The Securities and Exchange Commission announced awards totalling $50 million to whistleblowers who brought high-quality information to the SEC and assisted in bringing a successful enforcement action.
As with all whistleblower awards, the order is heavily redacted as to the company involved, what happened, and when it happened. I’m not sure I can identify which case the awards tie to.
Two things caught my attention about the awards.
One, the order discusses approval or rejection of awards for Claimant #1, Claimant #2, Claimant #4, and Claimant #7. I take it that at least seven people submitted tips to the SEC for the bad acts involved in the case. That is a lot of people sending information to the SEC. I’m not if it’s because a lot of people knew about the problem or a lot of people knew they could make money by reporting the problem.
Second, the two successful claimant had attorneys involved in the whistleblowing process.
Claimant #1 had his or her attorney approach the SEC first before formally submitting the tip. That ended up hurting the award because the SEC found the delay unreasonable and investors were continuing to be harmed. Somehow, Claimant #1 “passively financially benefited” from the misconduct during the delay.
Claimant #2 met with the SEC with his or her attorney. According to the order, Claimant #2 had the “smoking gun” evidence that indisputably showed the problem.
Claimant #2 also received a whistleblower award from another agency in connection with the action. I would guess it was this CFTC award.
Putting those two things together, lots of whistleblowing and lots of lawyers, whistleblowing is becoming a new industry and there is growing population of professional whistleblowers and their service providers.
Matt Kelly pointed out the slick graphic the SEC now seems to be appending to whistleblower award press releases. I have to be a bit snarky and point out the shortcomings of the fancy map showing the quantity of tips by state.
In my snarkiness, I’m going to point out that that the map also shows the most populous states. More people=>more companies=>more tips.
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