In the Matter of the Claim for an Award
Two unaffiliated whistleblowers jointly received over $2.5 million from the SEC for providing original, highly-probative analysis of publicly available information that exposed accounting violations and triggered a successful enforcement action, with each to receive 50% unless otherwise requested.
The SEC awarded over $2.5 million jointly to two whistleblowers, Claimant 1 and Claimant 2, for providing original information that led to a covered enforcement action involving accounting violations at a company. The whistleblowers, unaffiliated outsiders, did not report internally but delivered detailed, actionable analysis based on publicly available data, which formed the foundation of the SEC’s investigation and conserved significant staff resources. The award, determined under Rule 21F-6, reflected the significance of their tip, their substantial assistance, and the law enforcement value of deterring fraud, with the amount representing a percentage of monetary sanctions collected and split equally between the two unless they requested otherwise.
Two unaffiliated whistleblowers, Claimant 1 and Claimant 2, jointly received an award of over $2.5 million from the SEC for providing original, highly-probative analysis based on publicly available information that exposed accounting violations at a company and directly caused the SEC to open its investigation. The whistleblowers submitted their information through a single Form TCR and Form WB-APP via the same counsel, prompting the SEC to treat them as a single whistleblower for award purposes. Their analysis was the underlying source for the Covered Action, and their ongoing assistance focused the investigation and saved substantial Commission resources. The SEC applied Rule 21F-6 factors, positively assessing the significance of the information, the quality of their assistance, and the deterrent effect of the award, while noting no internal reporting or culpability issues. Both claimants accepted the Preliminary Determination without contest, and the award is to be split equally between them unless they jointly request a different allocation. The SEC confirmed the action as a single Covered Action under Rule 21F-4(d)(1), as all administrative actions arose from the same nucleus of operative facts. No details about the company or specific violations were disclosed in the public order, consistent with whistleblower confidentiality protections.
Extracted insights
- $2.50M $2,500,000 $1M–$10M
- person claims review staff
- person covered action
- person possible accounting violations
- agency Securities and Exchange Commission
- person whistleblower award recommendation
- Claimant 1 And Claimant 2 receive whistleblower award Over $2,500,000
- Claimant 1 And Claimant 2 provided original information SEC
- Claimant 1 And Claimant 2 revealed Possible Accounting Violations
- Claimant 1 And Claimant 2 caused opening of Investigation
- Claims Review Staff issued Preliminary Determination Whistleblower Award Recommendation
- SEC issued Release No. 89721
- SEC issued on September 1, 2020
- Vanessa A. Countryman signed as Secretary
- Claimant 1 And Claimant 2 provided assistance in Covered Action
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 89721 / September 1, 2020 WHISTLEBLOWER AWARD PROCEEDING File No. 2020-28 In the Matter of the Claim for an Award in connection with Redacted Redacted Redacted Redacted Redacted Redacted 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 1”) and Redacted (“claimant 2”) jointly 1 receive a whistleblower award in the amount of over $2,500,000 ( *** % of the monetary sanctions collected in Redacted 1 We have determined to treat claimant 1 and claimant 2 jointly as a “whistleblower” for purposes of the award determination given that a Form TCR was submitted on behalf of both of them and they submitted their Forms WB-APP together via the same counsel. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining a “whistleblower” to include two or more individuals acting jointly who provide information relating to a violation of the securities laws to the Commission). Our proceeding in this way has not impacted the total award percentage to claimants. Unless claimants, within ten (10) calendar days of the issuance of this Order, make a joint request, in writing, for a different allocation of the award between the two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award. Redacted ). 2 Claimant 1 and claimant 2 subsequently provided written notice of claimants’ decision not to contest the Preliminary Determination. The recommendation of the CRS is adopted. The record demonstrates that claimants voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. 3 In particular, claimants, both unaffiliated outsiders to the company that was the subject of the Covered Action, provided highly-probative independent analysis based upon publicly available information that revealed possible accounting violations at the subject company and caused the staff to open the investigation that resulted in the Covered Action. Applying the award criteria in Exchange Act Rule 21F-6 to the specific facts and circumstances here, we find that the proposed award amount is appropriate. 4 In reaching that determination, we positively assessed the following facts: (i) that claimants’ tip caused the opening of the investigation and was the underlying source that formed the basis for the Covered Action; (ii) that the violations charged in the Covered Action related to the detailed analysis submitted by claimants, as well as information uncovered by claimants based on Redacted ; and (iii) that claimants provided substantial, ongoing assistance which focused the investigation and conserved significant Commission staff time and resources. Accordingly, it is hereby ORDERED that claimants shall jointly receive an award of over $2,500,000 ( *** % of the monetary sanctions collected in the Covered Act ion). By the Commission. Vanessa A. Countryman Secretary 2 For the purposes of making an award, we consider the administrative actions in this matter as a single Covered Action because they arose out the same nucleus of operative facts. See Exchange Act Rule 21F- 4(d)(1), 17 C.F.R. §240.21F-4(d)(1). 3 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). 4 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 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. 17 C.F.R. §240.21F-6. 2
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 89721 / September 1, 2020 WHISTLEBLOWER AWARD PROCEEDING File No. 2020-28 In the Matter of the Claim for an Award in connection with Redacted Redacted Redacted Redacted Redacted Redacted 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 1”) and Redacted (“claimant 2”) jointly1 receive a whistleblower award in the amount of over $2,500,000 ( *** % of the monetary sanctions collected in Redacted 1 We have determined to treat claimant 1 and claimant 2 jointly as a “whistleblower” for purposes of the award determination given that a Form TCR was submitted on behalf of both of them and they submitted their Forms WB-APP together via the same counsel. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining a “whistleblower” to include two or more individuals acting jointly who provide information relating to a violation of the securities laws to the Commission). Our proceeding in this way has not impacted the total award percentage to claimants. Unless claimants, within ten (10) calendar days of the issuance of this Order, make a joint request, in writing, for a different allocation of the award between the two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award. Redacted ).2 Claimant 1 and claimant 2 subsequently provided written notice of claimants’ decision not to contest the Preliminary Determination. The recommendation of the CRS is adopted. The record demonstrates that claimants voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.3 In particular, claimants, both unaffiliated outsiders to the company that was the subject of the Covered Action, provided highly-probative independent analysis based upon publicly available information that revealed possible accounting violations at the subject company and caused the staff to open the investigation that resulted in the Covered Action. Applying the award criteria in Exchange Act Rule 21F-6 to the specific facts and circumstances here, we find that the proposed award amount is appropriate.4 In reaching that determination, we positively assessed the following facts: (i) that claimants’ tip caused the opening of the investigation and was the underlying source that formed the basis for the Covered Action; (ii) that the violations charged in the Covered Action related to the detailed analysis submitted by claimants, as well as information uncovered by claimants based on Redacted ; and (iii) that claimants provided substantial, ongoing assistance which focused the investigation and conserved significant Commission staff time and resources. Accordingly, it is hereby ORDERED that claimants shall jointly receive an award of over $2,500,000 ( *** % of the monetary sanctions collected in the Covered Action). By the Commission. Vanessa A. Countryman Secretary 2 For the purposes of making an award, we consider the administrative actions in this matter as a single Covered Action because they arose out the same nucleus of operative facts. See Exchange Act Rule 21F- 4(d)(1), 17 C.F.R. §240.21F-4(d)(1). 3 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). 4 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 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. 17 C.F.R. §240.21F-6. 2