In the Matter of the Claim for an Award
A former internal auditor at a redacted company received a $300,000 SEC whistleblower award after providing original information about securities law violations, qualifying despite their compliance role because they had a reasonable basis to believe the company would impede the investigation, and voluntarily shared details with federal authorities before the SEC’s involvement.
The SEC awarded approximately $300,000 to a whistleblower who had internal audit responsibilities at a redacted company, despite Rule 21F-4(b)(4)(iii)(B) normally excluding compliance employees from eligibility. The whistleblower qualified because they had a reasonable basis to believe the company’s conduct would impede the SEC’s investigation, and voluntarily reported the misconduct to a federal agency before the SEC contacted them. They met with Enforcement staff more than a dozen times, identified key witnesses, attempted to remedy the violations, and suffered unique hardships, leading the SEC to adopt the Claims Review Staff’s preliminary award recommendation after the whistleblower declined to contest it.
The SEC awarded approximately $300,000 to a whistleblower who served in an internal audit role at a redacted company, recognizing their substantial contribution to a successful enforcement action despite their compliance duties, which typically disqualify individuals from whistleblower awards. The whistleblower was deemed eligible because they had a reasonable basis to believe the company’s actions would impede the SEC’s investigation, satisfying the exception under Exchange Act Rule 21F-4(b)(4)(v)(B). They voluntarily provided original information to a federal agency prior to any SEC inquiry, meeting the statutory requirement for voluntariness. Over the course of the investigation, the whistleblower met with SEC Enforcement staff more than a dozen times, identified potential witnesses, and actively sought to remedy the misconduct, even as they endured unique personal hardships. The Claims Review Staff initially recommended the $300,000 award—representing a percentage of the monetary sanctions collected or to be collected—and the whistleblower declined to contest this preliminary determination. The SEC formally adopted the recommendation, affirming that the information provided was original, significant, and instrumental to the Covered Action’s success. This case underscores the SEC’s willingness to reward insiders who act courageously to expose wrongdoing, even when their roles would otherwise bar them from eligibility.
Extracted insights
- $300K $300,000 $100K–$1M
- person enforcement staff
- person potential witnesses
- person preliminary determination
- person unique hardship
- person written notice
- CRS issued Preliminary Determination
- Preliminary Determination recommends Claimant receive whistleblower award of $300,000
- Claimant provided written notice
- Claimant provided original information to the Commission
- Claimant met with Enforcement Staff
- Claimant identified potential witnesses
- Claimant attempted to remedy misconduct
- Claimant suffered unique hardship
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 90656 / December 14, 2020 WHISTLEBLOWER AWARD PROCEEDING File No. 2021-15 In the Matter of the Claim for an Award in connection with Redacted Redacted Notice of Covered Action Redacted ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Redacted (“Claimant”) receive a whistleblower award of approximately $300,000, which represents *** percent ( *** %) of the monetary sanctions collected, or to be collected, in the above-referenced 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 significantly contributed to the successful enforcement of the Covered Action. 1 In reaching this determination, we have considered the application of Exchange Act Rule 21F-4(b)(4)(iii)(B), which excludes information from being credited as the whistleblower’s “independent knowledge” or “independent analysis”—and hence original information 2 —if the 1 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). 2 Under Exchange Act 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). whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities. . . .” 3 Here, the record reflects that Claimant became aware of the potential securities law violations in connection with Claimant’s audit-related responsibilities Redacted Redacted However, such claimants may learn original information and be eligible for whistleblower awards if they had “a reasonable basis to believe that the relevant entity is engaging in conduct that will impede an investigation of the misconduct.” 4 Here, the record shows that Claimant had a reasonable basis at the time Claimant provided the information 5 to believe that Redacted Redacted would impede the Commission’s investigation because Redacted Redacted had Redacted Redacted Redacted Claimant met with Enforcement staff more than a dozen times, and identified potential witnesses. Further, Claimant aggressively attempted to remedy the misconduct and suffered a unique hardship, Redacted Redacted 3 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). 4 17 C.F.R. § 240.21F-4(b)(4)(v)(B). 5 Claimant satisfies the voluntariness requirement because Claimant provided information about the securities law violation to a federal agency before Commission staff contacted Claimant. See 17 C.F.R. §240.21F- 4(a)(1)(ii) (a “submission of information to the Commission will be considered voluntary if [a claimant] voluntarily provided the same information to” inter alia, any authority of the federal government “prior to receiving a request, inquiry, or demand from the Commission”). 6 7 Redacted Redacted Redacted 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. Vanessa A. Countryman Secretary 8 Redacted
UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 90656 / December 14, 2020 WHISTLEBLOWER AWARD PROCEEDING File No. 2021-15 In the Matter of the Claim for an Award in connection with Redacted Redacted Notice of Covered Action Redacted ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Redacted (“Claimant”) receive a whistleblower award of approximately $300,000, which represents *** percent ( *** %) of the monetary sanctions collected, or to be collected, in the above-referenced 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 significantly contributed to the successful enforcement of the Covered Action.1 In reaching this determination, we have considered the application of Exchange Act Rule 21F-4(b)(4)(iii)(B), which excludes information from being credited as the whistleblower’s “independent knowledge” or “independent analysis”—and hence original information2—if the 1 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). 2 Under Exchange Act 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). whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities. . . .”3 Here, the record reflects that Claimant became aware of the potential securities law violations in connection with Claimant’s audit-related responsibilities Redacted Redacted However, such claimants may learn original information and be eligible for whistleblower awards if they had “a reasonable basis to believe that the relevant entity is engaging in conduct that will impede an investigation of the misconduct.”4 Here, the record shows that Claimant had a reasonable basis at the time Claimant provided the information5 to believe that Redacted Redacted would impede the Commission’s investigation because Redacted Redacted had Redacted Redacted Redacted Claimant met with Enforcement staff more than a dozen times, and identified potential witnesses. Further, Claimant aggressively attempted to remedy the misconduct and suffered a unique hardship, Redacted Redacted 3 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). 4 17 C.F.R. § 240.21F-4(b)(4)(v)(B). 5 Claimant satisfies the voluntariness requirement because Claimant provided information about the securities law violation to a federal agency before Commission staff contacted Claimant. See 17 C.F.R. §240.21F- 4(a)(1)(ii) (a “submission of information to the Commission will be considered voluntary if [a claimant] voluntarily provided the same information to” inter alia, any authority of the federal government “prior to receiving a request, inquiry, or demand from the Commission”). 6 7 Redacted Redacted Redacted 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. Vanessa A. Countryman Secretary 8 Redacted