On January 13, the U.S. Securities and Exchange Commission (SEC) issued a $3 million whistleblower award to an anonymous individual who voluntarily provided the Commission with original information which led to a successful enforcement action.
According to the award order, the whistleblower “provided information that helped streamline the Covered Action investigation and assisted the Commission staff in drafting document requests, participated in multiple interviews with Commission staff, and identified key witnesses.”
Through the SEC Whistleblower Program, qualified whistleblowers are eligible to receive awards of 10-30% of the sanctions collected in an SEC enforcement action aided by their disclosure. The SEC weighs a number of factors in determining the exact percentage to award whistleblowers, including the significance of the information, the degree of further assistance, culpability and any unreasonable delay in reporting.
As part of the program’s strong confidentiality protections, the SEC does not release any potentially identifying information about award recipients, including details about the enforcement action aided by their disclosure.
Established in 2010 with the passage of the Dodd-Frank Act, the SEC Whistleblower Program has now awarded a total of more than $2.2 billion to 444 individuals.
In FY 2024, the SEC Whistleblower Program received a record 24,980 whistleblower tips and awarded over $255 million, the third highest annual amount. According to SEC Office of the Whistleblower’s annual report, the most common fraud areas reported by whistleblowers in FY 2024 were Manipulation (37%), Offering Fraud (21%), Initial Coin Offerings and Crypto Asset Securities (8%), and Corporate Disclosures and Financials (8%).
Whistleblowers looking to blow the whistle on securities fraud may do so anonymously, but must be represented by a whistleblower attorney.
Geoff Schweller also contributed to this article.