SEC Whistleblower Awards For Related Actions

If a whistleblower provides information about a securities crime or violation to the SEC, and the SEC brings a successful action in which it collects more than $1 million from the perpetrators, an SEC whistleblower reward may become available, assuming all other rules and requirements are satisfied.  If an award is available in the SEC’s case, and one or more different government agencies also bring their own cases in which they use the same information that the whistleblower provided to the SEC, the whistleblower may be able to get one or more additional related action SEC whistleblower awards.

What Are “Related Actions”?

related action SEC whistleblower awardsSome types of SEC whistleblower cases involve crimes or violations that other government agencies or regulatory authorities have jurisdiction over.  When that happens, the other agencies or authorities can conduct their own investigations and bring their own cases, separate from the SEC’s case.

The other agencies or authorities might learn about the fraud or crime because the SEC whistleblower told them about it, either before or after reporting to the SEC.  Sometimes the SEC itself lets the other agencies or authorities know about it.

If the same original information that a whistleblower gives to the SEC also leads to one or more successful actions by different agencies or authorities, those other agencies’ or authorities’ cases may be considered “related actions” to the SEC’s case.

Under the SEC whistleblower program, the Commission gives SEC whistleblower rewards for related actions.

Three Conditions For Related Action SEC Whistleblower Awards

There are three important conditions that must be satisfied for the SEC to give out related action SEC whistleblower awards.

First, the whistleblower must give his or her original information to the SEC.  A whistleblower cannot give his or her information to a different agency or authority, but not give it to the SEC, and then ask the SEC to give him or her a related action SEC whistleblower award.

Second, the whistleblower’s original information must lead to a “successful” SEC action, as defined by the SEC whistleblower rules.  This means that an SEC whistleblower reward has to be available in the SEC’s case before the SEC will consider granting any related action SEC whistleblower awards.  (See Rule 21F-11(a).)

Third, the same original information must also lead to the successful enforcement of the related action by the other agency or authority.  In determining whether the related action is “successful”, the SEC uses “the same criteria” in the SEC whistleblower rules “for awards made in connection with Commission actions.”  (Rule 21F-3(b)(2).)  For more information about how the SEC whistleblower rules define a “successful” action, see here.

The Relevant Agencies And Authorities

Related action SEC whistleblower awards may be available for “related” judicial or administrative actions brought by the Attorney General of the United States, a state attorney general in a criminal case, a self-regulatory organization such as the NYSE or FINRA, or an appropriate regulatory authority (which is defined elsewhere in the SEC whistleblower rules).

Because the Commodity Futures Trading Commission (“CFTC”) has its own whistleblower reward program, no SEC whistleblower reward will be available for a related CFTC action if the CFTC has already granted its own whistleblower award in that same related action.

Applying For Related Action SEC Whistleblower Awards

Claims for related action SEC whistleblower awards must be made using Form WB-APP.  This is the same form that is used to apply for an award in an SEC whistleblower case.

When filing a Form WB-APP for an SEC whistleblower reward in an SEC case, if there is already a final order imposing monetary sanctions on the violators in a related action, the claims for both awards in both cases must be made on the same Form WB-APP.

If a final order imposing monetary sanctions has not yet been entered in any related action, then the Form WB-APP will include only the claim for an award in the SEC case.  Later, when a final order is entered in a related action, the whistleblower must file another Form WB-APP for that related action.  That Form WB-APP must be submitted to the SEC within ninety (90) days of the issuance of the final order imposing sanctions in the related action.

Additional Information

For more information about related action SEC whistleblower awards, click on the links below: