In the Matter of the Claim for Award
A foreign resident whistleblower received approximately $500,000 from the SEC for providing the original, pivotal information that triggered an enforcement action involving fraud occurring abroad, where the tip was the first to expose the misconduct and helped identify a key witness.
The SEC awarded a foreign resident whistleblower approximately $500,000, representing a percentage of monetary sanctions collected in a covered enforcement action involving misconduct that occurred overseas. The whistleblower’s tip was the first information the SEC received on the violations and served as a principal motivating factor in launching the investigation, despite later corroboration from other sources. The Commission credited the whistleblower for expeditiously reporting the misconduct and identifying a key witness, and determined the award appropriate under Rule 21F-6 based on the significance of the information and the difficulty of detecting the fraud without it.
The U.S. Securities and Exchange Commission (SEC) awarded a foreign resident whistleblower approximately $500,000 for providing original information that led to a successful enforcement action involving financial misconduct occurring abroad. The whistleblower’s tip was the first to alert the SEC to the violations and was identified as a principal motivating factor in initiating the investigation, even though subsequent evidence was gathered from other witnesses. The claimant expeditiously reported the misconduct and directed enforcement staff to a critical witness, significantly aiding the investigation despite not providing ongoing assistance. The SEC determined the award amount under Rule 21F-6, considering factors such as the significance of the information, the difficulty of detecting the fraud without the tip, and the whistleblower’s lack of culpability or delay. The claimant did not contest the Preliminary Determination, allowing the SEC to formally adopt the award recommendation without further proceedings. The case underscores the SEC’s commitment to incentivizing international whistleblowers whose information is essential to uncovering cross-border securities violations. The underlying nature of the fraud and the entities involved remain redacted, but the whistleblower’s role was central to the action’s success.
Extracted insights
- $500K $500,000 $100K–$1M
- person claims review staff
- person original information
- person preliminary determination
- person whistleblower award
- Claims Review Staff issued Preliminary Determination
- Claims Review Staff recommended whistleblower award
- Claimant provided object":
- Claimant received approximately $500,000
- Claimant provided original information
- Commission adopted recommendation of the Claims Review Staff
- Commission ordered Claimant shall receive an award
- Vanessa A. Countryman served as Secretary
1 *** UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 86431 / July 23, 2019 WHISTLEBLOWER AWARD PROCEEDING File No. 2019-8 In the Matter of the Claim for Award in connection with Notice of Covered Action: Redacted Redacted Redacted Redacted ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Redacted (“Claimant”) receive a whistleblower award in the amount of Redacted percent ( %) of the monetary sanctions collected in the above-referenced Covered Action for a payout of approximately $500,000. 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, a foreign resident, voluntarily provided original information to the Commission that led to the successful enforcement of the above-referenced Covered Action pursuant to Section 2 *** 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) 1 and Rule 21F-3(a) thereunder. 2 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. 3 In reaching that determination, we positively assessed the following facts: Claimant’s tip was the first information on the charged misconduct that the Commission received; Claimant expeditiously reported to the Commission and pointed Enforcement staff to an important witness; and without Claimant’s tip, the violations at issue would have been difficult to identify and prove, in part because the misconduct occurred abroad. We also took into account that Claimant was not in a position to provide continuing assistance, and other witnesses provided the information to substantiate Claimant’s tip. Upon due consideration under Rules 21F-10(f) and (h) of the Exchange Act, the Preliminary Determination of the CRS is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of Redacted percent ( %) of the monetary sanctions collected in the Covered Action. By the Commission. Vanessa A. Countryman Secretary 1 15 U.S.C. § 78u-6(b)(1). Although not the sole source of information, Claimant’s tip was a principal motivating factor in the decision to investigate the misconduct. See Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-63237, 75 FR 70488, 70497 (Nov. 3, 2010) (Rule 21F-4(c)(1) “does not necessarily contemplate that the whistleblower’s information will be the only information that the staff obtains before deciding to proceed. However, the proposed rule would apply when the whistleblower gave the staff information about conduct that the staff is not already investigating or examining, and that information was a principal motivating factor behind the staff’s decision to begin looking into the whistleblower’s allegations.”). 2 17 C.F.R. § 240.21F-3(a). 3 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. 86431 / July 23, 2019 WHISTLEBLOWER AWARD PROCEEDING File No. 2019-8 In the Matter of the Claim for Award in connection with Notice of Covered Action: Redacted Redacted Redacted Redacted ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Redacted (“Claimant”) receive a whistleblower award in the amount of Redacted percent ( %) of the monetary sanctions collected in the above-referenced Covered Action for a payout of approximately $500,000. 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, a foreign resident, voluntarily provided original information to the Commission that led to the successful enforcement of the above-referenced Covered Action pursuant to Section 2 *** 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)1 and Rule 21F-3(a) thereunder.2 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.3 In reaching that determination, we positively assessed the following facts: Claimant’s tip was the first information on the charged misconduct that the Commission received; Claimant expeditiously reported to the Commission and pointed Enforcement staff to an important witness; and without Claimant’s tip, the violations at issue would have been difficult to identify and prove, in part because the misconduct occurred abroad. We also took into account that Claimant was not in a position to provide continuing assistance, and other witnesses provided the information to substantiate Claimant’s tip. Upon due consideration under Rules 21F-10(f) and (h) of the Exchange Act, the Preliminary Determination of the CRS is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of Redacted percent ( %) of the monetary sanctions collected in the Covered Action. By the Commission. Vanessa A. Countryman Secretary 1 15 U.S.C. § 78u-6(b)(1). Although not the sole source of information, Claimant’s tip was a principal motivating factor in the decision to investigate the misconduct. See Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-63237, 75 FR 70488, 70497 (Nov. 3, 2010) (Rule 21F-4(c)(1) “does not necessarily contemplate that the whistleblower’s information will be the only information that the staff obtains before deciding to proceed. However, the proposed rule would apply when the whistleblower gave the staff information about conduct that the staff is not already investigating or examining, and that information was a principal motivating factor behind the staff’s decision to begin looking into the whistleblower’s allegations.”). 2 17 C.F.R. § 240.21F-3(a). 3 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.