The Securities and Exchange Commission has shown in two whistleblower awards this year that it will reward individuals who provide significant assistance in existing cases, not just to whistleblowers whose information is the basis for a new investigation.
The SEC paid a $3.5 million whistleblower award last week to an individual whose information “bolstered” an ongoing investigation.
In March, the SEC awarded two whistleblowers roughly $65,000 each for providing information that helped an investigation that began as a result of a claim filed by a separate whistleblower.
“Whistleblowers can receive an award not only when their tip initiates an investigation, but also when they provide new information or documentation that advances an existing inquiry,” said SEC Director of Enforcement Andrew Ceresney.
The SEC is bound by law to protect the identity of its whistleblowers, so it doesn’t provide details about the role of whistleblowers in any specific cases.
Reports indicate it wasn’t an easy road for the whistleblower to earn a reward in the most recent case. The whistleblower’s initial claim for a reward actually was denied by the SEC.
But after the whistleblower appealed that decision, the SEC asked the enforcement staff for additional guidance and determined that the whistleblower’s additional information “significantly contributed to the success” of the case.
“What the whistleblower initially argued was his or her information caused the commission to inquire into different conduct,” Phillips & Cohen partner Erika Kelton told National Law Journal. “The commission interpreted that provision and said no, that doesn’t fit here. But what it does fit is the significant contribution prong.”
Kelton has represented three whistleblowers who have received separate SEC awards, including the international whistleblower who received more than $32 million from the SEC. That was the largest whistleblower award in the program’s history when it was announced.
Since the SEC whistleblower reward program’s inception in 2011, the agency has paid more than $62 million to 28 whistleblowers.