Whistleblower Awards

SEC

10312025

10/31/2025

FINAL ORDER — THESE PRELIMINARY SUMMARY DISPOSITIONS AS TO CLAIMANTS 2, 3, 4, 6, 7, AND 9 BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 31, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 10312025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from (“Claimant 2”), (3) (“Claimant 3”), (“Claimant 4”), (“Claimant 6”), (7) (4) (“Claimant 7”), (“Claimant 9”) (collectively, “Claimants”) for (“Covered Action”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower (“OWB”) has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated Claimants’ award applications for resolution through the summary disposition process.¹

OWB has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

Claimants did not provide information to the Commission that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F-4(c). Claimants’ information did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action.

According to Division of Enforcement Staff (“Staff”) responsible for the investigations that led to the Covered Action (“Investigations”), none of Claimants’ information was used by Staff in connection with bringing the Covered Action. Claimants’ information was not used in, and had no impact on, the Investigations or the resulting Covered Action.

As to Claimant 2, Claimant 2 bases his claim for award on information submitted to [REDACTED]. Staff is not familiar with such information. Staff does not recall receiving or reviewing any information provided by Claimant 2. Staff also does not recall communicating with Claimant 2 before or during the Investigations. Overall, none of Claimant 2’s information helped advance the Investigations. None of Claimant 2’s information was used in, or had any impact on, the Covered Action.

As to Claimant 3, Staff does not recall receiving or reviewing any information provided by Claimant 3. Staff also does not recall communicating with Claimant 3 before or during the Investigations. Overall, none of Claimant 3’s information helped advance the Investigations. None of Claimant 3’s information was used in, or had any impact on, the Covered Action.

As to Claimant 4, Claimant 4’s information concerned allegations regarding [REDACTED]. Claimant 4 provided information to the Commission in [REDACTED]. By that time, however, Staff was already aware of [REDACTED]. Staff does not recall communicating with Claimant 4 before or during the Investigations. Overall, none of Claimant 4’s information helped advance the Investigations. None of Claimant 4 information was used in, or had any impact on, the Covered Action.

As to Claimant 6, Claimant 6 contends that [REDACTED] provided information to the Commission about [REDACTED] and that this information [REDACTED]. Staff’s investigation into [REDACTED], however, did not arise out of [REDACTED] related to [REDACTED]. Staff does not recall receiving or reviewing any information provided by Claimant 6. Staff also does not recall communicating with Claimant 6 before or during the Investigations. Overall, none of Claimant 6’s information helped advance the Investigations. None of Claimant 6’s information was used in, or had any impact on, the Covered Action.

As to Claimant 7, Staff does not recall receiving or reviewing any information provided by Claimant 7. Staff also does not recall communicating with Claimant 7 before or during the Investigations. Overall, none of Claimant 7’s information helped advance the Investigations. None of Claimant 7’s information was used in, or had any impact on, the Covered Action.

As to Claimant 9, Staff does not recall receiving or reviewing any information provided by Claimant 9. Staff also does not recall communicating with Claimant 9 before or during the Investigations. Overall, none of Claimant 9’s information helped advance the Investigations. None of Claimant 9’s information was used in, or had any impact on, the Covered Action.

By: Office of the Whistleblower

Date: September 30, 2025

¹See Exchange Act Rule 21F-18(a)(1)6).

SEC

10302025

10/30/2025

FINAL ORDER–THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 30, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

Reference No: 10302025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [REDACTED] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower (“OWB”) has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

OWB has preliminarily determined to recommend that the Commission deny the above award claim.¹ The information provided by Claimant was never used by staff handling the Covered Action or the investigation that gave rise to the Covered Action (“the Investigation”). Therefore, Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation,² or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.³

By: Office of the Whistleblower
Date: August 29, 2025

¹ OWB also preliminarily determines to deny Claimant’s claim for an award in the criminal action, resulting from the Federal Bureau of Investigation’s (“FBI”) investigations. See Metcalf v. SEC, 97 4th 733, 752 (11th Cir. 2024) (claimant “does not qualify for an award based on any ‘related actions’ brought against [defendant], because the statute and regulations require that [claimant] qualify under the Covered Action as a prerequisite to bringing in any related actions, which he does not”).

² The Investigation was opened in [REDACTED] before Claimant submitted a TCR to the Commission, because of a referral from the FBI’s [REDACTED] and not because of any information provided to the Commission by Claimant.

³ Claimant’s information did not cause Enforcement staff to inquire into different conduct and did not significantly contribute to the success of the Covered Action. Enforcement staff responsible for the Investigation were not aware of [REDACTED]’s role in a scheme involving [REDACTED] when the Commission’s Office of Market Intelligence briefed the investigative team at a high level on [REDACTED] about Claimant’s allegations. However, Enforcement staff took no investigative steps in response to this information, and within days, the FBI’s [REDACTED] contacted Enforcement staff with detailed information [REDACTED] involving [REDACTED] and [REDACTED] co-conspirators. The FBI’s information was more detailed than Claimant’s and included inculpatory statements [REDACTED] made to [REDACTED]. As the Commission’s investigation shifted to focus on [REDACTED], the FBI’s referral was its primary source of information, and Claimant’s information was not useful.

SEC

10302025A

10/30/2025

FINAL ORDER–THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 30, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

Reference No: 10302025A

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [REDACTED] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Office of the Whistleblower (“OWB”) has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

OWB has preliminarily determined to recommend that the Commission deny Claimant’s claim. Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.¹

By: The Office of the Whistleblower

Date: September 18, 2025

¹ Claimant submitted his/her information after the Commission had been investigating the matter for nearly six months. Enforcement staff met with Claimant but found his/her information to be duplicative of more detailed evidence that had already been collected, and Claimant’s information did not contribute to the success of the Covered Action.

SEC

10262025

10/26/2025

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 26, 2025, PURSUANT TO RULE 21F-18(b) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

Reference No. 10262025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] (“Claimant 1”), [REDACTED] (“Claimant 2”), and [REDACTED] (“Claimant 3”), (collectively, “”Claimants”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower (“OWB”) has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated Claimants’ award applications for resolution through the summary disposition process.¹

OWB has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

Claimant 1

Claimant 1 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information Claimant 1 provided did not, (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 1’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In particular, the investigation that resulted in the Covered Action (the “Investigation”) was opened based on information obtained from a source other than Claimant 1. Additionally, Claimant 1’s information did not cause the Commission to inquire into different conduct or significantly contribute to the success of the Covered Action. Staff on the Investigation never received or reviewed Claimant 1’s information or communicated with Claimant 1 during the course of the Investigation, and none of Claimant 1’s information was used in, or had any impact on, the Commission’s findings in the Covered Action.

Claimant 2

Claimant 2 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information Claimant 2 provided did not, (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 2’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In particular, the investigation that resulted in the Covered Action (the “Investigation”) was opened based on information obtained from a source other than Claimant 2. Additionally, Claimant 2’s information did not cause the Commission to inquire into different conduct or significantly contribute to the success of the Covered Action. Staff on the Investigation never received or reviewed Claimant 2’s information or communicated with Claimant 2 during the course of the Investigation, and none of Claimant 2’s information was used in, or had any impact on, the Commission’s findings in the Covered Action.

Claimant 3

Claimant 3 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information Claimant 3 provided did not, (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In particular, the investigation that resulted in the Covered Action (the “Investigation”) was opened based on information obtained from a source other than Claimant 3. Additionally, Claimant 3’s information did not cause the Commission to inquire into different conduct or significantly contribute to the success of the Covered Action. Staff on the Investigation never received or reviewed Claimant 3’s information or communicated with Claimant 3 during the course of the Investigation, and none of Claimant 3’s information was used in, or had any impact on, the Commission’s findings in the Covered Action.

By: The Office of the Whistleblower

Date: September 26, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

10252025

10/25/2025

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 25, 2025, AS TO CLAIMANTS 2 AND 5 PURSUANT TO RULE 21F-18(b) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 10252025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from “Claimant 2”’), (“Claimant 5”’) (collectively, ““Claimants”’) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F- 18 and has designated Claimants’ award applications for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

Notice of Covered Action [REDACTED]

Reference No. 10252025

Claimant 2

Claimant 2 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information Claimant 2 provided did not (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 2’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In particular, the investigation that resulted in the Covered Action was opened based on information obtained from a source other than Claimant 2. Additionally, Claimant 2’s information did not cause the Commission to inquire into different conduct or significantly contribute to the success of the Covered Action. Staff on the investigation never received or reviewed Claimant 2’s information or communicated with Claimant 2 during the course of the investigation, and none of Claimant 2’s information was used in, or had any impact on, the Commission’s findings in the Covered Action.

Notice of Covered Action

Reference No. 10252025

Claimant 5

Claimant 5 did not provide original information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information Claimant 5 provided was duplicative of information staff had previously received and did not (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or 1n part, on conduct that was the subject of Claimant 5’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In particular, the investigation that resulted in the Covered Action was opened based on information obtained from a source other than Claimant 5. Additionally, Claimant 5’s information did not cause the Commission to inquire into different conduct or significantly

Notice of Covered Action

Reference No. 10252025

contribute to the success of the Covered Action. According to Commission staff, Claimant 5’s information was already known to staff, and staff did not communicate with Claimant 5 or use Claimant 5’s information during the investigation. None of Claimant 5’s information was used in, or had any impact on, the charges brought by the Commission in the Covered Action.

By: The Office of the Whistleblower

Date: September 25, 2025

SEC

10212025

10/21/2025

FINAL ORDER — THESE PRELIMINARY SUMMARY DISPOSITIONS AS TO CLAIMANT 2 AND CLAIMANT 3 BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 21, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

Reference No. 10212025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] (“Claimant 2”), [REDACTED] (“Claimant 2”), and [REDACTED] (“Claimant 3”) (collectively, “”Claimants”) for [REDACTED] (“Covered Action”).

OWB has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

Claimants did not provide information to the Commission that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Claimants’ information did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

According to Division of Enforcement Staff (“Staff”) responsible for the investigation that led to the Covered Action (“Investigation”), none of Claimants’ information was used by Staff in connection with bringing the Covered Action. Claimants’ information was not used in, and had no impact on, the Investigation or the resulting Covered Action.

As to Claimant 2, Claimant 2’s Form WB-APP bases Claimant 2’s claim for award on 1 iii This TCR, however, was closed and was not sent to Staff. Staff does not recall receiving or reviewing any information provided by Claimant 2. Staff also does not recall communicating with Claimant 2 before or during the Investigation.

As to Claimant 3, Claimant 3’s Form WB-APP bases Claimant 3’s claim for award on TCR [REDACTED]. Claimant 3 made two additional TCR submissions to the Commission, TCR [REDACTED] and TCR [REDACTED]. All of these TCRs, however, were closed and were not sent to Staff. Staff does not recall receiving or reviewing any information provided by Claimant 3. Staff also does not recall communicating with Claimant 3 before or during the Investigation.

By: The Office of the Whistleblower

Date: September 18, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

10202025

10/20/2025

FINAL ORDER — THESE PRELIMINARY SUMMARY DISPOSITIONS BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 20, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

Reference No. 10202025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] (“Claimant 1”), [REDACTED] (“Claimant 2”), and [REDACTED] (“Claimant 3”) (collectively, “Claimants”) for [REDACTED] (“Covered Action”).

OWB has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

Claimants did not provide information to the Commission that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Claimants’ information did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Specifically, as to Claimant 1, Claimant 1 bases his/her claim for award on a TCR dated [REDACTED]. This TCR, however, was closed and was not sent to Staff. Staff does not recall receiving or reviewing any information provided by Claimant 1. Further, Staff does not recall receiving or reviewing any information provided by any other source that may have originated from Claimant 1. Staff also does not recall communicating with Claimant 1 before or during the Investigation.

As to Claimant 2, Claimant 2 bases his/her claim for award on [REDACTED] dated [REDACTED]. Staff was unable to locate any TCR submission from Claimant 2 in the TCR System. Staff does not recall receiving or reviewing any information provided by Claimant 2. Further, Staff does not recall receiving or reviewing any information provided by any other source that may have originated from Claimant 2. Staff also does not recall communicating with Claimant 2 before or during the Investigation.

Additionally, Claimant 2 submitted an untimely whistleblower award application. The deadline to submit a whistleblower award application for the Covered Action was [REDACTED]. Claimant 2 did not submit a whistleblower award application for the Covered Action until [REDACTED].

As to Claimant 3, Claimant 3 alleges that in [REDACTED] [REDACTED]. Claimant 3 has not indicated that he/she provided any information to the Commission directly, and Staff was unable to locate a TCR submission from Claimant 3 in the TCR System. Staff does not recall receiving or reviewing any information provided by Claimant 3. Further, Staff does not recall receiving or reviewing any information provided by any other source that may have originated from Claimant 3. Staff also does not recall communicating with Claimant 3 before or during the Investigation.

By: The Office of the Whistleblower

Date: September 17, 2025

¹ See Exchange Act Rule 21F-18(a)(1)–(6).

SEC

10162025A

10/16/2025

FINAL ORDER–THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 16, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

Reference No: 10162025A

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [REDACTED] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reasons stated below.

Claimant did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Claimant’s information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Enforcement staff opened the Covered Action investigation based on a source other than Claimant’s information. While Enforcement staff responsible for the Covered Action reviewed Claimant’s information, the information did not contribute to the investigation that resulted in the Covered Action (the “Investigation”). More specifically, Claimant’s TCR was submitted more than a year after Enforcement staff had opened the Investigation. Enforcement staff reviewed Claimant’s TCR but determined that the TCR did not contain any information that advanced the Investigation and therefore did not contact Claimant for additional information or analysis. In sum, none of Claimant’s information helped advance the Investigation and it did not save the staff time or resources, or result in the staff taking additional investigative steps or bringing additional charges or charges against additional respondents. Further, none of Claimant’s information was used in or had any impact on the allegations in the Covered Action.

By: Office of the Whistleblower

Date: September 16, 2025

¹ See Exchange Act Rule 21F-18(c)(1)-(6).

SEC

10162025

10/16/2025

FINAL ORDER–THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 16, 2025, PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

OWB Reference No. 10162025

PRELIMINARY SUMMARY DISPOSITION
OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [REDACTED] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reasons stated below.²

Claimant did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F-4(c) thereunder. Claimant’s information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Enforcement staff responsible for the Covered Action investigation did not receive or review information from the Claimant and did not have any communications with Claimant. As such, Claimant’s information was not used in, and had no impact on, the investigation or resulting Covered Action.

By: Office of the Whistleblower

Date: September 16, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

² To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

Note: Since the PDF is inaccessible/corrupted, I cannot verify if there are any redaction stamps or additional [REDACTED] insertions needed beyond what I marked in the “Notice of Covered Action” line. If you have access to a working copy of this PDF or can obtain it through other means, please let me know and I can refine this further.

SEC

10102025

10/10/2025

FINAL ORDER–THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 10, 2025, AS TO CLAIMANTS 1 AND 2 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

Reference No: 10102025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] (“Claimant 1”), [REDACTED] (“Claimant 2”), and [REDACTED] ( collectively “Claimants”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.¹

Claimants did not provide original information to the Commission that led to the successful enforcement of the Covered Action, as required by Exchange Act Section 21F(b)(1) and Exchange Act Rules 21F-3(a) and 21F-4(c). The “led to” requirement is satisfied under Exchange Act Rule 21F- 4(c)(1) only if a whistleblower’s original information was sufficiently specific, credible and timely to cause the staff to commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of his/her original information; or under Exchange Act Rule 21F-4(c)(2), if a whistleblower’s original information significantly contributed to the success of a Commission judicial or administrative enforcement action. In determining whether Claimants’ information significantly contributed to the success of the Covered Action, the Commission may consider, among other things, whether Claimants’ information would have been sufficient for the Commission to bring the Covered Action.²³

Nor did Claimants cause Enforcement staff to inquire into different conduct or that significantly contributed to the success of the Covered Action. Enforcement staff began investigating the Respondent based on the tips from another whistleblower provided to the Commission in. Enforcement staff responsible for the Covered Action did not receive or review information from Claimants, and did not have communications with Claimants, before or during the Covered Action investigation or resulting Covered Action. Claimants provided no information that was used in or that contributed to the success of the Covered Action. Additionally, Claimant 1 did not provide sufficient evidence that he/she submitted any information at all to the Commission.

By: The Office of the Whistleblower

Date: September 2, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

² To the extent Claimants applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, Claimants are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 2 1F-4(g) and (f); Rule 2 lF-11 (a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

³ See Securities Whistleblower Incentives & Protections (“Adopting Release”), 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission may consider whether the information allowed the agency to bring: (1) the action in significantly less time or with significantly fewer resources, (2) additional successful claims, or (3) successful claims against additional individuals or entities).

SEC

10092025

10/09/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 9, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

[REDACTED]

Notice of Covered Action: [REDACTED]

Reference No. 10092025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notices of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] (“Claimant 2”) for the above-referenced matters. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated Claimant 2’s award applications for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

Claimant 2 did not provide original information to the Commission that led to the successful enforcement of the Covered Actions, as required by Exchange Act Section 21F(b)(1) and Exchange Act Rules 21F-3(a) and 21F-4(c) thereunder, because the information provided by Claimant 2 to the Commission did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of the original information under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 2 did not provide information that caused the Covered Action investigations to open. Nor did Claimant 2 cause Enforcement staff to inquire into different conduct or provide information that significantly contributed to the success of the Covered Actions. Enforcement staff responsible for the Covered Actions did not receive or review information from Claimant 2 and had no communications with Claimant 2 before or during the Covered Action investigations. None of the information provided by Claimant 2 was used in, or had any impact on, the Covered Action investigations or resulting Covered Actions.

By: Office of the Whistleblower

Date: September 8, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

10092025

10/09/2025

FINAL ORDER–THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 9, 2025 AS TO JOINT CLAIMANTS, 2 AND 3, PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

OWB Reference No. 10092025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from, and jointly from [REDACTED] (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F- 18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

Claimant 2 did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder, because the information provided by Claimant 2 to the Commission did not (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and the Commission brought a successful judicial or administrative enforcement action based in whole or in part on conduct that was the subject of the original information under Rule 21F-4(c)(2) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 2 did not provide information that caused the Covered Action investigations to open. Nor did Claimant 2 cause Enforcement staff to inquire into different conduct or provide information that significantly contributed to the success of the Covered Actions. Enforcement staff responsible for the Covered Actions did not receive or review information from Claimant 2 and had no communications with Claimant 2 before or during the Covered Action investigations. None of the info1mation provided by Claimant 2 was used in, or had any impact on, the Covered Action investigations or resulting Covered Actions.

By: The Office of the Whistleblower

Date: September 8, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

10062025

10/06/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 6, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

Reference No: 10062025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [REDACTED] (“Claimant 1”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated Claimant 1’s award application for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reasons stated below.

Claimant 1 did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Claimant 1’s information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 1’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Enforcement staff did not open the Covered Action investigation based on information provided by Claimant 1. Enforcement staff responsible for the Covered Action do not recall receiving or reviewing any information provided by Claimant 1. Enforcement staff responsible for the Covered Action did not have any communications with Claimant 1, and none of Claimant 1’s information advanced the investigation or contributed to the Covered Action.

By: Office of the Whistleblower

Date: September 4, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

10052025

10/05/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 5, 2025 AS TO CLAIMANT 2, PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

[REDACTED]

OWB Reference No. 10052025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [REDACTED] (“Claimant 2”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated the award application for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reasons stated below.

Claimant 2 submitted an untimely award application because Claimant 2 failed to submit the claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act. The deadline to file award claims for the Covered Action was [REDACTED]. Claimant’s award application was signed and dated [REDACTED] about two and half months after the filing deadline.

Claimant 2 did not provide original information to the Commission that led to the successful enforcement of the Covered Action, as required by Exchange Act Section 21F(b)(1) and Exchange Act Rules 21F-3(a) and 21F-4(c) thereunder, because the information provided by Claimant 2 to the Commission did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of the original information under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 2 did not provide information that caused the Covered Action investigation to open. Rather, Enforcement staff opened the Covered Action investigation based on information submitted by another individual. Nor did Claimant 2 cause Enforcement staff to inquire into different conduct or provide information that significantly contributed to the success of the Covered Action. Enforcement staff responsible for the Covered Action did not receive or review information from Claimant 2 and had no communications with Claimant 2 before or during the

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

Notice of Covered Action:

Covered Action investigation. None of the information provided by Claimant 2 was used in, or had any impact on, the Covered Action investigation or resulting Covered Action.²

By: Office of the Whistleblower

Date: September 5, 2025

² Because Claimant 2 is not eligible for an award in an SEC Covered Action, Claimant 2 also is not eligible for an award in connection with any related action. See U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b); see also Order Determining Whistleblower Award Claims, Release No. 34-86902 (Sept. 9, 2019).

SEC

10052025B

10/05/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 5, 2025, AS TO CLAIMANT 3, PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

OWB Reference No. 10052025B

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] (“Claimant 3”), [REDACTED] and [REDACTED] (collectively, “Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.²

[REDACTED]

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

² To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21 F-11(a); see a/so Order Determining Whistleblower A ward Claim, Release No. 34-86902 (Sept. 9, 2019).

Notice of Covered Action: [REDACTED]

Claimant 3

Claimant 3 did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F-4(c) thereunder. Claimant 3’s information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Enforcement staff opened the Covered Action investigation based on sources other than Claimant 3’s information. The Covered Action investigation was opened almost two years before

Notice of Covered Action: [REDACTED]

Claimant 3 submitted information to the Commission. While the record reflects that Enforcement staff responsible for the Covered Action investigation reviewed information submitted by Claimant 3 and spoke to his/her counsel, Claimant 3’s information did not relate to the same subject matter of the Covered Action investigation because the allegations related to the Company’s conduct in locations not part of the Covered Action investigation. As such, Claimant 3 did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

Notice of Covered Action: [REDACTED]

By: Office of the Whistleblower

Date: July 31, 2025

SEC

10052025A

10/05/2025

FINAL ORDER – THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 5, 2025, AS TO CLAIMANT 4 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

Reference No: 10052025A

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [REDACTED] and [REDACTED] (“Claimant 4”), for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Office of the Whistleblower (“OWB”) has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

[REDACTED]

Reference No: 10052025

Claimant 4

OWB has preliminarily determined to recommend that the Commission deny Claimant 4’s claim. Claimant 4 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (I) cause the Commission to (I) commence an examination, (II) open or reopen an investigation, or (III) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.³

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 5, 2025, AS TO CLAIMANT 4 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

Reference No: 10052025

By: Office of the Whistleblower

Date: July 25, 2025

¹ [REDACTED]
² [REDACTED]
³ Claimant 4 submitted several tips to the Commission and was interviewed by Enforcement staff responsible for the Covered Action. However, Enforcement staff could not corroborate Claimant 4’s information and ultimately decided not to recommend charging the defendant with violations based on conduct alleged by Claimant 4. None of Claimant 4’s information was used in, or had any impact on, the Commission’s findings. Nor as asserted in Claimant 4’s award application, did Claimant 4’s information serve as leverage to obtain a more favorable resolution in the Covered Action. His/her information did not have any impact on the calculation of disgorgement or prejudgment interest, or the amount of the civil penalty assessed against the defendant in the Covered Action.

SEC

10032025

10/03/2025

FINAL ORDER–THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON OCTOBER 3, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action [REDACTED]

[REDACTED]

OWB Reference No. 10032025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [REDACTED] (“Claimant 3”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reasons stated below.

Claimant 3 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

The Covered Action investigation was opened based upon information provided by another claimant. Investigative staff for the Covered Action do not recall receiving or reviewing Claimant 3’s information, nor communicating with Claimant 3. Claimant 3’s information related to conduct different than that charged in the Covered Action. Claimant 3 provided no information that was used in or that was helpful to the Covered Action investigation or the Covered Action.

By: Office of the Whistleblower

Date: September 3, 2025

SEC

34-104145

09/30/2025

___________________________________________________________________
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 104145 / September 30, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-61
_________________________________________________________________

In the Matter of the Claim for Award
in connection with

Notice of Covered Action
Redacted
Redacted

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that the Commission award Claimant Redacted *** percent (***%) of monetary sanctions collected or to be collected in the above-captioned covered action (the “Covered Action”), which would result in no current payment based on the lack of collections in the Covered Action.

The recommendation of the CRS is adopted. The record demonstrates that the Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.¹

Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted

¹ See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted

Claimant alerted the Commission to the misconduct which prompted the opening of the investigation that resulted in the Covered Action, and provided ongoing assistance during the investigation, including participating in an interview with Commission staff.

Accordingly, it is ORDERED that Claimant 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

Redacted
Redacted
***

SEC

34-104143

09/30/2025

______________________________________________________________________
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 104143 / September 30, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-60
______________________________________________________________________

In the Matter of the Claim for an Award
in connection with

Redacted
Redacted
Redacted

Notice of Covered Action

Redacted

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

Redacted

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with Redacted percent (***) ***the above-referenced Covered Action (the “Covered Action”) recommending that (“Claimant”) receive a whistleblower award in the amount of %) of the monetary sanctions collected or to be collected, in the Covered Action, which would result in no current payment. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.¹

Redacted
Redacted
Redacted
Redacted

¹ A second claimant’s claim was preliminarily denied through the Preliminary Summary Disposition process, pursuant to Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-18. Because the second claimant did not contest the preliminary denial, his/her denial is now deemed to be the Final Order of the Commission. See Exchange Act Rule 21F-18(b)(4).

² See Exchange Act Section 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)

In coming to this determination, we note that the record supports the conclusion that Claimant’s information substantially advanced the ongoing investigation, as it Redacted Redacted Redacted Redacted Redacted Redacted helped Enforcement staff understand complicated transactions and relationships involving numerous entities, identified key witnesses and documents, assisted staff in preparing subpoenas and developing targeted requests and saved significant staff time.

Accordingly, it is 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

SEC

34-104142

09/30/2025

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 104142 / September 30, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-57

In the Matter of the Claim for an Award in connection with [REDACTED] [REDACTED] Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

[REDACTED] The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [REDACTED] (“Claimant”) receive a whistleblower award in the amount of [REDACTED] percent ([REDACTED]%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”) for a payout of approximately $700,000.¹

[REDACTED] [REDACTED] [REDACTED]

[REDACTED] Claimant’s TCRs provided a roadmap for the investigation, Claimant submitted multiple, helpful TCRs and [REDACTED], participated in an interview, and the Commission quoted [REDACTED] in one of its court [REDACTED] filings. [REDACTED]

[REDACTED]

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [REDACTED] percent ([REDACTED]%) of the monetary sanctions collected or to be collected in the Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

Vanessa A. Countryman
Secretary

FOOTNOTES:

¹ The Preliminary Determination of the CRS also recommended denying an award to another claimant (“Claimant 2”), who did not file a written response. Accordingly, the Preliminary Determination has become the Final Order of the Commission with respect to Claimant 2 pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

² See Exchange Act Section 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).

SEC

34-104141

09/30/2025

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 104141 / September 30, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-59

In the Matter of the Claim for an Award in connection with [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS

The Office of the Whistleblower (“OWB”) issued Preliminary Summary Dispositions recommending that the Commission deny the award claims of [REDACTED] (“Claimant”) in connection with the above-referenced Notices of Covered Action (the “Covered Actions”). OWB also recommended that the Commission determine that Claimant’s award applications lack a colorable connection between Claimant’s tips and the Covered Actions, and pursuant to Rule 21F-8(e), that the Commission permanently bar Claimant from participating in the Commission’s Whistleblower Program.

For the reasons discussed below, the recommendations of OWB are adopted.

Background

Claimant submitted three award applications to OWB for the Covered Actions. Claimant bases these award claims on tips involving pump and dump schemes, algorithmic trading, and orchestrated trading by multiple parties.

On [REDACTED], pursuant to Exchange Act Rule 21F-8(e), OWB provided notice to Claimant that it had determined that these three award applications were frivolous or noncolorable. The Covered Actions pertain to [REDACTED] [REDACTED] [REDACTED]. The Covered Actions do not involve pump and dump schemes, algorithmic trading, and/or orchestrated trading by multiple parties. OWB also informed Claimant that the Commission has the authority to permanently bar a claimant. Accordingly, OWB recommended that Claimant withdraw all frivolous or noncolorable claims. The 30-day deadline to withdraw expired on [REDACTED], and Claimant did not withdraw the claims at issue.

Preliminary Summary Dispositions

OWB then issued Preliminary Summary Dispositions recommending that Claimant’s applications for award in the Covered Actions be denied and further recommended that the Commission find that his/her award claims are noncolorable because the information submitted by Claimant did not relate to the conduct of the Covered Actions. Finally, OWB recommended that the Commission permanently bar Claimant from participation in the Commission’s Whistleblower Program.

Claimant submitted a timely response contesting the Preliminary Summary Dispositions.¹ In the response, Claimant argues six primary points: 1) Claimant refuses to sign a Confidentiality Agreement; 2) Claimant reported allegations of orchestrated trading which would “align” with the conduct that formed the basis of the Covered Actions; 3) the [REDACTED] [REDACTED] TCR submission portal does not contain an option to select [REDACTED] from a drop-down menu; 4) Claimant was unaware that he needed to include the names of specific entities in his tips; 5) the Preliminary Summary Dispositions fail to identify why Claimant’s claims are noncolorable; and 6) barring Claimant appears to be an attempt to avoid paying his award claims.

Analysis

Exchange Act Rule 21F-8(e) authorizes the Commission to permanently bar a claimant from the Whistleblower Program based on submissions or applications that are frivolous or fraudulent, or that otherwise hinder the effective and efficient operation of the Whistleblower Program. The Commission’s Adopting Release defines “frivolous claims” as “those that lack any reasonable or plausible connection to the covered or related action.”

First, the record supports the conclusion that Claimant is not eligible for an award in the Covered Actions because he/she did not provide information that led to the successful enforcement of the Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.²

Second, the Commission finds that the Claimant’s award applications lack a colorable connection between the Claimant’s tips and the Covered Actions for which the Claimant is seeking awards within the meaning of Rule 21F-8(e) of the Exchange Act. This is because there is no relation between the information provided by Claimant to the Commission and the subject matter of the Covered Actions at issue.

Third, pursuant to Rule 21F-8(e)(1), the Commission permanently bars Claimant from participation in its Whistleblower Program because Claimant has filed three or more applications for award that the Commission finds lack a colorable connection between the Claimant’s tips and the Covered Actions for which the Claimant is seeking awards. Claimant’s filing of noncolorable claims has consumed considerable staff time and resources and has hindered the efficient operation of the Whistleblower Program. As such, we find it appropriate to permanently bar Claimant from the Commission’s Whistleblower Program. This permanent bar applies to any pending applications from Claimant at any stage of the claims review process as well as to all future award claims.

Accordingly, it is hereby ORDERED that Claimant’s award claims in the Covered Actions are denied and it is determined that the applications are lacking a colorable connection between the tips and the Covered Actions and that Claimant shall be permanently barred from participation in the Commission’s Whistleblower Program.

By the Commission.

Vanessa A. Countryman
Secretary

FOOTNOTES:

¹ Claimant requested the underlying record of the Preliminary Summary Dispositions but failed to sign and return the required Confidentiality Agreement. As a result, the record was never provided to Claimant.

² Claimant’s information did not relate to the conduct in the Covered Actions and was not reviewed by investigative staff responsible for the Covered Actions.

SEC

34-104139

09/30/2025

______________________________________________________________________________
UNITED STATES OF AMERICA
Before the
SECURITIES EXCHANGE ACT OF 1934
2025-58
Release No. 104139 / September 30, 2025
WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-58

