SEC awards $31M to whistleblowers between 2 separate cases

In one case, two whistleblowers received a joint award of nearly $27 million. Most of the information the tipsters provided wasn’t new, the SEC noted, but what they did identify helped “meaningfully” advance the agency’s investigation and form the basis of certain allegations made against the company that was eventually charged.

Though the whistleblowers worked together, there was disagreement over the share of the award. A verbal understanding that one claimant would be responsible for filing the whistleblower application and determining the distribution of any award to the group was complicated when the other claimant filed their own award application.

“Whatever [the claimants’] private understanding may have been, and regardless of their apparent subsequent falling out, the record is clear that they presented themselves to the Commission as joint whistleblowers,” the SEC explained. A third individual was also in the mix but denied any share of the award for not providing any information during the investigation.

The other case saw $3.75 million awarded to one whistleblower and $750,000 paid out to another. The tipster that earned the larger share “provided information and assistance that was more important to the resolution of the overall case,” the agency stated.

The whistleblower that earned $3.75 million (“Claimant 2”) originally had their claim denied, along with three others. The SEC’s preliminary determination only had one tipster (“Claimant 1”) earning a share of the award. However, Claimant 2 succeeding in contesting the determination and proving the information they provided was voluntary and “more valuable and of more assistance than the information provided by Claimant 1.”

Claimant 1 was criticized for a lag in reporting to the SEC, and their information solely contributed to the agency’s action against an individual—not the larger penalty issued against the company.

With the awards, the SEC has paid out approximately $873 million to 162 individuals since 2012. Over $100 million of that total has been announced in the last month following a $50 million bounty issued April 15.

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 SEC neither identifies whistleblowers, nor discloses information that could reveal a whistleblower’s identity.