SEC Awards $18 Million to Whistleblower
The SEC awarded $18 million to a whistleblower for providing information that led to a successful enforcement action.
According to the SEC, the whistleblower provided significant information regarding potential securities violations, which prompted an investigation by the Commission's Office of Compliance, Inspections and Examinations ("OCIE"). The SEC stated that the whistleblower provided assistance to the OCIE during its exam, but the OCIE ultimately uncovered violations that were broader than what was alleged by the whistleblower. Additionally, a large portion of the monetary sanctions against the company related to conduct beyond that reported by the whistleblower. The SEC found that the whistleblower suffered hardships as a result of trying to report the conduct internally. The SEC weighed all of these factors when considering the appropriate award percentage for the whistleblower.
Commentary
In what is becoming an all too familiar feature in recent cases, the whistleblower reported internally "multiple times" in an effort to immediately address the misconduct. Instead of taking his concerns seriously, the company not only ignored them, but took retaliatory acts against the whistleblower. If companies continue to ignore internal reports of misconduct, 2020 may turn out to be a record-setting year for whistleblower awards.
Further, the SEC highlighted the fact that millions of dollars were returned to retail investors as a result of the whistleblower's actions. This is consistent with the SEC's focus on the protection of retail investors for the past two-plus years since the formation of the Retail Strategy Task Force. The SEC said repeatedly that it will concentrate resources and expertise from across the Commission to develop targeted initiatives to identify and address misconduct that most affects retail investors. It is making good on that promise.