______________________________________________________________________________
In the Matter of the Claims for Award
in connection
Redacted
Redacted Notice of Covered Action
Redacted
ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS
The Claims Review Staff (“CRS”) issued Preliminary Determinations in connection with
(“Covered Action”) recommending that the Commission :
waive the TCR filing requirements under Rules 21F 9(a) and (b) as to (“Claimant 1”);
Redacted
Redacted
Redacted
find that Claimant 1 voluntarily provided original information to the Commission that led to the
Redacted
***
(
***successful enforcement of the Covered Action; grant Claimant 1 an award of percent
%) of the monetary sanctions collected in the Covered Action; and deny
(“Claimant 2 ) a whistleblower award for the Covered Action .
Claimant 1 and Claimant 2 (collectively, “Claimants”) submitted timely responses
contesting the Preliminary Determinations .1 For the reasons discussed below, we adopt the
recommendations of the CRS as to Claimant 1 and Claimant 2 .
See Exchange Act Rule 21F -10(e), 17 C.F.R. § 240.21F -10(e). Preliminary denial s were also issued to two
other claimants in connection with the Covered Action. These individuals did not contest the preliminary denial s of
their claim s and, as such, the Preliminary Determination and the Preliminary Summary Disposition with respect to
these individuals’ claim s became final orders of the Commission . See Exchange Act Rule 21F-10(f), 17 C.F.R. §
240.21F-10(f) ; Exchange Act Rule 21F-18(b)(4), 17 C.F.R. § 240.21F-18(b)(4). 1
I. Background
A. The Covered Action
Respondent 1
Respondents also
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
RedactedOn the Commission instituted settled cease -and-desist proceedings
against (“Respondent 1”) and
(“Respondent 2”) (collectively, “Respondents”). The Covered Action
determined that from
Through their misconduct, Respondents violated
Among other relief, the
Commission ordered Respondents to pay more than $1 million in monetary sanctions due to
Respondents’ misconduct (“Relevant Misconduct”).
The Office of the Whistleblower (“OWB”) posted a Notice of Covered Action on the
Commission’s public website inviting claimants to submit whistleblower award applications
within 90 days.2 Claimants submitted timely whistleblower award claims.
B. The Preliminary Determinations
The CRS issued Preliminary Determinations
***3 recommending that Claimant 1 receive an
award equal to % of the monetary sanctions collected in the Covered Action and that Claimant
2’s claim be denied .4
1. The Preliminary Determinations as to Claimant 1
As to Claimant 1, the CRS made several recommendations . First , the Preliminary
Determinations recommended that the Commission exercise its general exemptive authority
under Section 36(a) of the Exchange Act to waive the TCR filing requirements under Rules 21F-
9(a) and (b) . Second , the CRS preliminarily determined that Claimant 1
Redacted
Redacted
2 See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
3 See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
4 The record supporting the Preliminary Determination included the declaration (“Declaration”) of Division
of Enforcement (“Enforcement”) staff (“Staff”) who opened the investigation that led to the Covered Action
(“Investigation”). See Exchange Act Rule 21F -12(a), 17 C.F.R. § 240.21F -12(a).
2
RedactedThird , the CRS preliminarily determined that Claimant 1
voluntarily provided original information to the Commission that led to the successful
enforcement of the Covered Action. Fourth , the CRS recommended that Claimant 1 receive an
award of
*** % of the monetary sanctions collected in the Covered Action. Fifth , the Preliminary
Determinations recommended that the Commission decline to use its Section 36(a) exemptive
***
Redacted
authority to grant Claimant 1 a larger award based upon certain reimbursements made
before the Covered Action was brought.
2. The Preliminary Determinations as to Claimant 2
As to Claimant 2, the Preliminary Determinations recommended that the Commission
deny an award to Claimant 2. No information submitted by Claimant 2 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange
Act and Rule 21F-3(a)(3) and Rule 21F-4(c) because none of the information that Claimant 2
submitted: (1) c aused the Commission to (i) commence an examination, (ii) open or reopen an
investigation, or (iii) inquire into different conduct as part of a current Commission examination
or investigation under Rule 21F- 4(c)(1); or (2) s ignificantly contributed to the success of a
Commission judicial or administrative enforcement action under Rule 21F -4(c)(2).
5
C. Claimants’ Responses to the Preliminary Determination s
Claimants submitted timely written responses contesting the Preliminary Determinations.
1. Claimant 1’s Response to the Preliminary Determinations
In Claimant 1’s response to the Preliminary Determination s, Claimant 1 argues that the
amount of money on which Claimant 1’s award is based should be increased, even though the recommended award was % of the monetary sanctions collected in the Covered Action.
the whistleblower
Redacted
***
***
program rules (“Rules”). Claimant 1 complains that if the Commission follows the Preliminary
Determinations’ recommendations, he/she will only receive a $3.36 million award. Claimant 1 asserts that this $3.36 million is a fraction of what he/she should actually receive.
Redacted
In the Covered Action, the Commission ordered Respondents to pay
was the only monetary sanction ordered in the Covered
Redacted
Action. Under the Rules, whistleblowers can only be paid a percentage of the monetary
sanctions that the Commission has collected in connection with a covered action.
Exchange Act Rules 21F -4(c)(1) and (c)(2), 17 C.F.R. §§ 240.21F -4(c)(1) and (c)(2).
3 5
According to Claimant 1, rather than receiving an award based on the in
Redacted
Redacted
Redacted
monetary sanctions ordered and collected in the Covered Action, he/she should instead receive
Redacted
Redacted
Redacted
Redacted
Redacted
(totaling
*** an award based on the as well as an additional
. Before the Commission brought the Covered Action,
reimbursed Claimant 1 believes he/she should
therefore receive an award totaling Claimant 1
believes that such an award would represent t he true value of his/her whistleblowing .
Claimant 1 contends that the Preliminary Determinations improperly failed to
recommend that the Commission exercise its exemptive authority to include the in
Redacted
reimbursements in the calculation of his/her whistleblower award . According to Claimant 1, the
Preliminary Determinations were erroneous for four reasons.
First, Claimant 1 alleges that the Preliminary Determinations failed to treat similar
whistleblowers alike. According to Claimant 1, the Commission has encountered prior situations
where entities have disgorged ill -gotten gains before enforcement actions were brought.
Claimant 1 alleges that in such cases, the Commission has “deemed” those disgorgement payments as having been ordered as sanctions in the enforcement actio ns.
6 Claimant 1 states that
by including such “deeming clauses” in the enforcement actions, the Commission has ensured that whistleblowers can receive awards based on the full value of the relief they secured .
Redacted
Redacted
Redacted
The
Covered Action, however, did not include a “deeming clause” with respect to
prior reimbursements Claimant 1 argues that the Commission’s
failure to do so was arbitrary, capricious, and an abuse of discretion.
Claimant 1 states that Congress intended “monetary sanctions” that “support a
whistleblower award” to cover all payments that are “in the nature of relief for violations that are the subject of the [enforcement] action .”
7 Claimant 1 asserts that when an entity preemptively
disgorges funds that should have gone to investors, the reimbursements are “in the nature of relief” and are directly related to the “violations that are the subject of the action .”
6 For instance, Claimant 1 cites to In the Matter of Insight Venture M anagement , LLC , Admin. Proc. File No.
3-21499 (June 20, 2023). There, the Commission ordered respondent Insight Venture Management, LLC
(“Insight”) to “pay disgorgement of $773,754.41 and prejudgment interest of $91,203.76 for a total of $864,958.17,
with such payment being deemed satisfied by the payments Insight previously made .” According to Claimant 1,
such “deemed satisfied” language is critical for potential whistleblowers. Claimant 1 states that even though Insight
returned the money before the Commission brought an enforcement action, the Commission’s “deeming clause” in the enforcement action ensured that an eligible whistleblower could recover an award based on the combined total of
Insight’s prior reimbursements ($864,958.17) and the civil money penalty ($1.5 million) that was actually ordered in
the enforcement action.
7 Whistleblower Program Rules , 85 Fed. Reg. 70898, 70905 (Nov. 5, 2020).
4
Claimant 1 argues that the pre -Covered A ction reimbursements were made as a direct
Redacted
result of his/her internal reporting to Respondent 1 in before Claimant 1 submitted
information to the Commission . Claimant 1 states that Respondents had known about the
Relevant Misconduct dating back to ; the reimbursements, however, were not made for the
first time until Claimant 1 contends that absent raising his/her concerns, the
reimbursements would never have been made ; absent the reimbursements, the
Commission would have ordered the to be disgorged in the Covered Action as a
monetary sanction, along with
Redacted
Redacted
Redacted
Redacted
***
Second , Claimant 1 argues that the Preliminary Determinations undermine the
Commission’s policies and whistleblower program by discouraging internal reporting and
creating a loophole for future whistleblower retaliation. Claimant 1 contends that if he/she does
not receive an increased award, whistleblowers who first report internally will run the risk of
having smaller award bases in comparison to the larger award bases they would receive if they
came forward to the Commission first.8
In support of this argument, Claimant 1 cites to the Commission’s rulemaking process
before the Rules were implemented in 2011. According to Claimant 1, the Commission was warned that its Rules could force whistleblowers to “decline to report a violation internally based
on the strategic calculation that the company could reduce the monetary sanctions through remediation, self -reporting, cooperation, etc., which in turn might reduce the whistlebl ower’s
award .”
9 Claimant 1 states that the Commission dismissed these concerns as lacking either
“anecdotal [or] empirical evidence,” and it declined to adopt a rule to address such a situation.10
Claimant 1 contends that because his/her case was apparently not previously contemplated by the
Commission, that is another reason for the Commission to issue an exemption.11
Claimant 1 also argues that absent an exemption, the Commission would be creating a
loophole that would incentivize securities laws violators to not only discourage employees from
reporting to the Commission, but also retaliate against those who do. Claimant 1 hypothesizes
that a violator could inform a whistleblower that the violator wou ld cooperate with the
Commission. The violator could also tell the whistleblower that it would quickly reimburse
investors for the amount of the misconduct. Claimant 1 asserts that such threats would be
enough to dissuade employees from blowing the whistle ; even for those whistleblowers who
report to the Commission, the potential awards would be reduced or even eliminated.
Claimant 1 asserts that his/her award base
Redacted
Redacted is “exponentially smaller” than what the award
base should be because he/she repo rted internally first before coming forward to the Commission.
9 Securities Whistleblower Incentives and Protections , 76 Fed. Reg. 34300, 34360, n. 455 (June 13, 2011)
(“Adopting Release”).
10 Id.
Redacted
Claimant 1 further adds that because he/she internally reported,
if Claimant 1 h ad first reported to the Commission instead.
Redacted
5 8
11
Third , Claimant 1 argues that the Preliminary Determinations are unfair and inequitable
to Claimant 1, a model whistleblower who was instrumental to initiating the Investigation that
led to the Covered Action. Claimant 1 states that when he/she was deciding whether to report
the violations and risk “career suicide ”, he/she believed that a potential whistleblower award
would be based on monetary sanctions between plus interest.
Claimant 1 states that it is deeply unfair that h is/her award is only based on the in
Redacted
Redacted
monetary sanctions that were actually ordered in the Covered Action, well below the actual value
of Respondents’ violations.
Fourth, Claimant 1 argues that no countervailing policies support the CRS’s denial of an
exemption. Claimant 1 alleges that given the unique facts here, there is no possible downside or future risks for the Commission in granting an exemption and increasing Claim ant 1’s award.
12
Claimant 1 asserts that this matter presents unusual facts, and, as such, the Commission is
unlikely to face similar exemption requests in the future. According to Claimant 1, this case is
unique for three primary reasons. First , unlike most cases where entities reimburse investors,
Claimant 1 was the sole cause of the reimbursements . Second, the amount of monetary sanctions
that the Commission would have issued absent the reimbursements is known and easily
identifiable. Third , potential whistleblowers are unlikely to be shortchanged in future cases
when the Commission follows its practice of imposing sanctions that are “deemed satisfied” by
the prior reimbursements. According to Claimant 1, so long as the Commission impos es
sanctions that are “deemed satisfied” by the prior reimbursements, Claimant 1’s situation is
unlikely to arise again.
2. Claimant 2’s Response to the Preliminary Determinations
In Claimant 2’s response to the Preliminary Determination s, Claimant 2 argues that
he/she provided information that resulted in the Covered Action. Claimant 2 alleges that the
Declaration contains false statements about the nature of the information Claimant 2 provided to
the Commission. Claimant 2 contends that he/she provided direct evidence of a dispute among
Respondents and Claimant 2 believes this is the
Redacted
same misconduct involved in the Covered Action.
Redacted Claimant 2 states that he/she provided
extensive information directly related to
Claimant 2 also states that he/she provided extensive information to support findings in the
Claimant 1 notes that the Preliminary Determinations did not explain why it would be inappropriate for the
Commission to grant Claimant 1 an exemption. Claimant 1 speculates that the CRS’s decision could be explained
by two potential concerns: (1) granting an exemption for Claimant 1 would force the Commission to always grant
exemptions for pre -settlement reimbursements; and (2) issuing an award based on monies the Commission has not
collected would deplete the Investor Protection Fund, from which whistleblower awards are paid . Claimant 1 states
that neither of these potential concerns justifies denying an exemption.
6 12
Covered Action related to
13
Redacted
Redacted
II. Analysis
To qualify for a whistleblower award under Section 21F of the Exchange Act, an
individual must voluntarily provide the Commission with original information that leads to the
successful enforcement of a covered action.14 Under Rules 21F-4(c)(1) and (2), respectively, the
Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (1) the original information caused the staff,
as relevant here, to open an investigation “or to inquire concerning different conduct as part of a
current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;
15 or (2) the conduct was already
under examination or investigation, and the original information “significantly contributed to the success of the action.”
16
A. Claimant 1
1. Waiver of the TCR Filing Requirement s
We exercise our general exemptive authority under Section 36(a) of the Exchange Act to
waive the TCR filing requirements under Rules 21F- 9(a) and (b) as to Claimant 1. Section 36(a)
grants the Commission the authority in certain circumstances to exempt any person from any
provision of the Exchange Act or any rule or regulation thereunder to the extent that such
exemption is (i) “necessary or appropriate in the public interest” and (ii) “consistent with the
13 Claimant 2 also takes issue with certain statements made in the Declaration. In particular, the Declaration
indicates that Staff found certain of Claimant 2’s information to be confusing. Claimant 2 states that Staff never
expressed any confusion to Cla imant 2 and that he/she was always available and responsive to Staff’s inquiries and
requests. Claimant 2 contends that for Staff to now claim that Staff was confused by Claimant 2’s information is
difficult to reconcile given the lengthy record of communications among Claimant 2 and Staff.
14 Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u -6(b)(1).
15 Exchange Act Rule 21F -4(c)(1); 17 C.F.R. § 240.21F -4(c)(1).
16 Exchange Act Rule 21F -4(c)(2), 17 C.F.R. § 240.21F -4(c)(2) . In determining whether the information
“significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the cover ed action. See
Order Determining Whistleblower Award Claims , Exchange Act Rel. No. 90922 at 4 (Jan. 14, 2021); see also Order
Determining Whistleblower Award Claims , Exchange Act Rel. No. 85412 at 9 (Mar. 26, 2019). For example, the
Commission will consider a claimant’s information to have significantly contributed to the success of an
enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly
fewer resources , or to bring additional successful claims or successful claims against additional individuals or
entities. Exchange Act Rel. No. 85412 at 8 –9.
7
protection of investors.”17 In analyzing whether the standard for a Section 36(a) waiver has been
met, the Commission considers (1) whether application of the rule in a particular matter would
result in hardship, unfairness, or inequity;18 and (2) whether the unique circumstances of a
particular matter raise considerations and arguments “substantially different from those which [were] carefully considered at the rulemaking proceeding.”
19
Here, in
Redacted Claimant 1’s counsel emailed a copy of Claimant 1’s TCR to OWB
and an Enforcement attorney. Claimant 1’s counsel informed OWB and the Enforcement attorney that counsel would be sending hardcopies of Claimant 1’s TCR to the Commission by
next-day mail. There is no evidence in the record, however, that the Commission received
Claimant 1’s TCR by mail. Consequently, Claimant 1 did not satisfy Rule 21F- 9(a), which
requires whistleblowers to submit tips by fax, mail, or through the Commiss ion’s online portal.
20
As a result of Claimant 1’s failure to satisfy Rule 21F -9(a), Claimant 1 also did not satisfy Rule
21F- 9(b), which requires whistleblowers to sign their TCRs under penalty of perjury at the time
they submit their TCRs through one of the permitted methods.21
We find that a Section 36(a) waiver from the requirements of Rule 21F -9(a) and Rule
21F- 9(b) is appropriate due to the unique circumstances of this matter , including the following:
(1) Claimant 1’s TCR, which was emailed to Commission staff, includ ed the required perjury
declaration; (2) Commission staff acknowledged that when Claimant 1 submitted Claimant 1’s
Redacted
Tip in [REDACTED]early in the COVID-19 pandemic[REDACTED] the Commission’s mailrooms were not
“fully functional”; (3) citing the Commission’s disrupted mail processing, Commission staff
specifically requested that Claimant 1 forward the exhibits to Claimant 1’s TCR to Commission
staff by email; (4) Claimant 1’s information caused Staff to open the Investigation ; and (5) after
Claimant 1 initially submitted information to the Commission, Claimant 1 provided substantial continuing assistance to Staff throughout the Investigation.
2. Award to Claimant 1
The record demonstrates that Claimant 1 voluntarily provided original information to the
Commission and that this original information led to the successful enforcement of the Covered
17 Exchange Act Section 36(a)(1), 15 U.S.C. § 78mm(a)(1).
18 See, e.g., Orange Park Florida TV, Inc. v. FCC , 811 F.2d 664, 675 (D.C. Cir. 1987) (“[A]ny rule of general
applicability will involve particular cases of hardship, for which an agency would be empowered to make individual
dispensations.”).
19 See P&R Temmer v. FCC , 743 F.2d 918, 929 (D.C. Cir. 1984) (“Where any administrative rule, although
considered generally to be in the public interest, is not in the public interest as applied to particular facts, an agency should waive application of the rule.”).
20 Exchange Act Rule 21F -9(a), 17 C.F.R. § 240.21F- 9(a).
21 Exchange Act Rule 21F -9(b), 17 C.F.R. § 240.21F -9(b).
8
Action.22
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
In coming to this conclusion, the Commission considered that Claimant 1 provided
significant information alerting Staff about the Relevant Misconduct, prompting the opening of
the Investigation. Claimant 1 also saved Staff significant time and resources26 and provided
ongoing assistance over the course of the Investigation by identifying potential witnesses and
assisting Staff with document requests.27
We thus find that Claimant 1 shall receive an award of
*** percent (
*** %) of the
monetary sanctions collected in the Covered Action, resulting in an award equal to $3.36
***
million
22 See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u -6(b)(1); Exchange Act Rule 21F -3, 17 C.F.R.
§ 240.21F -3.
23 Exchange Act Rule 21F -16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R.
§ 240.21F -16.
Redacted
Redacted
26 According to the Declaration, all of the investigative steps that Staff took in the Investigation stemmed
from Claimant 1’s information, including, without limitation, obtaining a formal order and issuing document and
testimony subpoenas. Further, all of the settled charges brought by the Commission against Respondents in the
Covered Action derived from information that Claimant 1 provided regarding the Relevant Misconduct.
27 Specifically, the Declaration, provided under penalty of perjury, which we credit, states that based solely on
Claimant 1’s TCR, which concerned the Relevant Misconduct, Staff opened the Investigation.
Redacted
Redacted
9
3. Claimant 1’s Request to Increase the Award
We decline to exercise our discretionary exemptive authority under Section 36(a) to grant
Redacted
Claimant 1 a larger award based upon amounts that were reimbursed prior to
the Covered Action. Such reimbursements were not ordered as monetary sanction s in the
Covered Action and thus cannot be considered when calculating the amount of Claimant 1’s
award.
The Rules specify that the amount of a whistleblower award “will be at least 10 percent
and no more than 30 percent of the monetary sanctions that the Commission” is able to collect in connection with a covered action.
29 Under the Rules, “monetary sanctions” mean s “[a]n order
to pay money that results from a Commission action” and which is either (i) “[e]xpressly designated as a penalty, disgorgement, or interest” or “[o] therwise ordered as relief for the
violations that are the subject of the covered action .”
30
Here, in the Covered Action, the Commission ordered Respondents to pay a civil money
penalty of for the Relevant M isconduct. In the Covered Action’s recitation of
facts, the Commission stated that
Such reimbursements, were made before the
Commission brought the Covered Action in In the Covered Action, these
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
reimbursements were not “expressly designated as a penalty, disgorgement, or interest.” These
reimbursements were also not “ordered as relief for the violations that [were] the subject of ” the
Covered Action. Indeed, the Commission never ordered the reimbursements to be paid. Instead,
the plain text of the Covered Action makes clear that the only monetary sanction ordered by the
Redacted
***
Commission in the Covered Action was This
Redacted
monetary sanction [REDACTED]which the Commission has collected in full[REDACTED]is the amount that
must therefore serve as the award base for calculating Claimant 1’s award.
We have previously declined to include reimbursements to investors made pursuant to
voluntary undertakings as monetary sanctions for purposes of calculating claimants’ awards. In
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
29 Exchange Act Rule 21F -5(b), 17 C.F.R. § 240.21F -5(b).
30 Exchange Act Rule 21F -4(e), 17 C.F.R. § 240.21F- 4(e). See also Adopting Release at 34328 (“regardless
of how designated, we will consider all amounts that are ‘ordered to be paid’ in a Commission action . . . as
‘monetary sanctions’ for purposes of Section 21F.”).
10
one final order (“2018 Final Order”),31 we considered a covered action in which a respondent
voluntarily reimbursed certain amounts to investors. In the 2018 Final Order, w e determined that
a voluntary undertaking is not a monetary sanction. We reasoned that a respondent could not be
ordered or otherwise compelled to comply with the undertaking, and, therefore, a voluntary
undertaking “cannot be included for purposes of calculating a whistleblower award.”32
We have also previously declined to permit an award to be calculated based on amounts
greater than those actually “collected”. In a second final order (“ 2023 Final Order ”),33 a
claimant argued that a whistleblower award should be based on the amount that the Commission
could have collected or was “able to” collect rather than the amount that the Commission actually collected. In the 2023 Final Order, we rejected that claimant’s argument,
34 finding that
the “statutory maximum whistleblower award is based on the amount actually collected in connection with the [c]overed [a]ction.”
35 The Commission, therefore could not base the amount
of the award on a higher amount that the Commission did not collect. We indicated that
calculating whistleblower award payments based on what the Commission did not collect would
introduce uncertainty, inconsistency, and could delay the processing of award claims.
In the 2023 Final Order, we also denied the claimant’s request that the Commission use
its Section 36(a) exemptive authority to set the claimant’s award amount above the statutory limit. We observed that we have used our discretionary authority to exempt whistleblowers from
certain of the Rules under limited circumstances. Importantly, however, we affirmed that “the
limitation on the amount of the award to be issued in connection with any [c]overed [a]ction was
set by statute” and that “we have never used our discretion under Section 36(a)(1) of the
Exchange Act to exempt a whistleblower from a statutory requirement or to approve an award
amount above the statutory limit.”
36 We continued, stating that the text of the statute “reflects a
clear congressional design to grant awards of no more than 30 percent of the amounts collected”
by the Commission.37
Notably, Congress has established the same framework for awards to be paid to
whistleblowers in cases brought by the Commodity Futures Trading Commission (CFTC)38 and
under the Anti-Money Laundering Improvement Act (AML).39 Thus, we concluded, given the
clarity and consistency of the statutory design for whistleblower awards, “the Commission does
31 See Order Determining Whistleblower Award Claim, Rel. No. 34 -83037 (Apr. 12, 2018).
32 Id. at 1, n. 1.
33 See Order Determining Whistleblower Award Claims , Rel. No. 34 -97202 (Mar. 27, 2023).
34 See id. at 6–8.
35 Id. at 7.
36 Id. at 8.
37 Id.
38 § 7 U.S.C. 26(b)(1).
39 § 31 U.S.C. 5323(b)(1).
11
not believe it would be appropriate to use its exemptive authority to award an amount above the
statutory limit even in cases such as [the one involved in the 2023 Final Order], where a higher
award amount might otherwise be warranted.”40
We are bound by the Rules, which are unambiguous in affirming that awards can only be
Redacted
paid based on the monetary sanctions that are ordered in any given covered action.
Redacted
Redacted Here,
***
in monetary sanctions were ordered against Respondents in the Covered Action and fully
collected by the Commission. As such, $3.36
million, None of Claimant 1’s
arguments about why the Commission should exercise its Section 36(a) discretionary authority change this conclusion.
Claimant 1’s assertion that Congress intended “monetary sanctions” that “support a
whistleblower award” to cover all payments that are “in the nature of relief for violations that are the subject of the [enforcement] action” is also misplaced . The statutory definition of “monetary
sanctions” is clear and unambiguous and does not permit voluntary reimbursements made by a respondent before an enforcement action is brought to qualify as monetary sanctions upon which
a whistleblower award can be made.
Additionally, the Commission previously contemplated t he possibility that internal
reporting by a whistleblower might lead to internal remediation , which could then reduce a
potential award . As we previously stated in the Adopting Release, the Rules permit upward
adjustments in award amounts where internal reporting potentially results in a lower monetary sanction.
41 Thus, it is not accurate to state that that the Commission merely dismissed such
concerns or that Claimant 1’s case was not previously contemplated by the Commission .
Claimant 1’s contention that there is no possible downside or future risks for the
Commission in granting an exemption and increasing Claimant 1’s award is erroneous. As we have noted previously, granting a waiver to allow amounts that were not ordered by a covered
40 2023 Final Order at 8.
41 See Adopting Release at 34359– 62. Among other things, the Commission addressed a concern expressed
by commenters that a sizeable percentage of whistleblowers could be “more motivated to report to the Commission
in lieu of reporting internally because of the f inancial incentives created by the whistleblower program.” Id. at
34360. The Commission explained that the Rules were tailored to provide additional economic incentives for
whistleblowers to continue to report internally. Such incentives included the possibility of awards based on self –
reports prompted by internal reports as well as the inclusion of participation in internal compliance programs as a
positive factor in determining the amounts of whistleblower awards. The Commission also specifically addressed
the concern that some whistleblowers could still “decline to report a violation internally based on the strategic
calculation that the company could reduce the monetary sanctions through remediation, self -reporting, cooperation,
etc., which in turn might reduce the whistleblower’s award. ” Id. at 34360, n. 455. We observed that “various
factors in Rule 21F -6 allow us to account for a reduced monetary sanction by providing for an upward adjustment in
the award determination where the internal reporting potentially resulted in a lower monetary sanction.” Id.
12
action to count as monetary sanctions on which an award could be based would introduce
uncertainty, inconsistency, and could delay the processing of award claims.
In all, consistent with our precedent, we reject Claimant 1’s request to increase the
amount of money on which Claimant 1’s award is based. We have never granted such a request before in the history of the whistleblower program, and we decline to do so he re.
B. Claimant 2
Claimant 2 does not qualify for an award. Claimant 2’s information did not lead to the
success of the Covered Action. Claimant 2 did not provide any information that was used in,
advanced, or impacted the Investigation or the Covered Action. In all, Claimant 2’s information
did not open the Investigation, did not cause Staff to inquire into different conduct, and did not
significantly contribute to the Investigation or the Covered Action. Although Claimant 2
communicated with Staff and provided documents to Staff, the information that Claimant 2
provided was not helpful to Staff. Thus, Claimant 2 fails to satisfy Rule 21F -4(c).
According to the Declaration, provided under penalty of perjury, which we credit, in
Claimant 2 submitted a tip (“Claimant 2’s Tip”). Claimant 2’s Tip alleged that in
Respondent 1 had
Claimant 2’s Tip alleged that this potentially
In Staff opened an investigation to
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
Redacted
investigate such allegations (“Prior Unrelated Investigation”).42 This Prior Unrelated
Investigation was a separate investigation from the Investigation that led to the Covered Action;
Redacted
Redacted
the Investigation was opened in based solely on Claimant 1’s Tip. The Prior
Unrelated Investigation did not result in any enforcement action and was closed in
after Staff conducted a thorough investigation of Claimant 2’s allegations .
The Declaration indicates that during the Prior Unrelated Investigation, Claimant 2
provided Staff with documents. According to Staff, cer tain of the documents that Claimant 2
provided were very confusing, and Claimant 2 made incorrect representations about them to
Staff.
Redacted
According to the Declaration, Claimant 2’s allegations did not in any way relate to the
Redacted
Relevant Misconduct. In fact, Claimant 2’s Tip did not allege that
relating to the Relevant Misconduct . Further, Claimant 2’s Tip
did not even hint at the Relevant Misconduct’s existence. The Relevant Misconduct was the sole
basis for the Covered Action. The Relevant Misconduct was not disclosed in any document
Specifically, on
Redacted
Redacted Staff opened a matter under inquiry, which was converted to an
investigation on
13 42
provided by Claimant 2. Overall , none of Claimant 2’s information helped advance the
Investigation or saved Staff any time or resources in conducting the Investigation.43
Claimant 2 argues that there are inaccuracies in the Declaration; in our view, however,
the Declaration , which we credit, provides a robust explanation that Claimant 2’s information
was not relevant to the Investigation, the Relevant Misconduct, or the Covered Action.
Consequently, there is sufficient evidence in the record to deny Claimant 2’s claim.
III. Conclusion Accordingly, it is hereby ORDERED that: (1) Claimant 1 shall receive an award of
percent (
*** %) of the monetary sanctions collected in the Covered Action; and (2) the
***
whistleblower award application of Claimant 2 in connection with the Covered Action be, and
hereby is, denied.
By the Commission.
Vanessa A. Countryman
Secretary
Additionally, the Declaration states that all the information that Claimant 2 provided to Staff during the
Prior Unrelated Investigation [REDACTED]whether communicated in writing or verbally during calls or meetings with Staff [REDACTED]
centered on alleged misconduct by Respondents solely with respect to The Relevant
Misconduct [REDACTED]which Claimant 2 never told Staff about [REDACTED]was not
Finally, during the Prior Unrelated Investigation, Claimant 2 told Staff that he/she
Claimant 2 never provided Staff with
Redacted
Redacted
Redacted
Redacted
Redacted
any information, however, suggesting the existence of the Relevant Misconduct.
14 43

SEC

34-104137

09/30/2025

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 104137 / September 30, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-56

In the Matter of the Claim for Award in connection with [REDACTED] [REDACTED] Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

[REDACTED] [REDACTED] The Claims Review Staff (“CRS”) issued Preliminary Determinations in connection with [REDACTED] (“Covered Action”) recommending that [REDACTED] (“Claimant”) be denied a whistleblower award for the Covered Action. Claimant submitted a timely response contesting the preliminary denial.¹ For the reasons discussed below, Claimant’s award claim is denied.

I. Background

A. The Covered Action

On [REDACTED] [REDACTED] the Commission instituted settled administrative and cease-and-desist proceedings against [REDACTED] (“Respondent”). The Covered Action concerned [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]. The Covered Action also concerned Respondent’s [REDACTED] [REDACTED]. As a result of its misconduct, Respondent [REDACTED] [REDACTED] [REDACTED]. Among other relief, the Commission ordered Respondent to pay [REDACTED] in monetary sanctions.

The Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.² Claimant submitted a timely whistleblower award claim.

B. The Preliminary Determination as to Claimant

The CRS issued a Preliminary Determination as to Claimant³ recommending that Claimant’s claim be denied.⁴ The Preliminary Determination noted that Claimant was not a “whistleblower” within the meaning of Rule 21F-2(a) at the time that the Investigation was opened. Claimant wrote [REDACTED] article, [REDACTED] (“Article”). However, Claimant did not provide the substance of the Article to the Commission until [REDACTED] when Claimant submitted information for the first time to the Commission by filing a Form TCR (“TCR”). Claimant filed his/her TCR one month after the Investigation was opened in [REDACTED].

The Preliminary Determination thus recommended that Claimant’s claim should be denied because Claimant’s submission of information to the Commission did not lead to the success of the Covered Action within the meaning of Exchange Act Section 21F(b)(1) and Rules 21F-3(a) and 21F-4(c) thereunder, which require that:

a. The claimant gave the Commission original information that caused the Commission to (i) commence an investigation, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1); or

b. The claimant gave the Commission original information about conduct that was already under examination and investigation by the Commission and the claimant’s submission significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2).⁵

According to the Preliminary Determination, Claimant did not alert Staff to the information contained in the Article. Instead, Staff found the publicly available Article on Staff’s own initiative. Because there was no causal connection between the opening of the Investigation and Claimant’s submission of information to the Commission, Claimant cannot satisfy the requirements of Rule 21F-4(c)(1).⁶ Additionally, Claimant’s submission of information did not significantly contribute to the success of the Covered Action as required under Rule 21F-4(c)(2). Claimant’s TCR did not advance the Investigation because by the time Claimant submitted the TCR to the Commission, Staff was already aware of the bulk of the information in the TCR based on Staff’s own investigative efforts. To the extent the TCR contained any new information, that information was not useful to the Investigation or the Covered Action.⁷

C. Claimant’s Response to the Preliminary Determination

In Claimant’s response to the Preliminary Determination, Claimant makes two principal arguments about why he/she should receive an award for the Covered Action.

First, Claimant argues that he/she should receive an award under Rule 21F-4(c) because the Commission opened the Investigation based on the Article, which was published in [REDACTED]. Claimant asserts that, contrary to any assertions otherwise in the Preliminary Determination, Claimant is a “whistleblower” whose original information “led to the successful enforcement” of the Covered Action. Claimant states that he/she blew the whistle on Respondent’s misconduct when the Article was published.

Claimant asserts that although he/she submitted his/her TCR to the Commission in [REDACTED], nothing in the Exchange Act or the whistleblower program rules (“Rules”), as they existed at the time that Claimant filed his/her TCR, required Claimant to first report to the Commission before publishing the Article. According to Claimant, there is no sequencing requirement in the Rules that specifies that a claimant can only obtain “whistleblower status” once that claimant files a TCR. Claimant alleges that the text, structure, purpose, and history of the Rules confirm this.

Claimant contends that he/she satisfies Rule 21F-4(c)(1) because his/her information opened the Investigation and also caused Staff to inquire concerning different conduct as part of the Investigation. According to Claimant, it is not a claimant’s TCR that must lead to the success of a covered action under Rule 21F-4(c)(1). Instead, alleges Claimant, all that is required under Rule 21F-4(c)(1) is that: (1) the whistleblower give the Commission “original information”; (2) such information causes Commission staff to open an investigation; and (3) the resulting successful enforcement action concerns the conduct that was the subject of the “original information”.

Claimant believes that the Preliminary Determination’s reading of Rule 21F-4(c)(1) effectively creates a new sequencing requirement where a claimant must first file a TCR with the Commission in order to receive credit for opening a Commission investigation. Such a reading, Claimant alleges, would effectively change Rule 21F-4(c)(1) such that a claimant would be required to “give the Commission original information [and the claimant’s submission]” must have “cause[d] the staff . . . to open an investigation.”

Claimant argues that this interpretation of Rule 21F-4(c)(1) should be rejected for several reasons. First, according to Claimant, the Rules contemplate that a whistleblower can receive an award when the information he/she provides in his/her submission is already known by the Commission. Second, Claimant states that the Exchange Act and the Rules emphasize that it is the “original information” that must lead to a covered action—not the submission of such information. Third, Claimant alleges that the use of the term “submission” in Rule 21F-4(c)(2) but not in Rule 21F-4(c)(1) demonstrates that Rule 21F-4(c)(1) has no TCR timing requirement. Fourth, Claimant asserts that Commission precedent confirms Claimant’s position.⁸ Finally, Claimant maintains that his/her reading of Rule 21F-4(c)(1) best aligns with the purposes of the Rules, which include identifying and remedying violations of the federal securities laws quickly to avoid increased injury to investors. Claimant states that by publishing the Article before filing his/her TCR, Claimant immediately warned [REDACTED] about Respondent and [REDACTED].⁹

Claimant contends that he/she also satisfies Rule 21F-4(c)(3). Claimant alleges that before publishing the Article, Claimant attempted to notify Respondent of his/her information; however, Claimant could not reach Respondent by phone or email, and Respondent had no way for the public to reach its “internal whistleblower, legal, or compliance procedures”. Claimant states that he/she reported his/her allegations in the only way that was reasonably available to Claimant—by publishing the Article [REDACTED]. According to Claimant, the Article subsequently caused Respondent to “initiate” an internal “investigation” whose “results” confirmed Claimant’s allegations. Claimant asserts that the Commission later relied on the results of Respondent’s internal investigation to prove that Respondent had violated the federal securities laws.¹⁰

Second, in the alternative, Claimant contends that even if the Commission concludes that Claimant did not comply with the Rules in submitting his/her information to the Commission first before the Article was published, such non-compliance should be waived. According to Claimant, such non-compliance was nothing more than harmless procedural error.

Claimant argues that given the factual circumstances related to this matter, it would be grossly inequitable to deny him/her an award. Claimant states that he/she spent hundreds of hours uncovering Respondent’s securities violations. Claimant wanted to immediately warn [REDACTED] of Respondent’s misconduct and also wanted to participate in the Commission’s whistleblower program. Claimant alleges that he/she was not a sophisticated whistleblower, and, [REDACTED], as [REDACTED] Claimant feared that the Commission would not take his/her tip seriously. Claimant concluded that the best way to get the Commission’s, Respondent’s, and [REDACTED] attention was to go public with his/her information. After the Article was published, Claimant spent the next few weeks preparing to brief the Commission; Claimant subsequently submitted the TCR when Claimant felt that he/was ready to be interviewed by Commission staff.

Claimant observes that because of the Article [REDACTED], Respondent subsequently launched an internal investigation, and [REDACTED] [REDACTED] [REDACTED]. According to Claimant, his/her information provided the Commission with a detailed roadmap to investigate Respondent’s misconduct.

Further, Claimant states that as a result of bringing to light Respondent’s misconduct, he/she has [REDACTED] [REDACTED] [REDACTED].

Claimant argues that overall, he/she is exactly the type of whistleblower who should receive a waiver of the Rules and be granted an award. Claimant alleges that there is no relevant distinction between this matter and other purportedly similar matters where the Commission has granted exemptions to deserving whistleblowers who made only minor procedural missteps. Claimant believes that issuing an exemption would therefore ensure that Claimant is treated the same as other whistleblowers who received exemptive relief.¹¹

II. Analysis

A. Rule 21F-4(c)

Claimant’s information did not lead to the successful enforcement of the Covered Action. To qualify for an award under Section 21F of the Exchange Act, a whistleblower must have “voluntarily provided original information to the Commission that led to the successful enforcement of the covered . . . action.”¹² Rules 21F-4(c)(1) and (c)(2) specify that this “led to” requirement is satisfied if either “[y]ou gave the Commission original information that . . . cause[d] the staff to . . . open an investigation . . . or to inquire concerning different conduct as part of a current examination or investigation” or “[y]ou gave the Commission original information about conduct that was already under examination or investigation by the Commission . . . and your submission significantly contributed to the success of the action.”¹³

The record supports the conclusion that Claimant does not satisfy Rule 21F-4(c). Claimant does not satisfy Rule 21F-4(c)(1) because Claimant did not provide information to the Commission that caused the opening of the Investigation, nor did Claimant provide information to the Commission that caused Staff to inquire into different conduct. Claimant does not satisfy Rule 21F-4(c)(2) because Claimant did not provide the Commission with any information that significantly contributed to the success of the Covered Action.

Further, at the time that Staff opened the Investigation in [REDACTED], Claimant was not a “whistleblower” as defined within the meaning of Rule 21F-2(a)(1) because Claimant had not provided information in writing to the Commission.¹⁴

A declaration from Staff (“Enforcement Declaration”), provided under penalty of perjury, which we credit, confirms that Staff opened the Investigation on or around [REDACTED] to determine, among other things, whether Respondent had: [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]. At or around the time that Staff opened the Investigation, Staff learned that staff from EXAMS (“EXAMS Staff”) was already conducting an examination of Respondent on those issues (“Examination”).

A declaration from EXAMS Staff (“EXAMS Declaration”), also provided under penalty of perjury, which we also credit, confirms that EXAMS Staff opened the Examination on [REDACTED]. The scope of the Examination included, but was not limited to, [REDACTED] [REDACTED] [REDACTED]. The Examination sought to determine whether Respondent had violated [REDACTED]; if violations had transpired, the Examination sought to understand the scope of the violations.

The Examination was opened as a result of several prior examinations of [REDACTED]. The prior examinations sought to [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]. At the time the Examination was opened, there was also [REDACTED] and several discussions amongst Commission staff about [REDACTED] [REDACTED] [REDACTED]. In fact, dating back to [REDACTED] when the Examination was opened, EXAMS Staff had internal communications regarding [REDACTED] [REDACTED] [REDACTED]. Such internal communications also influenced the commencement of the Examination.

According to the Enforcement Declaration, on or around [REDACTED] Claimant published the Article, which concerned Respondent and its alleged misconduct. On or around [REDACTED], Staff opened the Investigation after reviewing the Article. On [REDACTED], Claimant submitted his/her TCR to the Commission. On or around [REDACTED], Staff received the TCR. After receiving the TCR, Staff never had any communications with Claimant.

While the TCR contained some new information beyond what Staff already knew from the Article, such information did not advance the Investigation. The information in the TCR was either already known to Staff or was not otherwise helpful to the Investigation. Additionally, Staff’s investigatory steps after the opening of the Investigation were taken based upon information developed from other sources, including: (1) a referral from EXAMS; (2) information and testimony provided by Respondent and its employees; (3) internal Commission analysis; and (4) information provided by [REDACTED] [REDACTED].

On or around [REDACTED], Claimant published another article regarding Respondent and its alleged misconduct (“Second Article”). Staff does not recall receiving the Second Article from Claimant. The information in the Second Article was not helpful to the Investigation or the Covered Action.¹⁵

As we have recently discussed at length, Rule 21F-4(c) requires that a claimant’s submission of information to the Commission prove helpful to Enforcement staff in the relevant covered action.¹⁶ Here, Claimant has not satisfied the statutory “led to” requirement. Such a requirement is embodied in Congress’s directive that, to qualify for an award, a whistleblower must have “voluntarily provided original information to the Commission that led to the successful enforcement of the covered . . . action.”¹⁷ Claimant’s submission of information to the Commission in [REDACTED] bore no causal connection to Staff’s opening of the Investigation in [REDACTED] and therefore did not satisfy Rule 21F-4(c)(1).¹⁸

Claimant’s interpretation of the Rules is misplaced. The Commission’s “led to” rule implements Congress’s decision to condition award eligibility on whether a whistleblower gave the Commission original information that “led to the successful enforcement of” a covered action.

In relevant part, the “led to” rule conditions award eligibility on whether the whistleblower’s “original information . . . cause[d] the staff to open . . . an investigation” under Rule 21F-4(c)(1) or, for later submissions, whether the whistleblower’s “submission significantly contributed to the success of the action” under Rule 21F-4(c)(2). To paraphrase, these first two paragraphs of the “led to” rule focus on causation: Did the whistleblower’s submission to the Commission of original information cause the Enforcement staff to open the investigation or else significantly contribute to the success of the covered action?

Claimant’s proposed interpretation of Rule 21F-4(c)(1) would sever that chain of causation by granting award eligibility whenever the Enforcement staff opens an investigation based on publicly available information, even if that individual’s submission to the Commission at a later date bore no causal connection to the opening of the investigation. Claimant’s reading would reduce the statutory requirement that the information be provided “to the Commission” to a ministerial step, one that had no independent substantive (causal) connection between the whistleblower’s information and the success of the Commission’s action. We do not believe that this is what Congress intended when Congress enacted the “led to” requirement in Section 21F(b)(1), nor does it seem the better reading of the statute.

On the present record, for example, Claimant published the Article in [REDACTED] but did not submit information directly to the Commission until one month later, at which point Claimant’s submission had no value to Staff. Such a scenario is not of the sort that the whistleblower program was designed to reward. As the U.S. Supreme Court has recognized, Congress’s “‘core objective’” in enacting Exchange Act Section 21F was “‘to motivate people who know of securities law violations to tell the SEC.’”¹⁹ Extending our whistleblower rules to reward Claimant would do little, if anything, to effectuate that purpose.

Accordingly, we reject Claimant’s proposed interpretation of our Rules. Claimant’s belated submission of information to the Commission bore no causal connection to Staff’s opening of the Investigation and therefore did not satisfy Rule 21F-4(c)(1).

The record also supports the conclusion that Claimant does not satisfy Rule 21F-4(c)(3). That Rule provides that the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if: (1) the claimant reported original information “through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time [the claimant] reported them to the Commission;” (2) that entity later provided the claimant’s information to the Commission or the results of an internal investigation initiated in response to the claimant’s information; and (3) the information the entity provided to the Commission satisfies either Rules 4(c)(1) or 4(c)(2).

Here, Claimant never reported any information internally to Respondent. Claimant’s argument that because there was no way to directly contact Respondent, his/her publishing of the Article publicly was an “internal report” to Respondent does not pass muster. Publishing an article online is not a way to report information “through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law”, as Rule 21F-4(c)(3) requires.²⁰

B. Waiver

In the alternative, Claimant argues that should the Commission determine that Claimant is not eligible for an award because he/she did not comply with the Rules, the Commission should waive such non-compliance and grant him/her an award. We decline to do so.

Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of [the Exchange Act] or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.”²¹ In whistleblower matters, the Commission has found that the public interest warranted an exemption from a rule requirement in a limited number of cases where the unique circumstances of the particular matter raised considerations substantially different from those which had been considered at the time the rules were adopted, and a strict application of the rules would result in undue hardship, unfairness, or inequity. Given the factual circumstances involved here, we do not believe that any such considerations exist.

Declining to exercise our exemptive authority to waive Claimant’s failure to satisfy Rule 21F-4(c) and denying Claimant an award does not undermine the goals of the Commission’s whistleblower program. The Commission’s whistleblower program was designed to encourage persons with information about potential securities violations to report such information to the Commission.²² Using Section 36(a) to excuse a claimant’s failure to report information to the Commission in a timely manner would be contrary to the underlying purpose of the Commission’s whistleblower program.

None of Claimant’s arguments about why the Commission should exercise its Section 36(a) discretionary authority change this conclusion. Claimant’s allegations that [REDACTED] [REDACTED], as he/she was an unsophisticated whistleblower who did not have the benefit of counsel advising him/her when Claimant published the Article and then forwarded his/her information to the Commission is offset by other aspects of the record.

Despite [REDACTED], when he/she published the Article and submitted information to the Commission, Claimant was not unsophisticated. To the contrary, according to a declaration from Claimant, which was submitted under penalty of perjury to the Commission (“Claimant’s Declaration”), Claimant was [REDACTED] [REDACTED] [REDACTED]. Around this time, Claimant learned of the Commission’s whistleblower program. As a regular consumer of financial periodicals—such as The Wall Street Journal and Bloomberg—Claimant began to read about whistleblower awards that the Commission had been granting to individuals who reported securities violations.

According to Claimant’s Declaration, in [REDACTED] Claimant began [REDACTED] [REDACTED]. Claimant stated that during his/her work looking into Respondent, he/she spent more than 250 hours conducting a thorough and wide-ranging investigation that uncovered Respondent’s securities violations, which included conducting interviews, researching Respondent, and performing sophisticated analyses of publicly available data. On Claimant’s TCR, when asked to select the profession that best represented him/her, Claimant selected “Other” and then specified that he/she was [REDACTED] [REDACTED]. According to Claimant’s Declaration, in [REDACTED], after [REDACTED] [REDACTED], Claimant began for the first time to search for legal counsel to assist Claimant with filing an award claim with the Commission.²³

In light of these facts, Claimant’s failure to follow the Rules by reporting to the Commission first before publishing an article publicly cannot be excused. Contrary to Claimant’s assertions otherwise, applying the “led to” requirement to deny an award does not result in any unfair burden to Claimant. The “led to” requirement is not a mere technicality but rather helps ensure that award eligibility is limited to claimants whose submissions to the Commission actually prove to be helpful, consistent with Congress’s statutory design. Regardless of a particular claimant’s unique circumstances—including those that Claimant has raised—we see no unfairness in concluding that a claimant who voluntarily publishes an article online before submitting information to the Commission should generally bear the risk that Enforcement staff may learn that information before the staff receives the claimant’s submission itself.²⁴

Finally, in declining to exercise our discretionary exemptive authority under Section 36(a) to waive Claimant’s non-compliance with the Rules, we note that such a practice is consistent with many other matters that the Commission has decided in recent years. In fact, within the past few months, we have denied award claims and concluded that invoking our Section 36(a) waiver authority would not be appropriate for claimants similarly situated to Claimant. These claimants, like Claimant, did not comply with the Rules and instead went public with their information before providing such information to the Commission.²⁵

Based on the facts and circumstances of this case, we thus decline to exercise our discretionary exemptive authority under Section 36(a) to waive Claimant’s non-compliance with the Rules.

