In the Matter of the Claim for Award
The SEC awarded over $7 million in whistleblower payouts to three individuals—Claimant #1, an outsider who triggered the investigation into an investment fraud scheme defrauding hundreds of unsophisticated investors, and Claimants #2 and #3, who jointly provided critical new information—after they voluntarily provided original information leading to a successful enforcement action, with no contest filed to the preliminary determination.
The SEC awarded Claimant #1 more than $4 million and Claimants #2 and #3 a joint award of more than $3 million for providing original, voluntary information that led to a successful enforcement action against an investment fraud scheme. Claimant #1, an outsider, was the primary catalyst for the investigation, while Claimants #2 and #3 significantly advanced the case with new information. The awards, determined under Rule 21F-6 and Section 21F of the Securities Exchange Act of 1934, were formally adopted after all claimants declined to contest the preliminary determination.
The SEC awarded a total of over $7 million in whistleblower payouts to three individuals for exposing an investment fraud scheme that defrauded hundreds of unsophisticated investors. Claimant #1, an outsider, provided the original information that triggered the SEC’s investigation and is set to receive more than $4 million, representing a percentage of the monetary sanctions collected. Claimants #2 and #3 jointly submitted critical new information that significantly contributed to the success of the enforcement action and are to share a joint award of more than $3 million, with each expected to receive 50% unless they requested otherwise. All three claimants declined to contest the SEC’s preliminary determination, allowing the Commission to formally adopt the recommended awards under Section 21F of the Securities Exchange Act of 1934 and Rule 21F-6. The SEC found that the disclosures were voluntary, original, and directly led to the covered action, satisfying all statutory criteria for whistleblower awards. The total amount of monetary sanctions in the covered action was not disclosed, but the scale of the awards underscores the significance of the claimants’ contributions. The case highlights the effectiveness of the SEC’s whistleblower program in uncovering complex frauds involving vulnerable investors.
Extracted insights
- $3.00M $3 million $1M–$10M
- person claims review staff
- person joint whistleblower award
- person preliminary determination
- person whistleblower award
- Claims Review Staff issued Preliminary Determination
- Claimant #1 receive whistleblower award
- Claimant #2 and Claimant #3 receive joint whistleblower award
- Claimant #1, Claimant #2, and Claimant #3 provided written notice to the Commission
- Office of the Whistleblower directed pay each of them individually 50% of their joint award
Redacted Redacted Redacted UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 79853/ January 23, 2017 WHISTLEBLOWER AWARD PROCEEDING File No. 2017-6 In the Matter of the Claim for Award in connection with Redacted Notice of Covered Action Redacted ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM On December 7, 2016, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action Preliminary Determination recommended that Redacted Redacted (the “Covered Action”). The (“Claimant #1”) receive a whistleblower award, and Redacted (“Claimant #2”) and Redacted (“Claimant #3”) receive a joint whistleblower award because Claimant #1, individually, and Claimant #2 and Claimant #3, jointly, voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the Claims Review Staff recommended that such awards be set in the amounts of Redacted percent of the monetary sanctions collected or to be collected in the Covered Action for Claimant #1, which will yield an award of more than $4 million; and percent of the monetary sanctions collected or to be collected in the Covered Action for Claimant #2 and Claimant #3, which will yield a joint award of more than $3 million. In reaching this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of the claimants’ applications. On December 8, 2016, Claimant #1, Claimant #2, and Claimant #3 each provided written notice to the Commission of their decisions not to contest the Preliminary Determination. Redacted Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F- 10(f), (h), the Preliminary Determination of the Claims Review Staff is adopted, including the award determinations. The record firmly demonstrates that the claimants have satisfied the criteria for awards. Claimant #1, an outsider, was a primary cause of the staff’s investigation into an investment scheme that defrauded hundreds of investors, many of whom were unsophisticated. Claimant #2 and Claimant #3, acting jointly, voluntarily provided new information to the Commission that significantly contributed to the success of the Covered Action. Accordingly, it is hereby ORDERED that Claimant #1 shall receive an award of Redacted percent of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order; and Claimant #2 Redacted Redacted and Claimant #3 shall receive a joint award of percent of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order. 1 By the Commission. Brent J. Fields Secretary 1 Unless Claimant #2 and Claimant #3, 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. 2
Redacted Redacted Redacted UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 79853/ January 23, 2017 WHISTLEBLOWER AWARD PROCEEDING File No. 2017-6 In the Matter of the Claim for Award in connection with Redacted Notice of Covered Action Redacted ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM On December 7, 2016, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action Preliminary Determination recommended that Redacted Redacted (the “Covered Action”). The (“Claimant #1”) receive a whistleblower award, and Redacted (“Claimant #2”) and Redacted (“Claimant #3”) receive a joint whistleblower award because Claimant #1, individually, and Claimant #2 and Claimant #3, jointly, voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the Claims Review Staff recommended that such awards be set in the amounts of Redacted percent of the monetary sanctions collected or to be collected in the Covered Action for Claimant #1, which will yield an award of more than $4 million; and percent of the monetary sanctions collected or to be collected in the Covered Action for Claimant #2 and Claimant #3, which will yield a joint award of more than $3 million. In reaching this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of the claimants’ applications. On December 8, 2016, Claimant #1, Claimant #2, and Claimant #3 each provided written notice to the Commission of their decisions not to contest the Preliminary Determination. Redacted Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F- 10(f), (h), the Preliminary Determination of the Claims Review Staff is adopted, including the award determinations. The record firmly demonstrates that the claimants have satisfied the criteria for awards. Claimant #1, an outsider, was a primary cause of the staff’s investigation into an investment scheme that defrauded hundreds of investors, many of whom were unsophisticated. Claimant #2 and Claimant #3, acting jointly, voluntarily provided new information to the Commission that significantly contributed to the success of the Covered Action. Accordingly, it is hereby ORDERED that Claimant #1 shall receive an award of Redacted percent of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order; and Claimant #2 Redacted Redacted and Claimant #3 shall receive a joint award of percent of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.1 By the Commission. Brent J. Fields Secretary 1 Unless Claimant #2 and Claimant #3, 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. 2