, in (collectively, the “Covered Action”). 1 Claimant provided written notice, through counsel, that Claimant does not contest the Preliminary Determination. 2 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. 3 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. 4 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.” 5 The presumption, however, does not apply here because at least one negative factor – unreasonable reporting delay – under Rule 21F-6(b) is present. 6 Based on the unique facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant’s information was submitted approximately two years from the date on which Claimant first suspected that there could possibly be a securities law violation occurring. Further, the Commission has determined not to waive this criterion under Rule 21F-6(c)(iii). 7 Applying the award criteria in Rule 21F-6 to the specific facts and circumstances here, we find the % award determination to be appropriate. 8 In coming to this determination, we considered that (i) Enforcement staff was unaware of the misconduct until Claimant submitted the tip, (ii) Claimant’s documents and assistance allowed the staff to conserve considerable resources, (iii) the charges brought by the Commission were based in significant part on conduct 3 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). 4 Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16. 5 Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv). 6 Rule 21F-6(b) provides that in determining whether to decrease the amount of an award, the Commission will consider the following negative factors – culpability, unreasonable reporting delay, and interference with an internal compliance and reporting system. 7 Rule 21F-6(c)(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.” 8 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. Rules 21F-6(a) and (b); 17 C.F.R. § 240.21F-6(a) and (b). 2 --- page 2 --- The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award in the amount of approximately $2.9 million, which is equal to percent ( %) of the monetary sanctions collected, or to be collected, in (collectively, the “Covered Action”). 1 Claimant provided written notice, through counsel, that Claimant does not contest the Preliminary Determination. 2 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. 3 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. 4 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.” 5 The presumption, however, does not apply here because at least one negative factor – unreasonable reporting delay – under Rule 21F-6(b) is present. 6 Based on the unique facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant’s information was submitted approximately two years from the date on which Claimant first suspected that there could possibly be a securities law violation occurring. Further, the Commission has determined not to waive this criterion under Rule 21F-6(c)(iii). 7 Applying the award criteria in Rule 21F-6 to the specific facts and circumstances here, we find the % award determination to be appropriate. 8 In coming to this determination, we considered that (i) Enforcement staff was unaware of the misconduct until Claimant submitted the tip, (ii) Claimant’s documents and assistance allowed the staff to conserve considerable resources, (iii) the charges brought by the Commission were based in significant part on conduct 3 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). 4 Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16. 5 Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv). 6 Rule 21F-6(b) provides that in determining whether to decrease the amount of an award, the Commission will consider the following negative factors – culpability, unreasonable reporting delay, and interference with an internal compliance and reporting system. 7 Rule 21F-6(c)(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.” 8 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. Rules 21F-6(a) and (b); 17 C.F.R. § 240.21F-6(a) and (b). 2 --- page 3 ---