On September 15, 2021, the SEC announced accumulated awards of over $1 billion paid to 207 whistleblowers since its first award in 2012.  Over $500 million was awarded in fiscal year 2021 alone.

The SEC crossed the billion-dollar milestone with awards of $110 million and $4 million to two whistleblowers on September 15, 2021.  The $110 million award marks the second-highest award to date and consists of $40 million stemming from an SEC case and $70 million for related actions by another agency.

An examination of the $110 million award order provides important insights into the SEC’s evaluation of whistleblower assistance.  According to the SEC, the information provided by the award recipient was valuable because it was based on the whistleblower’s own examination, evaluation, and independent analysis, and it contributed significant independent “original information” that bridged the gap between certain publicly available information and the possible securities violations that the Commission and the Other Agency were investigating.  For example:

  • The whistleblower used publicly available information to provide the Commission with important insights into the extent of the alleged misconduct.
  • The whistleblower also provided information derived from multiple sources not readily identifiable or accessible by members of the public without specialized knowledge, unusual effort, or substantial cost.
  • The whistleblower’s sources collectively raised a strong inference of securities law violations not otherwise reasonably inferable from any individual source.

The SEC noted that, as a result of this analysis, the whistleblower provided the agency with a detailed suggested witness list and other supporting documentation, thereby saving the SEC significant time and resources.  The whistleblower also provided substantial, ongoing assistance to the staff, including multiple written submissions, communications, and in-person meetings.  The SEC also disclosed that the whistleblower suffered personal and professional hardships as a result of the whistleblower activities (while not providing any details regarding such hardships).

The SEC acknowledged, however, that the whistleblower submitted information after the Commission had already opened an investigation of the potential misconduct, and it assisted with only some of the misconduct the staff was investigating – suggesting even a higher possible award where these circumstances are not present.

The award amount can range from 10-30% of the money collected when the monetary sanctions exceed $1 million.  Rule 21F-5(b).  But, the award is at the discretion of the SEC, and the same order which provided for the $110 million award to a whistleblower denied an award to another whistleblower in an unrelated award claim.

An award can also be provided for an action that results in a non-prosecution agreement (NPA) or deferred prosecution agreement (DPA), based on the amendments to the SEC whistleblower program rules in December 2020.  As such, in February 2021, a whistleblower who had already received an award for an SEC enforcement action received another award for a successful NPA or DPA resolution by the Department of Justice on a related action.

Stay tuned for our ongoing review of the monthly notices of Covered Actions.  See our previous posts on the June 2021 Covered Actions here and July 2021 Covered Actions here.

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Photo of Rina Kim Rina Kim

M. Rina Kim is a senior counsel, focusing on complex securities and commercial litigation, investigations and restructurings that include issues relating to financial projections, accounting statements, and financial disclosures. She is experienced in working with economists and financial advisors both on consulting projects…

M. Rina Kim is a senior counsel, focusing on complex securities and commercial litigation, investigations and restructurings that include issues relating to financial projections, accounting statements, and financial disclosures. She is experienced in working with economists and financial advisors both on consulting projects and as experts in litigated matters. Rina helps clients achieve successful outcomes and resolve sophisticated financial matters through her auditing and forensic knowledge in financial statements, books and records, and complex accounting standards.

Rina is a certified public accountant in Virginia and Washington, D.C., a certified fraud examiner and certified management accountant and a chartered financial analyst candidate. Rina was recognized as a Pathfinder in 2021 by the Leadership Council on Legal Diversity (LCLD). Rina maintains an active and diverse pro bono practice, with a focus on immigration law, special education rights, and racial justice and interests. A native speaker of Korean, Rina also is proficient in Spanish.

Prior to joining Proskauer, Rina was a manager at KPMG Forensic Services, where she worked on financial statement audits, fraud and compliance risk assessments, internal whistleblower investigations, anti-bribery and FCPA investigations, and project management of process improvement and implementation surrounding commercial mortgage lending practices and the Servicemembers Civil Relief Act compliance.

Rina is president of the Korean American Bar Association (KABA) of Washington, D.C. where she has been an officer since 2012. She has spearheaded efforts to form a coalition of 13 KABAs to address issues on a national scale, such as refuting misleading narratives on Korean history, supporting diverse law student interests, and fighting for racial justice. She was the host committee coordinator and bilingual mistress of ceremony of the 2016 Conference of International Association of Korean Lawyers.

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