SEC discretion nets tipster US$37M award

A dogged whistleblower is being rewarded with more than US$37 million for reporting misconduct that led to enforcement actions.

The U.S. Securities and Exchange Commission (SEC) ordered a whistleblower award comprised of US$29 million for reporting alleged misconduct to the SEC and another US$8 million for a related action brought by another, unnamed agency, after repeatedly submitting anonymous tips to the SEC and the company that was involved in the misconduct.

According to the SEC’s order granting the award, the tipster first reported their suspicions to the regulator and submitted an anonymous tip to the company about six months later.

That tip to the company prompted an internal investigation that eventually resulted in the firm self-reporting the misconduct to the SEC, which then initiated its own investigation.

The regulator’s order noted that the tipster, who was an outsider to the company, technically didn’t qualify for a whistleblower award under the program’s rules since they didn’t report their concerns to the company before or at the same time as they tipped off the SEC.

However, the commission ruled that the spirit of its rules, and the goal of encouraging internal reporting, was met in this case, even if the technical requirements of the rules were not.

It also noted that the whistleblower “submitted multiple anonymous tips to both the company and the commission throughout the course of the investigations.”

“The whistleblower here made persistent efforts to bring the conduct to the attention of the SEC, another agency and the company, and is credited with the results of the company’s internal investigation,” said Creola Kelly, chief of the SEC’s Office of the Whistleblower, in a release.

According to the order, two other people also made whistleblower claims in the case, but those claims were denied.

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