2019-11-15 SEC Press pdf 141 KB 3,631 chars

In the Matter of the Claims for Award

summary

Three harmed investor claimants provided original information that enabled the SEC to shut down a fraudulent scheme targeting investors in a redacted company, leading to a whistleblower award of over $260,000, or ***% of monetary sanctions collected or to be collected, after they cooperated with the investigation and were deemed critical to uncovering recidivist misconduct.

paragraph

The SEC awarded three claimants a joint whistleblower payout of ***% of monetary sanctions collected or to be collected in a covered action involving fraud at a redacted company, with current estimates exceeding $260,000. The claimants, who were themselves investors that lost retirement savings, provided original information that was essential to uncovering the scheme—information the SEC stated would likely not have been discovered without their tip. They also assisted the investigation by giving an early interview, and the SEC credited their cooperation, low defendant collections, and role in deterring recidivist fraud as key factors in determining the award amount.

narrative

The U.S. Securities and Exchange Commission (SEC) granted a whistleblower award to three claimants who jointly provided original, critical information that led to the successful enforcement action against undisclosed violators operating a fraudulent scheme at a redacted company. The claimants, who were harmed investors that lost their retirement savings, played an indispensable role by supplying information the SEC determined would likely not have been discovered otherwise. They further aided the investigation by participating in an early interview, helping the agency shut down the scheme and protect other investors from recidivist fraudsters. Although the monetary sanctions collected from the defendants were low at the time of the award determination, the SEC still awarded ***% of the total sanctions collected or to be collected, resulting in an estimated payout of over $260,000. The claimants did not contest the Preliminary Determination, and the SEC directed that the award be divided equally among them unless they requested otherwise. The award was justified under Rule 21F-6 based on the significance of the information, the claimants’ cooperation, the law enforcement interest in deterring repeat violations, and their status as harmed insiders rather than culpable actors. This case underscores the SEC’s commitment to incentivizing whistleblowers who are victims themselves to come forward with vital evidence against financial fraud.

Enriched metadata

Scheme
financial-fraud (95%)
Classified financial-fraud(confidence 95%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 67% / precision 23%. detection rule →
Statutes
15 U.S.C. § 78u-6(b)17 C.F.R. § 240.21F-3(a)17 C.F.R. § 240.21F-6Section 21F(a)(6) of the Securities Exchange ActSection 21F(a)(6) of the Securities Exchange ActRule 21F-3(a)Rule 21F-6
Keywords
awardclaimantscommissioncovered actionexchangematter claimsclaims awardsecurities exchangewhistleblower awardaward amountmonetary sanctionsclaimswhistlebloweractionredacted

Extracted insights

Dollar amounts 1
  • $260K $260,000 $100K–$1M
Triples 6
  • The Claims Review Staff Issued A Preliminary Determination Recommending that claimants jointly receive a whistleblower award in the amount of percent of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action
  • Claimants Provided Written Notice Of Claimants’ decision not to contest the Preliminary Determination
  • The Recommendation Of The CRS Is Adopted The record demonstrates that Claimants voluntarily provided original information to the Commission that led to the successful enforcement of the above-referenced Covered Action pursuant to Exchange Act Section 21F(b)(1) and Rule 21F-3(a) thereunder
  • The Commission Applies The Award Criteria Specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here
  • The Commission Positively Assessed The following facts: (i) the Claimants’ information was significant as it would have been unlikely for Commission staff to have learned of the misconduct absent the Claimants’ initial tip; (ii) each of the Claimants provided assistance to Commission staff by providing an interview early in the investigation; (iii) Claimants’ information helped the Commission further significant law enforcement interests by enabling the Commission to shut down a fraudulent scheme in which investors in a company were preyed upon by recidivist violators; (iv) Claimants were harmed investors who lost their retirement savings; and (v) current collections from the defendants of the monetary sanctions ordered were low
  • The Commission Orders That Claimants Shall Receive An award of percent of the monetary sanctions collected, or to be collected, in the Covered Action
Text layers
Extracted body text (3,631c)

1 
 
UNITED STATES OF AMERICA 
 
before the 
 
SECURITIES AND EXCHANGE COMMISSION 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 87544 / November 15, 2019 
WHISTLEBLOWER AWARD PROCEEDING 
File No. 2020-1 
 
 
In the Matter of the Claims for Award 
in connection with 
Notice of Covered Action: 
Redacted 
 
Redacted 
 
 
 
 
ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS 
The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending 
that claimants, 
Redacted 
(“Claimants”), jointly 
receive a whistleblower award in the amount of 
*** 
percent ( 
*** 
%) of the monetary 
sanctions collected, or to be collected, in the above-referenced Covered Action.
1 
Based on 
current collections, a 
*** 
% award would result in an undivided payment to Claimants of over 
$260,000. Claimants provided written notice of Claimants’ decision not to contest the 
Preliminary Determination. 
 
The recommendation of the CRS is adopted. The record demonstrates that Claimants 
voluntarily provided original information to the Commission that led to the successful 
 
 
 
1 
See Section 21F(a)(6) of the Securities Exchange Act of 1934 (“Exchange Act”) (defining “whistleblower” to 
mean “2 or more individuals acting jointly who provide information relating to a violation of the securities laws 
to the Commission”). Our proceeding in this way has not impacted the net total award percentage to Claimants. 
Unless Claimants, within ten (10) calendar days of the issuance of this Order, make a joint request, in writing, 
for a different allocation of the award between the three of them, the Office of the Whistleblower is directed to 
pay each of them individually one-third of their joint award. 

