The SEC Awards More Than $2.2 Million to Whistleblower Under Safe-Harbor Rule

On April 5, 2018, the SEC issued a news release announcing that it had awarded more than $2.2 million to a whistleblower whose tips helped the Commission open an investigation which led to an enforcement action.  The whistleblower initially reported the information to another federal agency and subsequently provided the same information to the SEC.

The award was the first award paid by the SEC under Rule 21F-4(b)(7) of the Exchange Act (the “Safe-Harbor Rule”), which states that whistleblowers who initially provide information to another federal agency and submit the same information to the SEC within 120 days will still be eligible to be considered for an award from the SEC for information that leads to a successful enforcement action.  Notably, although the tipster reported the information to the SEC after the SEC had already opened an investigation, the SEC treated the information as though it had been reported at the same time the tipster provided the information to the other agency, as permitted under the Safe-Harbor Rule.

Jane Norberg, Chief of the SEC’s Office of the Whistleblower, commented “[w]histleblowers, especially non-lawyers, may not always know where to report, or may report to multiple agencies…[t]his award shows that whistleblowers can still receive an award if they first report to another agency, as long as they also report their information to the SEC within the 120-day safe harbor period and their information otherwise meets the eligibility criteria for an award.”

Since 2012, the SEC has paid more than $264 million in whistleblower awards to 54 individuals.  The SEC Release can be found here.