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SEC issues multiple whistleblower awards, including award based on DOJ agreement

Buckley InfoBytes

On February 23, the SEC announced a more than $9.2 million award to a whistleblower whose information and assistance led to successful related DOJ actions. This marks the first SEC whistleblower award based on a DOJ non-prosecution agreement or deferred prosecution agreement since amendments to the SEC’s whistleblower program rules took effect last December (covered by InfoBytes here). The SEC noted that the whistleblower was previously awarded for his contributions to a successful SEC enforcement action based on the same information that supported the DOJ’s actions, which is a prerequisite in order to be eligible for a related-action award. According to the redacted order, the whistleblower provided significant, original information to the SEC about an ongoing fraud that “enabled a large amount of money to be returned to investors harmed by the fraud.” The SEC provided the information to the DOJ, noting that the whistleblower provided significant assistance by traveling at the whistleblower’s own expense to be interviewed by DOJ.

Earlier on February 19, the SEC announced whistleblower awards totaling nearly $3 million in two separate enforcement actions. According to the first redacted order, the SEC awarded a whistleblower over $2.2 million for providing original information that significantly contributed to the investigation and resulted in the “return of millions of dollars to harmed clients.” According to the SEC, the whistleblower also “took personal and professional risks by raising concerns internally in an effort to remedy the misconduct.”

In the second redacted order, the SEC awarded a whistleblower nearly $700,000 for alerting Commission staff to a fraudulent reporting scheme, which prompted the opening of an investigation. The SEC noted that the whistleblower voluntarily provided critical documents and information to Commission staff, helped identify key documents and witnesses, thus conserving SEC time and resources, and “internally raised concerns about the perceived conduct in an effort to remedy the violations.”

The SEC has now paid approximately $750 million to 136 individuals since the inception of the program in 2012.

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