In the Matter of the Claim for an Award
summary
A whistleblower received over $1.8 million from the SEC for internally reporting securities violations at a company with a prior history of similar misconduct, triggering an internal investigation that led to a successful enforcement action involving hard-to-detect overseas fraud, with the SEC increasing the award due to the significance of the information, timely reporting, and the whistleblower’s personal and professional risks.
paragraph
The SEC awarded over $1.8 million to a whistleblower who reported securities violations through their company’s internal compliance system and submitted the same information to the SEC within 120 days, qualifying under Rule 21F-4(c)(3). The company’s subsequent internal investigation, initiated in response to the tip, uncovered overseas misconduct that was difficult to detect and provided the foundation for the SEC’s enforcement action, which resulted in substantial monetary sanctions. The SEC increased the award beyond its preliminary recommendation due to the significance of the information, the whistleblower’s timely reporting, the company’s prior sanctions for similar conduct, and the personal and professional risks taken by the whistleblower.
narrative
A whistleblower received an award of over $1.8 million from the SEC for providing original information about securities violations through their company’s internal compliance system and submitting the same details to the SEC within 120 days, satisfying the requirements of Rule 21F-4(c)(3). The company, prompted by the whistleblower’s report, launched an internal investigation that uncovered complex overseas fraud—conduct that would have been extremely difficult for the SEC to detect independently. The findings from this internal probe were then reported to the SEC, which opened a formal enforcement action based in part on the whistleblower’s original information. The SEC increased the award beyond its initial preliminary recommendation because the information was pivotal to the investigation, the whistleblower acted promptly and responsibly, the company had previously been sanctioned for similar misconduct, and the whistleblower faced significant personal and professional risks in coming forward. The award also recognized the whistleblower’s cooperation with internal compliance systems and the efficiency gained by the SEC through the company’s self-reporting. No charges against the company or individuals were detailed in the award order, as the proceeding focused solely on the whistleblower’s eligibility and award amount. Two other claimants submitted joint claims but were denied awards and did not contest the decision. The final payout represents a percentage of the total monetary sanctions collected in the covered enforcement action.
Classified unclassified. No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →
Statutes
15 U.S.C. §78u-6(b)17 C.F.R. §240.21F-3(a)17 C.F.R. §240.21F-6Rule 21F-4(b)Rule 21F-4(c)Rule 21F-10(f)Rule 21F-3(a)Rule 21F-6
Parties
claims review staffcompany
Keywords
commissionclaimantawardinformationcovered actionexchangeredactedprovidedpreliminary determinationinformation commissioncoveredinternalactioncompanydetermination
Extracted insights
Dollar amounts 1
- $1.80M $1,800,000 $1M–$10M
Entities 2
- person claims review staff
- company company
Triples 10
- Claimant receive whistleblower award of over $1,800,000
- Claimant provided original information to the Commission
- Claimant reported original information through internal compliance system
- Company launched internal investigation into alleged misconduct
- Company reported findings to the Commission
- SEC issued ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM
- Claims Review Staff issued Preliminary Determination recommending whistleblower award
- Claimant provided written notice of decision not to contest Preliminary Determination
- Claimant submitted Form TCR to the Commission within 120 days
- Commission opened investigation based on Company's report
Text layers
Extracted body text (5,957c)
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 89996 / September 25, 2020 WHISTLEBLOWER AWARD PROCEEDING File No. 2020-34 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 (the “Claimant”) receive a whistleblower award of over Redacted which is equal to Redacted percent ( *** ) of the monetary sanctions collected in Redacted Redacted (the “Covered Action”). 1 Claimant subsequently provided written notice of Claimant’s decision not to contest the Preliminary Determination. After considering the administrative record, we choose to depart from the Preliminary Determination and award Claimant Redacted percent ( Redacted of the monetary sanctions collected in the Covered Action, for a payout of over $1,800,000. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. 2 In reaching this determination, we have relied on Exchange Act Rule 21F-4(b)(7) and Exchange Act Rule 21F-4(c)(3). Exchange Act Rule 21F-4(b)(7) states in relevant part that if a claimant 1 The Preliminary Determination of the CRS also recommended denying an award claim submitted by two joint claimants. On July 23, 2020, the joint claimants, through their attorney, provided written notice of their decision not to contest the Preliminary Determination. As such, the Preliminary Determination has become the Final Order of the Commission in accordance with Exchange Act Rule 21F-10(f). 2 See 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 provides information to an entity’s internal whistleblower, legal or compliance procedures for reporting allegations of possible violations of law, and then, within 120 days, submits the same information to the Commission, then for purposes of evaluating a claim for award, the Commission will consider that claimant provided the information as of the date of the original disclosure, report or submission. Further, Exchange Act Rule 21F-4(c)(3) provides that a claimant’s original information will be deemed to have led to a successful enforcement action if: (3) You reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time you reported them to the Commission; the entity later provided your information to the Commission, or provided results of an audit or investigation initiated in whole or in part in response to information you reported to the entity; and the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of this section. Under this paragraph (c)(3), you must also submit the same information to the Commission in accordance with the procedures set forth in §240.21F-9 within 120 days of providing it to the entity. Here, Claimant reported original information through the internal compliance system at Redacted (the “Company”), and provided the same information in a Form TCR to the Commission within 120 days. Therefore, Claimant is deemed to have reported the information to the Commission as of the date of Claimant’s report to the Company. Initiated in part in response to Claimant’s tip, the Company, in turn, launched an internal investigation into the alleged misconduct and subsequently reported the findings to the Commission. Further, the Company’s report of the findings of its internal investigation caused the Commission to open an investigation, and the resulting Covered Action was based in part on the conduct alleged by Claimant and reported by the Company, in satisfaction of Exchange Act Rule 21F-4(c)(1). Applying the award criteria in Exchange Act Rule 21F-6 to the specific facts and circumstances here, we have chosen to increase the award to Claimant. 