On March 11, the U.S. Securities and Exchange Commission (SEC) issued a whistleblower award of approximately $14 million to an individual who published an online report detailing an ongoing fraud. Following the publication of the report, the individual repeatedly reached out to the SEC about the fraud and eventually submitted a formal whistleblower disclosure with the agency. The SEC also denied an award application for a second individual who was also involved in the publication of the report but who, in contrast, did not directly contact the SEC about the violations.
According to the SEC, the online report contained credible and high-quality information about an ongoing fraud that prompted the opening of an investigation. The investigation in turn led to a successful enforcement action which allowed millions of dollars to be returned to harmed investors.
Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to successful enforcement action, are entitled to an award of 10-30% of the funds collected by the government. To be eligible for a whistleblower award, an individual must formally file a disclosure with the SEC via a Form TCR.
Upon a preliminary review, the SEC denied the awarded whistleblower’s award claim due in part to the fact the individual did not file a Form TCR until four years after posting the online report and two months after the SEC posted a Notice of Covered Action for the...
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