In the Matter of the Claims for Award
Three harmed investor claimants provided original information that enabled the SEC to shut down a fraudulent scheme targeting investors in a redacted company, leading to a whistleblower award of over $260,000, or ***% of monetary sanctions collected or to be collected, after they cooperated with the investigation and were deemed critical to uncovering recidivist misconduct.
The SEC awarded three claimants a joint whistleblower payout of ***% of monetary sanctions collected or to be collected in a covered action involving fraud at a redacted company, with current estimates exceeding $260,000. The claimants, who were themselves investors that lost retirement savings, provided original information that was essential to uncovering the scheme—information the SEC stated would likely not have been discovered without their tip. They also assisted the investigation by giving an early interview, and the SEC credited their cooperation, low defendant collections, and role in deterring recidivist fraud as key factors in determining the award amount.
The U.S. Securities and Exchange Commission (SEC) granted a whistleblower award to three claimants who jointly provided original, critical information that led to the successful enforcement action against undisclosed violators operating a fraudulent scheme at a redacted company. The claimants, who were harmed investors that lost their retirement savings, played an indispensable role by supplying information the SEC determined would likely not have been discovered otherwise. They further aided the investigation by participating in an early interview, helping the agency shut down the scheme and protect other investors from recidivist fraudsters. Although the monetary sanctions collected from the defendants were low at the time of the award determination, the SEC still awarded ***% of the total sanctions collected or to be collected, resulting in an estimated payout of over $260,000. The claimants did not contest the Preliminary Determination, and the SEC directed that the award be divided equally among them unless they requested otherwise. The award was justified under Rule 21F-6 based on the significance of the information, the claimants’ cooperation, the law enforcement interest in deterring repeat violations, and their status as harmed insiders rather than culpable actors. This case underscores the SEC’s commitment to incentivizing whistleblowers who are victims themselves to come forward with vital evidence against financial fraud.
Extracted insights
- $260K $260,000 $100K–$1M
- The Claims Review Staff Issued A Preliminary Determination Recommending that claimants jointly receive a whistleblower award in the amount of percent of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action
- Claimants 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 above-referenced Covered Action pursuant to Exchange Act Section 21F(b)(1) and Rule 21F-3(a) thereunder
- The Commission Applies The Award Criteria Specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here
- The Commission Positively Assessed The following facts: (i) the Claimants’ information was significant as it would have been unlikely for Commission staff to have learned of the misconduct absent the Claimants’ initial tip; (ii) each of the Claimants provided assistance to Commission staff by providing an interview early in the investigation; (iii) Claimants’ information helped the Commission further significant law enforcement interests by enabling the Commission to shut down a fraudulent scheme in which investors in a company were preyed upon by recidivist violators; (iv) Claimants were harmed investors who lost their retirement savings; and (v) current collections from the defendants of the monetary sanctions ordered were low
- The Commission Orders That Claimants Shall Receive An award of percent of the monetary sanctions collected, or to be collected, in the Covered Action
1 UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 87544 / November 15, 2019 WHISTLEBLOWER AWARD PROCEEDING File No. 2020-1 In the Matter of the Claims for Award in connection with Notice of Covered Action: Redacted Redacted ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that claimants, Redacted (“Claimants”), jointly receive a whistleblower award in the amount of *** percent ( *** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action. 1 Based on current collections, a *** % award would result in an undivided payment to Claimants of over $260,000. Claimants 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 1 See Section 21F(a)(6) of the Securities Exchange Act of 1934 (“Exchange Act”) (defining “whistleblower” to mean “2 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 net 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 three of them, the Office of the Whistleblower is directed to pay each of them individually one-third of their joint award. 2 enforcement of the above-referenced Covered Action pursuant to Exchange Act Section 21F(b)(1) 2 and Rule 21F-3(a) thereunder. 3 Applying the award criteria specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate. 4 In reaching that determination, we positively assessed the following facts: (i) the Claimants’ information was significant as it would have been unlikely for Commission staff to have learned of the misconduct absent the Claimants’ initial tip; (ii) each of the Claimants provided assistance to Commission staff by providing an interview early in the investigation; (iii) Claimants’ information helped the Commission further significant law enforcement interests by enabling the Commission to shut down a fraudulent scheme in which investors in a Redacted company were preyed upon by recidivist violators; (iv) Claimants were harmed investors who lost their retirement savings; and (v) current collections from the defendants of the monetary sanctions ordered were low. Accordingly, it is hereby ORDERED that Claimants shall receive an award of Redacted percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action. By the Commission. Vanessa A. Countryman Secretary 2 15 U.S.C. § 78u-6(b)(1). 3 17 C.F.R. § 240.21F-3(a). 4 In assessing the appropriate award amount, Rule 21F-6 provides 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.
1 UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 87544 / November 15, 2019 WHISTLEBLOWER AWARD PROCEEDING File No. 2020-1 In the Matter of the Claims for Award in connection with Notice of Covered Action: Redacted Redacted ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that claimants, Redacted (“Claimants”), jointly receive a whistleblower award in the amount of *** percent ( *** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action.1 Based on current collections, a *** % award would result in an undivided payment to Claimants of over $260,000. Claimants 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 1 See Section 21F(a)(6) of the Securities Exchange Act of 1934 (“Exchange Act”) (defining “whistleblower” to mean “2 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 net 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 three of them, the Office of the Whistleblower is directed to pay each of them individually one-third of their joint award. 2 enforcement of the above-referenced Covered Action pursuant to Exchange Act Section 21F(b)(1)2 and Rule 21F-3(a) thereunder.3 Applying the award criteria specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate.4 In reaching that determination, we positively assessed the following facts: (i) the Claimants’ information was significant as it would have been unlikely for Commission staff to have learned of the misconduct absent the Claimants’ initial tip; (ii) each of the Claimants provided assistance to Commission staff by providing an interview early in the investigation; (iii) Claimants’ information helped the Commission further significant law enforcement interests by enabling the Commission to shut down a fraudulent scheme in which investors in a Redacted company were preyed upon by recidivist violators; (iv) Claimants were harmed investors who lost their retirement savings; and (v) current collections from the defendants of the monetary sanctions ordered were low. Accordingly, it is hereby ORDERED that Claimants shall receive an award of Redacted percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action. By the Commission. Vanessa A. Countryman Secretary 2 15 U.S.C. § 78u-6(b)(1). 3 17 C.F.R. § 240.21F-3(a). 4 In assessing the appropriate award amount, Rule 21F-6 provides 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.