2 
 
enforcement of the above-referenced Covered Action pursuant to Exchange Act Section 
21F(b)(1)
2 
and Rule 21F-3(a) thereunder.
3
 
 
Applying the award criteria specified in Rule 21F-6 of the Exchange Act to the 
specific facts and circumstances here, we find the proposed award amount is appropriate.
4
 
In reaching that determination, we positively assessed the following facts: (i) the Claimants’ 
information was significant as it would have been unlikely for Commission staff to have 
learned of the misconduct absent the Claimants’ initial tip; (ii) each of the Claimants provided 
assistance to Commission staff by providing an interview early in the investigation; 
(iii) Claimants’ information helped the Commission further significant law enforcement 
interests by enabling the Commission to shut down a fraudulent scheme in which investors in 
a 
Redacted 
company were preyed upon by recidivist violators; (iv) Claimants were 
harmed investors who lost their retirement savings; and (v) current collections from the 
defendants of the monetary sanctions ordered were low. 
 
Accordingly, it is hereby ORDERED that Claimants shall receive an award of 
 
 
 
 
Redacted 
percent ( 
*** 
%) of the monetary sanctions collected, or to be collected, in the Covered Action. 
 
By the Commission. 
 
Vanessa A. Countryman 
Secretary 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2 
15 U.S.C. § 78u-6(b)(1). 
3 
17 C.F.R. § 240.21F-3(a). 
4 
In assessing the appropriate award amount, Rule 21F-6 provides that the Commission consider: (1) the 
significance of information provided to the Commission; (2) the assistance provided in the Commission action; 
(3) law enforcement interest in deterring violations by granting awards; (4) participation in internal compliance 
systems; (5) culpability; (6) unreasonable reporting delay; and (7) interference with internal compliance and 
reporting systems. 17 C.F.R. § 240.21F-6. 
OCR text (3,633c · tika · 95% conf)
1  

UNITED STATES OF AMERICA 
 

before the 
 

SECURITIES AND EXCHANGE COMMISSION 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 87544 / November 15, 2019 

WHISTLEBLOWER AWARD PROCEEDING 

File No. 2020-1 
 
 

In the Matter of the Claims for Award 

in connection with 

Notice of Covered Action: Redacted 

 
Redacted 

 
 

 
 

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS 

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending 
that claimants, Redacted (“Claimants”), jointly 
receive a whistleblower award in the amount of *** percent ( *** %) of the monetary 
sanctions collected, or to be collected, in the above-referenced Covered Action.1 Based on 
current collections, a *** % award would result in an undivided payment to Claimants of over 
$260,000. Claimants provided written notice of Claimants’ decision not to contest the 
Preliminary Determination. 

 
The recommendation of the CRS is adopted. The record demonstrates that Claimants 

voluntarily provided original information to the Commission that led to the successful 
 
 
 

1 See Section 21F(a)(6) of the Securities Exchange Act of 1934 (“Exchange Act”) (defining “whistleblower” to 
mean “2 or more individuals acting jointly who provide information relating to a violation of the securities laws 
to the Commission”). Our proceeding in this way has not impacted the net total award percentage to Claimants. 
Unless Claimants, within ten (10) calendar days of the issuance of this Order, make a joint request, in writing, 
for a different allocation of the award between the three of them, the Office of the Whistleblower is directed to 
pay each of them individually one-third of their joint award. 



2  

enforcement of the above-referenced Covered Action pursuant to Exchange Act Section 
21F(b)(1)2 and Rule 21F-3(a) thereunder.3 

 
Applying the award criteria specified in Rule 21F-6 of the Exchange Act to the 

specific facts and circumstances here, we find the proposed award amount is appropriate.4 

In reaching that determination, we positively assessed the following facts: (i) the Claimants’ 
information was significant as it would have been unlikely for Commission staff to have 
learned of the misconduct absent the Claimants’ initial tip; (ii) each of the Claimants provided 
assistance to Commission staff by providing an interview early in the investigation; 
(iii) Claimants’ information helped the Commission further significant law enforcement 
interests by enabling the Commission to shut down a fraudulent scheme in which investors in 
a Redacted company were preyed upon by recidivist violators; (iv) Claimants were 
harmed investors who lost their retirement savings; and (v) current collections from the 
defendants of the monetary sanctions ordered were low. 

 
Accordingly, it is hereby ORDERED that Claimants shall receive an award of 

 
 
 
 

Redacted 

percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action. 
 

By the Commission. 
 

Vanessa A. Countryman 
Secretary 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2 15 U.S.C. § 78u-6(b)(1). 
3 17 C.F.R. § 240.21F-3(a). 
4 In assessing the appropriate award amount, Rule 21F-6 provides that the Commission consider: (1) the 
significance of information provided to the Commission; (2) the assistance provided in the Commission action; 
(3) law enforcement interest in deterring violations by granting awards; (4) participation in internal compliance 
systems; (5) culpability; (6) unreasonable reporting delay; and (7) interference with internal compliance and 
reporting systems. 17 C.F.R. § 240.21F-6.