The Securities and Exchange Commission has awarded $14 million to an unnamed individual who published a detailed report on ongoing fraud by unidentified perpetrators. Despite providing credible evidence and valuable insights in the initial report, the agency initially denied an award to the whistleblower because they did not submit the formal Form TCR disclosure with the agency until four years after the initial publication of their findings and two months after the SEC posted a notice of Covered Action. The SEC also initially claimed that the whistleblower did not voluntarily offer the information because the agency reached out to them first.
This latter issue turned out to be a misunderstanding – the whistleblower voluntarily reached out three days after publishing their findings and provided information before the SEC reached out. The SEC denied another claimant also involved in the initial report because they did not contact the SEC.
Getting it right
The whistleblower repeatedly contacted the agency about the fraud and eventually submitted the formal Form TCR to the SEC’s Whistleblower Program. The information prompted an investigation that led to a successful enforcement action, and millions of dollars were returned to harmed investors. The award was finally announced on March 11, 2022. The SEC does have the discretion to waive the Form TCR requirement.
“Whistleblowers can play a critical role in an investigation,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “Here, the whistleblower posted a research report online outlining the allegations against the company and its officer and also, importantly, took expeditious steps to provide this information to the Commission. This case demonstrates the importance of whistleblowers reporting directly to the SEC so that the agency can promptly investigate allegations of wrongdoing.”