SEC Awards $1.6 Million to Whistleblower
The SEC awarded more than $1.6 million to a whistleblower for providing original information that led to a successful enforcement action.
According to the SEC, the whistleblower provided extensive assistance to the SEC in its investigation, including (i) offering original information, (ii) reporting allegations that otherwise would have been hard to detect, and (iii) saving SEC staff time and resources by providing information early in the process that helped shape the SEC's investigation.
The SEC noted that the whistleblower was "unreasonably delayed" in reporting the allegations, though it did not result in a significant decrease in the SEC's award because the delay did not take place "entirely after" the SEC's Whistleblower Program was established.
Commentary
This case demonstrated the breadth of the SEC's discretion when determining the amount of a whistleblower award. The SEC chose not to place significant weight on the whistleblower's unreasonable delay in reporting the allegations because they occurred during the time the Whistleblower Program was being implemented. This is particularly interesting given the rule revisions the SEC has been considering that would give the SEC discretion to reduce or cap certain large whistleblower payouts. Chair Clayton argued during a Senate hearing late last year that the intent of the revised rules was not to cap awards, but rather to use good judgment in determining awards. Some hypothesized that these proposed changes might disincentivize whistleblowers from coming forward, but this year has shown no signs of the Whistleblower Program slowing down.