A U.S. whistleblower will receive US$37 million for their tip from the U.S. Securities and Exchange Commission (SEC), even though the tipster wanted more.
The SEC said the whistleblower “significantly contributed” to a successful enforcement action by meeting with investigators and providing the regulator with information that saved it time and resources, such as identifying witnesses and evidence.
The whistleblower asked the regulator to reconsider its decision for a US$37-million award, arguing they were entitled to a larger amount. Supporting factors, the whistleblower said, included that the tip likely led to the opening of an investigation and contributed to the SEC reaching a large settlement.
The commission declined to change its decision, indicating that the misconduct was uncovered by the SEC’s compliance unit, the division of examinations.
“While [exams division] staff reviewed the [whistleblower report], it had no effect on the opening of the exams, the selection of the entities to be examined, or the scope of the exams,” the SEC’s order said.
After compliance staff referred the case to enforcement, which opened an investigation, they also passed along the whistleblower report, the order said.
“Enforcement staff opened the [inquiry] before receiving his/her tip and interviewing him/her,” the order said, adding that the case was not formally converted into an investigation as a result of the tip.
Whistleblower awards can range from 10% to 30% of the sanctions collected by the SEC in cases where those sanctions exceed US$1 million.
In determining the size of awards, “we consider what impact the [whistleblower’s] information had on the investigation, not how the information could have impacted the investigation in hypothetical circumstances,” the SEC said.
In this case, the tipster’s information helped SEC enforcement staff “focus their attention on relevant witnesses, and influenced their decisions as to what documents to request and from which witnesses to take testimony, which saved time and resources.”
Tens of millions of dollars were returned to harmed investors as a result of the enforcement action, the SEC added.