The Securities and Exchange Commission (SEC) on Monday announced the award of $300,000 to a whistleblower with audit-related responsibilities, a rarity for the program.
Of the agency’s 124 awards distributed to individuals since the first in 2012, only four have been paid out to whistleblowers in the audit/compliance space. Tipsters to hold a such a position are generally considered ineligible for awards, though exceptions may be made based on certain circumstances.
In the case of Monday’s award, the whistleblower alerted the SEC to conduct that would impede an agency investigation. The tipster “became aware of the potential securities law violations in connection with audit-related responsibilities” and came forward to the SEC with “high-quality information and continued assistance” that aided its investigation into the violations.
“This award is an example of the important role that audit and compliance professionals can play in assisting the Commission’s enforcement efforts, especially when the entity is attempting to thwart an investigation,” said Jane Norberg, chief of the SEC’s Office of the Whistleblower, in a press release. “The whistleblower attempted to remedy the conduct and provided exceptional assistance to the enforcement staff.”
According to the SEC’s order, the whistleblower contacted the agency with the information before it was aware of the misconduct, which satisfied the requirement that information be provided voluntarily in order to qualify for an award.
The whistleblower met with SEC enforcement staff “more than a dozen times,” identified numerous witnesses, and “aggressively attempted to remedy the misconduct and suffered a unique hardship,” the order said. The order redacts the details of the hardship to prevent disclosing the tipster’s identity.
With the award, the SEC has issued nearly $170 million to whistleblowers in fiscal year 2021, which began Oct. 1. In the entire FY2020, the SEC issued a record $175 million in awards. The program has distributed $731 million in awards total since 2012.
Awards can range from 10 percent to 30 percent of the money collected when the penalties exceed $1 million; all award payments are made through an investor protection fund established by Congress and financed by monetary sanctions paid to the SEC by securities law violators.
The last compliance-related whistleblower award announced by the SEC was for $450,000 in March.