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SEC issues whistleblower awards totaling $40 million
On October 15, the SEC announced awards totaling approximately $40 million to two whistleblowers who provided information and assistance leading to a successful SEC enforcement action. According to the redacted order, the SEC paid one of the whistleblowers roughly $32 million for providing substantial assistance to enforcement staff, identifying witnesses, and helping staff understand complex fact patterns. The SEC noted that the whistleblower’s tip was the initial source of the underlying investigation, and that without the individual’s information, the abuses would have been difficult to detect. The second whistleblower—who delayed reporting to the SEC for several years—provided helpful information during the course of the investigation that gave enforcement staff a more complete picture of events, and was awarded approximately $8 million.
The SEC has awarded approximately $1.1 billion to 218 individuals since issuing its first award in 2012.
National bank to pay $37 million for alleged foreign exchange violations
On September 27, a proposed settlement was filed in the U.S. District Court for the Southern District of New York resolving allegations that a national bank (defendant) allegedly defrauded nearly 800 commercial customers by charging higher prices on foreign exchange (FX) transactions despite having fixed-pricing agreements. According to the complaint, from 2010 to 2017, the defendant allegedly defrauded customers who utilized its FX services, which violated the mail fraud, wire fraud, and bank fraud statutes of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), by: (i) falsely representing that the defendant would charge fixed FX spreads or sales margins on the customers’ FX transactions; (ii) financially incentivizing the FX sales specialists to overcharge while failing to certify that FX sales specialists comply with fixed-pricing agreements; and (iii) systematically charging “higher [FX] spreads or sales margins than [the bank] represented it would charge and/or was charging in fixed-pricing agreements or otherwise, while concealing the overcharges from the Customers.” Under the terms of the proposed settlement, the defendant must pay nearly $35.3 million plus interest, while an additional $2 million payment plus interest is subject to forfeiture to the U.S. The proposed settlement notes that the defendant paid $35.3 million in restitution to commercial customers who utilized the bank’s FX services. According to the order, the whistleblower who filed a declaration in 2016 with the U.S. under the Financial Institutions Anti-Fraud Enforcement Act will receive $1.6 million of the civil penalty. The DOJ sent a letter informing the court “that the United States and [the bank] have entered into a proposed Stipulation and Order of Settlement and Dismissal (the ‘Settlement’) resolving this action.”
SEC bans two individuals from whistleblower program
On September 28, the SEC announced that it permanently barred two individuals, pursuant to the 2020 amendments to the Whistleblower Program Rules, from the SEC's whistleblower award program due to filing hundreds of frivolous award applications. According to both orders (see here and here), the individuals submitted award applications to the Commission that had no relation to the enforcement action for which they were applying, and refused to stop submitting the filings after repeatedly warned to do so. According to the SEC, the filing of the applications took considerable time and resources from Commission staff, hindered the effective operation of the program, and did not lead to any enforcement action. The permanent bars imposed in these matters pertain to pending award applications from the individuals, and to all future award applications submitted by the individuals.
SEC awards $36 million to whistleblower
On September 24, the SEC announced that it awarded a whistleblower approximately $36 million for providing information and assistance leading to a successful SEC enforcement action, as well as actions by another federal agency. According to the redacted order, the whistleblower voluntarily provided information regarding an illegal scheme to staff at both agencies and met with SEC enforcement staff on multiple occasions. According to the SEC, the SEC's whistleblower program allows individuals who provide critical information to other agencies to be eligible for a related action award if they are also eligible for an award in the underlying SEC action.
The SEC has awarded approximately $1.1 billion to 214 individuals since issuing its first award in 2012.
SEC issues whistleblower awards totaling $11.5 million
On September 17, the SEC announced whistleblower awards totaling approximately $11.5 million to two whistleblowers who provided information and assistance leading to a successful SEC enforcement action. According to the redacted order, the SEC paid one of the whistleblowers nearly $7 million for being the initial source that led enforcement staff to open an investigation into hard-to-detect violations and for providing subsequent substantial assistance. According to the SEC, the whistleblower also “made persistent efforts to remedy the issues, while suffering hardships.” The second whistleblower, who provided information several years after the investigation was already underway, was paid more than $4.5 million. The SEC noted that the information was particularly helpful as it was based on the second whistleblower’s more recent experience. However, the SEC reduced the award after determining that the whistleblower delayed reporting to the SEC for several years after becoming aware of the wrongdoing.
The SEC has awarded approximately $1 billion in whistleblower awards to 212 individuals since issuing its first award in 2012.
