Second SEC Whistleblower Award Granted On AppealIn its Preliminary Determination, the SEC’s Claims Review Staff (“CRS”) recommended denying an individual any SEC whistleblower reward. The individual challenged the Preliminary Determination and took an administrative appeal to the Commission. On May 13, 2016, the Commission granted the individual an award. This was only the second SEC whistleblower award granted on appeal. As of the end of Fiscal Year 2017, the SEC had received over 22,000 tips from whistleblowers. In the eight+ years since the SEC whistleblower program began in 2010, many of the CRS’s recommendations to deny SEC whistleblower awards in other cases had been appealed to the Commission. The Commission denied all but one of those appeals. For information about the first SEC whistleblower award ever granted on appeal, click here.
Why The CRS Recommended Denying Any AwardThe Order clarified that the SEC first opened its investigation in response to certain media reports. After the investigation began, the individual submitted a “detailed whistleblower tip” about the same misconduct. Although the SEC was already aware of the misconduct, the individual’s tip provided new information and supporting documentation. In addition, SEC Enforcement staff spoke with the individual concerning the tip. The Claims Review Staff’s reason for recommending the denial of any SEC whistleblower reward was that the information provided by the individual “did not lead to the successful enforcement of the Covered Action”. As explained in the Commission’s Order:
Specifically, based on the factual record at the time, it appeared that Claimant’s information did not cause Enforcement staff to open the investigation or to inquire into different conduct, nor did the information appear to have significantly contributed to the success of the Covered Action.