The Securities and Exchange Commission (SEC) surpassed $1 billion in whistleblower awards with the announcement Wednesday of a $110 million payout to a whistleblower whose independent analysis led to two successful enforcement actions against a company.
The bounty, the agency’s second largest, consisted of $40 million in connection with an SEC action and $70 million linked to a related action by another unnamed agency. In addition, the SEC paid out $4 million to a second whistleblower in the same case.
With the announcement, the SEC has paid out approximately $1 billion to 207 whistleblowers since the first award was distributed in 2012. Half that amount—approximately $511 million—has been awarded in the current fiscal year, which ends Sept. 30. The previous high-water mark was $175 million in fiscal year 2020.
Put another way, over two-thirds of SEC whistleblower payouts have been awarded since Oct. 1, 2019.
“Today’s announcement underscores the important role that whistleblowers play in helping the SEC detect, investigate, and prosecute potential violations of the securities laws,” said SEC Chair Gary Gensler in a press release.
According to the agency’s order, the whistleblower who received $110 million performed an independent analysis on publicly available information to find a company had violated securities law, then presented the results of that analysis to investigators.
The whistleblower used the information “in a way that went beyond the information itself and afforded the Commission with important insights into the extent of” the company’s misconduct, the order said.
“The information was derived from multiple sources that were not readily identified and accessed by members of the public without specialized knowledge, unusual effort, or substantial cost,” the SEC said. The sources the whistleblower used “collectively raised a strong inference of securities law violations that was not otherwise reasonably inferable from any of the sources individually.”
The tipster’s “own examination, evaluation, and analysis contributed significant independent information that bridged the gap between certain publicly available information and the possible securities violations that the Commission and the Other Agency were investigating.”
In addition, the whistleblower provided a detailed suggested witness list among information and supporting documents that saved the SEC “significant time and resources.” They met with Enforcement Division staff in-person and provided multiple written submissions and communications.
The whistleblower “suffered personal and professional hardships as a result” of coming forward, the SEC said.
Only the agency’s $114 million award to a whistleblower in October 2020 was larger, the SEC said. Wednesday’s payout is the second to surpass $100 million.