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and hereby is, denied.

By the Commission.

Vanessa A. Countryman
Secretary

FOOTNOTES:

¹ See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e). A preliminary denial was also issued to three other claimants in connection with the Covered Action. However, these individuals did not contest the preliminary denials of their claims and, as such, the Preliminary Determinations with respect to these claimants’ award claims became the Final Order of the Commission. See Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

² See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

³ See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

⁴ The record supporting the Preliminary Determination included declarations of Commission staff, including Division of Enforcement (“Enforcement”) staff (“Staff”) who opened the investigation that led to the Covered Action (“Investigation”). See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).

⁵ See Exchange Act Rules 21F-4(c)(1) and (c)(2), 17 C.F.R. § 240.21F-4 (c)(1) and (c)(2).

⁶ The Preliminary Determination observed that even if Claimant’s submission of information to the Commission satisfied the “original information” requirement under Rule 21F-4(b)(1), the submission did not satisfy the “led to” requirement under Rule 21F-4(c)(1).

⁷ According to the Preliminary Determination, much of Staff’s investigatory steps were taken based upon information developed from other sources, including: (1) a referral from the Division of Examinations (“EXAMS”) dated [REDACTED]; (2) information and testimony provided by Respondent and its employees; (3) internal Commission analysis; and (4) information provided by [REDACTED] [REDACTED] [REDACTED].

⁸ See Order Determining Whistleblower Award Claims, Rel. No. 34-94398 (Mar. 11, 2022) (“2022 Order”) (granting an award to a whistleblower who was deemed to be an “original source” where the whistleblower emailed his/her report to Enforcement staff three days after posting it online, even though it was Enforcement staff’s discovery of the online report and not Enforcement staff’s receipt of the claimant’s email that prompted the opening of the successful investigation). Claimant contends that the 2022 Order involved virtually identical facts to the present matter. According to Claimant, for the Commission to reach an opposite conclusion and deny his/her award claim would be the definition of arbitrary and capricious.

⁹ Additionally, Claimant notes that even if the Commission’s reading of the Rules were correct, Claimant still “gave” the Commission his/her “original information” when the Article was published publicly. According to Claimant, the word “give” does not require a direct transfer but means simply “to cause to have”.

¹⁰ Claimant also alleges that Rules 4(c)(1), (c)(2), and (c)(3) are not the only ways under which a whistleblower’s information can “lead to” a successful enforcement action.

¹¹ Along with relying on the 2022 Order, Claimant also cites several other orders; Claimant alleges that in such matters, the Commission “has overlooked similar foot-faults” that are comparable to Claimants’ mistake. In these prior orders, the Commission granted waivers for, inter alia, failing to submit information internally before or at the same time that the information was reported to the Commission, failing to file a TCR with the Commission after reporting internally, and failing to timely submit a claim for an award with the Commission. Claimant also notes that past whistleblowers who unreasonably delayed reporting to the Commission for years still received awards. Finally, Claimant mentions a whistleblower who was granted an award even though the whistleblower initially submitted information to the Commission but then waited two months to file a TCR with the Commission.

¹² Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1) (emphasis added).

¹³ Exchange Act Rules 21F-4(c)(1) and (c)(2), 17 C.F.R. §§ 240.21F-4(c)(1) and (c)(2) (emphasis added). In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action. Order Determining Whistleblower Award Claims, Rel. No. 34-90922 at 4 (Jan. 14, 2021); see also Order Determining Whistleblower Award Claims, Rel. No. 34-85412 at 9 (Mar. 26, 2019). For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities. Rel. No. 34-85412 at 8–9.

¹⁴ See Exchange Act Rule 21F-2(a)(1), 17 C.F.R. § 240.21F-2(a)(1). See also Order Determining Whistleblower Award Claim, Rel. No. 34-102232 (Jan. 17, 2025); Digit. Realty Tr., Inc. v. Somers, 138 S. Ct. 767 (2018) (stating that with respect to the Commission’s whistleblower program, a “whistleblower” is “any individual who provides . . . information relating to a violation of the securities laws to the Commission” and finding that because an individual did not provide information “to the Commission” before the termination of his employment, that individual did not qualify as a “whistleblower” at the time of alleged employment retaliation) (emphasis in original).

¹⁵ According to the EXAMS Declaration, EXAMS Staff did not receive any information from Claimant, and EXAMS Staff did not communicate with Claimant before or during the Examination. Claimant did not provide any new information that was used to formulate or change the scope of the Examination that contributed to the success of the Examination. EXAMS Staff was aware of the Article and the Second Article as they were published in the course of the Examination. Although the Article and the Second Article caused some discussion amongst EXAMS Staff, the articles were not the basis of or had any impact on the results of the Examination.

¹⁶ See Order Determining Whistleblower Award Claim, Rel. No. 34-102987 (May 5, 2025) (“May 2025 Order”) (denying award claim where investigation was opened based on news articles, and not information joint claimants provided to the Commission a year later, despite joint claimants’ argument that their information was used in the news articles). In the May 2025 Order, we disavowed the approach followed in the 2022 Order, upon which Claimant relies in arguing that he/she should receive an award even though his/her information was published in the Article publicly before Claimant submitted information to the Commission.

¹⁷ Exchange Act Section 21F(b)(1) (emphasis added).

¹⁸ Kilgour v. SEC, 942 F.3d 113, 122 (2d Cir. 2019) (reading the “led to” language in Section 21F(

¹⁸ Kilgour v. SEC, 942 F.3d 113, 122 (2d Cir. 2019) (reading the “led to” language in Section 21F(b)(1) as “seem[ing] to require that the information as provided by the whistleblower must have ‘led to the successful enforcement action.’”) (emphasis in original). See also May 2025 Order; Order Determining Whistleblower Award Claims, Rel. No. 34-96669 (Jan. 17, 2023) (denying award claims as investigation was opened based on press reports and not because of information provided by claimants to the Commission).

¹⁹ Digital Realty Trust, Inc. v. Somers, 583 U.S. 149, 162 (2018) (quoting S. Rep. No. 111–176, at 38 (2010)).

²⁰ We also note that Claimant’s assertion that Rules 21F-4(c)(1), (c)(2), and (c)(3) are not the only ways for a claimant to satisfy the “led to” standard is not supported by the Rules. We have previously discussed these matters in great detail. See Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 89551, 5–7 (Aug. 13, 2020). In short, as we have previously explained, Rule 21F-4(c) provides the only mechanisms by which a claimant can satisfy the “led to” requirement. If (as is the case here) a claimant does not fall within any of the three circumstances identified in Rule 21F-4(c), then the claimant is not entitled to an award. Although Rule 21F-4(c) does not expressly state that the three components are the only way to establish “led to,” it has been the Commission’s consistent practice for more than a decade to apply the rule in this manner. When the Commission has considered whether a claimant provided information that “led to” a successful covered action, the Commission has looked only to the definition in Rule 21F-4(c). Thus, there is no basis to expand the “led to” requirement beyond the three standards specified in Rule 21F-4(c).

²¹ Exchange Act Section 36(a)(1), 15 U.S.C. § 78mm(a)(1).

²² See Digital Realty Trust, Inc. 583 U.S. at 162.

²³ Claimant has also represented [REDACTED] by the time he/she [REDACTED] [REDACTED] [REDACTED].

²⁴ This analysis is limited to the facts and circumstances presented in this record.

²⁵ See e.g., Order Determining Whistleblower Award Claim, Rel. No. 34-103177 (June 4, 2025) (denying request to exercise Section 36(a) exemptive authority to extend the relation-back period of Rule 21F-4(b)(7) beyond 120 days in order to cure the failure of claimant’s submission of information to the Commission to lead to the successful enforcement of the covered action as required by Rule 21F-4(c)); May 2025 Order (denying request to waive any applicable procedural bars to joint claimants’ award eligibility, including the requirement under Rule 21F-4(b)(7) to submit information to the Commission within 120 days of reporting it to an entity enumerated in the Rules); Order Determining Whistleblower Award Claim, Rel. No. 34-102232 (Jan. 17, 2025) (denying request to exercise Section 36(a) exemptive authority to waive any applicable procedural bars to award eligibility, including Rule 21F-4(c)(1) and Rule 21F-4(b)(7)’s 120-day reporting requirement). Claimant cites to other matters in which we have invoked our Section 36(a) exemptive authority to waive certain procedural requirements under the Rules. In such matters, however, we did not waive the “led to” requirement, and we will not do so here, for the reasons previously discussed.

SEC

09232025

09/30/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 23, 2025 WITH RESPECT TO CLAIMANT 2 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: _
OWB Reference No. 09232025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from ___ (“Claimant 2”) (collectively “Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.¹ The basis for this determination is as follows: Claimants did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Claimants’ information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of the Claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.²

¹ To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (6)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

² See Securities Whistleblower Incentives & Protections, 16 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).

Notice of Covered Action:
OWB Reference No. 09232025
SEC Enforcement staff responsible for the Covered Action did not receive or review the information cited by Claimant 2 in his/her Form WB-APP as the basis for his/her award claim; nor did Enforcement staff responsible for the Covered Action receive information relating to the Covered Action from the other Commission staff referenced in Claimant 2’s Form WB-APP. SEC Claimant 2 did not provide any information that was used in, or that contributed to, the Covered Action investigation or the resulting enforcement action.

By: Office of the Whistleblower
Date: August 21, 2025

SEC

34-104136

09/29/2025

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 104136 / September 29, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-55

In the Matter of the Claims for an Award in connection with [REDACTED] [REDACTED] Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claims submitted by joint claimants [REDACTED] [REDACTED] [REDACTED] [REDACTED] (“Claimant 1”) and [REDACTED] (“Claimant 2”) (collectively, the “Joint Claimants”) in connection with the above-referenced covered action (the “Covered Action”) and the criminal action, [REDACTED] (“Criminal Action”). Joint Claimants filed a timely response contesting the preliminary denial. For the reasons discussed below, Joint Claimants’ award claims are denied.

I. Background

A. The Covered Action

On [REDACTED], the Commission instituted settled cease-and-desist proceedings against [REDACTED] (the “Company”) and [REDACTED] former executives for [REDACTED] [REDACTED] [REDACTED]. The Commission found that, while the Company executives used [REDACTED] (“Other Company”), [REDACTED], as [REDACTED], the Company repeatedly concealed material information about its sales to and relationship with the Other Company and how the Other Company significantly contributed to [REDACTED] [REDACTED]. Even in its investor presentation devoted to its relationship with the Other Company on [REDACTED], the Company failed to explain how the Other Company sales had impacted [REDACTED] [REDACTED] [REDACTED] in prior quarters. In [REDACTED] [REDACTED], the Company restated its financial statements to [REDACTED] [REDACTED] [REDACTED] from the Other Company sales in the second half of [REDACTED]. The Commission also separately alleged that the Company had failed to disclose the material impact of certain [REDACTED] it received from [REDACTED].

Final Judgments were entered against the Company and its executives ordering monetary sanctions of more than $1 million.

The Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Joint Claimants filed timely whistleblower award claims.

B. The Preliminary Determination

The CRS issued a Preliminary Determination recommending that Joint Claimants’ claims be denied. While not a basis for denial, the CRS noted that the Joint Claimants were not “whistleblowers” within the meaning of Exchange Act Rule 21F-2(a) prior to [REDACTED] – the date on which Joint Claimants first submitted a Form TCR pursuant to Rule 21F-9(a) – weeks after the investigation that led to the Covered Action was opened. Additionally, Joint Claimants’ submission of information did not lead to the success of the Covered Action as required under Exchange Act Section 21F(b)(1) and Exchange Act Rule 21F-4(c). The Joint Claimants did not give information to the Commission until after [REDACTED] Commission staff [REDACTED] to the information contained in their published reports and Commission staff opened the investigation that led to the Covered Action. The Joint Claimants did not alert Enforcement staff [REDACTED] to the publicly available reports on their own initiative. Joint Claimants cannot satisfy Rule 21F-4(c)(1) because their submissions of information to the Commission did not cause the staff to open the investigation that led to the Covered Action or identify the undisclosed relationship with the Other Company or any other conduct that became part of the Covered Action. Further, the information provided in their [REDACTED] TCR (hereinafter, “November TCR”), which attached their public reports, and their submissions of information after the November TCR did not significantly contribute to the success of the Covered Action. Finally, the Joint Claimants did not satisfy “led to” through Exchange Act Rule 21F-4(c)(3) because contacting Company personnel, including the then-General Counsel, and informing them of and seeking comment about their upcoming publications does not satisfy 21F-4(c)(3)’s requirement that “[y]ou reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law . . .”

C. Joint Claimants’ Response to the Preliminary Determination

Joint Claimants submitted a timely written response (the “Response”) contesting the Preliminary Determination.¹ In the Response, the Joint Claimants make the following principal arguments.

First, Joint Claimants argue that they are whistleblowers and that nothing in the Exchange Act or Commission’s regulations require a claimant to have submitted information to the Commission on a TCR before staff opens the investigation to be eligible for an award. That Joint Claimants submitted their TCR after staff opened the investigation does not mean that an individual cannot be a “whistleblower,” as evidenced by Rule 21F-4(c)(3) (satisfying “led to” through internal reporting) and Rule 21F-4(b)(7) (the 120-day look back provision).

Second, Joint Claimants contend that they satisfy “led to” through Rule 21F-4(c)(1) because they provided “original information” to the Commission in their Form TCRs, which included a copy of their reports exposing the Company, and they were the original source of the information in the reports that caused the Commission staff to open an investigation into the Company. According to Joint Claimants, Exchange Act Rule 21F-4(c)(1) has only three requirements: (1) the whistleblower “gave the Commission original information”; (2) the “information” that the whistleblower gave “was sufficiently specific, credible, and timely to cause the staff to . . . open an investigation”; and (3) the Commission’s successful enforcement concerned the “conduct that was the subject of [the] original information.” According to Joint Claimants, while Rule 21F-4(c)(2) speaks to a claimant’s “submission,” Rule 21F-4(c)(1) concerns a claimant’s information, indicating that Rule 21F-4(c)(1) has no Form TCR timing requirement. For further support, Joint Claimants point to the Commission’s prior decision in Order Determining Whistleblower Award Claim, Release No. 34-94398 (Mar. 11, 2022) (“2022 Order”), where the Commission made a $14 million award to a claimant who was the original source of an online report that prompted the investigation and then submitted an email to the Commission three days later. And even if Joint Claimants were required to “give” their information to the Commission, the term “give” does not require a direct transfer but means simply “[t]o cause to have.”² According to Joint Claimants, their reports were widely disseminated, among other means, by email to mailing lists that included some Commission staff and they intended that the Commission staff would receive their online reports.³

Third, Joint Claimants argue that they satisfy the “led to” requirement pursuant to Rule 21F-4(c)(3) because they reported their information through the Company’s “lega[l] or compliance procedures,” and the Company responded by conducting an internal investigation and reporting the results to the Commission. Specifically, on [REDACTED] [REDACTED], Claimant 1 called and left messages for the Company’s head of investor relations, whose staff directed Claimant 1 to the Company’s outside PR agency. On [REDACTED], Claimant 1 reached a member of the PR agency and explained to him/her over the phone “the nature of [his/her] upcoming story.” Claimant 1 then sent him/her an email with a list of questions about the Other Company. Also on [REDACTED], Claimant 1 called the cell phone of the Company’s then-General Counsel and left a detailed message that he/she wanted to talk about why the Company had failed to disclose its relationship with the Other Company. According to Joint Claimants, the CRS erred by concluding that Claimant 1 was not internally reporting information but merely seeking comment on an upcoming news publication. Nothing in the rules says that an individual does not report original information just because he/she is also seeking comment about a forthcoming story.

Fourth, Exchange Act Section 21F(b)(1) directs the Commission to pay whistleblower awards to those who voluntarily provided original information to the Commission that led to the successful enforcement of the Commission judicial or administrative action. The statute speaks to “original information,” not “submission,” and to the extent the Commission’s rule on “led to” conflicts with the Exchange Act’s requirements, it is arbitrary and capricious.

Finally, they contend that the Commission should waive any bars to their award eligibility because Joint Claimants spent significant resources and time in uncovering the Company’s wrongdoing, and a denial does not serve the purposes of the whistleblower program. The Joint Claimants further argue that Commission precedent supports a waiver, including the 2022 Order. However, none of the precedents cited in the Response involved waiver of the statutory “led to” requirement.

II. Analysis

A. Joint Claimants Do Not Satisfy “Led to” Under Exchange Act Rule 21F-4(c)(1)

Rule 21F-4(c)(1) specifies that this “led to” requirement is satisfied if “you gave the Commission original information that cause[d] the staff to . . . open an investigation . . . or to inquire concerning different conduct as part of a current examination or investigation” and the “Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of your original information.”

Joint Claimants’ submission of information to the Commission did not cause Enforcement staff to open the investigation or to open new lines of inquiry under Rule 21F-4(c)(1). According to a declaration provided by Enforcement staff responsible for the Covered Action, which we credit, the Commission’s investigation was opened on [REDACTED] based on publicly available information, which included published reports by one of the Joint Claimants, prior to any information being provided by the Joint Claimants to the Commission. The Joint Claimants did not give any information to the Commission until weeks after the Commission opened its investigation.⁵

Joint Claimants argue that Rule 21F-4(c)(1) does not have any TCR timing requirement, that it is irrelevant whether a claimant provides his information on Form TCR to the Commission before or after the opening of the investigation. But the information that Joint Claimants gave to the Commission, as required under Section 21F of the Exchange Act, did not cause Enforcement staff to open the investigation or to inquire into the Company’s undisclosed relationship with the Other Company.

The Commission recently reaffirmed that, as reflected in Section 21F, the information a claimant provides to the Commission must lead to the success of the covered action in order for a claimant to qualify for an award. In Order Determining Whistleblower Award Claim, Release No. 34-102987 (May 5, 2025) (“2025 Order”), the Commission denied the award claim of joint claimants whose information contributed to news publications that caused staff to open the investigation, but did not provide any information to the Commission until approximately a year later. In denying the joint award claim, the Commission stated:

Joint Claimants’ proposed interpretation of Rule 21F-4(c)(1) would sever that chain of causation by granting award eligibility whenever the Enforcement staff opens an investigation based on publicly available information for which an individual was the “original source,” even if that individual’s submission to the Commission at a later date bore no causal connection to the opening of the investigation. Joint Claimants’ reading would reduce the statutory requirement that the information be provided “to the Commission” to a ministerial step, one that had no independent substantive (causal) connection between the whistleblower’s information and the success of the Commission’s action. We do not believe that this is what Congress intended when Congress enacted the “led to” requirement in Section 21F(b)(1), nor does it seem the better reading of the statute.⁶

Joint Claimants resist these conclusions by contending that they were the “original source” of the information in the online reports that prompted the staff’s opening of the investigation. In other words, Joint Claimants argue that they satisfy Rule 21F-4(c)(1) by virtue of the “original source” rule in Rule 21F-4(b), because it was their “original information” in the relevant news reports that prompted the Enforcement staff to open the investigation that culminated in the Covered Action.

But whether or not Joint Claimants were the original source of the relevant online reports is a separate issue from whether they satisfy the statutory “led to” requirement. That requirement is embodied in Congress’s directive that, to qualify for an award, a whistleblower must have “voluntarily provided original information to the Commission that led to the successful enforcement of the covered . . . action.” Section 21F(b)(1) (emphasis added). In other words, putting aside the separate requirement of whether the information was original, it must have been the information that was provided “to the Commission” that led to the successful enforcement of the covered action.

Joint Claimants’ interpretation also misunderstands how the statutory “led to” requirement and the Commission’s original source rule were designed to interact. The Commission’s “led to” rule implements Congress’s decision to condition award eligibility on whether a whistleblower gave the Commission original information that “led to the successful enforcement of” a covered action. Section 21F(b)(1). As already quoted, and in relevant part, the “led to” rule conditions award eligibility on whether the whistleblower’s “original information . . . cause[d] the staff to open . . . an investigation” under Rule 21F-4(c)(1) or, for later submissions, whether the whistleblower’s “submission significantly contributed to the success of the action” under Rule 21F-4(c)(2).⁷ To paraphrase, these first two paragraphs of the “led to” rule focus on causation: Did the whistleblower’s submission to the Commission of original information cause the Enforcement staff to open the investigation or else significantly contribute to the success of the covered action?⁸ Joint Claimants’ proposed interpretation of Rule 21F-4(c)(1) would sever that chain of causation by granting award eligibility whenever the Enforcement staff opens an investigation based on publicly available information for which an individual was the “original source,” even if that individual’s submission to the Commission at a later date bore no causal connection to the opening of the investigation.

On the present record, for example, Joint Claimants delayed for several weeks before submitting information directly to the Commission, at which point their submission no longer had any useful value to the Enforcement staff. That behavior by Joint Claimants is not of the sort that the whistleblower program was designed to reward. As the U.S. Supreme Court has recognized, Congress’s “‘core objective’” in enacting Exchange Act Section 21F was “‘to motivate people who know of securities law violations to tell the SEC.’” Digital Realty Trust, Inc. v. Somers, 583 U.S. 149, 162 (2018) (quoting S. Rep. No. 111-176, at 38 (2010)). Extending the Commission’s whistleblower rules to reward Joint Claimants would do little, if anything, to effectuate that purpose.

Satisfying the Commission’s original source rule goes to Congress’s statutory requirement that a whistleblower submit original information, and it is not a substitute for satisfying Congress’s separate led-to requirement. Indeed, this result was implicit in the illustrative example in the Commission’s 2011 adopting release of how the “original source” rule and the “led to” rule were designed to interact:

As the language of our rule indicates, if B makes a whistleblower submission based upon information obtained from A, and A later makes his or her own submission of that information, then A will be considered the “original source” of the information (assuming that A establishes his or her status as the original source and that the information otherwise qualifies as “original information”). However, A’s status as the “original source” of the information does not exclude B from award eligibility. In this example, because B obtained the facts underlying his or her submission from A, and those facts were not derived from publicly available sources, B would also be deemed to have submitted information derived from his or her “independent knowledge.” Thus, both submissions could qualify as “original information;” B’s because he or she was first to bring the Commission information derived from “independent knowledge,” and A’s because he or she was the “original source” of information that, as of B’s submission, was already known to the Commission.

Further, by virtue of being first-in-time, B may have an advantage over A. If B’s submission were sufficiently specific, credible, and timely that it caused us to open an investigation, and if a successful enforcement action resulted, then we would consider whether B’s submission “led to” our successful action under the lower standard set forth in Rule 21F-4(c)(1). Correspondingly, if A made his or her submission after we were already investigating the matter that B brought to us, then A’s information would be evaluated under Rule 21F-4(c)(2), and A would have to meet the additional requirement that his or her information “significantly contributed” to the success of the action. In this regard, we note that A would also be considered the “original source” of any additional information he or she provided that materially added to our base of knowledge.

Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300, 34,321-22 (June 3, 2011). In this illustration, both A and B could qualify as having provided original information, with A taking advantage of the “original source” rule, but each would be evaluated under a different prong of the “led to” rule depending on the timing of their respective submissions to the Commission. By contrast, on Joint Claimants’ reading, even if A made his or her submission to the Commission long after the Enforcement staff opened the investigation, both A and B could satisfy Rule 21F-4(c)(1) based solely on B’s earlier submission to the Commission of information for which A was an “original source.” Moreover, A would no longer have to meet the “significantly contributed” standard under Rule 21F-4(c)(2). That is not how Rule 21F-4(c)(1) and Rule 21F-4(c)(2) were designed to operate.

Accordingly, Joint Claimants’ proposed interpretation of the Commission’s whistleblower rules should be rejected. Their belated submission of information to the Commission bore no causal connection to the Enforcement staff’s opening of the investigation and therefore did not satisfy Rule 21F-4(c)(1).

Joint Claimants argue that denying their award claim would create inconsistencies with the 2022 Order, in which we granted an award to a claimant who emailed his report to the Enforcement staff three days after posting it online, even though it was the staff’s discovery of the online report and not its receipt of the email that prompted the opening of the successful investigation.⁹ We reasoned that the whistleblower was the “original source” of the information in the online report and that this information had caused the Enforcement staff to open its investigation under Rule 21F-4(c)(1). See id. On appeal of the 2022 Order by a second, unsuccessful claimant, the U.S. Court of Appeals for the Third Circuit sustained the denial but expressed concern about the award to the first claimant:

We acknowledge that the SEC’s proffered justification for awarding Claimant 1 $14 million and Doe [that is, the second claimant] nothing—hinging primarily on a single email that Claimant 1 sent to an SEC enforcement attorney—leaves something to be desired. The SEC has elsewhere argued that awards should only be granted where the tip itself “significantly contribute[d] to the success of the [SEC] action.” Kilgour v. SEC, 942 F.3d 113, 123 (2d Cir. 2019). Yet Claimant 1’s email had no ostensible impact on the investigation; SEC investigators found the Report on their own. . . . But these potential issues are beyond the scope of this appeal and, moreover, serve only to call Claimant 1’s award into question while doing nothing to undermine the SEC’s reasoning as to Doe.

Doe (Claimant #2) v. SEC, No. 22-1652, 2023 WL 3562977, at *3 n.3 (3d Cir. Mar. 23, 2023).

Given the Third Circuit’s concern, we turn to the Kilgour matter referenced by the Third Circuit. There, it was undisputed that certain joint claimants had delayed their submission until the Enforcement staff’s investigation was nearly complete. See Order Determining Whistleblower Award Claims, Release No. 34-82181, 2017 WL 596236, at *7 (Nov. 30, 2017) (the “2017 Order”). We therefore reasoned that, to satisfy the second paragraph of the “led to” rule, “they must demonstrate that their ‘submission significantly contributed to the success of the action.’” Id. (quoting Rule 21F-4(c)(2)). Because those joint claimants’ submission was duplicative of an earlier submission by another claimant, we concluded that their award claim must fail. See id.

On appeal of the 2017 Order, the U.S. Court of Appeals for the Second Circuit sustained our submission-focused interpretation of Rule 21F-4(c)(2). Kilgour v. SEC, 942 F.3d 113, 122-23 (2d Cir. 2019). That court read the “led to” language in Section 21F(b)(1) as “seem[ing] to require that the information as provided by the whistleblower must have ‘led to the successful enforcement action.’” Id. at 122. In reaching that conclusion, the Second Circuit observed that our submission-focused interpretation encourages whistleblowers to “curat[e] their submissions” to maximize utility and therefore “strikes a sensible balance between care and timeliness” in the provision of original information. Id. at 123.

As the Third Circuit recognized, our submission-focused interpretation of Rule 21F-4(c)(2) in the 2017 Order contrasts with how we applied Rule 21F-4(c)(1) in the 2022 Order to focus on the information rather than the submission. While an argument might be made for that distinction based on the use of the word “information” rather than “submission” in Rule 21F-4(c)(1), we reject that reading in favor of a more natural reading which harmonizes Rule 21F-4(c)(1) with the “led to” language of Section 21F(b)(1). As the Second Circuit observed, Section 21F(b)(1) “seems to require that the information as provided by the whistleblower must have ‘led to the successful enforcement action.’” 942 F.3d at 122-23; see also Decker v. N.W. Env’t Def. Ctr., 568 U.S. 597, 609 (2013) (observing that a “permissible reading of the regulation … bring[s] it into harmony with … the statute” (omissions in original) (internal quotation omitted)).

Moreover, Joint Claimants’ contrary interpretation of Section 21F(b)(1) and Rule 21F-4(c) would reward behavior inconsistent with the statute’s design. Under an information-focused interpretation, for example, an individual could self-publish online or give information to the press, indirectly prompting the Enforcement staff to open an investigation upon finding the information in the public realm, while the individual could wait months or even years to provide that same information directly to the Commission. Not only would that outcome subvert the statutory design, but it would also open the door to abusive tactics if, for example, an individual were permitted to wait until the Commission publicly filed its enforcement action before coming forward as the alleged “original source” for a news story that long ago prompted the staff’s investigation.

Accordingly, as we recently stated in the 2025 Order, we disavow the information-focused approach followed in our 2022 Order and clarify that the submission-focused interpretation in our 2017 Order applies to both Rule 21F-4(c)(1) and Rule 21F-4(c)(2). In other words, both Rule 21F-4(c)(1) and Rule 21F-4(c)(2) require that a claimant’s submission of information to the Commission prove helpful to the Enforcement staff in the covered action.

We credit the staff declaration that Joint Claimants’ belated submission of information to the Commission did not cause staff to open the investigation or inquire into the Company’s undisclosed relationship with the Other Company.

Finally, we reject the Joint Claimants’ contention that widely disseminating information on the Internet with the expectation that someone from the Commission will see the information and act on it is the same as “giv[ing]” the information to the Commission. As the Commission previously noted, “[t]he plain language of Section 21F . . . requires that information be ‘provided’ directly to the Commission in order to support an award—and makes no allowance for the online publication of information that, by happenstance, indirectly makes its way into the hands of Commission staff.”¹⁰ Furthermore, that Joint Claimants circulated their news reports by sending a mass email which may have included Commission staff does not save Joint Claimants’ award claim, as the record does not support the conclusion that Enforcement staff opened the investigation or began inquiring into the Company’s undisclosed relationship with the Other Company because of the mass email, but because of publicly available news articles they themselves identified.

In sum, Joint Claimants’ belated submission of information to the Commission bore no causal connection to the Enforcement staff’s opening of the investigation and therefore did not satisfy Rule 21F-4(c)(1).

B. Joint Claimants Do Not Satisfy “Led To” Under Exchange Act Rule 21F-4(c)(2)

Exchange Act Rule 21F-4(c)(2) is satisfied if “[y]ou gave the Commission original information about conduct that was already under examination or investigation by the Commission . . . and your submission significantly contributed to the success of the action” (emphases added).¹¹

Joint Claimants do not dispute in their Response that the information they provided to the Commission after the opening of the investigation did not significantly contribute to the success of the Covered Action under Rule 21F-4(c)(2). Nor does the record support the conclusion that their information significantly contributed to the success of the Covered Action. According to a declaration provided by Enforcement staff responsible for the Covered Action, the information the Joint Claimants provided to the Commission beginning in [REDACTED] did not substantially advance the investigation because the information was duplicative of information already known to Enforcement staff from the Joint Claimants’ published reports or other sources or otherwise concerned conduct that did not become part of the Covered Action.

C. Joint Claimants Do Not Satisfy “Led to” Under Exchange Act Rule 21F-4(c)(3)

Exchange Act Rule 21F-4(c)(3) provides a third mechanism for satisfying the “led to” requirement. Exchange Act Rule 21F-4(c)(3) requires the following:

(i) “You reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time you reported them to the Commission;”

(ii) “[T]he entity later provided your information to the Commission, or provided the results of an audit or investigation initiated in whole or in part in response to information you reported to the entity;”

(iii) “[A]nd the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of this section;” and

(iv) “[Y]ou must also submit the same information to the Commission in accordance with the procedures set forth in §240.21F-9 within 120 days of providing it to the entity.”

Joint Claimants do not satisfy “led to” under Exchange Act Rule 21F-4(c)(3).

First, the record does not support the conclusion that Joint Claimants provided original information through the Company’s “internal whistleblower, legal, or compliance procedures.” They contend that Claimant 1 contacted the Company’s head of investor relations, which in turn, directed him/her to the firm’s outside PR agency. As an initial matter, we do not believe that providing information to a company’s investor relations department or their outside PR agency satisfies the requirement to report original information of wrongdoing through a company’s “internal whistleblower, legal, or compliance procedures.” A company’s investor relations department or outside PR firm are not generally persons responsible for a company’s compliance with law.¹² Nor does the record support the conclusion that the Company’s investor relations department or outside PR firm had responsibility for internal whistleblower, legal or compliance procedures. While the General Counsel of a company is a person responsible for compliance with law, we do not believe that a reporter leaving a voicemail message about an upcoming story he/she intends to publish on a General Counsel’s cell phone satisfies the first requirement of Rule 21F-4(c)(3).

In connection with the Response, Joint Claimants submitted a sworn declaration by Claimant 1, which supports the conclusion that outreach to the Company’s head of investor relations, outside PR firm and General Counsel was not an internal report of wrongdoing for purposes of Rule 21F-4(c)(3). While Joint Claimants contend that Claimant 1 was not just seeking comment, but was also reporting original information, that conclusion is not supported by Claimant 1’s declaration, which states in relevant part:

[A]s [REDACTED] journalist it is customary to fact-check and seek comment before the publication of stories about public companies or individuals. At the [REDACTED], to ensure both accuracy and fairness, we never sandbag or surprise the subjects of our investigations with what appears in our reports. Further, most media liability policies— better known as libel or error-and omission policies—require the publisher to attempt to make the subject of its reporting aware of what is being written. Accordingly, despite being ready to publish my report in early [REDACTED], I repeatedly offered [the Company] the opportunity to comment on my upcoming report.¹³

In other words, Claimant 1 was seeking comment from various Company personnel on his/her upcoming publications. He/She also appears to have contacted the Company because doing so may have been required under the media liability policies of his/her employer. We do not believe that a news reporter who contacts a company to solicit comment on an upcoming article is using the company’s procedures to internally report wrongdoing. To conclude otherwise would mean that any time a news reporter contacts an organization about an upcoming publication regarding wrongdoing by that organization, the reporter’s contact would be transformed into an internal whistleblower report. Furthermore, Claimant 1’s declaration supports the conclusion that instead of reporting wrongdoing, Claimant 1 was asking the Company questions about conduct on which he/she intended to report.

Because Claimant 1 did not submit anything in writing to the General Counsel, we are left with Claimant 1’s recollection about what he/she orally conveyed in his/her voicemail message to the General Counsel. But even Claimant 1’s recollection does not support the conclusion that he/she was reporting misconduct, as opposed to informing the General Counsel about an upcoming publication and wanting to ask the General Counsel questions in furtherance of his/her story.¹⁴ While the Commission has previously determined that outsiders, in addition to employees, may satisfy “led to” under Exchange Act Rule 21F-4(c)(3), they still must meet the rule’s several requirements, which Joint Claimants failed to do.

Second, Joint Claimants do not satisfy the second requirement under Rule 21F-4(c)(3), because there is insufficient evidence in the record to support the conclusion that it was the information that Claimant 1 provided to the Company’s investor relations department, outside PR firm or General Counsel on [REDACTED], that prompted the Company to internally investigate the misconduct or whether it was the subsequent publication of the online reports by the Joint Claimants that prompted the Company to initiate an internal investigation. According to the Response, it was Joint Claimants’ “reporting [that] caused the Company to quickly take corrective actions,” and that on [REDACTED], two days after Claimant 1’s published report, the Company formed an ad hoc committee of its board of directors to review the allegations. As such, it is more likely, as acknowledged by the Joint Claimants, that the Company began internally investigating the conduct because of the publication of the online reports by the Joint Claimants (as well as the other news media surrounding the Joint Claimants’ online reports) and not because of the voicemail message Claimant 1 left on the General Counsel’s cell phone.

In sum, Joint Claimants did not provide original information that led to the success of the Covered Action under Rule 21F-4(c)(3).

D. Waiver of the “Led To” Requirement

Finally, the Joint Claimants argue that the Commission should use its broad discretion to waive¹⁵ any eligibility requirements, contending that their denial is based on a simple timing issue – that had they submitted their TCR to the Commission prior to their online publications they would have been eligible for an award and that the Commission has previously granted exemptions to “deserving whistleblowers who made only minor procedural missteps.” We decline to use our Section 36(a) exemptive authority here.

Applying the “led to” requirement to deny an award does not result in any unfair burden to the Joint Claimants. The “led to” requirement is not a mere technicality but rather helps ensure that award eligibility is limited to claimants whose submissions to the Commission actually prove to be helpful, consistent with Congress’s statutory design. There is no unfairness in concluding that claimants who self-publish online or report to the press before submitting information to the Commission should generally bear the risk that the Enforcement staff may learn that information via those other sources before the staff receives the claimants’ submission itself.¹⁶ The precedents that Joint Claimants rely on in the Response did not involve waiver of the statutory “led to” requirement.¹⁷ Rather, the Commission’s decision here not to utilize Section 36(a) to waive the “led to” requirement is consistent with past Commission precedent.¹⁸

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award claims of Joint Claimants in connection with the Covered Action and the Criminal Action be, and hereby are, denied.

By the Commission.

Vanessa A. Countryman
Secretary

FOOTNOTES:

¹ See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

² Response at 16 (citing to Webster’s II New College Dictionary (2001)).

³ In connection with the Response, Joint Claimants submitted a sworn declaration by a public relations expert to evaluate the reasonableness of the Joint Claimants’ [REDACTED] [REDACTED] “whistleblower reporting strategy” and concluded that he is [REDACTED] [REDACTED] “confident” that the Company monitored media stories in the Fall of [REDACTED] and that the Commission staff regularly monitored financial media stories in the Fall of [REDACTED].

⁴ Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1). See also Kilgour v. SEC, 942 F.3d 113, 122-23 (2d Cir. 2019) (reading the “led to” language in Section 21F(b)(1) as “seem[ing] to require that the information as provided by the whistleblower must have ‘led to the successful enforcement action.’”).

⁵ While not a basis for the denial, in order to address Joint Claimants’ arguments in the Response, we note that at the time Enforcement staff opened the investigation, the Joint Claimants were not “whistleblowers” as defined within the meaning of Rule 21F-2(a) under the Exchange Act, because they had not provided information in writing to the Commission. Joint Claimants also contend their counsel contacted a former Assistant Director on [REDACTED] to orally report Claimant 1’s findings in his/her [REDACTED] [REDACTED] published reports. The Joint Claimants then submitted their Form TCRs on [REDACTED]. Joint Claimants were not “whistleblowers” until they provided information about a possible violation of the securities laws in writing to the Commission. See Exchange Act Rule 21F-2(a)(1). While Joint Claimants provided sworn declarations along with their Response from former Enforcement staff indicating that whistleblower counsel would contact them orally about possible securities law violations, for purposes of the Commission’s whistleblower program, an individual does not become a “whistleblower” until his information is provided in writing to the Commission. Regardless, the record demonstrates that Enforcement staff opened the MUI weeks prior to Joint Claimants’ oral report or submission of Form TCRs.

⁶ 2025 Order at 4.

⁷ By contrast, the Commission adopted the “original source” rule in 2011 to implement Congress’s directive that awards be paid only to whistleblowers who submit “original information,” Section 21F(b)(1), which is defined to mean information that, in addition to other conditions, “is not known to the Commission from any other source, unless the whistleblower is the original source of the information,” Section 21F(a)(3). The “original source” rule repeats those statutory directives and elaborates, “The Commission will consider you to be an original source of the same information that we obtain from another source if the information satisfies the definition of original information, and the other source obtained the information from you or your representative.” Exchange Act Rule 21F-4(b)(1)(ii), (b)(5). The “original source” rule was not designed to implement the “led to” statutory requirement.

⁸ The third and last paragraph of the “led to” rule embraces a chain of indirect causation for an individual who first reports internally through an employer’s internal compliance system and within 120 days reports the same information directly to the Commission. See Rule 21F-4(c)(3).

⁹ 2022 Order at 3.

¹⁰ Order Determining Whistleblower Award Claims, Release No. 34-82955 at *5 (Mar. 27, 2018).

¹¹ In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action. For example, the Commission would consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities. Order Determining Whistleblower Award Claims, Release No. 34-90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Release No. 34-85412 (Mar. 26, 2019) at 9 (same).