3 In reaching this determination, we positively assessed the following facts: (i) Claimant’s tip was significant in that it was a key source that formed the underlying basis of the Company’s internal investigation; (ii) Claimant timely reported the securities violations to the Company and ultimately, the Company’s findings focused the Commission’s investigation, revealed misconduct overseas that is difficult to detect and investigate, and conserved significant Commission staff time and resources; (iii) the law enforcement interest is substantial here because the Company had previously been sanctioned for similar misconduct; and (iv) the Claimant took both personal and professional risks in reporting this information. In considering the appropriate award percentage, we have 3 In assessing the appropriate award amount, Exchange Act Rule 21F-6 provides that the Commission consider: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Actions; (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. 17 C.F.R. §240.21F-6. 3 also determined to credit Claimant for the results of the Company’s internal investigation that were provided to the Commission and that ultimately formed the basis for the Covered Action. Accordingly, it is hereby ORDERED that Claimant shall receive an award of over $1,800,000 ( *** of the monetary sanctions collected in the Covered Action). By the Commission. Vanessa A. Countryman Secretary
OCR text (5,961c · tika · 95% conf)
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 89996 / September 25, 2020 WHISTLEBLOWER AWARD PROCEEDING File No. 2020-34 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 (the “Claimant”) receive a whistleblower award of over Redacted which is equal to Redacted percent ( *** ) of the monetary sanctions collected in Redacted Redacted (the “Covered Action”).1 Claimant subsequently provided written notice of Claimant’s decision not to contest the Preliminary Determination. After considering the administrative record, we choose to depart from the Preliminary Determination and award Claimant Redacted percent (Redacted of the monetary sanctions collected in the Covered Action, for a payout of over $1,800,000. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.2 In reaching this determination, we have relied on Exchange Act Rule 21F-4(b)(7) and Exchange Act Rule 21F-4(c)(3). Exchange Act Rule 21F-4(b)(7) states in relevant part that if a claimant 1 The Preliminary Determination of the CRS also recommended denying an award claim submitted by two joint claimants. On July 23, 2020, the joint claimants, through their attorney, provided written notice of their decision not to contest the Preliminary Determination. As such, the Preliminary Determination has become the Final Order of the Commission in accordance with Exchange Act Rule 21F-10(f). 2 See 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 provides information to an entity’s internal whistleblower, legal or compliance procedures for reporting allegations of possible violations of law, and then, within 120 days, submits the same information to the Commission, then for purposes of evaluating a claim for award, the Commission will consider that claimant provided the information as of the date of the original disclosure, report or submission. Further, Exchange Act Rule 21F-4(c)(3) provides that a claimant’s original information will be deemed to have led to a successful enforcement action if: (3) You reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time you reported them to the Commission; the entity later provided your information to the Commission, or provided results of an audit or investigation initiated in whole or in part in response to information you reported to the entity; and the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of this section. Under this paragraph (c)(3), you must also submit the same information to the Commission in accordance with the procedures set forth in §240.21F-9 within 120 days of providing it to the entity. Here, Claimant reported original information through the internal compliance system at Redacted (the “Company”), and provided the same information in a Form TCR to the Commission within 120 days. Therefore, Claimant is deemed to have reported the information to the Commission as of the date of Claimant’s report to the Company. Initiated in part in response to Claimant’s tip, the Company, in turn, launched an internal investigation into the alleged misconduct and subsequently reported the findings to the Commission. Further, the Company’s report of the findings of its internal investigation caused the Commission to open an investigation, and the resulting Covered Action was based in part on the conduct alleged by Claimant and reported by the Company, in satisfaction of Exchange Act Rule 21F-4(c)(1). Applying the award criteria in Exchange Act Rule 21F-6 to the specific facts and circumstances here, we have chosen to increase the award to Claimant.3 In reaching this determination, we positively assessed the following facts: (i) Claimant’s tip was significant in that it was a key source that formed the underlying basis of the Company’s internal investigation; (ii) Claimant timely reported the securities violations to the Company and ultimately, the Company’s findings focused the Commission’s investigation, revealed misconduct overseas that is difficult to detect and investigate, and conserved significant Commission staff time and resources; (iii) the law enforcement interest is substantial here because the Company had previously been sanctioned for similar misconduct; and (iv) the Claimant took both personal and professional risks in reporting this information. In considering the appropriate award percentage, we have 3 In assessing the appropriate award amount, Exchange Act Rule 21F-6 provides that the Commission consider: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Actions; (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. 17 C.F.R. §240.21F-6. 3 also determined to credit Claimant for the results of the Company’s internal investigation that were provided to the Commission and that ultimately formed the basis for the Covered Action. Accordingly, it is hereby ORDERED that Claimant shall receive an award of over $1,800,000 ( *** of the monetary sanctions collected in the Covered Action). By the Commission. Vanessa A. Countryman Secretary