For the first time, the Securities and Exchange Commission (SEC) has made an award to a whistleblower who provided information that led to a related settlement by another agency—in this case, the Department of Justice (DOJ).
The $9.2 million award announced Tuesday goes to a whistleblower whose information led to a DOJ non-prosecution agreement (NPA)/deferred prosecution agreement (DPA). It is the first such award since the SEC changed its whistleblower program rules in December 2020.
One of the amendments implemented “deem a DOJ NPA or DPA entered into after July 21, 2010, to be an administrative action that may be a ‘related action’ that is eligible for a whistleblower award from the SEC.”
“This award reflects the Commission’s determination that a whistleblower’s eligibility for an award should not depend on the procedural vehicle a federal agency selects to resolve an enforcement matter,” said Jane Norberg, chief of the SEC’s Office of the Whistleblower, in a press release. “Deserving whistleblowers, like today’s awardee, will be rewarded regardless of the path used to successfully conclude the matter.”
The whistleblower first received an award for providing information to the SEC that led to a successful enforcement action. The tipster provided the same information to the DOJ that also led to a successful enforcement action(s).
The SEC has awarded more than $750 million to 136 individuals since issuing its first bounty in 2012. Fiscal year 2021 is already the biggest year for whistleblower awards in the agency’s history, with a total of approximately $188 million paid since beginning Oct. 1. Fiscal year 2020 held the previous record, with $175 million in payouts.
Payments to whistleblowers are drawn from an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. Awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.
As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.
Aaron Nicodemus covers regulatory policy and compliance trends for Compliance Week. He previously worked as a reporter for Bloomberg Law and as business editor at the Telegram & Gazette in Worcester, Mass.
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