¹² Pursuant to the Commission’s 2011 Adopting Release, “a report to a supervisor will qualify under this standard if the entity’s internal compliance procedures require or permit reporting misconduct in the first instance to supervisors. Furthermore, if an entity does not have established internal procedures for reporting violations of law, we will consider an employee who reports a possible violation to the entity’s legal counsel, senior management, or a director or trustee to have provided the information through the appropriate ‘internal whistleblower, legal or compliance procedures.’” A company’s investor relations department or outside PR firm does not fall into one of the persons or groups illustrated in the Adopting Release that would count for purposes of Rule 21F-4(c)(3). Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34,325.

¹³ Declaration of Claimant 1 ¶ 35.

¹⁴ Declaration of Claimant 1 ¶ 43 (“I left him a long and detailed voice message. Among other substantive details, I identified myself and our [REDACTED] [REDACTED]; noted that we were about to publish a story about his company; provided my contact information; and indicated that I wanted to talk with him about the recent [REDACTED] and an organization that appeared important to [the Company], [the Other Company], and why [the Company] had never disclosed its close relationship with [the Other Company].”).

¹⁵ Exchange Act Section 36(a)(1) provides that “the Commission, by rule, regulation, or order, may conditionally or unconditionally exempt any person… from any provision or provisions of [the Exchange Act] or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” 15 U.S.C. § 78mm(a)(1).

¹⁶ Order Determining Whistleblower Award Claim, Release No. 34-102987 (May 5, 2025).

¹⁷ Order Determining Whistleblower Award Claim, Release No. 34-94398 (Mar. 11, 2022) (exercising Section 36(a) exemptive authority to waive the Form TCR filing requirement, not the “led to” requirement).

¹⁸ Order Determining Whistleblower Award Claim, Release No. 34-102987 (May 5, 2025); Order Determining Whistleblower Award Claim, Release No. 34-102232 (Jan. 17, 2025); Order Determining Whistleblower Award Claim, Release No. 34-102159 (Jan. 13, 2025).

SEC

34-104135

09/29/2025

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 104135 / September 29, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-54

In the Matter of the Claim for an Award

in connection with

[REDACTED]

Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [REDACTED] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background

A. The Covered Action

On [REDACTED], the Commission filed a complaint in the United States District Court for the [REDACTED] alleging that Defendant [REDACTED] and others perpetrated a fraudulent investment scheme. That same day, the Court granted the Commission’s ex parte motion for a temporary restraining order and issued asset freeze orders and other ancillary relief. On [REDACTED], the Court entered a final judgment as to some of the defendants, in the amount of approximately [REDACTED]. Because that final judgment was for monetary sanctions greater than $1,000,000, on [REDACTED], the Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action (NoCA) on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.¹

On [REDACTED], the Court granted default judgments against the remaining defendants, ordered injunctive relief, and bifurcated the determination of the amount of monetary remedies to be imposed. On [REDACTED], the Commission filed a Motion for Monetary Remedies and Entry of Final Judgment (the “Motion”). On [REDACTED], the Court imposed the monetary remedies that the Commission had requested.

B. The Preliminary Determination

Claimant, who was an investor in the scheme, forwarded to the Commission emails that he/she had received from Defendant [REDACTED], two of which the Commission included as attachments to the Motion. On [REDACTED], the CRS issued a Preliminary Determination denying Claimant’s application for an award on the ground that Claimant did not provide original information to the Commission.²

C. Claimant’s Response to the Preliminary Determination

Claimant submitted a timely written response contesting the Preliminary Determination (the “Response”).³ Claimant principally argues that he/she is entitled to an award because his/her information came from emails to which the Commission did not have access, which Claimant asserts renders the information original and not publicly available. Claimant, who participated in a call with staff from the Commission and the [REDACTED] (“Other Agency”) in [REDACTED] and forwarded various other emails and materials to Commission staff, when only the monetary sanctions remained to be determined in the Covered Action, also asserts that his/her other information and materials caused the Commission and the Other Agency “to open, reopen or build, investigate and finalize both [the Covered Action and the Other Agency’s matter].”

II. Analysis

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.⁴ “Original information” is information “[d]erived from [a Claimant’s] independent knowledge or independent analysis.”⁵ “Independent knowledge means factual information in your possession that is not derived from publicly available sources.”⁶ “Publicly available sources may include both sources that are widely disseminated (such as corporate press releases and filings, media reports, and information on the internet), and sources that, though not widely disseminated, are generally available to the public (such as court filings and documents obtained through Freedom of Information Act requests).”⁷ “Independent analysis means your own analysis, whether done alone or in combination with others. Analysis means your examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.”⁸

Claimant contends that he/she provided Enforcement staff with emails defendants sent in [REDACTED] showing that defendants’ misconduct was ongoing notwithstanding the Court’s earlier injunction. Claimant also asserts in the Response that these emails were of a “private” nature. But a staff declaration, which we credit, explained that both emails at issue contained no language suggesting they had been tailored to Claimant as the recipient and that, based on the staff’s communications with other witnesses, the staff’s understanding was that potential investors or other members of the public could sign up on [REDACTED] website to receive these kinds of emails from [REDACTED]. The weight of the record thus suggests that the emails were like corporate press releases—intended to reach a broad audience. Accordingly, there is sufficient evidence in the record to support a finding that they constitute publicly available sources and do not qualify as “independent knowledge.” Likewise, the information does not qualify as “independent analysis,” as Claimant merely forwarded the emails without additional information or analysis. Claimant therefore did not provide original information to the Commission.

In the Response, Claimant also asserts that his/her other information and materials⁹ caused the Commission “to open, reopen, or build” its case in the Covered Action. Here, Claimant cannot meet the standards of Rule 21F-4(c)(1) or 4(c)(2).¹⁰ With respect to Rule 21F-4(c)(1), at the time that Claimant entered the picture, the Commission had already filed its complaint, liability as to all parties had been resolved, and the Commission was in the process of preparing a motion for monetary sanctions at the direction of the Court. As such Claimant’s other information and materials, as a chronological matter, could not be deemed to have caused staff “to open” or “reopen” the investigation. In addition, according to a staff declaration, which we credit, Claimant’s other information or materials did not cause staff to inquire into different conduct.

With respect to Rule 21F-4(c)(2), in determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.¹¹ Here, Claimant did have one or more calls with Commission staff and did forward various materials to Commission staff in addition to the two emails at issue. But according to a staff declaration, which we credit, none of those pieces of information or materials were used in or had any impact on the Commission’s investigation or the resulting litigated action. Accordingly, the other information and materials did not significantly contribute to the success of the Covered Action under Rule 21F-4(c)(2).

For these reasons, we deny Claimant’s whistleblower award claim.

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

Vanessa A. Countryman
Secretary

¹ See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

² This Preliminary Determination superseded a Preliminary Summary Disposition that OWB issued to Claimant on [REDACTED].

³ See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

⁴ See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

⁵ Exchange Act Rule 21F-4(b)(1)(i), 17 C.F.R. § 240.21F-4(b)(1)(i).

⁶ Exchange Act Rule 21F-4(b)(2), 17 C.F.R. § 240.21F-4(b)(2).

⁷ Adopting Release for Whistleblower Rules (Aug. 12, 2011) at 44.

⁸ Exchange Act Rule 21F-4(b)(3), 17 C.F.R. § 240.21F-4(b)(3).

⁹ In the Response, Claimant references phone calls with Commission staff, as well as materials such as newsletters and Zoom meeting recordings that he/she emailed to Commission staff.

¹⁰ Rules 21F-4(c)(1) and (c)(2) specify that the “led to” requirement of Exchange Act Section 21F(b)(1) is satisfied if either “you gave the Commission original information that cause[d] the staff to . . . open an investigation . . . or to inquire concerning different conduct as part of a current examination or investigation” or “[y]ou gave the Commission original information about conduct that was already under examination and investigation by the Commission . . . and your submission significantly contributed to the success of the action.”

¹¹ Order Determining Whistleblower Award Claim, Exchange Act Release No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claim, Exchange Act Release No. 85412 (Mar. 26, 2019) at 9.

SEC

34-104134

09/29/2025

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 104134 / September 29, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-53

In the Matter of the Claims for an

Award in connection with

[REDACTED] [REDACTED]

Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [REDACTED] (“Claimant 1”) receive [REDACTED] percent (%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”), for a payment of more than $180,000, and that [REDACTED] (“Claimant 2”) receive [REDACTED] percent (%) of the monetary sanctions collected in the above-referenced Covered Action, for a payment of more than $130,000. Claimant 1 and Claimant 2 provided notice of their decisions not to contest the Preliminary Determination.¹ The recommendations of the CRS are adopted.

The record demonstrates that Claimant 1 and Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.² Both Claimant 1 and Claimant 2 provided original information based on their “independent knowledge” that significantly contributed to the success of the Covered Action.

In determining that Claimant 1 receive a [REDACTED] percent (%) award and that Claimant 2 receive a [REDACTED] percent (%) award, we considered that both Claimant 1 and Claimant 2 provided significant information and substantial assistance to the Enforcement staff. They both provided new important information, communicated with staff multiple times, provided supporting documentation, identified witnesses and saved the staff time and resources. While they contributed equally to the success of the Covered Action, we find that Claimant 1 should receive the slightly higher award because Claimant 2 unreasonably delayed reporting his/her information to the Commission for approximately 15 months.³ ⁴ ⁵ ⁶ ⁷ ⁸

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Accordingly, it is hereby ORDERED that Claimant 1 shall receive [REDACTED] (%) percent of the monetary sanctions collected and Claimant 2 shall receive [REDACTED] (%) percent of the monetary sanctions collected in the Covered Action.

By the Commission.

Vanessa A. Countryman
Secretary

¹ The CRS preliminarily denied the award claim of a third claimant. Because the third claimant did not seek reconsideration, the preliminary denial became the Final Order of the Commission through operation of Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

² See Exchange Act Section 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).

³ ⁴ ⁵ ⁶ ⁷ ⁸ [REDACTED]

SEC

09272025

09/27/2025

FINAL ORDER THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 27, 2025 AS TO CLAIMANTS 4, 5, 6, AND 7 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

Criminal Actions

[REDACTED]

OWB Reference No. 09272025
PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] (“Claimant 4”), [REDACTED] (“Claimant 5”), [REDACTED] (“Claimant 6”), and [REDACTED] (“Claimant 7”) (collectively, “Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated these award applications for resolution through the summary disposition process.¹

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims of Claimants 4, 5, 6, and 7.² The basis for this determination is below as follows:

Claimants 4, 5, 6 and 7 did not provide original information to the Commission that led to the successful enforcement of the Covered Action, as required by Exchange Act Section 21F(b)(1) and Exchange Act Rules 21F-3(a) and 21F-4(c) thereunder, because the information they provided to the Commission did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimants did not provide information that caused the Covered Action investigation to open. Rather, Enforcement staff opened the Covered Action investigation based on information submitted by another individual.

Nor did Claimants cause Enforcement staff to inquire into different conduct or provide information that significantly contributed to the success of the Covered Action. Enforcement staff responsible for the Covered Action did not receive or review information from Claimants 4 and 5 and had no communications with them before or during the Covered Action investigation. While Enforcement staff responsible for the Covered Action received and reviewed information provided by Claimants 6 and 7, and interviewed them, their information was not helpful and did not advance the Covered Action investigation because their information was duplicative of information already known to the Enforcement staff responsible for the Covered Action. None of the information provided by Claimants was used in, or had any impact on, the Covered Action investigation or resulting Covered Action.

By: Office of the Whistleblower

Date: August 28, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

² Claimant 7 also applied for a related action award in connection with the Criminal Actions. Because Claimant 7 is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F- 11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

SEC

09232025

09/23/2025

Notice of Covered Action:

OWB Reference No. 09232025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

The Office of the Whistleblower (“OWB”) has preliminarily determined to recommend that the Commission deny the above award claim of Claimant 2.¹ Claimants did not provide information that led to the successful enforcement of the Covered Action, within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2)(i) and (3) and 21F-4(c) thereunder. Claimants’ information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of the Claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.²

Claimants did not provide information that caused the opening of the Covered Action investigation. Enforcement staff opened the Covered Action investigation based on a source other than the Claimants’ information. Nor did the Claimants provide information that caused Enforcement staff to inquire into different conduct as part of the Covered Action investigation. Specifically, the Commission staff responsible for the Covered Action investigation did not receive or review information from Claimants 2, and Commission staff never investigated the information that was the subject of Claimants 2’s submission to Commission staff as alleged in his/her Form WB-APP.

Notice of Covered Action: _ OWB Reference No. 09232025

Enforcement staff responsible for the Covered Action did not receive or review the information cited by Claimant 2 in his/her Form WB-APP as the basis for his/her award claim; nor did Enforcement staff responsible for the Covered Action receive information relating to the Covered Action from the other Commission staff referenced in Claimant 2’s Form WB-APP. SR Claimant 2 did not provide any information that was used in, or that contributed to, the Covered Action investigation or the resulting enforcement action.

By: Office of the Whistleblower

Date: August 21, 2025

SEC

09222025

09/22/2025

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 22, 2025, AS TO CLAIMANT 2 PURSUANT TO RULE 21F-18(b) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]
[REDACTED] [REDACTED]
OWB Reference No. 09222025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated [REDACTED] [REDACTED] Claimant 2’s award applications for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.2

[REDACTED]

Claimant 2

In particular, the investigation that resulted in the Covered Action was opened based on information obtained from sources other than Claimant 2. Additionally, Claimant 2’s information did not cause the Commission to inquire into different conduct or significantly contribute to the success of the Covered Action. According to Commission staff, staff did not receive or review Claimant 2’s information before or during the investigation that resulted in the Covered Action, and staff did not communicate with Claimant 2 or use Claimant 2’s information during the investigation. None of Claimant 2’s information was used in, or had any impact on, the charges brought by the Commission in the Covered Action.3

By: The Office of the Whistleblower

Date: August 21, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

2 To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

3 “In order for your whistleblower submission to be considered original information, it must be: (i) Derived from your independent knowledge or analysis; (ii) Not already known to the Commission from any other source, unless you are the original source of the information; (iii) Not exclusively derived from an allegation made in… the news media, unless you are a source of the information…” Rule 21F-4(b)(1).

4 [REDACTED]

SEC

09192025

09/19/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 19, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

OWB Reference No. 09192025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [REDACTED] (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated the Claimant’s award application for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reason stated below.

Claimant did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Claimant’s information to the Commission did not: (1) cause the Commission to (1) commence an examination, (11) open or reopen an investigation, or (111) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

The Covered Action investigation was not opened because of information from Claimant. Additionally, Claimant provided no information that was used in or that contributed to the success of the Covered Action or the Covered Action investigation. Further, the Covered Action investigation staff does not recall receiving or reviewing any information provided by Claimant with regard to the Covered Action investigation; nor does it recall communicating with Claimant about the Covered Action investigation As such, Claimant’s information was not used in, and had no impact on, the investigation or resulting Covered Action.

By: Office of the Whistleblower

Date: July 21, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

09182025

09/18/2025

FINAL ORDERS — THESE PRELIMINARY SUMMARY DISPOSITIONS BECAME THE FINAL ORDERS OF THE COMMISSION ON SEPTEMBER 18, 2025 AS TO CLAIMANT 1 AND CLAIMANT 2, PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]
[REDACTED] [REDACTED]

OWB Reference No. 09182025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] [REDACTED] [REDACTED] (“Claimant 1”) and [REDACTED] [REDACTED] [REDACTED] (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated these award applications for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

The Claimants did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. The Claimants’ information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Enforcement staff responsible for the Covered Action investigation did not receive or review information from the Claimants and did not have any communications with the Claimants. As such, the Claimants’ information was not used in, and had no impact on, the investigation or resulting Covered Action.

By: Office of the Whistleblower

Date: August 18, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

09172025

09/17/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 17, 2025 AS TO CLAIMANT 5 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

OWB Reference No. 09172025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED], and [REDACTED] [REDACTED] [REDACTED] [REDACTED] (“Claimant 5”) (collectively, “Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.2

[REDACTED]

Notice of Covered Action: [REDACTED]

Claimant 5

Claimant 5 did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and (2) and 21F-4(c) thereunder. Claimant 5’s information to the Commission did not: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or (b) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Although the Enforcement staff responsible for the Covered Action investigation received Claimant 5’s information and interviewed Claimant 5, none of the information in the interviews or his/her submission was new or helpful to the Covered Action investigation. As such, Claimant 5 did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

Additionally, Claimant 5’s whistleblower submission was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1) because Claimant 5 made the submission after receiving a request, inquiry, or demand from Commission staff that was directed to Claimant 5 and that related to the subject matter of the submission.3

By: Office of the Whistleblower

Date: July 31, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

3 [REDACTED]

4 [REDACTED]

SEC

09092025

09/12/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 12, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

[REDACTED] [REDACTED] [REDACTED] [REDACTED]

OWB Reference No: 09122025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [REDACTED] [REDACTED] [REDACTED] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reasons stated below.2

Claimant did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Claimant’s did not submit information to the Commission that caused the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of any information from Claimant; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant failed to comply with the requirements of Rule 21F-9 of the Exchange Act by failing to submit any tip to the Commission, and Claimant is not eligible for a waiver under either Rule 21F-9(e) or the Commission’s other waiver authorities.

Additionally, Enforcement staff responsible for the Covered Action investigation did not receive or review information from the Claimant and did not have any communications with Claimant. As such, Claimant did not submit information that was used in or had any impact on the investigation or resulting Covered Action.

By: Office of the Whistleblower

Date: August 8, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

2 To the extent Claimant applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

SEC

09092025A

09/12/2025

FINAL ORDERS – THIS PRELIMINARY SUMMARY DISPOSITIONS BECAME THE FINAL ORDERS OF THE COMMISSION ON SEPTEMBER 12, 2025 AS TO CLAIMANT 1 AND CLAIMANT 2, PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]
[REDACTED] [REDACTED]

OWB Reference No. 09122025A

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] [REDACTED] [REDACTED] (“Claimant 1”) and [REDACTED] [REDACTED] [REDACTED] (“Claimant 2”) (Claimant 1 and Claimant 2 are together referred to as the “Claimants”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above two claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated these award applications for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.

The Claimants did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. The Claimants’ information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Office of the Whistleblower

Date: August 12, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

09092025B

09/09/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 9, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

OWB Reference No: 09092025B

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notices of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] (“Claimant”) [REDACTED] (“Claimant 1”) in connection with the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated these award applications for resolution through the summary disposition process.¹

The Office of the Whistleblower (“OWB”) has preliminarily determined to recommend that the Commission deny the above award claims.¹ First, Claimant did not submit any information to the Commission. Accordingly, Claimant failed to specify in the award applications the submission pursuant to Rule 21F-9(a) upon which Claimant’s claims for an award are based.²

Second, Claimant’s award applications lack a colorable connection to the Covered Actions for which Claimant has sought awards within the meaning of Rule 21F-8(e) of the Exchange Act.³ Moreover, pursuant to Rule 21F-8(e), OWB recommends that the Commission permanently bar Claimant from participation in the Commission’s Whistleblower Program. Claimant has filed three or more award applications that are frivolous, fraudulent, noncolorable, or otherwise hinder the effective and efficient operation of the Whistleblower Program. Any permanent bar that is issued will apply to any pending application from Claimant at any stage of the claims review process.³

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 9, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

By: Office of the Whistleblower

Date: August 8, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

² Information submitted by Claimant did not relate to the conduct in the Covered Actions.

³ On [REDACTED] and [REDACTED], OWB provided notice by email and United Parcel Service to Claimant of its determinations that these claims were frivolous or lacking a colorable connection between the award applications and the Covered Actions for which Claimant sought awards and gave Claimant the opportunity to withdraw these claims and further submissions from Claimant. Claimant did not respond within the 30-day response period which ended on [REDACTED].

SEC

09092025A

09/09/2025

FINAL ORDER-THIS PRELIMINARYSUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 9, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice

Notice of Covered Action of Covered Action Notice of Covered Action

Notice of Covered Action

Notice of Covered Action Notice of Covered Action Notice of Covered Action

OWB Reference No: 09092025A

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notices of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act’) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims and has designated your award applications for resolution through the summary disposition process.’

The Office of the Whistleblower (“OWB”) has preliminarily determined to recommend that the Commission deny the above award claims.” First, Claimant did not submit any information to the Commission. Accordingly, Claimant failed to specify in the award applications the submission pursuant to Rule 21F-9(a) upon which Claimant’s claims for an award are based.?

Second, Claimant’s award applications lack a colorable connection to the Covered Actions for which Claimant has sought awards within the meaning of Rule 21F- 8(e) of the Exchange Act.*

1 See Exchange Act Rule 21F-18(a)(1)-(6).

2 To the extent Claimant applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, Jjis not eligible for an award in connection with any related action. See U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F- 11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

3 Claimant failed to identify any tips or submissions as the basis for an award for any of the Covered Actions.

‘ Information submitted by Claimant in JJWB-APP award applications do not relate to the conduct in the Covered Actions.

FINAL ORDER-THIS PRELIMINARYSUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 9, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Accordingly, OWB recommends that the Commission permanently bar Claimant from participation in the Commission’s Whistleblower Program. Claimant has filed three or more award applications that are frivolous or fraudulent, or otherwise hinder the effective and efficient operation of the Whistleblower Program. Any permanent bar that is issued will apply to any pending application from Claimant at any stage of the claims review process.” By: Office of the Whistleblower

Date: August 8, 2025

>On, and OWB provided notice by email and United Parcel Service to Claimant of its determinations that award claims were frivolous or lacking a colorable connection between the tips and the Covered Actions for which Claimant sought awards and gave Claimant the opportunity to withdraw these claims. Claimant did not respond within the 30-day response period which ended on [REDACTED]

SEC

07302025

09/09/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON JULY 30, 2025 AS TO CLAIMANT 2 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from (“Claimant 2”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower (“OWB”)¹ has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

OWB has preliminarily determined to recommend that the Commission deny the above award claims. Claimant 2 submitted untimely award applications because Claimant 2 failed to submit their claims for awards to OWB within 90 days of the date of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act.¹

By: Office of the Whistleblower

Date: June 30, 2025

¹ The deadline to file award claims for the Covered Action was [REDACTED]. Claimant 2’s award application was [REDACTED]. Claimants have not cited to any evidence that would warrant exemptive relief under Section 36(a) of the Exchange Act or Exchange Act Rule 21F-8(a).

SEC

07302025-1

09/09/2025

*:first-child]:mt-0″>

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON JULY 30, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action —

OWB Reference No. 07302025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from PR Claimant 1. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower (“OWB”) has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

OWB has preliminarily determined to recommend that the Commission deny the above award claim. The information provided by Claimant was never used by staff handling the Covered Action or underlying investigation, and those staff members otherwise had no contact with Claimant. Therefore, Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (1) commence an examination, (11) open or reopen an investigation, or (111) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.¹

By: Office of the Whistleblower

Date: June 30, 2025

¹ The Covered Action investigation was opened based on a TCR submitted by another entity to the Commission and was not opened in response to information provided by Claimant. Investigative staff responsible for the Covered Action never had any communications with Claimant. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

09072025

09/07/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 7, 2025, AS TO CLAIMANTS 2, 3, AND 4 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action:

Reference No: 09072025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

The Office of the Whistleblower (“OWB”) has preliminarily determined to recommend that the Commission deny the above award claims of Claimants 2, 3, and 4.¹ Claimants did not provide information that led to the successful enforcement of the Covered Action, within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2)(i) and (3) and 21F-4(c) thereunder. Claimants’ information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.²

Claimants did not provide information that caused the opening of the Covered Action investigation. Enforcement staff opened the Covered Action investigation based on publicly-available information they discovered on their own initiative and not in response to information provided by the Claimants.³

Enforcement staff responsible for the Covered Action investigation did not receive or review information from Claimants 2, 3 or 4 and did not have any communications with Claimants 2, 3 or 4 before or during the investigation. As such, Claimants 2, 3, or 4 did not provide any information that was not used in, or that had any impact on, the investigation or resulting Covered Action. In addition, Claimant 4’s Form WB-APP does not identify any TCR on which Claimant 4 bases his/her award claim.

Notice of Covered Action: a

Reference No: 09072025

Enforcement staff opened the Covered Action investigation based on publicly-available information they discovered on their own initiative and not in response to information provided by the Claimants.³

By: Office of the Whistleblower

Date: August 8, 2025

¹ See Exchange Act Rule 21F-18(a)(1)-(6).

² To the extent Claimants applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, ¦j¦is not eligible for an award in connection with any related action. See U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claims, Release No. 34-90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Release No. 34-85412 (Mar. 26, 2019) at 9 (same).

³ In determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities. See Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011); Order Determining Whistleblower Award Claims, Release No. 34-90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Release No. 34-85412 (Mar. 26, 2019) at 9.

SEC

09062025

09/06/2025

FINAL ORDER-THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 6, 2025 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No: 09062025

PRELIMINARY DETERMINATION OF THE CLAIMS REVIEW STAFF

The Claims Review Staff (“CRS”) issued a Preliminary Determination (the “Preliminary Determination”) recommending that the Commission deny the whistleblower award claim submitted by [REDACTED], [REDACTED], and [REDACTED] (collectively, “Claimants” or “Joint Claimants”) in connection with the above-referenced covered action (the “Covered Action”). Claimants did not file a timely response contesting the Preliminary Determination. For the reasons discussed in the Preliminary Determination, Claimants’ award claim is denied.

Claimants do not meet the statutory threshold for an award under Section 21F(b)(1) of the Exchange Act because Claimants are not eligible for an award under Rule 21F-4(b)(4)(iii) of the Exchange Act, as they are excluded from award eligibility under the officer/director exclusion.

In the Covered Action, the Commission sued [REDACTED] (the “Entity”) and ordered [REDACTED] (each a “Respondent”) to pay disgorgement, prejudgment interest, and civil money penalties. Rule 21F-4(b)(4)(iii) makes ineligible for an award “any officer, director, trustee, or partner of an entity if the award would be based on [the entity’s] conduct that is alleged in an action brought by the Commission.” Here, the record supports the conclusion that the entire $1,000,000 in disgorgement and prejudgment interest ordered to be paid, or that are ordered against any entity whose liability is based substantially on conduct that the whistleblower directed, planned, or initiated.”² (emphasis supplied).

The record supports the conclusion that the liability of Be [REDACTED] pe (“the Entity”) was substantially based on conduct that Claimant ¦ directed.

Claimant 1 was the of the Entity and the between the Entity and one of its

Claimant 1 played a critical role in managing the relationship between the by the Entity, including

that the Commission was scrutinizing Action, the Commission alleged conduct related to the

FINAL ORDER-THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 6, 2025 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Reference No: 09062025

Claimant 1 played a critical role in the violation, and this violation accounted for the entire ordered in the Covered Action. The Bp violation, which caused financial harm to investors, also would have justified a significant civil penalty in its own right. Excluding those ordered amounts, the $1,000,000 threshold for making awards has not been met. As such, we recommend that Joint Claimants’ award claim be denied.

By: Claims Review Staff Date: July 8, 2025

¹ We are treating Claimantl, Claimant 2, and Claimant 3 as joint claimants because their TCR specifically stated they were joint whistleblowers and speaks to them as collectively providing the information to the Commission, and their Form WB-APPs, which are substantially identical and provided through the same counsel, also refer to their collective efforts. See Johnson v. SEC, Case No. 21-1132 (Sept. 23, 2023) (affirming the SEC’s determination that whistleblowers were joint by looking at whether claimants were joint as of the time they submitted information to the Commission).

² Rule 21F-4(b)(4)(iii)(B).

SEC

34-103876

09/05/2025

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103876 / September 5, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-52

In the Matter of the Claim for Award

in connection with

Notice of Covered Action:

[REDACTED] [REDACTED] [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [REDACTED], [REDACTED], and [REDACTED] (“Joint Claimants”) jointly¹ receive a whistleblower award equal to [REDACTED] percent (***%) of the amount collected, or to be collected, in the above-referenced Covered Action (“Covered Action”), which would result in a current payment of approximately $58,000 (based on current collections). The recommendation of the CRS is adopted. The record demonstrates that Joint Claimants voluntarily provided original information² to the Commission and that this original information led to the successful enforcement of the Covered Action.³

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]⁴ ⁵ ⁶ ⁷ Joint Claimants timely alerted Commission staff to the misconduct which prompted the opening of the investigation, and certain of the Commission’s charges are based, in part, on the conduct alleged by the Joint Claimants. Joint Claimants provided significant ongoing assistance to the Commission staff including an in-person meeting and submitting additional important information and documents supporting their allegations.

Accordingly, it is hereby ORDERED that Joint 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

¹ We have determined to treat Joint Claimants jointly as a “whistleblower” for purposes of the award determination given that their information and Forms WB-APP were submitted together via the same counsel. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining a “whistleblower” to include two or more individuals acting jointly who provide information relating to a violation of the securities laws to the Commission). Unless Joint 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 33.3% of the joint award.

² One of the Joint Claimants was the former [REDACTED] at (the “Company”), while another was the former [REDACTED] and [REDACTED] of an outside company. However, these Joint Claimants are not excluded from award eligibility by virtue of the officer/director exclusion of Exchange Act Rule 21F-4(b)(4)(iii)(A). The record supports the conclusion that two of the Joint Claimants obtained the information based on their personal observations of misconduct at the Company and not because another person informed them of allegations of misconduct or through the company’s processes for identifying violations of law. [REDACTED] And it was not within the third Joint Claimant’s job responsibilities at the outside company to identify misrepresentations by the Company or its personnel. While the third Joint Claimant obtained the information from the other two Joint Claimants, the record supports the conclusion that the Joint Claimants satisfy the 120-day exception under Rule 21F-4(b)(4)(v)(C), as one of the Joint Claimants reported concerns to his/her supervisor and the Company’s General Counsel, among others. As the three of them were working together to discuss the violations and how and to whom they should report the concerns, the third Joint Claimant would have received the information under circumstances indicating that one of the Joint Claimant’s supervisors and the entity’s chief legal officer were aware of the misconduct. Joint Claimants then waited more than 120 days to report the misconduct to the Commission.

³ See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

⁴ ⁵ ⁶ ⁷ [REDACTED]

SEC

34-103856

09/04/2025

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103856 / September 4, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-51

In the Matter of the Claim for an Award

in connection with

[REDACTED] [REDACTED]

Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [REDACTED] (“Claimant”) receive a whistleblower award of [REDACTED] percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”), for approximately $1,300,000. Claimant informed the Office of the Whistleblower that he/she does not contest the Preliminary Determination.¹

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that caused Commission staff to open the investigation that led to the Covered Action, and the Covered Action was based in part on conduct that was the subject of Claimant’s original information.²

The Commission positively assesses (1) the significance of Claimant’s information, which closely tracked the Commission’s findings in its order instituting proceedings, and (2) Claimant’s ongoing assistance, which included seven interviews, the identification of key witnesses and documents, and assisting in drafting targeted information requests.

However, the Commission believes that Claimant unreasonably delayed in reporting to the Commission. In reaching this determination, the Commission considered that Claimant waited 27 months after he/she learned of the misconduct before reporting to the Commission.

Accordingly, it is hereby ORDERED that Claimant 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

¹ A preliminary denial was also issued to one other claimant in connection with the Covered Action. However, this individual did not contest the preliminary denial of his/her claim and, as such, the Preliminary Determination with respect to this claimant’s award claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

² See Exchange Act Rule (hereafter “Rule”) 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

³ Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.

⁴ Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

SEC

34-103833

09/03/2025

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103833 / September 3, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-49

In the Matter of the Claim for an Award

in connection with

[REDACTED] [REDACTED]

Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [REDACTED] (“Claimant”) receive a whistleblower award of [REDACTED] percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”), for approximately $1,000,000. Claimant informed the Office of the Whistleblower that he/she does not contest the Preliminary Determination.

Because the Rule 21F-6(c) presumption does not apply, the amount of Claimant’s award is determined by the factors enumerated in Rules 21F-6(a) and (b): (i) the significance of information provided to the Commission; (ii) the assistance provided in the Covered Action; (iii) the law-enforcement interest in deterring violations by granting awards; (iv) participation in internal compliance systems; (v) culpability or involvement; (vi) unreasonable reporting delay; and (vii) interference with internal compliance and reporting systems.

The Commission positively assesses (1) the significance of Claimant’s information, which closely tracked the Commission’s findings in its order instituting proceedings, and (2) Claimant’s ongoing assistance, which included two interviews, the identification of potential witnesses, and the provision of key documents to Enforcement staff.

However, the Commission believes that Claimant unreasonably delayed in reporting to the Commission. In reaching this determination, the Commission considered: (1) the length of Claimant’s delay (approximately 36 months after he/she learned of the misconduct before reporting); (2) Claimant was [REDACTED], and he/she appreciated the issues raised by the misconduct; and (3) although Claimant raised concerns internally, the record supports the conclusion that the Company had no intention of addressing those concerns.⁴

Accordingly, it is hereby ORDERED that Claimant 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

¹ See Exchange Act Rule (hereafter “Rule”) 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

² Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.

³ Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

⁴ Furthermore, [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] Claimant reported internally more than 120 days before submitting information to the Commission.

SEC

34-103834

09/03/2025

*:first-child]:mt-0″>

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103834 / September 3, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-50

In the Matter of the Claim for an Award

in connection with

[REDACTED] [REDACTED]

Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition¹ recommending the denial of the whistleblower award claim submitted by [REDACTED] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.²

I. Background

A. The Covered Action

On [REDACTED], the Commission charged [REDACTED] [REDACTED] (together, the “Company”) for [REDACTED]. The Company consented to the entry of the Commission’s order finding that it violated [REDACTED] [REDACTED]. The Company was ordered to pay more than $1 million in monetary sanctions.

OWB posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower claim.

B. The Preliminary Summary Disposition

OWB issued a Preliminary Summary Disposition recommending that Claimant’s claim be denied because Claimant’s information did not lead to the success of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Enforcement staff opened the Covered Action investigation based on a referral from the Division of Examinations (“Exams”), which was commenced based on a referral from another source, not in response to information provided by Claimant. The record reflected that Claimant’s information was not used in connection with the referral from Exams that prompted the opening of the Covered Action investigation, and Exams staff did not forward Claimant’s information to Enforcement staff assigned to the Covered Action investigation. Enforcement staff responsible for the Covered Action never received or reviewed any information from Claimant or had any communications with Claimant before or during the course of the Covered Action investigation. Additionally, the information provided by Claimant was not related to the subject matter of the Covered Action. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

C. Claimant’s Response to the Preliminary Summary Disposition

Claimant submitted a timely written response contesting the Preliminary Summary Disposition.³ Specifically, Claimant argues that he/she is entitled to an award because the record reflects that Claimant’s information was received by the Exams staff and Claimant surmises that his/her information contributed to the decision to open the examination that resulted in the Covered Action. Claimant argues that he/she alerted the Commission to issues about the Company’s [REDACTED] [REDACTED], and the Exams staff reviewed Claimant’s submissions prior to commencing the examination that resulted in the Covered Action. Because Claimant’s submissions were reviewed by Exams staff prior to commencing its examination, Claimant contends that this “clearly led to certain avenues of inquiry” and is grounds for an award. Claimant further argues that to the extent that Exams staff did not affirmatively use Claimant’s submissions as the single reason for launching the examination that resulted in the Covered Action, that is not grounds for denial and would only affect the size of the award.

II. Analysis

The record supports the conclusion that Claimant’s information did not cause the Commission to commence an examination or to open the Covered Action investigation. Enforcement staff responsible for the Covered Action affirmed in a declaration, which we credit, that the investigation was opened based upon a referral from Exams, which originally was based on a referral from another source, not in response to information provided by Claimant. While Claimant surmises that his/her information must have “clearly led to certain avenues of inquiry” because it was provided to Exams before Exams commenced its examination, a supplemental declaration from Exams staff, which we credit, confirms that Claimant’s information was not used in the staff’s decision to commence the examination and did not contribute to the examination once it was commenced. Exams staff further affirmed that the decision to commence the examination was based solely on a referral from another source (a state regulator).

The record further supports the conclusion that Claimant’s information did not cause the Commission to inquire into different conduct as part of the investigation and did not significantly contribute to the success of the Covered Action. The record supports the conclusion that Claimant’s information was not used in the referral from Exams to Enforcement and Exams staff did not forward Claimant’s information to Enforcement staff assigned to the Covered Action investigation. Enforcement staff responsible for the Covered Action never received or reviewed any information from Claimant or had any communications with Claimant before or during the course of the Covered Action investigation. Additionally, the information provided by Claimant, which related to the Company’s [REDACTED], was not related to the subject matter of the Covered Action, which related to the Company’s [REDACTED] [REDACTED]. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action. Accordingly, Claimant’s information was not used in the Covered Action investigation, did not cause the staff to inquire into different conduct, and did not significantly contribute to the success of the Covered Action.

For these reasons, we deny Claimant’s whistleblower award claim.

III. Conclusion

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application in the Covered Action be, and hereby is, denied.

By the Commission.

Vanessa A. Countryman
Secretary

¹ See Exchange Act Rule 21F-18, 17 C.F.R. § 240.2F-18.

² OWB also preliminarily denied the award claims of two other claimants. These claimants did not seek reconsideration of the Preliminary Summary Dispositions, and therefore, the denials of their claims were deemed to be the Final Orders of the Commission under Exchange Act Rule 21F-18(b)(4).

³ See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3).

⁴ See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

⁵ Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

⁶ Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

⁷ See Order Determining Whistleblower Award Claims, Release No. 34-85412 (March 26, 2019); Order Determining Whistleblower Award Claims, Release No. 34-82897 (March 19, 2018); see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).

SEC

34-103817

09/02/2025

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103817 / September 2, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-48

In the Matter of the Claim for an Award

in connection with

[REDACTED] [REDACTED]

Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [REDACTED] (“Claimant”) receive a whistleblower award of thirty percent (30%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”). Claimant informed the Office of the Whistleblower that he/she does not contest the Preliminary Determination.

The presumption applies here because a maximum award would not exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to the award application, and the award claim does not trigger Rule 21F-16. Further, Claimant provided more than limited assistance, as Claimant provided documents and interviews to Commission staff. Application of the presumption would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.⁴

By the Commission.

Vanessa A. Countryman
Secretary

¹ See Exchange Act Rule (hereafter “Rule”) 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

² Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.

³ Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

⁴ The judgment against the Company was deemed satisfied by the collections efforts and distributions to investors by the Court-appointed Receiver. Amounts distributed to harmed investors will be counted as collected monetary sanctions for purposes of making a whistleblower award to Claimant. See Order Determining Whistleblower Award Claim, Release No. 102434, n.7 (Feb. 18, 2025).

SEC

09022025

09/02/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON SEPTEMBER 2, 2025 AS TO CLAIMANT 2 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

OWB Reference No. 09022025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [REDACTED] [REDACTED] [REDACTED] (“Claimant 2”), [REDACTED] [REDACTED] [REDACTED], [REDACTED] and [REDACTED] [REDACTED] [REDACTED] (collectively, “Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.2

[REDACTED]

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

Notice of Covered Action: [REDACTED]

Claimant 2

Claimant 2 did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F-4(c) thereunder. Claimant 2’s information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 2’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 2 submitted publicly available information that was general in nature without further evaluation. Additionally, although Enforcement staff reviewed Claimant 2’s information around the time they opened the Covered Action investigation, the staff determined that the submission was duplicative of information already known to the staff from other sources. As such, Claimant 2 did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action. Additionally, Claimant 2 failed to provide “original information,” as required under Exchange Act Rule 21F-4(b).3

“In order for your whistleblower submission to be considered original information, it must be: (i) Derived from your independent knowledge or analysis; (ii) Not already known to the Commission from any other source,

unless you are the original source of the information; (iii) Not exclusively derived from an allegation made in… the news media, unless you are a source of the information…” Rule 21F-4(b)(1).

Notice of Covered Action: [REDACTED]

[REDACTED]

Notice of Covered Action: [REDACTED]

By: Office of the Whistleblower

Date: July 31, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

3 [REDACTED]

SEC

34-103814

09/02/2025

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103814 / September 2, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-47

In the Matter of the Claim for an Award

in connection with

[REDACTED]

Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [REDACTED] (“Claimant”) receive a whistleblower award of [REDACTED] percent (***%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”), or more than $350,000. Claimant informed the Office of the Whistleblower that he/she does not contest the Preliminary Determination.