SEC reaches $1 billion milestone in whistleblower awards
On September 15, the SEC announced whistleblower awards totaling nearly $114 million to two whistleblowers who provided information and assistance leading to successful SEC and related actions. According to the redacted order, the first whistleblower was awarded $110 million for providing “significant independent information that bridged the gap between certain publicly available information and the possible securities violations.” The SEC noted that the “$110 million award consists of an approximately $40 million award in connection with an SEC case and an approximately $70 million award arising out of related actions by another agency.” The $110 million award is the second-highest award in the program's history, following an approximately $114 million whistleblower award the SEC issued in October 2020 (covered by InfoBytes here). After the SEC staff opened an investigation and undertook significant investigative steps, a second whistleblower voluntarily provided original information and received an approximately $4 million award.
The SEC has awarded approximately $1 billion in whistleblower awards to 207 individuals since issuing its first award in 2012, which includes over $500 million in fiscal year 2021 alone.
SEC issues whistleblower awards totaling nearly $2.6 million
On August 27, the SEC announced whistleblower awards to five individuals totaling nearly $2.6 million for information provided in three separate enforcement actions. According to the first redacted order, the SEC awarded a whistleblower nearly $1.2 million for voluntarily providing an “’independent analysis’ by creating and applying a complex algorithm to publicly available data,” which saved resources and time for Commission staff, and assisted the staff during settlement negotiations. In the second redacted order, the SEC awarded approximately $1 million to three individuals for providing original information and assistance that led to a successful enforcement action. According to the order, though the whistleblowers held compliance roles at the company, they are eligible for an award since they submitted information to the Commission more than 120 days after the alleged conduct was internally reported. The first whistleblower who received the highest award provided extraordinary assistance and comprehensive information that was vital to the successful enforcement action. In the third redacted order, the SEC awarded a whistleblower over $350,000 for providing independent analysis based on an unusual effort and expertise developed over many years. The whistleblower identified patterns among publicly available information that allowed the Commission to quickly identify and prevent wrongdoing and to preserve assets, which led to a successful enforcement action.
SEC awards $9.5 million to whistleblowers
On August 10, the SEC announced awards totaling nearly $6 million to two whistleblowers whose information and assistance led to separate successful SEC enforcement actions. According to the first redacted order, the SEC awarded a whistleblower nearly $3.5 million for voluntarily providing original information to the Commission, which expanded an existing investigation into a new geographic area and led to a successful enforcement action. The whistleblower also traveled to meet in person with staff, identified an important witness, and provided multiple supplemental submissions that assisted the SEC with the charges in the underlying enforcement action. In the second redacted order, the SEC awarded a whistleblower approximately $2.4 million for alerting the SEC to previously unknown conduct, which initiated the opening of the investigation. The whistleblower also met in person with SEC staff, provided documents, and identified potential witnesses.
Earlier on August 6, the SEC announced awards totaling more than $3.5 million to three whistleblowers whose information and assistance led to two SEC enforcement actions. According to the first redacted order, the SEC awarded a whistleblower nearly $2 million for voluntarily providing original information to the Commission, which led to a successful enforcement action. The whistleblower also provided ongoing assistance, participated in interviews, and provided information that saved staff time and resources. In the second redacted order, the SEC awarded a whistleblower approximately $1 million and a second whistleblower approximately $500,000. The SEC noted that though both whistleblowers provided valuable information, the whistleblower who received the larger award provided information and cooperation that was more impactful in the enforcement action.
The SEC has awarded approximately $956 million to 195 individuals since issuing its first award in 2012.
SEC considers revision of two amendments
On August 2, the SEC announced it will review two recent amendments to its whistleblower rules adopted in September 2020 in response to concerns that they would discourage whistleblowers from coming forward. According to SEC Chair Gary Gensler, “one amendment would preclude the Commission in some instances from making an award in related enforcement actions brought by other law-enforcement and regulatory authorities if a second, alternative whistleblower award program might also apply to the action.” The second amendment, on the other hand, may be utilized by a future Commission to decrease an award due to the size of the award in absolute terms. As previously covered by InfoBytes, these amendments were designed to “provide greater transparency, efficiency and clarity, and to strengthen and bolster the program.”
SEC issues whistleblower awards totaling nearly $4 million
On August 2, the SEC announced whistleblower awards to four individuals totaling nearly $4 million for information provided in two separate enforcement actions. According to the first redacted order, the SEC awarded a whistleblower nearly $2 million for voluntarily providing original information to the Commission, which initiated an investigation. The whistleblower also provided ongoing assistance, participated in interviews, and identified key witnesses, which led to a successful enforcement action. In the same enforcement action, the SEC awarded over $150,000 to another whistleblower, whose information helped SEC staff expand its investigation. In the second redacted order, the SEC awarded approximately $1.1 million to an individual for reporting misconduct internally and notifying the SEC of the violations, in addition to more than $500,000 to another whistleblower for providing important, but not sufficiently timely, information.
The SEC has awarded approximately $946 million to 190 individuals since issuing its first award in 2012.