April 22, 2025

On April 21, 2025, the U.S. Securities and Exchange Commission (SEC) announced a significant award of approximately $6 million to joint whistleblowers, highlighting the critical role these individuals play in enforcing securities laws. This award, detailed in a recent SEC Press Release and SEC Order (Release No. 102896), demonstrates the effectiveness of the SEC Whistleblower Program in incentivizing and protecting those who report violations. This article explores the details of the award, provides an overview of the SEC Whistleblower Program, and emphasizes the importance of whistleblowers in maintaining market integrity.

The SEC Press Release explains that the joint whistleblowers provided information that was instrumental in prompting the SEC’s Division of Examinations to open a formal examination. Their tips and subsequent submissions were valuable throughout the examination process, contributing to the final findings that were referred to the SEC’s Enforcement Staff. The Enforcement Staff described the whistleblowers’ information as a “roadmap” for their investigation, which led to a successful covered action. Notably, some allegations in the covered action were directly based on the conduct reported by the whistleblowers (“The whistleblowers’ information led to the opening of an examination and provided a roadmap for an enforcement action that resulted in a successful covered action,” SEC Press Release, April 21, 2025).

The SEC Order (Release No. 102896) further elaborates that the Claims Review Staff recommended, and the SEC approved, an award of a redacted percentage of the monetary sanctions collected in the covered action, totaling approximately $6 million for the joint claimants. The whistleblowers, treated as a single entity under Section 21F(a)(6) of the Exchange Act due to their collaborative efforts, voluntarily provided original information that initiated the examination and supported the enforcement action.

Established under Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC Whistleblower Program aims to encourage individuals to report possible violations of federal securities laws. The program offers monetary awards to eligible whistleblowers who provide original, timely, and credible information leading to successful enforcement actions where sanctions exceed $1 million. Awards range from 10% to 30% of the collected sanctions, funded through an investor protection fund financed by monetary sanctions from violators (SEC Whistleblower Program Overview).

Since its inception in 2011, the program has been highly successful. By the end of fiscal year 2024, the SEC had awarded more than $2.2 billion to 444 individual whistleblowers. In fiscal year 2024 alone, over $255 million was distributed to 47 whistleblowers, including a notable award of approximately $98 million split between two whistleblowers (FY24 Annual Report). The program’s success is evident in its ability to recover significant penalties, with whistleblower tips enabling the SEC to secure over $4.8 billion in financial penalties since 2011.

1. Eligibility and Award Criteria

To qualify for an award, whistleblowers must voluntarily provide original information that leads to a successful enforcement action with sanctions exceeding $1 million. The SEC evaluates several factors when determining awards, including the significance of the information, the degree of assistance provided, and the public interest in deterring violations. The recent $6 million award reflects these criteria, as the joint whistleblowers’ information directly influenced the examination and enforcement processes.

2. Confidentiality and Anonymous Filing

A cornerstone of the SEC Whistleblower Program is its commitment to protecting whistleblower confidentiality, as mandated by the Dodd-Frank Act. The SEC ensures that whistleblower identities remain confidential and does not disclose information that could reveal their identity (“As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose any information that could reveal a whistleblower’s identity,” SEC Press Release, April 21, 2025).

Additionally, whistleblowers can submit tips anonymously if represented by an attorney. This process involves using the SEC’s online Tips, Complaints, and Referrals Portal and providing the attorney’s contact information. The SEC treats all tips as confidential and nonpublic, offering protections under Section 21F(h)(2) of the Securities Exchange Act of 1934 and Rule 21F-7 of the SEC’s Whistleblower Rules. This anonymity option encourages individuals to report wrongdoing without fear of retaliation, a critical feature for those in sensitive positions.

Whistleblowers are indispensable to the SEC’s enforcement efforts, providing insider knowledge that often uncovers violations that might otherwise go undetected. The $6 million award to joint whistleblowers exemplifies their value, as their information not only initiated an examination but also shaped the enforcement action’s outcome. The program’s broader impact is evident in its fiscal year 2024 statistics, where 27 whistleblowers caused the opening of investigations, and 20 significantly contributed to ongoing investigations (Securities and Exchange Commission Office of the Whistleblower Annual Report to Congress for Fiscal Year 2024).

The SEC also actively protects whistleblowers from retaliation. In fiscal year 2024, the SEC took 11 enforcement actions under Rule 21F-17 against entities that impeded whistleblowers. These actions underscore the SEC’s commitment to safeguarding those who come forward.

The SEC’s $6 million award to joint whistleblowers on April 21, 2025, is a powerful example of the Whistleblower Program’s impact. By incentivizing and protecting whistleblowers, the SEC strengthens its ability to enforce securities laws and protect investors. The program’s success, evidenced by over $2.2 billion in awards and significant enforcement actions, underscores the vital role of whistleblowers in maintaining fair and transparent markets. Potential whistleblowers are encouraged to come forward, knowing they can do so anonymously and with strong legal protections.

The post “SEC Awards 6 Million to Joint Whistleblowers” first appeared on DigitalAsset.Law on April 22, 2025.