Because the Rule 21F-6(c) presumption does not apply, the amount of Claimant’s award is determined by the factors enumerated in Rules 21F-6(a) and (b): (i) the significance of information provided to the Commission; (ii) the assistance provided in the Covered Action; (iii) the law-enforcement interest in deterring violations by granting awards; (iv) participation in internal compliance systems; (v) culpability; (vi) unreasonable reporting delay; and (vii) interference with internal compliance and reporting systems.

The Commission positively assesses (1) the significance of Claimant’s information, which closely tracked the Commission’s findings in its order instituting proceedings, and (2) Claimant’s ongoing assistance, which included two interviews, the identification of potential witnesses, and the provision of key documents to Enforcement staff.

However, the Commission believes that Claimant unreasonably delayed in reporting to the Commission. In reaching this determination, the Commission considered that: (1) Claimant waited eight to nine months after he/she learned of the misconduct before reporting; (2) Claimant was an experienced [REDACTED] and he/she appreciated the issues raised by the misconduct; (3) although Claimant raised concerns internally, the record (including the Company’s continued efforts to implement the scheme after his/her complaint) supports the conclusion that the Company had no intention of addressing those concerns; and (4) Claimant delayed [REDACTED] after leaving the Company before reporting to the Commission.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [REDACTED] percent (***%) of the monetary sanctions collected in the Covered Action.

By the Commission.

Vanessa A. Countryman
Secretary

¹ See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule (“hereafter Rule”) 21F-3(a), 17 C.F.R. § 240.21F-3(a).

² Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.

³ Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

SEC

34-103810

08/29/2025

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 103810 / August 29, 2025

WHISTLEBLOWER AWARD PROCEEDING
File No. 2025-46

In the Matter of the Claim for an Award

in connection with

[REDACTED]

Notice of Covered Action [REDACTED]

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition¹ recommending the denial of the whistleblower award claim submitted by [REDACTED] (“Claimant”)² in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background

A. The Covered Action

On [REDACTED], the Commission filed a complaint in federal court against [REDACTED] (collectively, the “Defendants”), charging them with violations of [REDACTED]. The Commission alleged that the Defendants [REDACTED] (“The Company”). The Commission alleged [REDACTED]. On [REDACTED], the court entered final judgment against defendant [REDACTED], ordering payment of [REDACTED]. On [REDACTED], the court entered final judgment against defendant [REDACTED], ordering payment of [REDACTED]. On [REDACTED], the court entered final judgment against defendant [REDACTED]. On [REDACTED], the court entered final judgment against defendant [REDACTED], ordering payment of [REDACTED].

On [REDACTED], the Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower award claim.

B. The Preliminary Summary Disposition

OWB issued a Preliminary Summary Disposition recommending that Claimant’s claim be denied because Claimant’s information was not provided to or used by Enforcement staff assigned to the investigation that led to the Covered Action (the “Investigation”) and therefore did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. OWB preliminarily determined that the Investigation was opened based upon a referral from another organization. And while OWB preliminarily determined that staff assigned to the Investigation received information from Claimant after the Investigation was opened, OWB stated that Claimant’s information was vague, non-specific, and duplicative of other information Enforcement staff had already received. Accordingly, OWB stated that Claimant did not provide information that was used in or otherwise had any impact on the Investigation or resulting Covered Action.

OWB further preliminarily determined that Claimant did not provide “original information” within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information provided by Claimant was already known to the Commission.

OWB also preliminarily determined that Claimant did not comply with the requirements of Exchange Act Rule 21F-9 when submitting the tip upon which Claimant’s award was based, stating that Claimant did not submit his/her information on Form TCR or online through the Commission’s website, nor did Claimant sign the whistleblower declaration as required under Rule 21F-9(b).

C. Claimant’s Response to the Preliminary Summary Disposition

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Summary Disposition. In the Response, Claimant stated that he/she was contesting the Preliminary Summary Disposition “for same reasons as [Preliminary Determination] on [REDACTED] [Notice of Covered Action (“NoCA”)]”³ (the “Prior NoCA”). Claimant submitted a response to the Prior NoCA in [REDACTED]. Claimant did not provide any substantive response specific to the present NoCA, but merely referred to her response to the Prior NoCA.

Regarding Claimant’s request for reconsideration in the Prior NoCA, Claimant principally argues that Claimant should receive similar treatment as he/she did in another whistleblower proceeding, in which Claimant did not submit a TCR or sign the whistleblower declaration and was preliminarily granted an award by the Claims Review Staff. In response to the Prior NoCA, Claimant argues that by requiring a person with probative information about an ongoing fraud to complete and submit a detailed TCR and then wait for the TCR to be triaged and assigned to attorneys, “allows the recidivist time to end the scheme and move on.” Claimant further argues, “[t]here is no dispute that the Whistleblower tips to the Commission and other regulators regarding chief architect [Defendant] were timely, helpful . . . , and original.”

II. Analysis

To qualify for an award under Section 21F of the Exchange Act, a claimant must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.⁴ For a claimant’s submission to be considered “original information,” the submission must be (i) derived from the claimant’s “independent knowledge or independent analysis,” and (ii) “not already known to the Commission from any other source,” unless the claimant is the “original source” of the information.⁵

Additionally, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to “commence an examination, open an investigation . . . or to inquire concerning different conduct as part of a current examination or investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;⁶ or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”⁷

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.⁸ For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.⁹

Finally, to qualify for an award under Section 21F of the Exchange Act, an individual must be a whistleblower.¹⁰ Section 21F of the Exchange Act defines the term “whistleblower” to include “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.”¹¹ It also directs that “[n]o award under subsection (b) shall be made . . . to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule, require.”¹² Exchange Act Rule 21F-2(b), states, “[t]o be eligible for an award under Section 21F(b) of the Exchange Act (15 U.S.C. 78u-6(b)) based on any information you provide that relates to a possible violation of the federal securities laws, you must comply with the procedures and the conditions described in §§240.21F-4, 240.21F-8, and 240.21F-9.”¹³ Rule 21F-9 instructs that to be considered a whistleblower, an individual must submit information to the Commission online through the Commission’s TCR portal or by submitting a Form TCR, and the individual must declare under penalty of perjury that his/her “information is true and correct to the best of [his/her] knowledge and belief.”¹⁴

The record demonstrates that the Covered Action investigation was opened based on a referral from another organization and not from information provided by Claimant, and Claimant does not argue, nor is there any record support to show, that Claimant provided any information to the other organization that led to the referral. While the investigative staff on the Covered Action received non-whistleblower information from Claimant after the opening of the investigation, Claimant’s information was vague, non-specific, and duplicative of information that staff already had received. As such, Claimant did not provide original information that led to the success of the Covered Action because staff was already aware of Claimant’s information and his/her information was not used in and did not have any impact on the investigation or resulting Covered Action.

Additionally, Claimant failed to comply with Exchange Act Rule 21F-9, described above. Claimant sent his/her first email to the Commission about [REDACTED]. Claimant, by his/her own admission did not, however, submit a TCR about this information at that time.¹⁵ Moreover, Claimant did not provide the whistleblower declaration required by Rule 21F-9. Since Claimant did not provide the Commission with information relating to a possible securities law violation in accordance with the procedures set forth in Exchange Act Rule 21F-9(a) and did not sign the whistleblower declaration as required under Exchange Act Rule 21F-9(b), Claimant is ineligible to receive an award.¹⁶

Claimant contends that the Commission treated him/her differently in a prior whistleblower matter (NoCA [REDACTED]) where he/she did not submit a TCR in accordance with Rule 21F-9. However, in the prior matter, Claimant submitted his/her information to the Commission before the Commission’s whistleblower rules became effective on August 12, 2011. Therefore, in the prior matter, Claimant’s information was deemed to have satisfied Rules 21F-9(a) and (b) pursuant to Rule 21F-9(d).¹⁷ Here, Claimant submitted his/her information after August 12, 2011, and therefore he/she was required to comply with Rules 21F-9(a) and (b).

For these reasons, we deny Claimant’s whistleblower award claim.

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

Stephanie J. Fouse
Assistant Secretary

¹ See Exchange Act Rule 21F-18, 17 C.F.R. § 240.21F-18.

² [REDACTED]

³ Claimant’s Response cites to the response Claimant submitted regarding the Prior NoCA. However, Claimant’s Response refers to NoCA [REDACTED] which he/she never initially applied for, and which we construe as a typographical error. We construe the Response as citing to Claimant’s submissions in connection with the Prior NoCA, for which Claimant did submit a whistleblower application and which pertains to a similar matter as the Covered Action currently before us. The Commission issued a final order denying Claimant’s claim in the Prior NoCA on [REDACTED].

⁴ Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

⁵ Exchange Act Rule 21F-4(b)(1), 17 C.F.R. § 240.21F-4(b)(1).

⁶ Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

⁷ Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

⁸ Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.

⁹ Exchange Act Rel. No. 85412 at 8-9.

¹⁰ Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

¹¹ Id. Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6) (emphasis added).

¹² Id. Section 21F(c)(2)(D), 15 U.S.C. § 78u-6(c)(2)(D).

¹³ Exchange Act Rule 21F-2(b); 17 C.F.R. § 240.21F-2(b).

¹⁴ Exchange Act Rule 21F-9(a), (b), 17 C.F.R. § 240.21F-9(a), (b).

¹⁵ In addition to Claimant’s own admission, Commission staff did its own inquiry and confirmed that Claimant did not submit a TCR that related to any of the Defendants in the Covered Action.

¹⁶ Exchange Act Rule 21F-9(e), 17 C.F.R. § 240.21F-9(e), provides for an automatic waiver of the TCR filing requirement where a claimant can show either that he or she complied with the submission requirements of the rule within 30 days of submitting the original information or within 30 days of “first obtaining actual or constructive notice about those requirements (or 30 days from the date you retain counsel to represent you in connection with your submission of original information, whichever occurs first);” and “[t]he Commission can readily develop an administrative record that unambiguously demonstrates that you would otherwise qualify for an award.” Further, under this rule, a claimant must file a Form TCR within 30 days of providing the Commission with the original information to be relied upon as a basis for claiming an award. Claimant is not eligible for the automatic waiver under Rule 21F-9(e) because he/she did not submit a TCR relating to any of the Defendants in the Covered Action during the 30-day grace period (or afterwards), and the record does not unambiguously demonstrate that Claimant would otherwise qualify for an award.

¹⁷ The Claims Review Staff initially recommended that Claimant receive an award in NoCA [REDACTED]. However, after the issuance of the Preliminary Determination, new evidence came to the Claims Review Staff’s attention, and the Claims Review Staff issued a new Preliminary Determination denying an award to Claimant on the basis that he/she did not provide original information. Claimant did not seek reconsideration of the new Preliminary Determination, and it became the Final Order of the Commission on [REDACTED].

SEC

34-103794

08/28/2025

UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 Release No. 103794 / August 28, 2025

WHISTLEBLOWER AWARD PROCEEDING File No. 2025-44

In the Matter of the Claim for Award

in connection with

[REDACTED] [REDACTED]

.. [REDACTED] Notice of Covered Action

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claim submitted by [REDACTED] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial.’ For the reasons discussed below, the CRS’s recommendations are adopted and the award claim of Claimant is denied.

I. Background

A. The Covered Action

[REDACTED] The Commission brought enforcement actions

including the above-referenced Covered Action. mS Commission found that the respondent had

violated [REDACTED]

[REDACTED] [REDACTED]

[REDACTED]…, In violation of the federal

oe [REDACTED] securities laws, and to

[REDACTED]. Among other relief, the Commission ordered that the respondent pay Redacied

| The CRS also recommended the denial of the award applications of six other claimants, five of whom did not contest the Preliminary Determination and one of whom withdrew his/her award application. As a result, the Preliminary Determinations with respect to these claimants became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[REDACTED]

. The Office of the Whistleblower (“OWB”) posted a Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination

The CRS issued a Preliminary Determination recommending that the Claimant’s award claim be denied because his/her information did not lead to the success of the Covered Action. The CRS determined that the Commission investigation that led to the bringing of the Covered Action (the “Covered Action Investigation’) was not opened based on information provided by Claimant. Further, Claimant’s information was not received or used by the staff handling the Covered Action,” and those staff members otherwise had no contact with Claimant.

C. Claimant’s Response to the Preliminary Determination

Claimant submitted a timely written response contesting the Preliminary Determination. Claimant argues in his/her reconsideration request that Claimant’s contributions to an earlier Commission enforcement action against ecacte (the “Other Entity”) for similar misconduct was a “pivotal catalyst” and “foundation” for the Commission’s opening of the Covered Action Investigation. Claimant asserts that his/her internal whistleblowing to the Other Entity led the Other Entity to self-report these violations to the Commission which, in turn, led the Commission to open an investigation into the Other Entity (the “Other Entity Investigation’) and, ultimately, with the assistance of Claimant’s later detailed tip and other information, including sworn testimony, led to the success of the Commission’s enforcement action against the Other Entity (the “Other Entity Action”).° Claimant notes that one of the staff declarations in the record specifically stated the Covered Action Investigation was opened when staff assigned to a investigation discovered, in response to an investigative subpoena of the Other Entity, the existence of [REDACTED]

[REDACTED]

Reaacted. Claimant argues that this discovery, along with, to a lesser extent,

information the staff learned from news coverage and conversations with other SEC attorneys, showed that the Other Entity was not the only [REDACTED]

Recacied. Claimant maintains, however, that this declaration failed to disclose the key impact Claimant’s contributions to the Other Entity Investigation had on the decision to open the Covered Action Investigation, noting that while the declarant proposed the opening of the Covered Action Investigation, the declarant was not the person who actually authorized the opening of the investigation. Claimant asserts that the record needs to include a sworn declaration from the person(s) who did authorize the opening of the Covered Action

* The Covered Action Investigation consisted of an investigation into [REDACTED]

edacted

[REDACTED]

3 The Commission issued a final order awarding Claimant a whistleblower award for his/her

substantial assistance in the Other Entity Action.

Investigation and that this declaration would show the staffs awareness of the critical importance of the Other Entity’s self-report and the information Claimant subsequently provided to the Other Entity Investigation in the decision to open the Covered Action Investigation. Claimant also argues that the reason the Other Entity in response to the Commission’s subpoena was because the Other Entity as a direct result of Claimant having reported his/her allegations to the

[REDACTED]

Other Entity.

Claimant further argues that, even if the Covered Action Investigation staff did not receive his/her information, Claimant’s information should, nevertheless, be credited as having satisfied the “led to” requirements of Rule 21F-4(c)(3),* which credit a whistleblower who reports original information through an entity’s internal compliance procedures with the information the entity then provides the Commission based on the whistleblower’s information and/or the results of the entity’s investigation initiated in response to the whistleblower’s information.° Claimant asserts that the information the Commission received from the Other Entity’s self-report should be credited to Claimant under the provisions of this rule and, given the purported importance of the self-report to the decision to open the Covered Action Investigation, Claimant should be deemed to have provided information that led to the success of the Covered Action.

Claimant additionally contends that he/she is entitled to an award for the Covered Action since the Other Entity Action, for which Claimant received a whistleblower award (the “Other Entity Action Award’), shares “the same nucleus of operative facts” with the Covered Action and thus, pursuant to Exchange Act Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1), 1s deemed to be the same action for purposes of determining whistleblower award eligibility for the Covered Action. Claimant disputes the CRS’s determination that the Other Entity Action did not arise from the same nucleus of operative facts as the Covered Action because the Other Entity Action involved different time periods and different actors than those involved in the Covered Action. Claimant argues that, in fact, the Other Entity Action and the Covered Action “constitute one and the same action” and that Claimant, therefore, is eligible to receive a whistleblower award for the Covered Action based on his/her contributions to the Other Entity Action.

Claimant also contends that [REDACTED] in the Other Entity Action was based on Claimant’s whistleblowing, that Claimant’s information established the full dimension and context of the misconduct, and that the Commission used the Other Entity Action as a “playbook” or template for, and his/her information contributed to the process, findings wee in, the investigations and enforcement actions that followed the Other

* Exchange Act Rule 21F-4(c)(3), 17 C.F.R. § 240.21F-4(c)(3).

> Claimant disputes the CRS’s determination that he/she did not qualify under this provision because Claimant provided the information to the Commission more than 120 days after providing it to the Other Entity. Claimant asserts that he/she did provide the Commission with information within 120 days after providing it to the Other Entity. Claimant requests that, if he/she were deemed to have not provided information to the Commission within 120 days of providing it to the Other Entity, the Commission waive the 120-day requirement because of extraordinary circumstances, namely that he/she was retaliated against by the Other Entity and the failure of Claimant’s then-attorney to alert Claimant to the 120-day requirement for filing a TCR.

Entity Action.

Claimant next asserts that the Commission’s press release announcing the Other Entity

Action specifically notes that [REDACTED] [REDACTED]

[REDACTED].., and since Claimant

provided important information that helped the Commission to bring the Other Entity Action (for which the Commission awarded him/her the Other Entity Action Award), Claimant should also receive credit for the investigation that resulted in the bringing of the Covered Action.

Claimant also points to the fact that one of the supervisors of an investigation that resulted in the bringing of the Other Entity Action, and who attended Claimant’s sworn testimony in that investigation, is also listed as a supervisor in the press release that announced the Commission enforcement actions brought against nedacted

. Claimant contends that this supervisor must have transmitted to the staff that opened the Covered Action Investigation the issues Claimant raised in his/her testimony and helped approve, shape, and assist with the decision to open the investigation.

Next, Claimant argues that he/she should receive an award because Claimant’s information caused the news coverage of [REDACTED], which contributed to the staffs decision to open the Covered Action Investigation.

Finally, Claimant argues that the materials he/she received in response to Claimant’s request for the record materials are insufficient and should be supplemented with additional materials.°

IT. Analysis

© Among the materials that Claimant requests be made a part of the record are: (1) the identity of all SEC personnel who viewed or received copies of Claimant’s tip; (2) all internal and external communications from SEC personnel who implemented and approved the Covered Action Investigation, including the SEC’s Chairman, the Director of the Division of Enforcement and other senior Commission officials; (3) the identity of the Commission personnel who [REDACTED] with the Other Entity and the [REDACTED] charged in the Covered Action; (4) whether [REDACTED] were based on the Other Entity Action, and whether these personnel were familiar with Claimant’s information; (5) SEC records of quarterly case review meetings, other staff meetings or communications, investigative plans and Hub System reports that reference Claimant’s information; and (6) whether any SEC commissioner reviewed the Covered Action preliminary determination in advance of it being issued.

7 Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

whole or in part on conduct that was the subject of the original information;® or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”’ In determining whether a whistleblower’s information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.!° For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities. |!

As an initial matter, we note that the record includes several sworn declarations from the Enforcement staff, which we credit,!* including: (1) a declaration prepared by the staff attorney who proposed the opening of, and worked on, the Covered Action Investigation; (2) a declaration from a second attorney who worked on the Covered Action Investigation and the bringing of the Covered Action; (3) a declaration from a senior Enforcement attorney who reviewed the first declarant’s proposal and was consulted on the decision to open the Covered Action Investigation; and (4) a declaration from a senior Enforcement Attorney who supervised the Other Entity Investigation, as well as enforcement actions, including the Covered Action, resulting from the Covered Action Investigation. Based on our review of the record, including the multiple declarations, we find that Claimant did not provide information that led to the success of the Covered Action.

Claimant suggests that because his/her information concerned the same sort of misconduct that was found to have occurred in the Covered Action, his/her information must have been used by the responsible Enforcement staff that investigated and worked on the Covered Action. However, the standard for award eligibility is not what the staff would have or could have done in hypothetical circumstances, but, rather, what impact a claimant’s information actually has on the investigation.!* That Claimant’s information bears a factual nexus to the

’ Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).? See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R. § 240.21 F-4(c)(2).

10 Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).

‘l Exchange Act Rel. No. 85412 at 8-9.

!2 The whistleblower rules contemplate that the record upon which an award determination is made shall consist of, as relevant here, sworn declaration(s) provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).

13 Order Determining Whistleblower Award Claims, Rel. No. 99670 (March 5, 2024); Order Determining Whistleblower Award Claim, Release No. 34-98655 (Sept. 29, 2023); Order Determining Whistleblower Award Claim, Rel. No. 34-97408 (May 1, 2023); Order Determining Whistleblower Award Claim, Rel. No. 34-96657 (Jan. 13, 2023).

findings in the Covered Action, and that Claimant’s information was important to the success of the Other Entity Action, does not mean that his/her information “led to” the success of the Covered Action. Rather, the record, including multiple sworn staff declarations, supports the conclusion that neither Claimant provided information to the Commission that caused the opening of the Covered Action Investigation or significantly contributed to the Covered Action Investigation or the success of the Covered Action.

Contrary to Claimant’s supposition, the Other Entity Action resulted from ~ separate Commission investigations, including the Other Entity Investigation to which he/she had submitted his/her information and provided testimony. The several declarations establish that it was the staff from a different investigation, and not from the Other Entity Investigation, that recommended the opening of the Covered Action Investigation. While one of the supervisors of the Other Entity Investigation also supervised portions of the Covered Action Investigation (including the bringing of the Covered Action), and did review Claimant’s information and attended Claimant’s sworn testimony in connection with the Other Entity Investigation, this supervisor provided a sworn declaration, which we credit, attesting that to the best of the supervisor’s recollection, Claimant did not provide information to the Other Entity Investigation sta ff [REDACTED]

[REDACTED].. Nor, as noted, did the staff that opened the Covered Action Investigation receive Claimant’s information from any other source. Finally, as noted, a sworn declaration from the staff that worked on and brought the Covered Action also attested that it did not receive Claimant’s information.

Claimant asserts that the staff declarations were deficient because they did not include a declaration from the supervisor(s) who approved the opening of the Covered Action Investigation, which, Claimant argues, would have shown that the decision to open the Covered Action Investigation was “shaped by [the staff declarant’s] supervisors’ knowledge of [Claimant’s] information” and “inevitably influenced by awareness of [Claimant’s] information.’ However, OWB obtained a supplemental sworn declaration from the declarant’s supervisor and, as noted, from a supervisor of the Other Entity Investigation (who also supervised portions of the Covered Action Investigation, including the bringing of the Covered Action) to address Claimant’s assertions. The declarant’s supervisor confirmed that the decision to open the Covered Action Investigation was not based on any information that the staff received from Claimant nor from information learned from the Other Entity self-report.’* And, as noted above,

‘4 The supervisor confirms that, like the first declarant, he/she was aware that the Other Entity had sent a self-report to the Commission but was not aware of the specific details of the self-report. In addition, the supervisor states that, at the time of the conception and opening of the Covered Action Investigation, the supervisor, like the first declarant, was not aware of Claimant’s TCR or of the existence of its underlying factual allegations and did not become aware that Claimant had submitted his/her whistleblower complaint to the Commission until well after the opening of the Covered Action Investigation.

Both declarants note that they had limited discussions with staff from the Other Entity Investigation prior to the opening of the Covered Action Investigation. The supervisor notes that these discussions were general in nature and did not delve into the specific information that that staff had received or learned from the Other Entity. Moreover, the supervisor attests that during these discussions, the Other Entity Investigation staff did not tell the supervisor

[REDACTED] —__ The other declarant states that his/her discussions with the Other Entity Investigation staff prior to

the Other Entity Investigation supervisor attested that Claimant did not provide information to the Other Entity Investigation staff Showing that eaacle edacte

Claimant asserts that he/she should receive credit for the information and assistance he/she provided that contributed to the Other Entity Action, since that action led to the Commission investigating the; including nedacied the subject of the Covered Action. However, the Other Entity Investigation supervisor stated that that Claimant did not provide information to the Other Entity Investigation staff showing [REDACTED] saacted. Further, the declarations from the staff who participated in the decision to open the Covered Action Investigation and the supervisor of the Other Entity Investigation state that the Other Entity Investigation staff did not share Claimant’s information with the staff that opened the Covered Action Investigation nor advise the staff that opened the Covered Action Investigation

[REDACTED] Indeed, the Other Entity Investigation supervisor stated that he/she did not recall telling the staff who participated in the opening | of the Covered Action Investigation about [REDACTED] that the Other Entity Investigation staff received, nor did he/she recall mentioning Claimant to them or the information Claimant provided to the Other Entity Investigation staff.

This is not to denigrate Claimant’s contribution to the success of the Other Entity Action, a contribution that we recognized with an order directing the payment of a whistleblower award to Claimant.!° However, the issue here in assessing Claimant’s eligibility to receive a whistleblower award is not the importance of Claimant’s contribution to the Other Entity Investigation and the Other Entity Action but, rather, whether Claimant’s submission of information to the Commission caused the staff to open the Covered Action Investigation, inquire concerning different conduct as part of a current examination or investigation or provided information that significantly contributed to the success of the Covered Action. We conclude that Claimant’s information did not cause the staff to open the Covered Action Investigation, inquire concerning different conduct as part of a current examination or investigation or significantly contribute to the Covered Action Investigation or the success of the Covered Action.

We also reject Claimant’s argument that he/she 1s entitled to awards for the Covered Action, since the Covered Action shares “the same nucleus of operative facts” with the Other Entity Action. While the Other Entity Action concerned similar types of misconduct as that determined to have occurred in the Covered Action, the misconduct in the Other Entity Action

the opening of the Covered Action Investigation only helped to inform his/her understanding of the ~ problems at the Other Entity in relation to Reaacted and that he/she did not learn about the existence of problems at companies other than the Other Entity from the Other Entity Investigation staff.

|S See supra note 3.

involved different actors and somewhat different time periods!® than that involved in the Covered Action.!’ Thus, we find that the Covered Action did not arise from the same nucleus of operative facts as the Other Entity Action.

We further reyect Claimant’s assertion that he/she is eligible for an award because the

Commission allegedly used the resolution of the Other Entity Action as a “playbook” for the Covered Action. To qualify for an award under Section 21F of the Exchange

Act, a whistleblower must have “voluntarily provided original information to the Commission that led to the successful enforcement of the covered… action.”!® Rules 21F-4(c)(1) and (c)(2) specify that this “led to” requirement is satisfied if either “you gave the Commission original information that cause[d] the staff to… open an investigation… or to inquire conceming different conduct as part of a current examination or investigation” or “[y]ou gave the Commission original information about conduct that was already under examination and investigation by the Commission… and your submission significantly contributed to the success of the action.”!’ The focus of the inquiry is on claimant’s information, and Claimant’s argument that the Other Entity Action served as a “playbook” for the Commission’s settlement of the Covered Action does not address whether the information provided by Claimant led to the success of the Covered Action under Rules 21F-4(c)(1) and (c)(2). As discussed, the information Claimant submitted to the Commission was not shared with the staff that opened the Covered Action Investigation and was not helpful to the staff that worked on the Covered Action. Thus, the Commission need not decide whether the Other Entity Action was a “playbook” for the settlement of the Covered Action since Claimant’s information did not lead to the success of the Covered Action. Further, an interpretation that would grant an award for a “playbook” untethered to specific fact allegations would undermine the administrability of the whistleblower program by “introducing speculative and complex causal chains that would be difficult and impracticable in many instances for the Commission to investigate and evaluate.”7°

6 While the Other Entity Action and the Covered Action concerned misconduct that occurred from — *°a#et6

, the misconduct in the Other Entity Action continued through _*°9#®¢_— and the misconduct in the Covered Action continued through = [REDACTED]

7 See Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 98340 (Sept. 11, 2023) at 4 (“While the Associated Actions involved similar misconduct related to the Covered Action, the time periods of the misconduct in each case were different and they each involve different actors [and] [a]s a result, the Associated Actions do not arise from the same nucleus of operative facts and should not be aggregated together or with the Covered Action for purposes of making an award determination under Rule 21F-4(d)(1)”); Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 96324 (Nov. 16, 2022) at 2 (“The record demonstrates that the Covered Action and the Second Action involved different and unrelated parties and transactions, which Claimant concedes. The Second Action also was brought more than two years after the Covered Action. That the two enforcement proceedings allege similar violations of law does not mean that they arose from the same nucleus of operative facts.”’).

18 Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

‘? Claimant’s eligibility for an award under Rule 21F-4(c)(3) is addressed separately below.

20 See Exchange Act Release No. 91253 (Mar. 4, 2021).

Similarly, while Claimant does not specify what is meant by providing a “playbook” for the Covered Action, even if Claimant can be broadly construed to be arguing that he/she should receive an award based on speculation that the Other Entity Action pointed to a general area of enforcement interest though untethered to any specific information, that argument fails for the additional reason that such a submission does not qualify as “original information” with respect to the Covered Action. Only “original information” that “led to the successful enforcement of the covered… action” can qualify a claimant for an award.) Original information consists of either “independent knowledge” or “independent analysis.” Independent knowledge means “factual information in [claimant’s] possession that is not derived from publicly available sources.”’” Independent analysis means claimant’s “examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.”*° Speculation as to the potential impact of a claimant’s submission regarding another action on general areas of enforcement interest untethered to any specific fact allegations from the award claimant regarding the Covered Action does not satisfy that threshold. Because such a submission would not qualify Claimant for an award in any case, the Commission need not decide whether Claimant’s submission amounts to a “playbook” as described earlier or served as a “playbook” for the Covered Action.

Regarding Claimant’s argument that he/she 1s eligible for a whistleblower award under Exchange Rule 21F-4(c)(3) “4 for the information the Other Entity provided the Commission as a result of Claimant having first reported internally to the Other Entity, Claimant does not meet the requirements of this rule. Rule 21F-4(c)(3) provides that if:

* a whistleblower reports original information through an entity’s internal whistleblower, legal or compliance procedures before or at the same time he or she reports it to the Commission;

* the entity provides the Commission with the whistleblower’s information or with the results of an investigation initiated in response to the whistleblower’s information;

* the information provided by the entity to the Commission “led to” successful enforcement under the criteria of Rule 21F-4(c)(1) or (c)(2) discussed above; and

* the whistleblower submits the same information to the Commission within 120 days of providing it to the entity,

then the whistleblower will receive full credit for the information provided by the entity as if the whistleblower had provided the information to the Commission.

*1 Exchange Act Section 21F(b)(1).

22 Exchange Act Rule 21F-4(b)(2), 17 C.F.R. § 240.21F-4(b)(2).

23 Exchange Act Rule 21F-4(b)(3), 17 C.F.R. § 240.21F-4(b)(3).

4 Exchange Act Rule 21F-4(c)(3), 17 C.F.R. § 240.21F-4(c)(3).

While Claimant satisfies the first two requirements of Rule 21F-4(c)(3) — he/she reported internally through the Other Entity’s internal whistleblower, legal or compliance procedures before or at the same time he/she reported it to the Commission, and the Other Entity provided the Commission with the results of an investigation initiated in response to Claimant’s information — Claimant does not satisfy the third requirement of the rule — that the information the entity provided to the Commission satisfied the “led to” requirements of either paragraph (c)(1) (caused the Commission to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation), or (c)(2) of the rule (as relevant here, significantly contributed to the success of the action). First, several staff declarations attested that no information from Claimant was used in, or had any impact on, the charges brought by the Commission in the Covered Action. Second, the Other Entity Investigation supervisor also attested that Claimant did not provide information to the Other Entity Investigation staff showing tha t [REDACTED] Nedacied. Finally, both the staff attorney who proposed the opening of the Covered Action Investigation and that staff attorney’s supervisor stated in their respective declarations that, while they were aware at the time the Covered Action Investigation was opened that the Other Entity Investigation had been opened Recacie’ based on a self-report the Other Entity had sent the Commission, they were not aware of the specific details of the self- report. While the supervising attorney had discussions with staff who worked on the Other Entity Investigation, including the Other Entity Investigation supervisor, both supervisors attested that the discussions were “general in nature” and did not extend to

or into the specific information that the Other Entity Investigation staff had received or learned from the Other Entity. Rather, both the staff attorney and that attorney’s supervisor attested that the Covered Action Investigation was opened as a result of the Covered Action Investigation staff’s receipt, in response to its investigative Subpoena to the Other Entity,” of

information showing that the [REDACTED]

kee

, as well as their discussions with other SEC attorneys (none of whom provided them with information from Claimant or detailed information about the Other Entity’s self-report), and in [REDACTED] reading news coverage indicating that similar conduct had taken place. Thus, Claimant’s tip and the Other Entity’s self-report did not cause the opening of the Covered Action Investigation, nor, as multiple staff declarations attest, did it contribute to the Covered Action Investigation itself or to the success of the Covered Action.”°

We also reject Claimant’s argument that he/she should receive an award because Claimant’s information caused news coverage of mew, which contributed to the

*° This subpoena was not issued by the staff on the Other Entity Investigation and was separate and apart from that investigation.

6 Regarding the fourth requirement of Rule 21F-4(c)(3) — that the whistleblower submit the same information to the Commission within 120 days of providing it to the entity — Claimant argues that the Commission should waive or grant an exemption for his/her arguable failure to have submitted the information within 120 days of providing it to the entity. We do not address this contention since the third requirement of Rule 21F-4(c)(3) was not met and, thus, the rule is inapplicable regardless of whether a waiver or exemption were granted.

decision to open the Covered Action Investigation. Exchange Act Rule 21F-4(c) requires that information must be submitted to the Commission, not the news media, to qualify as information that led to the success of a covered action.

Finally, Claimant’s argument regarding the alleged incompleteness of the record and his/her need to review additional materials is inapposite, and we deny Claimant’s request for additional documents. The whistleblower rules permit an award claimant to request and to receive a copy of the materials that formed the basis of the Preliminary Determination”’ but, as we have previously pointed out, “the whistleblower rules do not authorize a claimant to go ona fishing expedition to… obtain copies of the SEC’s entire investigative file.”*® Similarly, the rules do not permit a claimant to investigate, or cause the Commission to investigate, how the staff utilized the information it received from a claimant.?” The evidence in the record demonstrates that Claimant requested and then was properly sent the record materials that formed the basis for the Preliminary Determinations.°° Claimant is not entitled to any extra- record materials.

7 The Rules state that the record upon which an award determination is made shall consist of sworn declarations provided by the relevant Commission staff, in addition to the publicly available materials related to the particular covered action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F12(a). There is no basis to disregard Rule 21F-12(a) and expand the record to include any of the additional documents requested by Claimant. See Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b) (“These rules do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section [i.e., Rule 21F 12(a)].”

8 Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 94647 (Apr. 8, 2022) at 5; Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 88973 (May 29, 2020) at 5. See also Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b) (noting that the whistleblower rules “do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section’’).

2? Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 94647 (Apr. 8, 2022) at 5.

3° The record materials include [REDACTED] versions of four staff declarations (which were [REDACTED] to protect the confidentiality of the other claimants), Claimant’s Form WB-APP, and Claimant’s TCR. Because

Claimant had previously submitted the Form WB-APP and the TCR to the Commission, those documents were omitted from the record package that OWB sent to Claimant; however, the Form WB-APP and the TCR are still part of the record.

II. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

Vanessa A. Countryman Secretary

SEC

34-103808

08/28/2025

UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 Release No. 103808 / August 28, 2025

WHISTLEBLOWER AWARD PROCEEDING File No. 2025-45

In the Matter of the Claims for an Award

in connection with

[REDACTED]

Notice of Covered Action

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIMS

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that (i) joint claimants! “— (“Claimants”) receive a joint whistleblower award of percent (. %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action; (11) the Commission treat “ee

“ws (the “Other Agency

Action’), as a “related action” under Exchange Act Rule 21F-3(b); and that (111) Claimants receive an awardof percent ( / %) of the monetary sanctions collected or to be collected in the Other Agency Action. Based on current collections, the total award would be more than $4.5 million. Claimants provided written notice of their decision not to contest the Preliminary

Determinations. The recommendations of the CRS are adopted.

The record demonstrates that Claimants voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder.

The record demonstrates that: (1) the Other Agency Action constitutes a “related action”

We have determined to treat the claimants jointly as a “whistleblower” for purposes of the award determination given that their information and Forms WB-APP were submitted together via the same counsel. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining a “whistleblower” to include two or more individuals acting jointly who provide information relating to a violation of the securities laws to the Commission). Unless the joint 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

to the Covered Action within the meaning of Rule 21F-3(b); (11) the original information that Claimants provided to the Commission also led to the successful enforcement of the related Other Agency Action; and (111) Claimants have satisfied the procedural requirements for applying for a related-action award.”

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

[REDACTED]

[REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED] [REDACTED]

[REDACTED]

[REDACTED] [REDACTED]

[REDACTED]

Claimants provided interviews and key documents to [REDACTED].. °.. Enforcement staff. A award would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.

Claimants were exemplary whistleblowers. They observed that the principal of the firm that employed them restricted information about the firm’s finances so that no one person other than the principal had an accurate view of the firm’s finances. Claimants, however, were able to work together to overcome these restrictions and show that the firm had misrepresented one of its signature investment projects.

2 Rule 21F-11(b).

3 Rule 21F-6(c)(1)(i).

[REDACTED]

Accordingly, it is hereby ORDERED that Claimants shall receive a joint award of percent ( %) of the monetary sanctions collected or to be collected in the Covered Action and the Related Action.

By the Commission.

Vanessa Countryman Secretary

SEC

08272025

08/27/2025

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 27, 2025 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action:

Reference No. 08272025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission’’) received a whistleblower award claim from (“Claimant’’) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.! The basis for this determination is below as follows:

The information provided by Claimant was never provided to or used by staff handling the Covered Action or underlying investigation and those staff members otherwise had no contact with Claimant. Therefore, Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (1) commence an examination, (11) open or reopen an investigation, or (111) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.”

By: Office of the Whistleblower

Date: July 28, 2025

1 To the extent Claimant applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u- 6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

2 Enforcement staff responsible for the Covered Action did not receive or review information from or have communication with Claimant before or during the course of the Covered Action investigation. Claimant provided no information to the Commission that was used in or that had any impact on the investigation or resulting Covered Action.

SEC

08242025

08/24/2025

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 24, 2025, AS TO CLAIMANT 2 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference Number: 08242025

PRELIMINARY SUMMARY DISPOSITIONS OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from (“Claimant 2”), and for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Office of the Whistleblower (“OWB”) has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

Claimant 2

OWB has preliminanly determined to recommend that the Comunission deny Clamant 2 ’s claim. The infomnation provided by Claimant 2 was never provided to or used by staff handling the Covered Action or underlying vestigation, and those staff members otherwise had no contact with Claimant 2. Therefore, Claimant 2 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (1) commence an examunation, (11) open or reopen an investigation, or (111) quire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative

enforcement action under Rule 21F-4(c)(2) of the Exchange Act.!

Enforcement staff responsible for the Covered Action do not recall receiving or reviewing Claimant 2’s tip nor communicating with him/her before or during the investigation that led to the Covered Action. The Commission’s TCR System mdicates that Claimant 2’s TCR was designated for “No Further Action.” Claimant 2 provided no formation that was used in or that contributed to the success of the Covered Action.

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 24, 2025, AS TO CLAIMANT 2 PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference Number: 08242025

By: Office of the Whistleblower

Date: July 25, 2025

SEC

08232025

08/23/2025

FINAL ORDER — THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 23, 2025, AS TO CLAIMANT 4 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 08232025

PRELIMINARY DETERMINATIONS OF THE CLAIMS REVIEW STAFF

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from

(“Claimant 4’’) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The CRS has preliminarily determined to recommend that the Commission deny the above award claims.! The CRS sets forth the basis for this determination below.

Rule 21F-3(a)(3) of the Exchange Act

To qualify for an award under Rule 21F-3(a) of the Exchange Act, a whistleblower must have “(1) voluntarily provided the Commission (2) With original information (3) That leads to the successful enforcement by the Commission of a Federal court or administrative action….”

