In the Matter of the Claim for an Award
A whistleblower received over $350,000 from the SEC for providing original, independent analysis of publicly available data that exposed a suspicious microcap stock promotional campaign by linking its email tactics to prior fraudulent schemes, triggering a covered enforcement action.
The SEC awarded the whistleblower more than $350,000, representing a percentage of monetary sanctions collected or to be collected in a covered enforcement action, for providing original information that led to the investigation. The claimant used years of expertise to conduct unusual, non-obvious analysis of publicly available promotional emails, revealing hidden connections between the microcap company and prior fraudulent campaigns, thereby satisfying the 'independent analysis' standard under Rule 21F-4(c)(1). The whistleblower further assisted by providing real-time information and cooperating with enforcement staff, and the award was finalized after they declined to contest the Preliminary Determination.
The SEC awarded a whistleblower over $350,000—representing a percentage of monetary sanctions collected or to be collected—in recognition of their pivotal role in triggering a covered enforcement action against a microcap company involved in a suspicious promotional campaign. The claimant leveraged years of specialized expertise to conduct original, independent analysis of publicly available promotional emails, comparing language patterns to identify connections between the target company and prior fraudulent campaigns, thereby bridging a critical gap that enforcement staff could not have discerned on their own. This analysis met the SEC’s standard for 'independent analysis' under Rule 21F-4(c)(1), as it revealed non-obvious patterns of securities violations not inferable from public data alone. The whistleblower further aided the investigation by providing real-time updates and cooperating with enforcement staff on at least two occasions. The SEC’s Claims Review Staff recommended the award, and the claimant voluntarily declined to contest the Preliminary Determination, leading to its formal adoption. No specific dollar amount of sanctions or corporate respondent was disclosed due to redactions, but the action qualified as a 'Covered Action' under Rule 21F-4(d)(1). The award underscores the SEC’s commitment to incentivizing sophisticated, non-obvious use of public information to uncover securities fraud.
Extracted insights
- $350K $350,000 $100K–$1M
- company claimant’s timely identification of the company
- The Claims Review Staff issued a Preliminary Determination recommending that the Claimant receive a whistleblower award of more than $350,000
- The Claimant provided written notice of the Claimant’s decision not to contest the Preliminary Determination
- The recommendation of the CRS is adopted The record demonstrates that Claimant voluntarily provided original information to the Commission that caused Enforcement staff to inquire concerning different conduct as part of a current investigation
- The Commission brought the Covered Action based in part on conduct that was the subject of Claimant’s nucleus of operative facts as the Covered Action
- Claimant satisfied the original information requirement by providing independent analysis based on publicly available information
- Claimant identified a microcap company whose stock was the subject of a suspicious promotional campaign
- Claimant’s information helped establish the connection between the Company and previous or ongoing promotional campaigns that were suspicious in nature
- Claimant’s timely identification of the Company helped secure an enforcement action
- Claimant assisted the investigation by speaking with Enforcement staff at least twice and providing real-time information about the incipient promotional campaign
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 92780 / August 27, 2021 WHISTLEBLOWER AWARD PROCEEDING File No. 2021-87 In the Matter of the Claim for an Award in connection with Notice of Covered Action ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award of more than $350,000, which represents percent ( %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). 1 Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination. The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that caused Enforcement staff to inquire concerning different conduct as part of a current investigation, 2 and the Commission brought the Covered Action based in part on conduct that was the subject of Claimant’s --- page 2 --- information. 3 Claimant satisfied the original information requirement by providing independent analysis 4 based on publicly available information. Claimant identified a microcap company (the “Company”) whose stock was the subject of a suspicious promotional campaign. Claimant’s information, including a comparison of the language in touting emails with emails in other promotional campaigns, was the product of unusual effort and expertise developed over many years and helped establish the connection between the Company and previous or ongoing promotional campaigns that were suspicious in nature. 5 Claimant’s timely identification of the Company helped secure and an enforcement action Claimant assisted the investigation by speaking with Enforcement staff at least twice and providing real-time information about the incipient promotional campaign. 3 See Exchange Act § 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a). 4 To be credited with providing “independent analysis,” the whistleblower’s examination and evaluation should contribute significant independent information that “bridges the gap” between the publicly available information and the possible securities violations. “[I]n each case, the touchstone is whether the whistleblower’s submission is revelatory in utilizing publicly available information in a way that goes beyond the information itself and affords the Commission with important insights or information about possible violations.” Adopting Release for Amendments to Whistleblower Rules, Release No. 34-89963 (Sept. 23, 2020) at 112-13. 5 Id. at 113 (“non-experts may configure publicly available information in a non-obvious way that reveals patterns indicating possible violations that would not be otherwise inferable from the public information or may engage in highly probative calculations or some other meaningful exercise with the information that may demonstrate the possibility of securities violations”). --- page 3 --- Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent ( %) of the monetary sanctions collected or to be collected in the Covered Action. By the Commission. Vanessa A. Countryman Secretary
UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 92780 / August 27, 2021 WHISTLEBLOWER AWARD PROCEEDING File No. 2021-87 In the Matter of the Claim for an Award in connection with Notice of Covered Action ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award of more than $350,000, which represents percent ( %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). 1 Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination. The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that caused Enforcement staff to inquire concerning different conduct as part of a current investigation, 2 and the Commission brought the Covered Action based in part on conduct that was the subject of Claimant’s --- page 2 --- information. 3 Claimant satisfied the original information requirement by providing independent analysis 4 based on publicly available information. Claimant identified a microcap company (the “Company”) whose stock was the subject of a suspicious promotional campaign. Claimant’s information, including a comparison of the language in touting emails with emails in other promotional campaigns, was the product of unusual effort and expertise developed over many years and helped establish the connection between the Company and previous or ongoing promotional campaigns that were suspicious in nature. 5 Claimant’s timely identification of the Company helped secure and an enforcement action Claimant assisted the investigation by speaking with Enforcement staff at least twice and providing real-time information about the incipient promotional campaign. 3 See Exchange Act § 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a). 4 To be credited with providing “independent analysis,” the whistleblower’s examination and evaluation should contribute significant independent information that “bridges the gap” between the publicly available information and the possible securities violations. “[I]n each case, the touchstone is whether the whistleblower’s submission is revelatory in utilizing publicly available information in a way that goes beyond the information itself and affords the Commission with important insights or information about possible violations.” Adopting Release for Amendments to Whistleblower Rules, Release No. 34-89963 (Sept. 23, 2020) at 112-13. 5 Id. at 113 (“non-experts may configure publicly available information in a non-obvious way that reveals patterns indicating possible violations that would not be otherwise inferable from the public information or may engage in highly probative calculations or some other meaningful exercise with the information that may demonstrate the possibility of securities violations”). --- page 3 --- Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent ( %) of the monetary sanctions collected or to be collected in the Covered Action. By the Commission. Vanessa A. Countryman Secretary