Rule 21F-4 provides definitions for each of these requirements. In its definition of “original information,” Rule 21F-4(b)(1) explains that, to be original, your information must “(njot already be known to the Commission from any other source, unless you are the original source of the information.” Rule 21F-4(b)(5) goes onto explain, “The Commission will consider you to be an original source of the same information we obtain from another source if the information satisfies the definition of original information and the other source obtained the information from you or a representative.” Rule 21F-4(b)(7) contains a lookback provision, which instructs that if you provide information to another federal government authority or through a company’s internal whistleblower, legal, or compliance procedures (among other authorities), and you, within 120 days, submit a TCR with the same information to the Commission, then the Commission “will consider that you provided information as of the date of your original disclosure, report or submission to one of these other authorities.”

In the separate definition of the “leads to” requirement of Rule 21F-3(a)(3), Rules 21F- 4(c)(1) and (c)(2) specify that your information leads to a successful enforcement action if either “you gave the Commission original information that cause[d] the staff to… open an

1 To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F- 11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

FINAL ORDER — THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 23, 2025, AS TO CLAIMANT 4 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered —

Reference No. 08232025

investigation… or to inquire concerning different conduct as part of a current examination or investigation” or “[v/ouw gave the Commission original information about conduct that was already under examination or investigation by the Commission… and your submission significantly contributed to the success of the action.” (Emphases added).

The Commission has recently clarified: “the Commission’s original source rule goes to Congress’s statutory requirement that a whistleblower submit original information, and it is not a substitute for satisfying Congress’s separate led-to requirement.”

I Order Determining Whistleblower Award Claim, Release No. 34-102987 (May 5, 2025).

FINAL ORDER — THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 23, 2025, AS TO CLAIMANT 4 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action a

Reference No. 08232025

FINAL ORDER — THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 23, 2025, AS TO CLAIMANT 4 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 08232025

FINAL ORDER — THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 23, 2025, AS TO CLAIMANT 4 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 08232025

Claimant 4

The CRS has preliminarily determined to recommend that the Commission deny an award to Claimant 4 because Claimant 4 did not submit original information to the Commission that led to the successful enforcement action, as required by Rule 21F-3(a)(3).

Claimant 4 contends that a provided information the, which, in turn provided Claimant 4’s information to the Commission, which caused staff to open the investigation that led to the Covered Action or significantly contributed to the success of the Covered Action. However, even if true, whether a claimant is the original source of information 1s relevant only to the “original information” requirement of Rule 21F-3(a)(2). A claimant must separately show that his/her original information “leads to” the success of the action under Rule 21F-3(a)(3). As indicated above, to “lead to” a successful enforcement action, Rules 21F-4(c)(1) and 21F-4(c)(2) require that “/y/ou gave the Commission” original information that caused the staff to open an investigation, inquire into different conduct, or that significantly contributed to the Covered Action. (Emphasis added).

Claimant 4 did not provide information to the Commission until he/she submitted a TCR on ae. a year and a half after the Commission instituted the Covered Action. That information was already known to staff and did not cause the staff to open the investigation or inquire into different conduct and did not significantly contribute to the Covered Action. Claimant 4 therefore did not submit to the Commission original information that led to the success of the Covered Action. Furthermore, Claimant 4’s TCR submission also does not satisfy the lookback provision of Rule 21F-4(b)(7) because Claimant 4 submitted his/her TCR well over 120 days after he/she submitted the same information to his/her employer or the fi

FINAL ORDER — THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 23, 2025, AS TO CLAIMANT 4 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 08232025

Claimant 4’s information also did not lead to the success of the Covered Action under Rule 21F-4(c)(3). Rule 21F-4(c)(3) provides that if you report original information internally at an entity, the entity then provides your information to the Commission, and that information contributes to the success of the covered action, your information will have led to the success of the action—but only if you submit the same information to the Commission on a TCR within 120 days of providing it to the entity. Here, Claimant 4 did not file a TCR until seven years after he/she complained internally to his employer. Therefore, Rule 21F-4(c)(3) does not apply.

Claimant 4 also submitted a Form WB-APP for the Covered Action on The deadline for filing award claims in the Covered Action was. As such, Claimant 4 submitted an untimely award application because Claimant 4 failed to submit the claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act.

By: Claims Review Staff

Date: June 23, 2025

SEC

08/23/2025

SEC

08/23/2025

SEC

08112025

08/11/2025

FINAL ORDER – THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 11, 2025 AS TO THE CLAIMANT, PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: [REDACTED]

OWB Reference No. 08112025

PRELIMINARY SUMMARY DISPOSITION
OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [REDACTED] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.1

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reasons stated below.

Claimant did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Claimant’s information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation; and (b) thereafter bring an action based in whole or in part on conduct that was the subject of Claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Office of the Whistleblower

Date: July 9, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

SEC

8112025

08/11/2025

FINAL ORDER-THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL
ORDER OF THE COMMISSION ON AUGUST 11, 2025 AS TO THE CLAIMANT,
PURSUANT TO RULE 21F-18(b)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
OWB Reference No. 08112025
PRELIMINARY SUMMARY DISPOSITION
OF THE OFFICE OF THE WHISTLEBLOWER
In response to the above-referenced Notice of Covered Action, the U.S. Securities and
Exchanoe Commission (“Commission”) received a whistleblower award claim from-
(“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities
Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the
Office of the Whistle blower has evaluated the above claim in accordance with the criteria set
fo1th in Rules 2 lF-1 through 2 lF-18 and has designated your award application for resolution
through the summa1y disposition process. 1
The Office of the Whistleblower has preliminarily dete1mined to recommend that the
Commission deny the above award claim for the reasons stated below.
Claimant did not provide info1mation to the Commission that led to the successful
enforcement of the referenced Covered Action within the meaning of Section 21F(b)(l) of the
Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Claimant’s inf01mation to the
Commission did not cause the Commission to (a) commence an examination, open or reopen an
investigation, or inquire into different conduct as pait of a cmTent Commission examination or
investigation, and (b) thereafter bring an action based, in whole or in pa1t, on conduct that was the
subject of Claimant’s info1mation; or (2) significantly contribute to the success of a Commission
judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.
Enforcement staff responsible for the Covered Action investigation did not receive or
review info1mation from the Claimant and did not have any commmiications with Claimant. As
such, Claimant’s infonnation was not used in, and had no impact on, the investigation or Tesultiug
Covered Action.
1 See Exchange Act Rule 21F-18(a)(l)-(6).
By: Office of the Whistle blower
Date: July 9, 2025

SEC

08092025

08/09/2025

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE

FINAL ORDER OF THE COMMISSION ON AUGUST 9, 2025, AS TO CLAIMANT 1

AND JULY 28, 2025, AS TO CLAIMANT 2 PURSUANT TO RULE 21F-18(b) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 08092025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from po (“Claimant 1”’) and (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated Claimant 1’s and Claimant 2’s award applications for resolution through the summary disposition process.!

The Office of the Whistleblower has preliminarily determined to recommend that the

Commission deny the above award claims for the reasons stated below. Claimant 1

Claimant 1 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information Claimant 1 provided did not, (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examunation or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 1’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In particular, Claimant 1’s information did not cause the opening of the investigation and did not cause the Commission to inquire into different conduct or significantly contribute to the success of the action. According to Commission staff, Claimant 1’s information was already known to staff, and staff did not communicate with Claimant 1 or use Claimant 1’s information during the investigation. None of Claimant 1’s information was used in, or had any impact on, the charges brought by the Commission in the Covered Action.

1 See Exchange Act Rule 21F-18(a)(1)-(6).

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE

FINAL ORDER OF THE COMMISSION ON AUGUST 9, 2025, AS TO CLAIMANT 1

AND JULY 28, 2025, AS TO CLAIMANT 2 PURSUANT TO RULE 21F-18(b) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 08092025

Claimant 2

In particular, Claimant 2’s information did not cause the opening of the investigation and did not cause the Commission to inquire into different conduct or significantly contribute to the success of the action. According to Commission staff, Claimant 2’s information was not relevant to the investigation, and staff did not communicate with Claimant 2 or use Claimant 2’s information during the investigation. None of Claimant 2’s information was used 1n, or had any impact on, the charges brought by the Commission in the Covered Action.

By: The Office of the Whistleblower

Date: June 25, 2025

SEC

08082025A

08/08/2025

FINAL ORDER-THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 8, 2025 AS TO CLAIMANTS 2, 5, 6, AND 7 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: po

Reference Na: 08082025A

PRELIMINARY DETERMINATIONS OF THE CLAIMS REVIEW STAFF

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received several whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and -11 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Prelimmary Determination for each award claimant as follows.

FINAL ORDER-THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 8, 2025 AS TO CLAIMANTS 2, 5, 6, AND 7 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action: P| Reference No: 08082025

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claims of Claimants 2 through 7. None of these claimants provided

information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F- 3(a)(3) and 21F- 4(c) thereunder because the information they provided did not:

(1) under Rule 21F-4(c)(1) of the Exchange Act cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of the information provided by Claimants 2 through 7, respectively: or

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by any of Claimants 2 through 7. In addition, none of the information provided by these claimants caused the staff to inquire concerning different conduct as part of the ongoing investigation or significantly contributed to the success of the Covered Action. Specifically, the staff responsible for the Covered Action did not receive or review any information from Claimants 2-7 or have any communications with them. Thus, Claimants 2-7’s information was not used in, and had no impact on, the staff’s investigation or the Covered Action.”

By: Claims Review Staff

Date: June 9, 2025

2 Certain of Claimants 2-7 also applied for a related action award in connection with an action brought by the CFTC. Claimants 2-7 are not eligible for a related action award because they are not eligible for an award in an SEC covered action, and CFTC actions are not related actions under the Commission’s whistleblower program rules. See Exchange Act Rule 21F-3(b)(1).

SEC

08082025

08/08/2025

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 8, 2025, AS TO CLAIMANTS 2 AND 3 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 08082025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and

Exchange Commission (“Commission’’) received whistleblower award claims from jointly, (“Claimant 2”) and

(“Claimant 3”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated Claimants’ award applications for resolution through the summary disposition process.!

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims for the reasons stated below.’

1 See Exchange Act Rule 21F-18(a)(1)-(6).

2 To the extent Claimants have applied for an award in a related action, because they are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b): Exchange Act Rule 21F-3(b), (b)(1):; Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

Notice of Covered Action

Reference No. 08082025

Claimant 2 and Claimant 3 (“Joint Claimants”’)

Joint Claimants did not provide information to the Commission that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and (3) and 21F(c) thereunder. Joint Claimants’ information to the Commission did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Jomt Claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Staff opened an investigation in ie and its subsidiaries (the _ Investigation”) based on information obtained from sources other than Jomt Claimants. Staff on the Investigation never received or reviewed Joint Claimants’ information or communicated with Joimt Claimants during the course of the pe Investigation, and Joint Claimants’ information was not used in the Covered Action.

By: The Office of the Whistleblower

Date: July 1, 2025

SEC

08052025

08/05/2025

FINAL ORDER — THIS PRELIMINARY SUMMARY DISPOSITION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 5, 2025, PURSUANT TO RULE 21F-18(b) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action

Reference No. 08052025

PRELIMINARY SUMMARY DISPOSITION OF THE OFFICE OF THE WHISTLEBLOWER

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from P| (“Claimant’’) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set

forth in Rules 21F-1 through 21F-18 and has designated Claimant’s award application for 1

resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim for the reasons stated below.’

Staff opened the investigation that resulted in the Covered Action based on information obtained from sources other than Claimant. Staff on the investigation never received or reviewed Claimant’s information or communicated with Claimant during the course of the investigation, and Claimant’s information was not used in the Covered Action.

By: The Office of the Whistleblower

Date: July 2, 2025

1 See Exchange Act Rule 21F-18(a)(1)-(6).

2 To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

SEC

34-103630

08/05/2025

UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 Release No. 103630 / August 5, 2025

WHISTLEBLOWER AWARD PROCEEDING File No. 2025-43

In the Matter of the Claim for an Award in connection with [REDACTED]

.. [REDACTED] Notice of Covered Action

ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [REDACTED] (“Claimant’’) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background

A. The Covered Action

[REDACTED] [REDACTED]

On, the Commission announced

[REDACTED] (“Respondent”), alleging that the Respondent, through

the actions of its senior managers, effected a fraudulent scheme to Redacie’ [REDACTED]

. The Respondent agreed to pay more

than $1 million in monetary sanctions to the Commission. The Commission also announced a settled

administrative and cease-and-desist proceeding against individuals and a litigated administrative proceeding against a individual. On [REDACTED], the Office of the Whistleblower (“OWB”) posted the Notice for the

Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination

The CRS issued a Preliminary Determination recommending that Claimant’s claim for award be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act’) and Rule 21F-4(c) thereunder. The Covered Action investigation was not opened based on information provided by Claimant to the Commission. Rather, the record reflects that Commission staff opened the Covered Action investigation in Recacte based on civil action filings, including a publicly- available amended class action complaint (“Amended Complaint’). Furthermore, Commission staff did not review or receive any information from Claimant, or have any communications with Claimant, before the filing of the Covered Action or the filing of a settled administrative proceeding against individual defendants in “**”°* | While Commission staff interviewed Claimant after the filing of the Covered Action in connection with a litigated proceeding against a individual, Claimant’s information did not contribute to that proceeding because his/her information was already known to the Enforcement staff and did not contribute to the resolution of the litigated proceeding against the individual. Claimant provided no information or assistance that was used in, or otherwise contributed to, the Covered Action or enforcement proceedings brought by the Commission against the individual defendants. Additionally, the CRS addressed Claimant’s contention that he/she was eligible for an award through operation of Exchange Act Rules 21F-4(b)(7) and 21F-4(c)(3) because of Claimant’s submission of information to a [REDACTED]

[REDACTED] professional at an exit interview in and during an interview with the Respondent’s Audit Committee in [REDACTED]. Claimant did not satisfy these rules, however, because Claimant did not provide the same information to the Commission within 120 days.

C. Claimant’s Response to the Preliminary Determination

The Claimant filed a timely written response (the “Response’’) contesting the Preliminary Determination. Claimant principally argues: (1) that he/she satisfies the “led to” requirement by virtue of the fact that he/she was the original source of information provided in the Amended Complaint, which prompted staff to open the Commission’s investigation; (2) at the time Claimant provided his/her information to counsel who filed the Amended Complaint the Commission’s regulations requiring the provision of a Form TCR to the Commission had not been implemented; (3) regardless, Claimant satisfied the Form TCR requirement under Rule 21F-9(e) by filing a TCR with the Commission within 30 days of retaining counsel; (4) Claimant provided information to [REDACTED] (“Other Government Authority”’) in Recacie’ which was then relayed by the Other Government Authority to the Commission and relied on by the Commission; and (5) the Commission should exercise its exemptive authority under Exchange Act Section 36(a) because, inter alia, reporting through a public medium raises considerations substantially different from those considered at the time the Commission’s whistleblower rules were adopted and denying Claimant an award would result in undue hardship and unfairness.

II. Analysis

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must have “voluntarily provided original information to the Commission that led to the successful enforcement of the covered… action.” Exchange Act Section 21F(b)(1) (emphasis added).! Rules 21F-4(c)(1) and (c)(2) specify that this “led to” requirement 1s satisfied if either “you gave the Commission original information that cause[d] the staff to… open an investigation… or to inquire concerning different conduct as part of a current examination or investigation” or “[y/ou gave the Commission original information about conduct that was already under examination and investigation by the Commission… and your submission significantly contributed to the success of the action” (emphases added).? “[B]oth Rule 21F-4(c)(1) and Rule 21F-4(c)(2) require that a claimant’s submission of information to the

Commission prove helpful to the Enforcement staff in the covered action.’””°

According to declarations provided by Enforcement staff responsible for the Covered Action, which we credit, in Recacted, Staff opened the Covered Action investigation based on the staff’s independent review of civil action filings, including the publicly-available Amended Complaint. Claimant did not provide the information contained in the Amended Complaint to the Commission, nor did staff receive or review any information from the Claimant prior to staff opening the Covered Action investigation. As such, Claimant did not provide information to the Commission that caused the opening of the investigation.

Nor did Claimant provide information to the Commission that caused staff to inquire into

different conduct or that significantly contributed to the success of the Covered Action. It was not until

Necacte’_, more than three-and-a-half years after Enforcement staff opened the investigation, and _ after the filing of the Covered Action with the Respondent and the filing of the settled action against of the individual defendants, that Claimant provided information to the Commission for the first time. Enforcement staff met with Claimant in Recacte’ in connection with the litigated proceeding against the individual defendant. However, the information provided by Claimant during the

Recacie’ interview was already known to the Enforcement staff and was not used in the Covered Action or actions against the individual defendants. Claimant submitted a TCR to the Commission on

Necacee just two weeks before the contested proceeding against the individual defendant

was settled. None of the information in the TCR contributed to the charges brought against the

| Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

* In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action. For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities. Order Determining Whistleblower Award Claims, Release No. 34-90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Release No. 34-85412 (Mar. 26, 2019) at 9 (same).

> Order Determining Whistleblower Award Claims, Release No. 34-102987 (May 5, 2025) at 8 (emphasis in original).

individual defendant or the resolution of that action.*

Finally, Claimant’s information does not satisfy the “led to” requirement under Exchange Act Rule 21F-4(c)(3). Exchange Act Rule 21F-4(c)(3) requires the following:

(i) “You reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or after the same time you reported them to the Commission;”

(iui) “[AJnd the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of this section;” and

(iv) “[Y]Jou must also submit the same information to the Commission in accordance with the procedures set forth in §240.21F-9 within 120 days of providing it to the entity.”

In the Response, Claimant states that he/she revealed his/her suspicion about the improper [REDACTED] ™

to an examiner from the Other Government Authority in and reiterated his/her suspicions during an exit interview later that year. Claimant also states that he/she was interviewed by investigators from multiple federal and state government agencies in and

However, Claimant did not provide any information to the Commission until approximately two years later in Necacie’ _, and thus did not provide the same information to the Commission within 120 days of providing the information to the Respondent or to the other government agencies.°

Turning to Claimant’s arguments in the Response, we disagree that Claimant satisfies the “led to” requirement under Rule 21F-4(c)(1) because he/she was the “original source” of the information in the Amended Complaint that contributed to the opening of the staffs investigation.

Whether Claimant was the original source of the information in the Amended Complaint is a separate issue from whether he/she satisfies the statutory “led to” requirement. That requirement is embodied in Congress’s directive that, to qualify for an award, a whistleblower must have “voluntarily provided original information to the Commission that led to the successful enforcement of the covered…action.” Section 21F(b)(1) (emphasis added).° In other words, putting aside the separate

* Claimant submitted a second TCR to the Commission on neeeee, after all actions with respect to the Respondent

and individual defendants were complete, and thus, had no impact on the Covered Action.

> See Exchange Act Rule 21F-4(b)(7) (establishing a 120-day look-back provision where a claimant submits information through an entity’s internal whistleblower procedures or to a federal government agency and then provides the same information to the Commission within 120 days).

® See also Kilgour v. SEC, 942 F.3d 113, 122-23 (2d Cir. 2019) (reading the “led to” language in Section 21F(b)(1) as

requirement of whether the information was original, it must have been the information that was provided “to the Commission” that led to the successful enforcement of the Covered Action.’ Here, Claimant did not provide information directly to the Commission until three-and-a-half years after the opening of the investigation and after the filing of the Covered Action.®

The staff declarations affirm that Claimant’s belated submission of information to the Commission was not in any way helpful to the staffs investigation, the Covered Action, or the proceedings against the individual defendants.

That a claimant must provide information to the Commission that “leads to” the success of the covered action is a statutory requirement. As the Commission has previously stated, “[t]he plain language of Section 21F… requires that information be ‘provided’ directly to the Commission in order to support an award — and makes no allowance for the online publication of information that, by happenstance, indirectly makes its way into the hands of Commission staff.”’? Despite Claimant’s argument to the contrary, the requirement that information be provided directly to the Commission for purposes of “led to” is not just reflected in the Commission’s regulations but embodied in the statute. As such, we reject Claimant’s argument that the Commission’s whistleblower program regulations had not been adopted at the time the Amended Complaint was filed, or that the regulations do not consider the reporting of information through a public medium, as the statute itself makes clear that to be eligible for

an award a whistleblower must provide information to the Commission that leads to the success of the

covered action.!°

“seem[ing] to require that the information as provided by the whistleblower must have ‘led to the successful enforcement action.’”’).

7’ See Order Determining Whistleblower Award Claims, Release No. 34-102987 (May 5, 2025); Order Determining Whistleblower Award Claim, Release No. 34-102232 (Jan. 17, 2025).

In the Response, Claimant contends that one of the Enforcement staff declarations appears to be self-contradictory, as the declarant stated he was not aware of information the Claimant provided to the Commission prior to the

interview, but also states that the Commission received a copy of the Claimant’s testimony transcript in se from the Other Government Authority. We do not find this statement contradictory. Commission staff obtained the testimony transcript from the Other Government Authority, not from Claimant. Additionally, Claimant does not satisfy the “led to” requirement by virtue of the testimony provided by Claimant to the Other Government Authority in eee which was provided by the Other Government Authority to the Commission in news’ The Claimant did not directly provide the information to the Commission; nor did he/she provide the information to the Commission within 120 days of providing it to the Other Government Authority. See Exchange Act Rule 21F-4(b)(7).

? Order Determining Whistleblower Award Claims, Release No. 34-82955 (Mar. 27, 2018) at 5.

10 Whether Claimant satisfies the Form TCR requirement under Rule 21F-9(e) because he/she submitted a TCR to the

Commission within 30 days of retaining counsel does not address whether Claimant’s information to the Commission “led ” the success of the Covered Action. The information Claimant provided directly to the Commission in neeeee did

not in any way advance the investigation or help resolve the litigated action against the individual defendant. Nor did

Claimant’s “””” TCR provide new information that contributed to the enforcement actions.

Finally, we reject Claimant’s request that we waive any applicable procedural bars to Claimant’s award eligibility. Section 36(a)(1) provides that “the Commission, by rule, regulation, or order, may conditionally or unconditionally exempt any person… from any provision or provisions of [the Exchange Act] or any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.”!! The Commission has not used its Section 36(a) exemptive authority to waive the “led to” requirement under Exchange Act Rule 21F-4(c) and we decline to do so here. The whistleblower program was designed to encourage persons with information about potential securities violations to report that information to the Commission. ‘* Using Section 36(a) to excuse a claimant’s failure to report information to the Commission that leads to the success of the enforcement action would be contrary to the underlying purpose of the Commission’s whistleblower program.

Finally, applying the “led to” requirement to deny an award does not result in any unfair burden to Claimant. The “led to” requirement is not a mere technicality but rather helps ensure that award eligibility is limited to claimants whose submissions to the Commission actually prove to be helpful, consistent with Congress’s statutory design.

In short, based on the facts and circumstances of this case, we decline to exercise our discretionary exemptive authority under Section 36(a) to waive the “led to” requirement for Claimant’s award claim in the Covered Action.!

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

Vanessa A. Countryman Secretary

115 U.S.C. § 78mm(a)(1).

12 See Digital Realty Trust, Inc. v. Somers, 583 U.S. 149, 162 (2018).

‘3 Because Claimant is not eligible for an award in an SEC Covered Action, Claimant also is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b); see also Order Determining Whistleblower Award Claims, Release No. 34-86902 (Sept. 9, 2019).

SEC

08042025

08/04/2025

FINAL ORDER — THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 4, 2025 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Notice of Covered Action:

OWB Reference No. 08042025 PRELIMINARY DETERMINATION OF THE CLAIMS REVIEW STAFF

In response to the above-referenced Notice of Covered Action (the “Action’’), the

Securities and Exchange Commission (“Commission”) received a whistleblower award claim from (“Claimant”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny Claimant’s claim. To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.! Pursuant to Rule 21F-3(a)(3), “the Commission will pay an award or awards to one or more whistleblowers who: (1) Voluntarily provide the Commission (2) With original information (3) That leads to the successful enforcement by the Commission of a Federal court or administrative action.”

Claimant submitted his/her information to the Commission almost five years after the entry of the pe final judgment = Judgment’’) in the Action. Thus, Claimant’s information did not help the Commission establish the elements of the securities-law violations charged in the underlying Action. While the record reflects that information derived from Claimant’s information was used in the Commission’s post-judgment supplemental briefing preceding the court’s nn amended final judgment f Amended Judgment’), the pe Amended Judgment did not resolve any new charges or award any new relief for the charges already asserted. The il Amended Judgment reinstated payment of the disgorgement and interest the court had waived in the PE Judgment and imposed a civil penalty it had declined to impose based on the defendant’s purported financial condition. In other words, Claimant’s information had no bearing at all on the Commission’s entitlement to relief in its own right. Instead, Claimant’s information related to the falsity of the defendant’s representations and thus to the collectability of relief that had been contemplated but waived in the po Judgment. As made clear by the language in the court’s i Amended Judgment, “Defendant is liable for reinstated disgorgement of… [and] is further liable for a reinstated civil penalty in the amount of

The po Judgment itself expressly stated that “the Court is not ordering Defendant to pay a civil penalty,” not because the Commission had failed to demonstrate that a penalty was warranted, but rather “[b]ased on Defendant’s sworn representations in 4 financial

‘ See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

FINAL ORDER — THIS PRELIMINARY DETERMINATION BECAME THE FINAL ORDER OF THE COMMISSION ON AUGUST 4, 2025 PURSUANT TO RULE 21F-10(f) OF THE SECURITIES EXCHANGE ACT OF 1934

Declaration.” Similarly, the i Judgment reiterated that “[t]he determination not to impose a civil penalty… is contingent upon the accuracy and completeness of Defendant’s financial Declaration.” Accordingly, Claimant’s information concerned only the collectability of relief that was waived in the i Judgment based on the defendant’s purported inability to pay—and had no bearing on whether that relief was warranted in its own right.

By: Claims Review Staff

Date: April 29, 2025

SEC

102896

04/21/2025

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that joint claimants [Redacted] (together, “Joint Claimants”) receive a joint whistleblower award in the amount of *** percent (*** %) of the monetary sanctions collected in the above-referenced covered action (“Covered Action”).[fn1] This will result in an award of approximately $6 million to Joint Claimants.

The recommendation of the CRS is adopted. The record demonstrates that Joint Claimants voluntarily provided original information to the Commission and that this information led to the successful enforcement of the Covered Action.[fn2] Further, the record reflects that (1) Joint Claimants’ information caused the Commission’s Division of Examinations (“Exams”) to open an examination (“Commission Examination”); (2) Joint Claimants’ tip and supplemental submissions were helpful in connection with the Commission Examination as well as Exams’ ultimate examination findings; (3) Exams referred the Commission Examination to Enforcement Staff, and Enforcement Staff found the referral from Exams to be helpful as a roadmap to the investigation that resulted in the Covered Action; and (4) certain of the allegations in the Covered Action were based, in part, on the conduct alleged by the Joint Claimants.

In light of these considerations and the relevant factors specified in Rule 21F-6,[fn3] it is appropriate that Joint Claimants receive an award of *** percent (*** %) of the monetary sanctions collected in the Covered Action.

Accordingly, it is hereby ORDERED that Joint Claimants shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

### Footnotes

[fn1] We have determined to treat Joint Claimants jointly as a “whistleblower” for purposes of the award determination given that they: presented themselves as a team in several submissions to the Commission and in their whistleblower award applications; and have been represented by the same whistleblower counsel when submitting written submissions of information to the Commission, interacting with Enforcement Staff, and in submitting their whistleblower award applications. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining “whistleblower” to mean 2 or more individuals acting jointly who provide information relating to a violation of the securities laws to the Commission).

[fn2] See Exchange Act Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[fn3] In determining the amount of the award to Joint Claimants, we considered the following factors set forth in Rule 21F-6 of the Exchange Act as they apply to the facts and circumstances of Joint Claimants’ application: (1) the significance of information provided; (2) the assistance provided; (3) the 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.

SEC

34-100262

06/04/2024

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action,[fn1] which would be more than $300,000 based on current collections. Claimant indicated that they did not contest the Preliminary Determination.

Exchange Act Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30% where (1) the maximum award would be $5 million or less; (2) none of the negative award factors under Rule 21F-6(b)—i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present; and (3) the award claim does not trigger Rule 21F-16.[fn3] The Commission does not apply the presumption here because Claimant was culpable for the underlying conduct, [Redacted].

Because the Rule 21F-6(c) presumption does not apply, the amount of Claimant’s award is determined by the factors enumerated in Rules 21F-6(a) and (b): (i) the significance of information provided to the Commission; (ii) the assistance provided in the Covered Action; (iii) the law-enforcement interest in deterring violations by granting awards; (iv) participation in internal compliance systems; (v) culpability; (vi) unreasonable reporting delay; and (vii) interference with internal compliance and reporting systems.

Considering these factors, the Commission believes an *** % award for Claimant is appropriate. Claimant’s assistance was extensive and conserved Commission resources – they continued to provide key documents and useful background information throughout the investigation. The law-enforcement interest here is particularly high because Claimant uncovered conduct that [Redacted] might otherwise have gone undetected.

[Redacted].

Nonetheless, [Redacted] would not have proceeded as it did without Claimant’s willingness to [Redacted]. The Commission rejects Claimant’s argument that they did not know the conduct was wrong, as they protested [Redacted] but ultimately agreed to [Redacted] anyway. Moreover, Claimant [Redacted].

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] Pursuant to Rule 21F-4(d), we are treating the enforcement action [Redacted], together with [Redacted], as a single Covered Action as they both arise from the same underlying facts. The two actions are collectively referred to as the “Covered Action.”

[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

[3] Rule 21F-16 concerns whistleblowers who engage in culpable conduct.

SEC

34-100263

06/04/2024

On [Redacted], the Claims Review Staff (“CRS”) issued a Preliminary Determination (“Initial Preliminary Determination”) recommending that [Redacted] (“Claimant”) receive a whistleblower award of twenty-eight percent (28%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). On [Redacted], after considering additional information, the CRS issued a revised Preliminary Determination (“Revised Preliminary Determination”) that recommended that Claimant receive an award of twenty-three percent (23%) of the monetary sanctions collected in the Covered Action. Claimant filed a timely response (“Response”) contesting the Revised Preliminary Determination.[fn1] For the reasons discussed below, the recommendation in the Revised Preliminary Determination is adopted.

I. The Background.

A. The Covered Action.

On [Redacted], the Commission instituted a settled administrative cease-and-desist proceeding against [Redacted] (“Respondent”). The Commission found that Respondent [Redacted]. As a result, Respondent [Redacted]. Among other relief, Respondent agreed to pay disgorgement of [Redacted], prejudgment interest of [Redacted], and a civil penalty of [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant submitted a timely whistleblower award claim.

B. The Initial Preliminary Determination.

The Initial Preliminary Determination recommended that Claimant receive an award of twenty-eight percent (28%) of the monetary sanctions collected in the Covered Action. The record supporting the Initial Preliminary Determination included staff declarations (“Initial Declarations”) from an accountant in the Division of Examinations (“EXAMS”) who was assigned to an examination of Respondent (“Examination”) that resulted in a referral to the Division of Enforcement (“Enforcement”) and from an Enforcement attorney who was assigned to the subsequent investigation (“Investigation”) that led to the Covered Action. The Initial Declarations both included statements to the effect that Claimant’s TCR[fn2] caused EXAMS staff to commence an examination of Respondent. The Initial Preliminary Determination cited this as one of the factors considered by the CRS in reaching the recommended award percentage.

C. The Proposed Final Determination.

On [Redacted], following written notice of Claimant’s decision not to contest the Initial Preliminary Determination, the Commission was notified of a Proposed Final Determination (“Proposed Final Determination”) recommending a twenty-eight percent (28%) award for Claimant.[fn3] OWB subsequently received information from EXAMS that indicated that, contrary to the stated bases for the CRS’s Initial Preliminary Determination, Claimant’s tip did not cause staff to open the Examination. In light of this new information, OWB requested that the Proposed Final Determination be withdrawn from Commission consideration at that time, to be resubmitted for consideration by the Commission at a later date. OWB then obtained additional staff declarations to clarify and correct the factual record[fn4] and subsequently submitted the revised record to the CRS for its further consideration and the issuance of a revised Preliminary Determination.

D. The Revised Preliminary Determination.

The Revised Preliminary Determination recommended that Claimant receive an award of twenty-three percent (23%) of the monetary sanctions collected in the Covered Action and noted that the CRS had received new evidence concerning the opening of the Examination. Specifically, the Revised Preliminary Determination stated that the new evidence clarified that the Examination already had been scheduled to begin and staff had already been assigned to conduct it prior to the Commission’s receipt of Claimant’s tip. The record supporting the Revised Preliminary Determination included supplemental declarations (“Supplemental Declarations”) from the Enforcement and EXAMS staff members who provided the Initial Declarations that acknowledged and corrected errors[fn5] contained in the Initial Declarations, as well as an additional declaration from an Assistant Regional Director in the Division of Examinations (“EXAMS Supervisory Declaration”) that addressed the circumstances under which Respondent was selected for examination. The Supplemental Declarations and EXAMS Supervisory Declaration indicate that the Respondent was selected for examination [Redacted] and not as the result of Claimant’s tip.[fn6]

E. Claimant’s Response to the Revised Preliminary Determination.

Claimant’s Response asserts that Claimant should receive the uncontested twenty-eight percent award initially recommended by the CRS for four reasons. First, the Response argues that the whistleblower program rules do not permit an uncontested Preliminary Determination to be “reopened” by OWB or the CRS and that the Revised Preliminary Determination must be invalidated because it was rendered in violation of the whistleblower program rules. Second, the Response contends that the factual record supporting a Preliminary Determination “closes” once a Preliminary Determination is deemed a Proposed Final Determination, which “occurs automatically when a [Preliminary Determination] is uncontested.” Third, the Response asserts that the staff declarations supporting the Initial and Revised Preliminary Determinations “are so wildly inconsistent that they render the statements themselves inherently unreliable and lacking credibility.” Finally, the Response states that reducing Claimant’s award “after the fact and based on contradictory testimony” will threaten the long-term programmatic interests of the whistleblower program.

II. Analysis.

We find that the record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant is eligible for a whistleblower award. Applying the award criteria in Rule 21F-6 to the specific facts and circumstances here, we find that an award of twenty-three percent (23%) is appropriate.

In reaching that determination, we considered that: (1) although Claimant’s tip was not the basis for opening the Examination, Claimant provided new and helpful information that assisted with both the Examination and subsequent Investigation into Respondent; (2) Claimant’s information assisted EXAMS staff in formulating additional requests for information from Respondent, the results of which helped support findings included in a referral to the Division of Enforcement; (3) Claimant provided ongoing assistance during the Investigation, including participating in a voluntary interview with Commission staff, and Claimant’s information supported certain findings [Redacted] in the Commission’s settled administrative order; (4) Claimant’s tip implicated strong law enforcement interests as it alleged [Redacted]; (5) Claimant persistently raised concerns internally in an effort to remedy the misconduct and took personal and professional risk in coming forward to the Commission; and (6) Claimant suffered significant hardships as a result of Claimant’s reporting, [Redacted]. The award percentage also recognizes that Claimant unreasonably delayed reporting to the Commission for over twenty-one months and that Claimant’s information contributed to only a portion of the findings in the Covered Action.

Additionally, we find no merit in Claimant’s arguments contesting the Revised Preliminary Determination, for the following reasons.

A. The Revised Preliminary Determination is Valid.

As an initial matter, we disagree with the Response’s first argument that the Revised Preliminary Determination must be set aside because it was rendered in violation of the whistleblower program rules. Specifically, the Response asserts that an uncontested Preliminary Determination “must be deemed a Proposed Final Determination” and “must be sent automatically to the Commission for its review and approval”; the Commission may not consider the Supplemental Declarations in rendering a final decision on the award claim; and the whistleblower program rules do not permit the CRS to issue a revised Preliminary Determination.

To the extent the Response argues that the uncontested Initial Preliminary Determination was not presented to the Commission as a Proposed Final Determination and therefore the requirements of Rules 21F-10(f) and 21F-10(h)[fn11] were not satisfied, the record does not support such an argument. The record shows that following OWB’s receipt of notice that Claimant would not contest the Initial Preliminary Determination, it was presented to the Commission for our consideration as a Proposed Final Determination.

The Commission is not required, however, to approve a Proposed Final Determination that comes before it, even if the CRS’s Preliminary Determination is uncontested. Determinations of whether, to whom, and in what amount to make awards are committed to the Commission’s discretion.[fn12] In reaching these determinations, the Commission must first consider whether a claimant has satisfied the eligibility conditions to receive an award; if so, the Commission must then consider the criteria set forth in Rule 21F-6[fn13] in determining the amount of any award.[fn14] Where the Commission makes an award based on the factors set forth in Rule 21F-6, the Commission’s determination regarding the amount of an award, including the allocation of an award as between multiple whistleblowers and any factual findings, legal conclusions, policy judgments, or discretionary assessments involving the Commission’s consideration of the factors set forth in Rule 21F-6, is not appealable.[fn15]

As the Response acknowledges, Rule 21F-10(h) provides that within 30 days of receiving notice of a Proposed Final Determination, any Commissioner may request that the Proposed Final Determination be reviewed by the Commission.[fn16] In this case, within the 30-day review period following the Commission’s receipt of the Proposed Final Determination and while the Proposed Final Determination was still pending with the Commission, new information came to OWB’s attention indicating that certain statements included in the Initial Declarations, which the CRS relied upon in issuing the Initial Preliminary Determination, were not correct. Subsequently, OWB requested that the matter be withdrawn from further Commission consideration so that OWB could obtain additional staff declarations to clarify and correct the factual record and resubmit the matter for Commission consideration at a later date.

With respect to Claimant’s argument that OWB and the CRS acted outside whistleblower program rules in issuing the Revised Preliminary Determination, we disagree. The Commission is authorized under Rule 21F-12(a) to consider sworn staff declarations regarding any matters relevant to the award determination in making a final determination.[fn17] Given this authority, we believe the CRS’s issuance of the Revised Preliminary Determination in this case served to further the Commission’s interest in obtaining a fulsome and accurate record prior to reaching a final determination on this matter. Further, it provided the Claimant an opportunity[fn18] to refute or otherwise respond to the revised factual record prior to the Commission’s final determination. Therefore, we believe it was appropriate to issue a Revised Preliminary Determination in this case and we reject Claimant’s first argument that the Revised Preliminary Determination was rendered in violation of whistleblower program rules.[fn19]

B. Additional Staff Declarations Are Appropriate.

We disagree with Claimant’s argument that, in reaching a final determination on this award claim, the Commission may not consider the Supplemental Declarations or any other evidence that was not before the CRS at the time of the Initial Preliminary Determination. In support of this argument, Claimant cites Rule 21F-10(h), which provides in part that in the event a Commissioner requests a review of a Proposed Final Determination, “the Commission will review the record that the staff relied upon in making its determinations . . . .” When reviewing Proposed Final Determinations, the Commission is expressly authorized to rely upon the materials specified in Rule 21F-12(a), including “[s]worn declarations (including attachments) from the Commission staff regarding any matters relevant to the award determination.” Claimant’s suggested interpretation of Rule 21F-10(h) as requiring that the record be “closed” once the CRS has rendered a Preliminary Determination cannot be reconciled with the express authority provided under Rule 21F-12(a) for the Commission to consider sworn staff declarations regarding any matters relevant to the award determination. Taking this authority into account, we read the language in Rule 21F-10(h) that “the Commission will review the record that the staff relied upon in making its determinations” to mean that, while the Commission is obliged to review the record the CRS considered, it is not prohibited from considering additional staff declarations, or other materials specifically permitted under Rule 21F-12(a), in rendering final decisions on whistleblower award claims.[fn20]

In order to satisfy the whistleblower program goal of incentivizing whistleblowers to come forward with high-quality information and to allow the Commission to treat award claimants fairly vis-à-vis our rules and other award claimants, it is of utmost importance that our award decisions are based on accurate factual records. In this case, the information brought to OWB’s attention that Claimant’s tip did not lead staff to open the Examination was relevant to both Claimant’s eligibility to receive an award and the significance of Claimant’s information to the success of the Covered Action, one of the factors we must consider under Rule 21F-6. For these reasons, we believe the Commission has ample authority to consider the Supplemental Declarations, and we have treated them as part of the record for this award proceeding.

C. The Declarations Are Consistent.

Turning to Claimant’s third argument, we disagree that the Revised Preliminary Determination is arbitrary and capricious and therefore invalid because the Initial Declarations and Supplemental Declarations are “so factually divergent and contradictory that they are inherently unreliable and raise serious credibility questions.” Given that the Supplemental Declarations expressly acknowledge and correct specific errors included in the Initial Declarations, we do not find them to be inconsistent with the Initial Declarations, as the Claimant urges. Although errors were made in the Initial Declarations, we have no reason to doubt the truthfulness of the Supplemental Declarations or, as corrected, the Initial Declarations. We note that the Initial Declarations and the Supplemental Declarations were provided by staff who worked on the related Examination and Investigation and thus are in the best position to understand and explain the factual background of the Examination and Investigation. Further, with respect to the circumstances under which the Examination began, the Supplemental Declarations are bolstered by the EXAMS Supervisory Declaration.[fn21] Finally, other than arguing that the Supplemental Declarations are “wildly inconsistent” with the Initial Declarations, Claimant does not provide any evidence to dispute the facts averred in the Supplemental Declarations.[fn22] Therefore, we credit the Supplemental Declarations and, as corrected, the Initial Declarations.

D. Whistleblower Program Interests.

Lastly, we disagree with the Response’s fourth argument that reducing Claimant’s award “after the fact” and “based on contradictory testimony” will threaten the long-term programmatic interests of the whistleblower program by disincentivizing whistleblowers from stepping forward. First, as discussed above, the whistleblower program rules expressly contemplate that final award decisions are in the discretion of the Commission; the whistleblower program rules thus recognize that in reaching final award decisions the Commission may depart from the recommendations of the CRS. Second, in order to achieve the whistleblower program goal of incentivizing whistleblowers to come forward with high-quality information, we believe it is critical that we base our eligibility and award determinations on accurate factual records, so that we may reward only those whistleblowers whose information has “led to” a successful enforcement action and make reasoned assessments of the positive and negative award factors specified in Rule 21F-6.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of twenty-three percent (23%) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] The Initial Preliminary Determination also recommended that the award application of one other claimant be denied. This claimant did not submit a request for reconsideration and, as such, the Preliminary Determination with respect to his/her award claim became the Final Order of the Commission, pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] The TCR System is the Commission’s electronic database which records and stores information received from whistleblowers and others about potential securities law violations and records staff action taken with regard to tips, complaints, and referrals (“TCRs”) entered into the system.

[3] Under Rule 21F-10(f), because Claimant did not contest the Initial Preliminary Determination, it was deemed a Proposed Final Determination for purposes of Rule 21F-10(h). See Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[4] The whistleblower rules contemplate that, in making an award determination, the Commission, the CRS, and OWB may rely upon, as relevant here, sworn declarations from Commission staff regarding any matters relevant to the award determination, as well as the publicly available materials related to the covered action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).

[5] In addition to correcting information regarding the opening of the Examination, the Supplemental Declarations clarified and corrected prior statements regarding the number of TCRs Claimant had submitted and how EXAMS staff made use of Claimant’s information in conducting the Examination. While the Initial Declarations stated that Claimant submitted two TCRs, the Supplemental Declarations clarified that Claimant had submitted only one TCR (the “Initial TCR”) on [Redacted]. The Initial TCR was sequestered by the Commission’s Office of Market Intelligence for a privilege review after EXAMS staff discovered, while conducting research on Respondent, that some of the attachments to the TCR were marked as privileged and confidential. Although EXAMS staff reviewed the allegations Claimant included in response to the TCR complaint form questions, staff did not review the contents of the attachments to the TCR. After the privilege review was completed, a redacted version of Claimant’s TCR, with *** privileged attachments redacted therefrom (the “Redacted TCR”), was emailed to EXAMS staff on [Redacted], and uploaded to the TCR system on [Redacted].

[6] According to the EXAMS Supervisory Declaration, which we credit, Respondent was selected for examination [Redacted], and staff were assigned to the Examination on [Redacted], three days before Claimant submitted his/her tip.

[7] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1). See also Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[8] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[9] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[10] See Order Determining Whistleblower Award Claims, Exchange Act Release No. 90922 at 4 (Jan. 14, 2021); see also Order Determining Whistleblower Award Claims, Exchange Act Release No. 85412 at 9 (Mar. 26, 2019). Exchange Act Rule 21F-4(c)(3), 17 C.F.R. § 240.21F-4(c)(3), is not relevant here.

[11] Rule 21F-10(f) provides, in part, that if a claimant fails to submit a timely response contesting a Preliminary Determination, “the Preliminary Determination will become the Final Order of the Commission (except where the Preliminary Determination recommended an award, in which case the Preliminary Determination will be deemed a Proposed Final Determination for purposes of [Rule 21F-10(h)]).” See Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f). Rule 21F-10(h) provides, in part, that OWB “will notify the Commission of each Proposed Final Determination.” See Exchange Act Rule 21F-10(h), 17 C.F.R. § 240.21F-10(h).

[12] See Exchange Act Section 21F(f), 15 U.S.C. § 78u-6(f); Exchange Act Rule 21F-13(a), 17 C.F.R. § 240.21F-13(a).

[13] These factors include: (1) the significance of the information provided by a whistleblower to the success of the Commission action or related action; (2) the degree of assistance provided by the whistleblower and any legal representative of the whistleblower in the Commission action or related action; (3) the programmatic interest of the Commission in deterring violations of the securities laws by making awards to whistleblowers who provide information that leads to the successful enforcement of such laws; (4) participation by the whistleblower in internal compliance systems; (5) culpability of the whistleblower; (6) whether the whistleblower unreasonably delayed reporting; and (7) interference with internal compliance and reporting systems by the whistleblower. See Exchange Act Rule 21F-6, 17 C.F.R. § 240.21F-6.

[14] See Exchange Act Rule 21F-5(b), 17 C.F.R. § 240.21F-5(b) (“If all of the conditions are met for a whistleblower award in connection with a Commission action or a related action, the Commission will then decide the percentage amount of the award applying the criteria set forth in [Rule 21F-6] and pursuant to the procedures set forth in [Rule 21F-10] and [Rule 21F-11].”).

[15] See Exchange Act Rule 21F-13(a), 17 C.F.R. § 240.21F-13(a).

[16] See Exchange Act Rule 21F-10(h), 17 C.F.R. § 240.21F-10(h).

[17] In light of this express authority, we also disagree with the Response’s assertion that allowing the record to be supplemented once the Commission is notified of a Proposed Final Determination is “administratively untenable” and “manifestly unfair to whistleblowers who do not contest a preliminary determination.”

[18] Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e), provides claimants an opportunity to request the record supporting a Preliminary Determination and to contest a Preliminary Determination. We note that, absent the issuance of the Revised Preliminary Determination, Claimant would not have had an opportunity to refute the revised record prior to our final determination in this matter.

[19] Contrary to Claimant’s arguments, it is not unprecedented for the CRS to issue a revised Preliminary Determination. See the Final Orders of the Commission, effective by operation of law pursuant to Rule 21F-10(f), available at https://www.sec.gov/files/denial-order-91823.pdf, https://www.sec.gov/files/denial-order-112123-nm.pdf, and https://www.sec.gov/files/denial-orders-53023.pdf.

[20] In support of this argument, the Response also asserts that it is “disingenuous” to characterize the information supporting the Revised Preliminary Declaration as “new evidence” given that the declarants would have known all the information that was contained in their later declarations at the time they provided the Initial Declarations. We disagree. The EXAMS Supervisory Declaration, which was provided at the time the CRS issued the Revised Preliminary Determination, clarified the circumstances under which Respondent was selected for examination.

[21] This sworn declaration was provided by the supervisor of the Examination, who had direct knowledge of Respondent’s selection for examination and assigned staff to the Examination.

[22] Contrary to Claimant’s arguments, the Supplemental EXAMS Declaration does not conclude that the Examination “was independent of [Claimant’s] information.” To the contrary, the Supplemental EXAMS Declaration avers that the Redacted TCR “meaningfully assisted” the Examination, “played a significant role in supporting” several findings included in the referral to Enforcement, and “supported the staff’s finding that [Respondent] failed to meet [Redacted].” Further, contrary to the claim in the Response that the Supplemental EXAMS Declaration states that the declarant “opened” at least some of the attachments, “but upon seeing that the attachments were marked as privileged and confidential, [the declarant] did not review their contents,” consulted supervisors as to the best course of action, and was subsequently instructed “not to further review the Initial TCR until the privilege review was complete.”

SEC

100068

05/07/2024

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of *** percent (*** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the referenced Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 21F-3(a) promulgated thereunder, and that Claimant receive an award of *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action.

[Redacted].

Although Claimant did not provide additional assistance after submission of Claimant’s tip, Claimant expeditiously submitted the tip, which included several documents, the information was closely related to the conduct in the Covered Action, the information alerted Commission staff to the conduct, and the staff opened the investigation after learning the information.

[Redacted].

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.

[1] The CRS also recommended that Claimant’s claims for a related action award in connection with [Redacted] (the “Criminal Action”) and [Redacted] be denied. Claimant did not contest the preliminary denial of the related action award claims, which are deemed final through operation of law.

SEC

99669

05/05/2024

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”), which based on current collections would result in no payment.[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn2]

[Redacted].

Claimant participated in multiple interviews with Commission staff, testimony, and provided documents which among other things, identified key witnesses and assisted the staff in drafting subpoenas.

[Redacted].

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.

[1] The CRS also recommended the denial of the award application of one other claimant who did not contest the Preliminary Determination. Accordingly, the Preliminary Determination with respect to that award claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] Claimant did not seek reconsideration of the Preliminary Determination determining that he/she did not apply for a related action award and therefore, the determination was deemed to be the final order of the Commission.

[3] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

SEC

100025

04/25/2024

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with the above-referenced Covered Action (the “Covered Action”) recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent (*** %) of the monetary sanctions collected for a payout of approximately $2,400,000. 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[fn1] to the Commission that led to the successful enforcement of the Covered Action.[fn2]

[Redacted].

After internally reporting concerns, Claimant submitted a tip to the Commission that prompted the opening of the investigation and thereafter provided continuing assistance to the staff.

[Redacted].

Accordingly, it is ORDERED that Claimant shall receive an award of *** percent (*** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] Because Claimant’s primary responsibilities included [Redacted], the Commission considered whether Claimant’s information was “original information”. Under Rule 21F-4(b)(1), “for [a] whistleblower submission to be considered original information, it must,” among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1). In turn, Rule 21F-4(b)(4)(iii)(B) provides that, unless an exception applies, “[t]he Commission will not consider information to be derived from [a whistleblower’s] independent knowledge or independent analysis” if the whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities” 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). The Commission determined that Rule 21F-4(b)(4)(iii)(B) did not apply here to disqualify Claimant’s information from treatment as original information because, pursuant to the 120-day exception in Rule 21F-4(b)(4)(v)(C), 17 C.F.R. § 240.21F-4(b)(4)(v)(C), Claimant reported the information internally to Claimant’s supervisor and to the Chief Compliance Officer or its equivalent, and then waited at least 120 days to report the information to the Commission.

[2] See Exchange Act Section 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).

SEC

99929

04/09/2024

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award equal to thirty percent (30%) of the amount collected, or to be collected,[fn1] in the above-referenced Covered Action (“Covered Action”). The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn2]

[Redacted].

In reaching this determination, the Commission considered that Claimant provided new information that significantly contributed to the success of the Covered Action; Claimant’s ongoing assistance during the investigation, which included multiple calls and emails, expedited the staff’s investigation; and the charges in the Covered Action were based, in part, on Claimant’s information.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] The Commission will treat the amounts distributed to harmed investors pursuant to future court orders, if any, as monetary sanctions collected under Rules 21F-4(e) and 21F-14(b). See 17 C.F.R. §§ 240.21F-4(e) and 240.21F-14(b).

[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

SEC

99916

04/08/2024

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that (i) [Redacted] (“Claimant”) receive a whistleblower award of over $750,000, which represents [Redacted] percent (*** %) of the monetary sanctions collected in [Redacted] (the “Covered Action”); (ii) the Commission order that [Redacted] (the “[Redacted] Action”), be deemed to have arisen from the same nucleus of operative facts as the Covered Action for purposes of determining payment on the award; (iii) the Commission treat [Redacted] and [Redacted] (the “Criminal Actions” or “Related Actions”) as “related actions” under Exchange Act Rule 21F-3(b); and that (iv) Claimant receive an award of over $375,000, which represents [Redacted] percent (*** %) of the remaining monetary sanctions collected in the Related Actions. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determinations. The recommendations of the CRS are adopted.

Covered Action.[fn1]

The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the referenced Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, and that Claimant receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action.[fn2]

Exchange Act Rule 21F-6(c) establishes a presumption of a statutory maximum award where (1) the maximum award would be $5 million or less and (2) none of the negative award factors under Rule 21F-6(b)—i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present and Exchange Act Rule 21F-16 regarding culpable whistleblowers does not apply.[fn3] The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn4] The presumption, however, does not apply here due to at least one negative factor – culpability. Claimant participated in the misconduct by following instructions to [Redacted] to lure and deceive investors, which contributed to ongoing investor harm, and waited to report to the Commission until after [Redacted] ended.

Accordingly, in determining the amount of award to recommend, the Commission considered the following factors set forth in Rules 21F-6(a) and (b) of the Exchange Act as they apply to Claimant: (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.

In reaching the recommended award percentage, the Commission considered that: Claimant’s initial information alerted Enforcement staff to the misconduct, prompting the opening of the investigation, and Claimant provided additional information and continuing assistance that significantly contributed to the Covered Action; Claimant ignored his/her [Redacted] suspicions, waiting until after [Redacted] ended to report to the Commission; and was culpable by participating in the misconduct, which facilitated ongoing investor harm.[fn5]

Criminal Actions

The record demonstrates that: (i) the Criminal Actions constitute “related actions” to the Covered Action within the meaning of Exchange Act Rule 21F-3(b);[fn6] (ii) the original information that Claimant provided to the Commission also led to the successful enforcement of the related Criminal Actions; and (iii) Claimant has satisfied the procedural requirements for applying for a related action award.[fn7] For the same reasons discussed above, the record demonstrates that Claimant receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the related Criminal Actions.[fn8]

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action and an award of [Redacted] percent (*** %) of the remaining monetary sanctions collected in the Related Actions.

By the Commission.

[1] The Commission has deemed that the Covered Action include a second proceeding, the [Redacted] Action, which arose out of the same nucleus of operative facts as the proceeding in File No. [Redacted]. See 17 C.F.R. § 240.21F-4(d).

[2] Although Claimant did not include the requisite whistleblower declaration with Claimant’s initial TCR, Claimant is eligible for an award under Rules 21F-4(c)(2) and 21F-9(e) as Claimant submitted a second TCR with the requisite declaration within 30 days of providing new information to the Commission that significantly contributed to the success of the Covered Action. See 17 C.F.R. § § 21F-4(c)(2) and 21F-9(e).

[3] See Rule 21F-16, 17 C.F.R. § 240.21F-16.

[4] Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv).

[5] In the Covered Action, in [Redacted] ordered the defendant to pay [Redacted], which was deemed satisfied by the criminal [Redacted] ordered against the defendant, of which the criminal authorities collected [Redacted]. In addition, the Commission collected *** from the [Redacted] Action.

[6] A related action “is a judicial or administrative action that is brought by,” among other agencies, the United States Department of Justice. See Rule 21F-3(b)(1), 17 C.F.R. § 240.21F-3(b)(1).

[7] See Rule 21F-11(b), 17 C.F.R. § 240.21F-11(b).

[8] The Commission Rules do not permit a claimant to obtain a “double recovery.” After deducting the criminal collections that count toward the Covered Action award, the remaining collections from the Related Actions total [Redacted].

SEC

99312

01/11/2024

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award equal to thirty percent (30%) of the amount collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

In reaching this determination, the Commission considered that Claimant provided new information that prompted Commission staff to open an investigation into the alleged misconduct; Claimant provided additional assistance during the investigation through in-person and telephonic interviews to explain documents and information submitted to the Commission; and the charges in the Covered Action were based, in part, on Claimant’s information.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

SEC

99313

01/11/2024

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of $1,500,000, or *** percent (*** %) of the monetary sanctions collected, in the above-referenced Covered Action (the “Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that caused the staff to open the investigation, and that the Commission’s findings in the successful enforcement action, were based, in part, on Claimant’s information.[fn1] Notably, Claimant uncovered and reported the wrongdoing after learning about the Commission’s enforcement action against another entity [Redacted], which caused Claimant to look into whether [Redacted] was committing similar violations.

[Redacted].

Claimant provided significant information and details about the violations and relevant individuals and gave numerous interviews to Commission staff.

[Redacted].

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.

[1] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

SEC

99229

12/22/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of over $13,000,000, which represents [Redacted] percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”) that [Redacted] (“Claimants 2, 3, 4, and 5”) receive a joint whistleblower award of over $13,000,000, which represents [Redacted] percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action,[fn1] and that [Redacted] (“Claimants 6 and 7”) received a joint whistleblower award of nearly $2,000,000, which represents *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action.[fn2] The CRS also preliminarily recommended that the award claim of [Redacted] (“Claimant 10”) should be denied.[fn3] Claimants 1, 2, 3, 4, 5, 6 and 7 provided written notices of their decisions not to contest the Preliminary Determinations[fn4] and Claimant 10 filed a timely response contesting the Preliminary Determinations.[fn5] After reviewing the arguments of Claimant 10, the CRS confirmed its original recommendations. For the reasons discussed below, the CRS’s recommendations are adopted with respect to Claimants 1, 2, 3, 4, 5, 6, 7 and 10.

I. The Background.

A. The Covered Action.

On [Redacted], the Commission instituted [Redacted], (the “Company”) [Redacted]. The Commission alleged that [Redacted]. Among other relief, the Commission order [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted the above-referenced Notice of Covered Action on the Commission’s website, inviting claimants to submit whistleblower award applications within 90 days.[fn6] Claimants 1, 2, 3, 4, 5, 6, 7 and 10 filed timely whistleblower claims.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn7] recommending that the Commission find that Claimants 1, 2, 3, 4, 5, 6, and 7 voluntarily provided original information to the Commission that led to the successful enforcement of the referenced Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder and that: (1) Claimant 1 receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action; (2) Claimants 2, 3, 4, and 5 receive a joint award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action; and (3) Claimants 6 and 7 receive a joint award of *** percent (*** %) of the monetary sanctions collected in the Covered Action. The CRS further preliminarily determined to recommend that the award claim of Claimant 10 be denied because Claimant 10 did not provided original information that “led to” the success of the Covered Action as required under Exchange Act Rule 21F-4(c). The CRS recommended that Claimant 10’s claims be denied because Claimant 10’s information neither caused the staff to open the investigation nor contributed to the success of the Covered Action. The CRS noted that staff responsible for the Covered Action did not receive or review information provided by Claimant 10 or have any communication with Claimant 10.

C. Claimant 10’s Response to the Preliminary Determinations.

Claimant 10 submitted a timely written response contesting the Preliminary Determinations.[fn8] Claimant 10 contends that he/she communicated directly with five Commission staff responsible for the Covered Action, that he/she submitted “hundreds of pages of documents” to the staff, and that his/her information led staff to inquire into different conduct as part of a current examination or investigation. Claimant 10 does not identify what different conduct he/she caused staff to inquire into. Based on these facts, Claimant 10 argues that his/her information contributed to the Covered Action and that he/she should receive an award.

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 1 qualifies for a whistleblower award. Applying the award criteria as specified in Rule 21F-6 of the Exchange Act, we find that an award of *** % is appropriate.[fn13] Claimant 1 provided Enforcement staff with detailed and highly significant information early in the investigation that advanced the staff’s investigation, saved considerable Commission time and resources, bore a close nexus to the charges brought by the Commission in the Covered Action, and resulted in millions of dollars being returned to harmed investors. Claimant 1 also provided ongoing assistance by, among other things, participating in voluntary interviews and providing supporting documents to the staff that served as a guide for the investigation, and identifying key witnesses that were critical to the investigation. Claimant 1 also made several attempts to internally report concerns to Company management and suffered hardships as a result.

B. Claimants 2, 3, 4, and 5.

The record demonstrates that Claimants 2, 3, 4 and 5 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimants 2, 3, 4 and 5 qualify for a whistleblower award. Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that a joint award of *** % is appropriate. Claimants 2, 3, 4, and 5 information provided Enforcement staff with detailed and highly significant information early in the investigation that advanced the staff’s investigation, saved considerable Commission time and resources, bore a close nexus to the charges brought by the Commission in the Covered Action, and resulted in millions of dollars being returned to harmed investors. Claimants 2, 3, 4, and 5 also provided ongoing assistance by, among other things, participating in voluntary interviews, providing supporting documents to the staff, and identifying key witnesses that were critical to the investigation. They made several attempts to internally report concerns to Company management and suffered hardships as a result.

C. Claimants 6 and 7.

The record demonstrates that Claimants 6 and 7 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimants 6 and 7 qualify for a whistleblower award. Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of *** % is appropriate. Claimants 6 and 7’s information was helpful to staff with respect to certain allegations in the Covered Action. Overall, Claimant 6 and 7’s contribution was significantly less than the contributions of Claimant 1 and Claimants 2, 3, 4, and 5. Claimants 6 and 7 provided information late in the investigation after significant progress had already been made by staff and much of their information was already known to the staff. Claimant 6 and 7’s assistance included participating in an interview and providing documents to the staff. Claimants 6 and 7 also made attempts to report concerns internally to management.

D. Claimant 10.

Claimant 10 does not qualify for an award. The record, which includes a supplemental declaration by Enforcement staff, which we credit, reflects that Enforcement staff opened the investigation based on a news report, not on any information provided by Claimant 10. Claimant 10 began providing information approximately two and a half years after the investigation opened. Additionally, none of the information submitted by Claimant 10 contributed to the success of the Covered Action. Enforcement staff responsible for the Covered Action did not receive or review information submitted by Claimant 10 or communicate with Claimant 10.

Contrary to Claimant 10’s assertions, the record demonstrates that Claimant 10 did not communicate with staff responsible for the Covered Action investigation. Instead, the record demonstrates that Claimant 10 provided information to staff in other regional offices and that none of the individuals at the Commission that Claimant 10 asserts he/she communicated with concerning his/her information were members of the team responsible for the Covered Action investigation. According to the staff responsible for the Covered Action, some issues identified by Claimant 10 were incorporated into certain examinations. However, the record demonstrates that none of Claimant 10’s information was forwarded to the staff handling the Covered Action. Therefore, information submitted by Claimant 10 had no impact on the staff’s investigation or the Covered Action.[fn14]

Claimant 10 did not provide original information that led to the successful enforcement action and his/her award claim should be denied.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 receive an award equal to *** % of the monetary sanctions collected in the Covered Action, that Claimants 2, 3, 4, and 5 receive a joint award equal to *** % of the monetary sanctions collected in the Covered Action, that Claimants 6 and 7 receive a joint award equal to *** % of the monetary sanctions collected in the Covered Action.

It is further ORDERED that Claimant 10’s whistleblower award application in the Covered Action be, and hereby is, denied.

By the Commission.

[1] The CRS preliminarily determined to treat Claimants 2, 3, 4, and 5 jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their tip. See Exchange Act Section 21F(a)(6) (defining “whistleblower” to mean “2 or more individuals acting jointly who provide[] information relating to a violation of the securities laws to the Commission”). Proceeding in this way has not impacted the net total award percentage to Claimants 2, 3, 4, and 5. Unless Claimants 2, 3, 4, and 5, 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 them, the Office of the Whistleblower is directed to pay each of them individually 25% of their joint award.

[2] The CRS preliminarily determined to treat Claimants 6 and 7 jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their tip. See Exchange Act Section 21F(a)(6). Proceeding in this way has not impacted the net total award percentage to Claimants 6 and 7. Unless Claimants 6 and 7, 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 them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

[3] The CRS also recommended the denial of the award application of three other claimants, who did not contest the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to those award claims became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[4] The CRS also preliminarily determined that the related action award claims by Claimants 1, 2, 3, 4, 5, 6, and 7 in connection with a state civil action brought by [Redacted] (“Other Agency”) be denied because the Other Agency action did not qualify as a related action under the Commission’s whistleblower rules. See Exchange Act Rules 21F-3(b)(1); 21F-11(a) 17 C.F.R. § 240.21F-11(a). Because Claimants 1, 2, 3, 4, 5, 6, and 7 did not contest this determination, the Preliminary Determinations with respect to their related action award claims became the Final Order of the Commission through operation of law pursuant to Exchange Act Rule 21F-11(f); 17 C.F.R. § 240.21F-11(f).

[5] We note that although Claimant 10 is identified as being Claimant 10 in the Preliminary Determinations, Claimant 10 refers to himself/herself as Claimant 9 in his/her response.

[6] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[7] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[8] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[9] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[10] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[11] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[12] See Order Determining Whistleblower Award Claims, Release No. 34-85412, March 26, 2019; Order Determining Whistleblower Award Claims, Release No. 34-82897, March 19, 2018; see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).

[13] In assessing the appropriate award amount, Exchange Act 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.

[14] Because Claimant 10 is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in a related action. See Order Determining Whistleblower Award Claims, Exchange Act Release No. 86902 (Sept. 9, 2019). Additionally, the settled civil action brought by the Other Agency is a state civil action, and as such, does not qualify as a related action under the Commission’s whistleblower rules. See Rules 21F-3(b)(1); 21F-11(a); 17 C.F.R. § 240.21F-3(b)(1); 17 C.F.R. § 240.21F-11(a).

SEC

11/30/2023

In response to the above-referenced Notices of Covered Action,[fn1] the U.S. Securities and Exchange Commission received one whistleblower award claim from [Claimant] (“Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claims. The basis for this determination is as follows:

Claimant failed to submit the claims for award within ninety (90) days of the above-referenced Notices of Covered Action, as required under Rule 21F-10(a) of the Exchange Act. Furthermore, Claimant has failed to demonstrate that the Commission should waive, in its discretion, the filing deadline based on “extraordinary circumstances,” as provided under Rule 21F-8(a) of the Exchange Act.[fn2]

By: Claims Review Staff.

[1] On the first page of the Form WB-APP, Claimant identifies NoCA 2012-104 as the covered action for which Claimant is applying. However, on the last page of the application, Claimant discusses a different action, In the Matter of Goldman Sachs & Co., File No. 3-14845 (Apr. 12, 2012), which was posted as NoCA 2012-53. Regardless of whether Claimant meant to apply for NoCA 2012-53 or 2012-104, the application is untimely.

[2] See Final Order, Whistleblower Award Proceeding, File No. 2014-4 (May 16, 2014); cf In the Matter of the Application of PennMont Securities et al., SEC Rel. No. 61967, Release No. 34-61967, 2010 WL 1638720 (April 23, 2010), aff’d PennMont Securities et al. v. SEC, 2011 WL 658560 (3d Cir. 2011).

SEC

11/30/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received one whistleblower award claim from [Redacted] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant based on the following.

Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

1. cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

98985

11/20/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”) and [Redacted] (“Claimant 4”) (collectively, “Joint Claimants”) receive a joint whistleblower award of *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”), which based on current collections would result in no payment.[fn1] Joint Claimants did not submit a response contesting the Preliminary Determination.

The recommendation of the CRS is adopted. The record demonstrates that Joint Claimants voluntarily provided original information to the Commission that caused the staff to open the investigation, and that the Commission’s charges in the successful enforcement action were based, in part, on Joint Claimants’ information.[fn2]

[Redacted].

Joint Claimants participated in multiple interviews with Commission staff and provided documents that provided evidence of false and misleading statements made to investors.

[Redacted].

Accordingly, it is hereby ORDERED that Joint Claimants shall receive a joint award of *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] We treat the four claimants as joint whistleblowers because they presented themselves as acting jointly when they provided their information to the Commission in their Form TCR. See Rule 21F-2(a)(1); 17 C.F.R. § 240.21F-2(a)(1). Proceeding in this way has not impacted the net total award percentage to the Joint Claimants. Unless they, within ten (10) calendar days of the issuance of this Order, make a joint request, in writing, for a different allocation of the award among the four of them, the Office of the Whistleblower is directed to pay each of them individually 25% of their joint award.

[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

SEC

98736

10/13/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of almost $1.9 million which is equal to *** percent (***%) of the amount collected in the above-referenced Covered Action (“Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information[fn1] led to the successful enforcement of the Covered Action.[fn2]

[Redacted].

In coming to this conclusion, the Commission considered that: Claimant used specialized access and expertise, Claimant expended efforts to identify the violations, Claimant’s tip alerted Enforcement staff to the alleged violations, and the conduct would have been difficult to detect in the absence of Claimant’s information.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent (*** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] The record reflects that the Claimant provided original information by using his/her specialized access and knowledge to evaluate the facts in a [Redacted] case against the Company and its executives to identify potential violations of the U.S. securities laws. As such, Claimant was able to provide an evaluation, assessment, or insight beyond what would be reasonably apparent to the Commission from the publicly available information. See Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34312 (June 13, 2011). “Independent analysis” is defined under the Whistleblower Rules as one’s own “examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.” Rule 21F-4(b)(3).

[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

SEC

98655

09/29/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claims submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 4”) in connection with the above-referenced covered actions (the “Covered Actions”). Claimant 1 and Claimant 4 each filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant 1 and Claimant 4’s award claims are denied.[fn1]

I. Background.

A. The Covered Actions.

On [Redacted], the Commission filed a complaint against [Redacted] (“Company”), [Redacted] (collectively, the “Defendants”) in connection with [Redacted]. According to the Complaint, [Redacted]. [Redacted], the Commission filed a complaint against [Redacted]. The complaint alleged that [Redacted].

The Court subsequently entered final judgments against all of the Defendants, ordering [Redacted] to pay disgorgement and civil penalties totaling over [Redacted].

On [Redacted] and [Redacted] OWB posted Notice for the Covered Action [Redacted] in connection with the [Redacted] on the Commission’s public website regarding inviting claimants to submit whistleblower award applications within 90 days. Claimant 1 and Claimant 4 filed timely whistleblower award claims in connection with the Covered Actions.

B. The Preliminary Determination.

On [Redacted], the CRS issued a preliminary determination recommending that Claimant 1’s and Claimant 4’s claims be preliminarily denied.[fn2] The CRS determined that Claimant 1 and Claimant 4 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The preliminary determination noted that neither Claimant 1 nor Claimant 4 provided information that caused the Covered Actions investigation to open. Investigative staff responsible for the Covered Actions opened the investigation prior to receiving information from Claimant 1 and Claimant 4. Nor did Claimant 1 nor Claimant 4 significantly contribute to either of the Covered Actions. While responsible investigative staff received information from Claimant 1, none of the information was used in, or had any impact on, the charges brought by the Commission in the Covered Actions. Investigative staff responsible for the Covered Actions never received any information from, or had any communications with, Claimant 4.

Claimant 1 and Claimant 4 each submitted a timely written response contesting the preliminary determination.[fn3]

C. Responses to the Preliminary Determination.

i. Claimant 1’s Response to the Preliminary Determination.

In Claimant 1’s response to the preliminary determination (“Claimant 1 Response”), Claimant 1 argues that he/she is entitled to an award because: (1) he/she significantly contributed to the Covered Actions because his/her information allowed the SEC to bring the Covered Actions in significantly less time and with significantly fewer resources; (2) prior SEC Orders confirm that he/she “significantly contributed” to the success of the Covered Actions and, in connection with this argument, argues that his/her willingness to provide an affidavit was a significant contribution; (3) there is a close nexus between his/her information and certain charges in the SEC’s successful Covered Actions, and he/she provided “new” information after submitting his/her tip; and (4) the goals of the whistleblower program militate in favor of granting him/her an award.

ii. Claimant 4’s Response to the Preliminary Determination.

In Claimant 4’s response to the preliminary determination (“Claimant 4 Response”), Claimant 4 principally focuses on a TCR that he/she believes could have contributed to the Covered Actions. Claimant 4 wrote, he/she is “contesting on the basis that the review staff at the Office of the Whistleblower was negligent by failing to forward my information to the investigative staff. By not sending valuable information to the appropriate staff, the SEC failed in its mission to ensure the integrity of the whistleblower program.” Liberally construed, the Claimant 4 Response appears to argue that since his/her TCR would have contributed to the success of the Covered Actions had the staff forwarded it to the relevant investigation, he/she deserves at least a 10 percent award.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn4] Among other things, to be considered original information the submission must be provided to the Commission for the first time after July 21, 2010.[fn5] Additionally, and as relevant here, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn6] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn7]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn8] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn9]

A. Claimant 1.

Claimant 1’s information does not merit a whistleblower award for the Covered Actions. As an initial matter, Claimant 1’s information did not cause the staff to open the investigation that led to the Covered Actions (the “Investigation”). As noted in the initial declaration from one of the primary Enforcement staff attorneys assigned to the Investigation (“Initial Declaration”), which we credit, Investigative staff opened the Investigation over two months before Claimant 1 submitted his/her tip.

The record also does not show that Claimant 1’s information caused the staff to inquire into different conduct or significantly contributed to the ongoing Investigation. At the outset, we note that Initial Declaration indicated that Claimant 1’s information was not useful to the *** [Redacted] or the [Redacted] The arguments Claimant 1 puts forth in his/her response to the preliminary determination are not persuasive.

First, Claimant 1 argues that he/she significantly contributed to the Covered Actions because his/her information allowed the SEC to bring the Covered Actions in significantly less time and with significantly fewer resources. To support this argument, Claimant 1 included a “detailed timeline” to imply that his/her information allowed the Commission to “bring an enforcement action in significantly less time.” In this vein, Claimant 1 writes, ” [w]ithin 22 days of receiving [Claimant 1’s] tip, the SEC converted the [Company] MUI to an investigation, during which [Claimant 1] and *** counsel had nearly daily interactions with the SEC, and then brought an action against [the Company] 12 days thereafter.” ( bold in original). Claimant 1 believes his/her information caused the Commission to “act more quickly” with respect to the Covered Actions. Claimant 1’s argument relies heavily on the timing of events to circumstantially demonstrate that he/she saved Commission time and resources.

We find that there is insufficient evidence in the record to show that Claimant 1’s information saved the Commission time and resources by allowing the Commission to “act more quickly.” As stated in the Initial Declaration, even though the staff did speak with Claimant 1, the staff did not find his/her information to be useful in the Covered Actions. In a supplemental declaration from Enforcement staff (“Supplemental Declaration”), staff noted that Claimant 1’s information did not help expedite the investigation that led to the Covered Actions. Moreover, Enforcement staff noted that it had already obtained a significant amount of information from other sources by the time Claimant 1 came forward in [Redacted].

Second, Claimant 1 argues that prior Commission Orders confirm that he/she “significantly contributed” to the success of the Covered Actions. In making this argument, Claimant 1 cites a Commission Order and suggests that this Order confirms that Claimant 1 “significantly contributed” to the Covered Actions at hand.[fn10] Claimant 1 notes that, “[in this] Order, the whistleblower received an award merely for providing the name of a potential witness.” Claimant 1 suggests that he/she provided significantly more information and assistance to the Commission in the Covered Actions in comparison to other whistleblowers who received awards for significantly contributing to successful enforcement actions.

The matter at hand is distinguishable from the Order cited by Claimant 1. Unlike the claimant in the cited Order, the record here does not indicate that Claimant 1’s information resulted in, for example, the “identification of an important witness, who in turn provided helpful supporting evidence, which significantly contributed….”[fn11] On the contrary, Enforcement staff reported that Claimant 1’s information did not assist Enforcement staff in bringing the Covered Actions at hand. Indeed, the Initial Declaration stated that “[n]one of [Claimant 1’s] information was used in, or had any impact on, the settlement negotiations or resulting charges brought by the Commission in the Covered Actions.” In connection with this argument, Claimant 1 also information and assistance ” confirmed [Redacted].” (emphasis added). But contends that he/she still significantly contributed to the Covered Actions because his/her confirming information obtained from other sources does not automatically make a whistleblower eligible under Rule 21F-4(c)(2).[fn12] In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action. Here, we find that both the Initial Declaration and Supplemental Declaration sufficiently demonstrate that Claimant 1’s information did not help advance the Covered Actions in a manner that was substantial and important.

In making the above argument, Claimant 1 also presents that his/her willingness to provide an affidavit to be used in the Commission’s litigation constituted significant contribution under Rule 21F-4(c)(2). As discussed in the Initial Declaration, while other staff members followed up with Claimant 1 and his/her counsel and interviewed Claimant 1 for the purpose of obtaining an affidavit in support of [Redacted], this affidavit was never used in connection with either of the Covered Actions. Although it is true that Claimant 1 was willing to provide an affidavit, the standard for award eligibility is not what the staff would have or could have done hypothetically, but, rather, what impact the whistleblower’s information actually had on the investigation.[fn13] Here, the affidavit was never used in connection with the Covered Actions and, as explained in the foregoing paragraphs, Claimant 1’s information did not otherwise qualify as significant contribution under Rule 21F-4(c)(2).

Third, Claimant 1 argues that there is a close nexus between his/her information and certain charges in the Covered Actions. In the Claimant 1 Response, Claimant 1 wrote in his/her response that he/she provided “new” information such as “specific and detailed information about [Redacted] [the Company], including how [Redacted].” Claimant 1 also responded to note that there is a “close nexus” between his/her information and certain charges in the SEC’s successful Covered Actions. Claimant 1 contends that, “[w]hile [his/her] TCR focused on [the Company’s] [Redacted], [his/her] subsequent communications with the SEC provided significant information related to [Redacted].” Claimant 1 also contends that his/her inside information about the Company must have been new information “as the SEC did not [Redacted] ***.”

The Initial Declaration noted that Enforcement staff did not receive any new information from Claimant 1–including in his/her TCR, through his/her counsel, or in staff interviews of Claimant 1–on which the staff relied or that resulted in the Covered Actions. Indeed, the Initial Declaration clearly indicated that both Covered Actions were “based on information the staff obtained from other sources.” In the Claimant 1 Response, Claimant 1 states, among other items, that he/she provided “new” information in subsequent communications related to the “[Redacted]”, that the Company “[Redacted]”, and that the “[Redacted].” But, even if Claimant 1 provided such information, the Supplemental Declaration from Enforcement staff indicates that this information, too, was already obtained from other sources.

Lastly, Claimant 1 references the goals of the whistleblower program and summarizes many of the arguments discussed above. We acknowledge and appreciate the sacrifices that many whistleblowers make and the hardships they may endure, including [Redacted]. Based on the record in this matter, however, we find that Claimant 1 did not meet the eligibility requirements for an award.

For these reasons, Claimant 1 is not eligible for a whistleblower award in the Covered Actions.

B. Claimant 4.

Claimant 4 does not qualify for a whistleblower award in this matter because his/her information did not cause the staff to open the investigation or examination that led to the Covered Actions, nor did Claimant 4’s information cause the staff to inquire into different conduct in or significantly contribute to the success of the Covered Actions. As referenced above, the Claimant 4 Response principally focuses on what he/she describes as Commission staff’s “failing to forward [his/her] information to the investigative staff.” Claimant 4 adds, “[i]f it hadn’t been for the review team’s negligence, my information would have surely contributed to the successful enforcement action.”

First, none of Claimant 4’s information was used or considered by Enforcement staff in connection with the opening of the Investigation. Here, the Initial Declaration reflects that the Investigation was opened on or about [Redacted], approximately four months before Claimant 4 submitted his/her TCR on or about [Redacted]. Accordingly, Claimant 4’s information did not cause the staff to open the Investigation.

Second, the record shows that Claimant 4’s tip to the Commission did not cause the Investigative staff to inquire into different conduct or significantly contribute to the success of the Covered Action. The Claimant 4 Response takes issue with the Commission failing to forward his/her information to the investigative staff and he/she believes his/her information “would have surely” contributed to the Covered Actions. As previously stated, the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s information actually had on the investigation.[fn14] Despite Claimant 4’s assertions that his/her tip would have contributed if received, it does not change the fact that Claimant 4’s tip in actuality was not received or used by the Commission staff assigned to the Investigation. Under those circumstances, Claimant 4’s information cannot be said to have contributed to the success of the Covered Actions.

Finally, the Claimant 4 Response appears to argue that since his/her TCR would have contributed to the success of the Covered Actions had the staff forwarded it to the relevant investigation, he/she deserves at least a 10 percent award. Here, we reiterate our response in the foregoing paragraph: award eligibility is not based upon hypothetical circumstances.

For these reasons, Claimant 4 is not eligible for a whistleblower award in this matter.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimant 1 and Claimant 4 in connection with the Covered Actions be, and they hereby are, denied.

By the Commission.

[2] The preliminary determination noted that to the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[5] See Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[6] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[7] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[8] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.

[9] Exchange Act Rel. No. 85412 at 8-9.

[10] See Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90864 (Jan. 7, 2021).

[11] Id. at 4.

[12] See supra fn. 9.

[13] See Order Determining Whistleblower Award Claim, Release No. 34-88667 (April 16, 2020) (“We must look to whether the Claimant’s information actually contributed to the success of the Covered Action, not whether ‘it should have or could have,’ as Claimant urges us to do.”) (citing Order Determining Whistleblower Award Claim, Release No. 34-85412 (Mar. 26, 2019)).

[14] See id.

SEC

98340

09/11/2023

The Office of the Whistleblower issued a Proposed Final Summary Disposition (“PFSD”) recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 2”) in connection with the above-referenced covered action (the “Covered Action”). Claimant 2 filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant 2’s award claim is denied.[fn1]

I. Background.

A. The Covered Action.

[Redacted], the Commission filed settled charges against [Redacted] ***. (“Respondent”) for [Redacted].

As described in the Commission’s order, [Redacted].

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant 2 filed a timely whistleblower award claim.

B. The Preliminary Summary Disposition.

OWB preliminarily determined that Claimant 2 was not eligible for an award because the information he/she provided did not lead to the success of an enforcement action. Specifically, OWB noted that Division of Enforcement staff (“Enforcement staff”) responsible for the Covered Action never received or reviewed Claimant 2’s tips. Additionally, Enforcement staff responsible for the Covered Action did not have any communications with Claimant 2 before or during the investigation. In Claimant 2’s whistleblower award application, Claimant 2 stated that he/she provided information to, and had communications with, two Enforcement staff (“Other Enforcement Staff”). As set out in the staff declaration in support of the recommended denial, while the Other Enforcement Staff spoke with Claimant 2, they spoke to him/her in connection with potentially new and separate investigations. Further, Enforcement Staff involved in the Covered Action did not receive Claimant 2’s information through the Other Enforcement Staff.

C. Claimant 2’s Response to the Preliminary Summary Disposition.

Claimant 2 submitted a timely written response contesting the Preliminary Summary Disposition.[fn2]

In his/her request for reconsideration, Claimant 2 makes three primary arguments. First, he/she asks that the Commission consider how his/her information may have shaped the Commission’s investigations and enforcement actions “writ large.” He/She claims that in his/her TCRs and communications with the Other Enforcement Staff, Claimant 2 explained [Redacted]. Second, contrary to the Enforcement staff’s declaration, Claimant 2 asserts that he/she did provide information specific to the Respondent’s product at issue in the Covered Action in his/her TCRs and in his/her communications with the Other Enforcement Staff. Third, Claimant 2 identifies *** “Associated Actions”[fn3] that he/she believes he/she contributed to and asks that the Commission aggregate the Associated Actions for purposes of making him/her an award.

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8]

As an initial matter, the record shows that Claimant 2’s information did not cause Enforcement staff to open the investigation. Enforcement staff confirms, in a sworn declaration, which we credit, that the Matter Under Inquiry that resulted in the Covered Action was opened in [Redacted] based on an initiative of Enforcement staff and not due to any information provided by Claimant 2, whose first tip to the Commission was submitted more than a year later in [Redacted]. Enforcement staff had identified the Respondent through its own analysis *** [Redacted]. By the time Claimant 2 submitted his/her tip, the Covered Action investigation was already substantially advanced. As such, Claimant 2’s assertion that his/her information somehow played a role in shaping the Covered Action investigation is not supported by the record.

The record also reflects that Claimant 2’s information did not cause Enforcement staff to inquire into different conduct or significantly contribute to the ongoing investigation. Enforcement staff responsible for the Covered Action investigation affirmed in a declaration that they did not receive or review Claimant 2’s information and that the Other Enforcement Staff with whom Claimant 2 communicated did not relay Claimant 2’s information to them. Even if Claimant 2 provided information relating to the Respondent in his/her TCRs or in his/her communications with the Other Enforcement Staff the record reflects that such information was not passed on or used in any way in connection with this Covered Action.

Finally, we disagree with Claimant 2’s contention that the Commission should treat the Associated Actions as a single Commission action for purposes of making an award to Claimant 2 and consider his/her contributions to the Associated Actions. Under Rule 21F-4(d)(1), while an “action” generally means a single captioned judicial or administrative proceeding brought by the Commission, the Commission may treat two or more administrative or judicial proceedings as a Commission action for purposes of an award if the proceedings arise out of the same nucleus of operative facts.[fn9] While the Associated Actions involved similar misconduct related to the Covered Action, the time periods of the misconduct in each case were different and they each involve different actors. As a result, the Associated Actions do not arise from the same nucleus of operative facts and should not be aggregated together or with the Covered Action for purposes of making an award determination under Rule 21F-4(d)(1).

For these reasons, Claimant 2’s information did not lead to the successful enforcement of the Covered Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant 2 in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[1] OWB also preliminarily denied the award claim of Claimant 1. The claimant did not seek reconsideration of the Preliminary Summary Disposition, and therefore the denial of his/her claim was deemed to be the Final Order of the Commission under Exchange Act Rule 21F-18(b)(4).

[2] See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3).

[3] In his/her request for reconsideration, Claimant 2 lists the following actions as “Associated Actions”: [Redacted] None of those actions exceeded the required $ 1,000,000 threshold to post as a Notice of Covered Action (“NoCA”) pursuant to Rule 21F-10.

[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[6] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).

[8] Exchange Act Rel. No. 85412 at 8-9.

[9] 17 C.F.R. § 240.21F-4(d)(1). Exchange Act Rule 21F-4(d)(1) provides that “the Commission will treat as a Commission action two or more administrative or judicial proceedings brought by the Commission if these proceedings arise out of the same nucleus of operative facts.” In deciding whether two or more proceedings arise from the same nucleus of operative facts, the Commission considers a number of factors, including whether the separate proceedings involve the same or similar: (1) parties; (2) factual allegations; (3) alleged violations of the Federal securities laws; or (4) transactions or occurrences. Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34327 (June 13, 2011).

SEC

98236

08/29/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of $600,000 which represents [Redacted] percent ( *** %) of the monetary sanctions collected in [Redacted] (“Covered Action”).[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn2]

[Redacted].

In reaching this determination, we considered that the Claimant provided substantial, ongoing assistance that included providing key evidence to support the Covered Action; and there was a substantial law enforcement interest in the information provided by Claimant given that it related to a type of violation that is often difficult to identify and assess.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] For purposes of making an award, we have determined to treat these [Redacted] as a single Commission action because they arose out of the same nucleus of operative facts. See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).

[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

SEC

98235

08/29/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $1.5 million, which represents [Redacted] percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant initially reported his/her concerns internally before providing information to Commission staff that led to the opening of the investigation and to the successful enforcement action. Claimant provided helpful information that saved Commission staff time and resources, including providing ongoing assistance over the course of the investigation, identifying potential witnesses, and assisting with staff with document requests.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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). Although Claimant held a compliance role, Claimant is eligible for an award because Claimant satisfies the 120-day exception under Exchange Act Rule 21F-4(b).

SEC

98219

08/25/2023

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted an administrative proceeding against [Redacted] (the “Company”) and [Redacted], the Company’s [Redacted]. The Order found that from [Redacted]. The Order imposed monetary sanctions totaling more than [Redacted]. Also on [Redacted], the Commission filed a separate action, [Redacted] (the “Additional Action”), against [Redacted], the Company’s [Redacted], for [Redacted]. On [Redacted], a final judgment was entered [Redacted] ordering a [Redacted] civil penalty. We find that the Additional Action arose out of the same nucleus of operative facts as the Covered Action and should be treated as part of the Covered Action for purposes of making a whistleblower award under Exchange Act Rule 21F-4(d)(1).[fn1]

On [Redacted], the Office of the Whistleblower posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted].[fn2] Claimants 1 and 2 filed whistleblower award [Redacted] applications.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn3] recommending that Claimant 1 receive a whistleblower award in the amount of *** percent (*** %) of the monetary sanctions collected and that Claimant 2’s award application be denied. The Preliminary Determination found that Claimant 2’s information did not lead to the success of the Covered Action because Claimant 2 submitted information after the Covered Action was filed and settled and none of the investigative staff recall receiving or reviewing any information from Claimant 2 nor communicating with Claimant 2. In addition, the Preliminary Determination found that Claimant 2 failed to submit his/her claim for award to the Office of the Whistleblower within ninety days of the date of the Notice of Covered Action, as required under Rule 21F-10 of the Exchange Act.[fn4]

C. Claimant 2’s Response to the Preliminary Determination.

Claimant 2 submitted a written response contesting the Preliminary Determination.[fn5] In Exchange Act Rules 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred”) and 21F-10(b)(1) (“All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award”). 17 C.F.R. §§ 240.21F-10(a) and 240.21F-10(b)(1). As further discussed below, because Claimant 2’s information did not lead to the successful enforcement of the Covered Action, the Commission finds it unnecessary to address whether or not Claimant 2 submitted a timely award application.

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn6] Accordingly, Claimant 1 is eligible for a whistleblower award.

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn7] In reaching this determination, we positively assessed the following facts: (i) Claimant 1 submitted a Form TCR that prompted Enforcement staff to open the Covered Action investigation; (ii) Claimant 1 provided additional helpful information and substantial, continuing assistance that saved Commission time and resources during the Covered Action investigation; (iii) Claimant 1’s information was closely related to the charges brought by the Commission; and (iv) Claimant 1 internally reported.

B. Claimant 2.

Claimant 2’s arguments that he/she is the source of the original information that led to the opening of the Covered Action investigation, led to the Commission issuing a subpoena to the Company, and led to the charges in the Covered Action are not supported by the record. The record, which includes declarations from the Enforcement staff responsible for the Covered Action, which we credit, shows that Claimant 1’s TCR prompted Enforcement staff to open the Covered Action investigation. In addition, it was Claimant 1’s information, not Claimant 2’s information, that put Enforcement staff on the correct path, and staff used Claimant 1’s information to, among other things, establish wrongdoing and craft subpoena document production requests. As Claimant 2 admits in the reconsideration request, Claimant 2 never communicated with Enforcement staff, and the Enforcement staff declarations confirm that investigative staff did not receive or review information from Claimant 2. As such, Claimant 2’s information did not cause the staff to open the Covered Action investigation or to inquire into different conduct once it was open, and did not significantly contribute to the success of the Covered Action.[fn9]

Liberally construed, Claimant 2’s reconsideration request appears to assert eligibility based on internal reporting under Rule 21F-4(c)(3). However, there is insufficient evidence to conclude that the Company forwarded Claimant 2’s information to the Commission. Enforcement staff explained in a supplemental declaration, which we credit, that although counsel for the Company did make presentations to the staff, the Company refused to provide the report resulting from its internal investigation and refused to provide any witness summaries or notes compiled during the internal investigation. The supplemental declaration also indicates that the staff does not recall the Company referencing Claimant 2’s information in its presentations. Moreover, Claimant 2 does not satisfy Rule 21F-4(c)(3), as Claimant 2 did not submit information to the Commission within 120 days of reporting it to the Company.[fn10] Claimant 2 submitted information to the Commission after the Covered Action was filed and settled, after the Notice of Covered Action was posted, and years after the Company initiated an internal investigation. Specifically, the Covered Action was filed on [Redacted], but Claimant never contacted the Commission until [Redacted], when he/she submitted a TCR. Even if Claimant 2 provided helpful information internally, and the Company relayed that information to the Commission, Claimant 2 did not provide that information to the Commission until well beyond 120 days, under any plausible calculation. We therefore conclude that Claimant 2’s information did not lead to the successful enforcement of the Covered Action.

Claimant 2’s arguments about the Company impeding him/her from submitting a TCR earlier and intending to obstruct the investigation, whether or not true, do not overcome Claimant 2’s eligibility hurdles. While Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive any of these procedures upon a showing of extraordinary circumstances,”[fn11] submitting information to the Commission that leads to the successful enforcement of the Covered Action is not a procedural requirement, but an important cornerstone of the Commission’s whistleblower award program, which Claimant 2 does not meet.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 shall receive an award of *** percent (*** %) of the monetary sanctions collected in the Covered Action and that Claimant 2’s award application be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] Exchange Act Rules 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred”) and 21F-10(b)(1) (“All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award”). 17 C.F.R. §§ 240.21F-10(a) and 240.21F-10(b)(1). As further discussed below, because Claimant 2’s information did not lead to the successful enforcement of the Covered Action, the Commission finds it unnecessary to address whether or not Claimant 2 submitted a timely award application.

[5] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[6] See Exchange Act Section 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).

[7] In assessing the appropriate award amount, Exchange Act 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.

[8] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[9] See Exchange Act Rules 21F-4(c)(1) and 21F-4(c)(2), 17 C.F.R. §§ 240.21F-4(c)(1) and 240.21F-4(c)(2).

[10] Exchange Act Rule 21F-4(c)(3), 17 C.F.R. § 240.21F-4(c)(3).

[11] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

SEC

98220

08/25/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 1”) in connection with the above-referenced covered action (the “Covered Action”). Claimant 1 filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant 1’s award claim is denied.[fn1]

I. Background.

A. The Covered Action.

[Redacted].

According to the Commission’s Order, from [Redacted].

The Commission’s Order finds that [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant 1 filed a timely whistleblower award claim.

B. The Preliminary Determination.

C. Claimant 1’s Response to the Preliminary Determination.

Claimant 1 submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2]

In his/her request for reconsideration, Claimant 1 makes the following principal arguments: (1) that his/her claim for award is based on two particular TCRs — [Redacted] and [Redacted] both dated [Redacted] (“[Redacted] TCRs”) — and claims that these “[Redacted]” and that Enforcement staff responsible for the Covered Action “must have received these TCRs and used them in its investigations;” (2) that the news article that prompted the opening of the investigation did not contain original information; (3) that Enforcement staff used the information in four other TCRs [Redacted] to subpoena documents from [Redacted]; (4) that the Enforcement staff must have received and used two other tips [Redacted] in connection with subpoenaing another entity [Redacted]; and (5) that the staff identified by Claimant 1 in his/her award application [Redacted] with whom he/she communicated must have forwarded his/her information on to Enforcement staff responsible for the Covered Action.

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7]

As an initial matter, the record shows that Claimant 1’s information did not cause Enforcement staff to open the investigation. Enforcement staff confirms, in a sworn declaration, which we credit, that the investigation was opened in [Redacted] based on a newspaper article, prior to any information provided by Claimant 1.[fn8]

The record also reflects that Claimant 1’s information did not cause Enforcement staff responsible for the Covered Action to inquire into different conduct or significantly contribute to the ongoing investigation. As to the [Redacted] TCRs identified in Claimant 1’s Response, Enforcement staff’s declaration confirms that they did not receive or review those tips. Nor did Enforcement staff receive or review Claimant 1’s other tips, other than [Redacted], submitted on [Redacted], and [Redacted], submitted on [Redacted]. Enforcement staff responsible for the Covered Action confirmed that they did not use these tips in connection with their investigation and submitted a supplemental declaration affirming that they did not use the information in any of Claimant 1’s tips in subpoenaing documents or information in connection with the Covered Action investigation. Finally, Enforcement staff responsible for the Covered Action confirmed that they did not communicate with the Commission staff identified by Claimant 1 in his/her Response concerning the conduct charged in the Covered Action. And contrary to Claimant 1’s assertions, Enforcement staff responsible for the Covered Action did not receive Claimant 1’s submissions from the other Commission staff with whom Claimant 1 communicated.

For these reasons, Claimant 1’s information did not lead to the successful enforcement of the Covered Action.

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant 1 in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[5] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[6] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).

[7] Exchange Act Rel. No. 85412 at 8-9.

[8] Claimant 1’s argument that the newspaper article did not contain original information is irrelevant as to whether Claimant 1’s information led to the success of the Covered Action.

SEC

98199

08/22/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the joint whistleblower award claim submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively, “Claimants”) in connection with the above-referenced covered action (“Covered Action”). Claimants filed a timely response contesting the preliminary denial.[fn1] For the reasons discussed below, Claimants’ joint award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted public administrative and cease-and-desist proceedings against [Redacted] (“Respondent 1”) and [Redacted] (“Respondent 2”) (collectively, “Respondents”), finding that Respondents engaged in [Redacted] and caused violations of [Redacted] (“Company”). Respondent 1 agreed to pay [Redacted] among other relief, to settle the charges. Respondent 2 [Redacted] agreed to settle the charges and pay [Redacted] in civil money penalties, among other relief. Respondent 1 [Redacted].

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimants filed a timely joint whistleblower award claim.[fn3]

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination[fn4] recommending that Claimants’ joint claim be denied. The Preliminary Determination recommended a denial because Claimants did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. In particular, based on a record that included the declaration (“Declaration”) of one of the Division of Enforcement (“Enforcement”) attorneys assigned to the investigation that led to the Covered Action (“Investigation”),[fn5] the CRS preliminarily determined that prior to Claimants’ submission of information, the Commission’s staff (“Staff”) had already opened the Investigation. The CRS also preliminarily concluded that Claimants’ information did not significantly contribute to the Investigation because substantially all of Claimants’ information was already known to Staff. According to the Declaration, the information from Claimants that was previously unknown to Staff was not used in, and did not contribute to, the Investigation or the charges brought in the Covered Action.

C. Claimants’ Response to the Preliminary Determination.

In response to the Preliminary Determination, Claimants assert that when they submitted information to the Commission, [Redacted]. Claimants state that in [Redacted]. Claimants state that [Redacted] thereby providing a “road map” to the Commission to investigate [Redacted].

Claimants allege that [Redacted] precipitated a number of important events and developments that ultimately prompted the Commission to bring the Covered Action [Redacted]. For instance, Claimants assert that [Redacted] and the Commission to issue the Company a subpoena in [Redacted] seeking information about the Company’s [Redacted]. Claimants also state that [Redacted] prompted the Commission’s Division of Corporation Finance to issue letters to the Company. [Redacted] prompted witnesses and sources to cooperate with the Investigation and also increased the pressure on [Redacted] to resolve the Covered Action [Redacted] without greater public exposure.

Claimants also argue that the Declaration is deficient in a number of ways and omits key details. Claimants allege that the Investigation—which was opened in [Redacted]—was merely informal, had a lower profile, and did not truly turn into a formal investigation until after [Redacted]. Claimants argue that they should not be precluded from an award just because the opening of the Investigation transpired before Claimants submitted their information to the Commission. Claimants also allege that the Declaration improperly dismissed and diminished the value of their information. Claimants assert that a number of sources—including the Covered Action, in paragraphs [Redacted] —have recognized the materiality of [Redacted] articles to the Company, Respondent 1, and those entities’ conduct.[fn7]

Additionally, Claimants allege that the Declaration inappropriately dismissed information from [Redacted] an individual who [Redacted] *** later testified in connection with the Commission’s Investigation in [Redacted]. Claimants cast doubt on the Declaration’s assertions that [Redacted] information was not useful in the Investigation and that the Commission did not rely on [Redacted] information in its charging decisions; specifically, Claimants contend that Staff would not have gone through the “superfluous” step of interviewing *** if *** information was not significant. Claimants also argue that the Declaration erroneously downplays Staff’s direct contact with Claimants. In particular, Claimants allege that while the Declaration refers to meetings that transpired between Staff and Claimants’ counsel, the Declaration ignores Claimant 1’s role in being an active and contributing participant in those meetings. Claimants complain that the Declaration fails to explain the import of the information Claimant 1 provided to Staff during those meetings, as Claimant 1 provided Staff with names of sources as well as a “road map” of securities violations that transpired.

Overall, Claimants argue that through [Redacted]. Claimants allege that their information qualifies as “independent analysis” because the information provided the Commission with a “road map” to bring the Covered Action [Redacted]. Claimants believe that they should receive a joint award for the Covered Action because their information significantly contributed to the Investigation and the Covered Action. Claimants also argue that [Redacted].

II. Analysis.

We deny an award to Claimants in connection with the Covered Action. To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn8] As relevant here, under Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn9] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn10]

In determining whether a claimant’s information “significantly contributed” to the success of a covered action, the Commission considers whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn11] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.

Claimants do not qualify for an award in the Covered Action under either Rule 21F-4(c)(1) or (2). We credit the Declaration and a supplemental declaration of the same Enforcement attorney who provided the Declaration (“Supplemental Declaration”), both provided under penalty of perjury, which confirm that Staff opened the Investigation in [Redacted] based on Staff’s review of Company financial statements and other publicly available information concerning the Company. From its inception, the Investigation primarily involved the potential [Redacted].

According to the Declaration, the tip that Claimants submitted to the Commission was dated [Redacted] (“Tip”) and was referred to Staff on [Redacted] approximately eight and a half months after the Investigation was opened. The information included in the Tip related to [Redacted]. The Declaration and Supplemental Declaration note that—as reflected in Claimants’ joint whistleblower award application—virtually all of the information in [Redacted] the Tip consisted of publicly available information that Staff had already reviewed by the time of [Redacted]. The one exception to this concerned [Redacted]. While Staff reached out to *** in [Redacted] and took *** testimony in [Redacted] Staff did not learn any information from *** that was useful in the Investigation, and the Commission did not rely on information from *** in its charging decisions. [Redacted] information was duplicative of information Staff already knew and had developed during the Investigation. And, contrary to Claimants’ assertion that because the Staff decided to interview [Redacted] information must have been significant, Commission staff conduct interviews and take testimony to learn what, if any, useful information a witness can *** provide. In this case, the Declaration and the Supplemental Declaration confirm that *** did not provide any significant or useful information when *** testified in connection with the Investigation.

Overall, none of [Redacted] information—including [Redacted] —was used in, nor contributed to, the Investigation or the charges brought in the Covered Action *** [Redacted].

Claimants’ specific arguments about why they significantly contributed to the Investigation and the Covered Action—that [Redacted] that ultimately prompted the Commission to issue the Company a subpoena and then bring the Covered Action [Redacted] that Claimants’ [Redacted] allegedly caused the Commission’s Division of Corporation Finance to issue letters to the Company; and that certain sources, including the Covered Action, have recognized the materiality of Claimants’ [Redacted] to the Company, Respondent 1, and those entities’ conduct—are misplaced. Such arguments are inapposite to the determination of whether the information that Claimants directly submitted to the Commission either: (1) caused Staff to open the Investigation or inquire concerning different conduct; or (2) significantly contributed to the success of the Covered Action, as required in relevant part by Rules 21F-4(c)(1) and (2). The Declaration and Supplemental Declaration both confirm that Claimants did not provide the Commission with any such information.

Claimants argue that the information they provided to the Commission significantly contributed to the Covered Action because such information purportedly appears in paragraphs [Redacted] of the Covered Action. However, those paragraphs do not support Claimants’ contention that they significantly contributed to the Covered Action. Paragraphs [Redacted] of the Covered Action do not describe how Staff became aware of certain facts or potential securities violations. According to the Supplemental Declaration, the purpose of those paragraphs was to show that even though Respondent 1 [Redacted]. Staff obtained facts relating to those failures [Redacted] by Respondent 1—after reviewing voluminous records, taking the testimony of dozens of witnesses, and [Redacted] Claimants did not provide any such information to Staff; rather, Staff developed this information during the course of its Investigation.

Claimants also allege that [Redacted] resulting from Claimants’ [Redacted] put pressure *** [Redacted] to resolve the enforcement actions [Redacted]. Claimants also allege that [Redacted] prompted witnesses and sources to cooperate with the Investigation. However, according to the Supplemental Declaration, Staff did not use Claimants’ information during the course of settlement negotiations with Respondent 1 or the Company in connection with the Covered Action [Redacted]. There is no evidence that [Redacted] caused [Redacted] settle or prompted witnesses and sources to cooperate with the Investigation.

Claimants further allege that the Commission sent a subpoena to the Company for the first time in [Redacted] which was only after the [Redacted]. However, according to the Supplemental Declaration, the [Redacted] subpoena that the Commission sent to the Company was not precipitated by the [Redacted]. The subpoena that the Commission sent to the Company, dated [Redacted] was precipitated by a Form 8-K filed by the Company on [Redacted] in the Form 8-K, the Company [Redacted]. Claimants also allege that in [Redacted] only four days after Claimants [Redacted] the Commission’s Division of Corporation Finance sent a letter related to the Company [Redacted]. However, according to the Supplemental Declaration, the Division of Corporation Finance letter had nothing to do with, and did not have any impact on, the Investigation, which was conducted by Staff from Enforcement.

Claimants’ other arguments are of no import. Claimants’ speculation that the Investigation—which was opened in [Redacted] well before Claimants [Redacted] submitted their Tip in [Redacted]—was merely informal until after the *** [Redacted] has no basis in the factual record. Claimants argue that they should not be precluded from an award just because the opening of the Investigation transpired before Claimants submitted their information to the Commission. However, nowhere in the Preliminary Determination did the CRS suggest this reasoning as the sole ground for denial. In fact, the Preliminary Determination described Claimants’ failure to satisfy both Rule 21F-4(c)(1) and Rule 21F-4(c)(2).

Claimants’ contentions that the information they provided to Staff in [Redacted] and [Redacted]—after the Tip was submitted to the Commission in [Redacted]—substantially contributed to the Investigation are without merit. According to the Declaration and the Supplemental Declaration, although Staff had conversations with Claimants’ counsel and Claimant 1 following Claimants’ submission of their Tip—including on [Redacted] and on [Redacted]—none of the information resulting from those communications was probative of the eventual claims that the Commission brought against Respondents [Redacted]. Further, even if, as Claimants allege, [Redacted] claimants [Redacted] must still satisfy the eligibility criteria for receiving awards under the Rules; here, Claimants have not satisfied such criteria.

Moreover, according to the Supplemental Declaration, Claimant 1 provided the names of purported sources and witnesses Claimant 1 believed would be able to assist Staff in its investigative work during Staff’s communications with Claimants’ counsel and Claimant 1. While Staff interviewed one of the individuals identified by Claimant 1—[Redacted] —and also took *** sworn testimony during the course of the Investigation, Staff was already aware of [Redacted] from other sources. Staff did not choose to interview [Redacted] and take *** testimony as a result of any information provided by Claimants or their counsel.[fn12]

In sum, both the Declaration and the Supplemental Declaration confirm that none of Claimants’ information caused the Staff to open the Investigation or inquire into different conduct, nor helped advance the Investigation. Further, none of Claimants’ information was used in, nor had any impact on, the charges brought by the Commission in the Covered Action [Redacted]. Thus, Claimants fail to satisfy either Rule 21F-4(c)(1) or (2). Accordingly, their joint award claim must be denied.

III. Conclusion.

Accordingly, it is hereby ORDERED that the joint whistleblower award application of Claimants in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] [Redacted].

[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[5] See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).

[6] [Redacted].

[7] See Covered Action, at [Redacted].

[8] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[9] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[10] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[11] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.

[12] Finally, the Commission need not reach the issue of whether Claimants satisfy the criteria for “independent analysis” under Rule 21F-4(b) because failing to satisfy Rule 21F-4(b) was not a ground for the denial of Claimants’ joint claim in the Preliminary Determination.

SEC

98198

08/22/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claims submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2,” and collectively “Claimants”) in connection with the above-referenced covered action (the “Covered Action”). Claimants filed timely responses contesting the preliminary denials. For the reasons discussed below, Claimant 1’s and Claimant 2’s award claims are denied.[fn1]

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled cease-and-desist proceedings against [Redacted] (the “Company”) alleging that the Company [Redacted]. The Commission alleged that [Redacted]. The Commission also alleged that the Company [Redacted]. The Commission charged the Company with violations of [Redacted]. The Company agreed to disgorgement, prejudgment interest, and a civil monetary penalty totaling of [Redacted].

B. The Preliminary Determinations.

The CRS preliminarily determined that staff from the Division of Examinations (“Examinations”)[fn2] commenced an examination (the “Exam”) of the Company in [Redacted] and that the decision to commence the examination was not based on any information or tips from Claimant 1 or Claimant 2. The CRS also preliminarily determined that in [Redacted] Examinations staff began looking at the issue of [Redacted] (the “Subject Matter”) which became the subject of the Covered Action. The CRS preliminarily determined that Examination staff did not look into the Subject Matter because of information provided by Claimant 1 or Claimant 2. With respect to Claimant 1, the CRS preliminary determined that while Examinations staff reviewed Claimant 1’s tips during the exam, Claimant 1’s information was unrelated to the Subject Matter and did not affect or guide the scope of the Exam, and none of Claimant 1’s information was referred to Enforcement staff responsible for the Investigation.

With respect to Claimant 2, the CRS preliminary determined that Claimant 2 submitted a tip in [Redacted] after Commission staff commenced the Exam and after Commission staff became aware of possible misconduct related to the Subject Matter. The CRS noted that Claimant 2’s TCR raised concerns relating to the affiliation of [Redacted] (“the Entity”) and the Company; however, even though Examinations staff noted information regarding the Entity in the referral to Enforcement, and Enforcement staff considered issues relating to the Entity, the CRS preliminary determined that the issues relating to the Entity did not become part of the Covered Action. Accordingly, the CRS stated that Claimant 2’s information did not lead to the success of the Covered Action. In addition, the CRS preliminary determined that to the extent Claimant 2 relied upon information provided to the Commission prior to [Redacted] as a basis for his/her award application, such information was not provided to the Commission pursuant to the procedural requirements of Exchange Act Rule 21F-9. Rule 21F-9 requires, as relevant here, that (1) a claimant submit information through the Commission’s online portal or on Form TCR, and (2) a claimant to sign a whistleblower declaration. Claimant 2 did neither until submitting a tip in [Redacted].

C. Claimant 1’s Response to the Preliminary Determinations.

Claimant 1 submitted a timely written response contesting the Preliminary Determinations.[fn3] Claimant 1 contends, among other things, that he/she has been following issues concerning the Subject Matter for over fifteen years, citing to press articles from that time, and that Claimant 1 had attended meetings with representatives from the Company for more than fifteen years. Claimant 1 argues that he/she based *** independent analysis upon review of publicly-available data regarding the Subject Matter. Claimant 1 further argues that he/she expressed concerns to Commission staff and later emailed the Chair of the Commission on [Redacted] and that his/her “strategy was to pull in journalists, academics and leading investment advocates . . . .” Claimant 1 argues that it is “not reasonable to think my work . . . was not a primary motivator for the SEC to open its investigation.”

D. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 submitted a timely written response contesting the Preliminary Determinations. Claimant 2 argues that while the Commission commenced an examination of the Company before Claimant 2 submitted a TCR, the record does not indicate what prompted the examination of the Company. Claimant 2 notes that “it was precisely around the time that [Examinations staff] commenced its investigation into [the Company] that [Claimant 2’s] prior counsel . . . began a dialogue” with the former co-head of a specialized Enforcement unit (“Former Official”). Claimant 2 states that “if [his/her] information contributed to the opening of the SEC investigation, then [Claimant 2] should receive credit for that information pursuant to the statute.” Claimant 2 also contends that he/she provided “specific and detailed information on a continuous and sustained basis over the course of several years to [Former Official] and other top staff members of the SEC about various . . . practices, including information that formed the exact basis for the Covered Action against [the Company] relating to [the Subject Matter].” Claimant 2 states that he/she responded to a set of questions from Former Official and attended a meeting with Commission staff in Washington, D.C., to discuss the matter. Based on these communications, Claimant 2 argues that information provided in Claimant 2’s [Redacted] submission, supplemental submissions, and at the [Redacted] meeting significantly contributed to the success of the Covered Action.

Claimant 2 also requests that Claimant 2 be allowed to depose seven current or former Commission staff members and that Claimant 2 be allowed to review “all documentation the [CRS] had made available for its review.” Claimant seeks “all emails, correspondence and other material regarding [Claimant 2’s] filing as well as the administrative file for the [Investigation].” Claimant 2 also requests “all notes, emails and other material related to [Claimant 2’s] meetings with SEC officials.” Claimant 2 asks that the Commission “make an award determination in [his/her] favor . . . or alternatively vacate the Preliminary Determination because it is not based on a complete record.”

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn4] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to “commence an examination, to open an investigation . . . or to inquire concerning different conduct as part of a current examination or investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8]

A. Claimant 1.

Claimant 1 does not qualify for a whistleblower award in this matter because his/her information did not cause Commission staff to open an examination or investigation, inquire into different conduct as part of an ongoing examination or investigation, nor did it significantly contribute to an ongoing investigation or examination. As an initial matter, the investigation that led to the Covered Action (the “Investigation”) was opened based upon a [Redacted] referral from Examinations staff to Enforcement staff relating to, among other things, the Subject Matter. The record shows that Examinations staff commenced the Exam in [Redacted] based on a risk-based approach that examines a variety of factors and information. The record also shows that the scope of the Exam was determined based upon Examinations own risk-based examination approach following a review of information provided by the Company, publicly available information, and information in the Commission’s own systems, including the TCR System.

Claimant 1 bases his/her award claim on a TCR submitted in [Redacted] more than one year before the Exam began. Claimant 1 also submitted a second TCR approximately four months later and other supplemental material. A declaration from Examinations staff, which we credit, confirms that Claimant 1’s TCR submissions and other submissions to the Commission did not play a part in the staff’s decision to commence the Exam, nor did Claimant 1’s information have any role in the determining the scope of the Exam. Although Examinations staff reviewed Claimant 1’s information, Examinations staff determined that Claimant 1’s information did not pertain to the Subject Matter and Examinations staff declined to pursue Claimant 1’s allegations.

The record also confirms that Claimant 1’s information did not cause Enforcement staff to open the Investigation, nor did Claimant 1 significantly contribute to the Investigation. Enforcement staff confirms, in a sworn declaration, which we credit, that the Commission’s TCR System indicates that Claimant 1’s tips were not forwarded to Enforcement staff responsible for the Investigation. In addition, Enforcement staff responsible for the Investigation did not receive any information form Claimant 1 before or during the Investigation, nor does Enforcement staff recall having any communication with Claimant 1.[fn9]

Accordingly, Claimant 1 is not eligible for an award.

B. Claimant 2.

Claimant 2 is not eligible for a whistleblower award because Claimant 2’s information did not lead to the success of the Covered Action. First, Claimant 2’s information does not meet the criteria of Exchange Act 21F-4(c)(1) because the record does not show that Claimant 2 meets both elements of Rule 21F-4(c)(1): (a) that Claimant 2’s information caused either Examinations staff to commence the Exam or Enforcement staff to open the Investigation, or inquire in to different conduct, and (b) that the Covered Action in whole or in part was based on conduct that was the subject of Claimant 2’s information. The record shows that Claimant 2’s information did not cause the staff to commence the Exam: Claimant 2 submitted his/her TCR approximately three months after Examinations staff had already commenced the Exam. And prior to Claimant 2’s TCR, Examinations staff was already aware of the Subject Matter, as well as issues relating to the Entity. Examinations staff assigned to the Exam also confirm that there was no communication with Claimant 2.[fn10]

Enforcement staff opened the Investigation based on a referral from Examinations, not based on Claimant 2’s TCR submission. And while the Examinations referral addressed, among other things, the Subject Matter and potential misconduct regarding the Company and the Entity raised by Claimant 2, the Covered Action ultimately did not include any allegations regarding the Entity. Examinations staff had already identified the Subject Matter and issues relating to the Entity and Claimant 2’s information did not play a role in the Covered Action.[fn11] Accordingly, the Covered Action was not based in whole or in part on information provided by Claimant 2. Therefore, Claimant 2 does not qualify for an award under Rule 21F-4(c)(1).

Second, Claimant 2’s information did not meet the criteria of Exchange Act Rule 21F-4(c)(2) because it did not significantly contribute to the success of the Exam or the Investigation – and thereby did not significantly contribute to the success of the Covered Action. As previously stated, Examinations staff commenced the Exam in [Redacted] approximately three months before Claimant 2 submitted his/her TCR. And while Examinations staff did receive a whistleblower tip regarding the Entity in [Redacted] Examinations staff had already been aware of issues relating to the Entity before [Redacted]. Further, Examinations staff confirms that the Subject Matter had been an issue of interest in the Exam prior to Claimant 2’s TCR submission, and that Examinations staff did not look into the Subject Matter because of Claimant 2’s information.

The record does not show that Claimant 2’s information significantly contributed to the Investigation. OWB staff state, in a sworn declaration, which we credit, that Claimant 2’s TCR submission and its supplements were not forwarded to staff assigned to the Investigation. While Enforcement staff assigned to the Investigation met with Claimant 2 in [Redacted] approximately nine months after Claimant 2 submitted his/her TCR, that meeting was related to a separate and unrelated matter and not connected to the Investigation. And while Enforcement staff assigned to the Investigation were aware that Claimant 2 submitted information related to the Entity, the staff elected not to pursue charges regarding the Entity in the Covered Action. Enforcement staff confirmed that they did not use any information provided by Claimant 2, nor did Claimant 2’s information affect the Covered Action. Accordingly, Claimant 2 does not qualify for an award under Rule 21F-4(c)(2).[fn12]

In addition, Claimant 2 argues that even if his/her information was not forwarded to staff assigned to the Investigation, he/she submitted supplemental material, met in-person with other Enforcement staff, including the Former Official, and other senior Commission staff in [Redacted] and shared information and responded to staff questions that ultimately assisted the staff and the Investigation. However, the record does not confirm Claimant 2’s contentions. The record does not reflect that any information Claimant 2 shared with the Former Official was shared with or otherwise impacted the Investigation. And as noted above, Enforcement staff assigned to the Investigation confirm that none of Claimant 2’s information was used in or contributed to the Covered Action.

Lastly, Claimant 2’s argument that the record is not complete and the Preliminary Determination should therefore be vacated is not meritorious. Claimant 2 is not entitled to depose current or former Commission staff, or receive, as requested in Claimant 2’s response to the Preliminary Determinations, “all documentation that the Claims Review Staff had made available for its review. . . [or] all emails, correspondence and other material regarding [Claimant 2’s] filing as well as the administrative file for the [Covered Action].” Exchange Act Rule 21F-12(a) lists the materials that form the basis for the Preliminary Determination and that Claimant 2 may request from the Commission.[fn13] “These rules do not entitle [Claimant 2] to obtain from the Commission any materials . . . other than those listed in paragraph (a) of this section.” Exchange Act Rule 21F-12(b). Claimant 2 requested and received the materials to which he/she was entitled under the Rule 21F-12(a) and is entitled to no more.

Therefore, Claimant 2 is not entitled to a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimant 1 and Claimant 2 in connection with the Covered Action be, and they hereby are, denied.

By the Commission.

[1] The CRS also recommended the denial of award applications from Claimant 3 and Claimant 4, neither of whom contested the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to Claimant 3’s and Claimant 4’s award claims became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] At the time, the Division of Examinations was known as the Office of Compliance Inspections and Examinations.

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[8] Exchange Act Rel. No. 85412 at 8-9.

[9] Claimant 1’s response to the Preliminary Determinations refers to information and communications Claimant 1 had with Commission staff and other government agency staff prior to July 21, 2010. To the extent that Claimant 1 bases his/her award application on such information and communication, Claimant 1 does not qualify for an award. Among other things, as noted above, an individual must submit original information to the Commission to qualify for an award. And to be considered original information, the individual’s submission must be provided to the Commission for the first time after July 21, 2010. See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).

[10] Claimant 2 states that he/she met with the Director of Examinations in [Redacted] along with other senior Commission staff. However, there is no evidence in the record that this meeting had any impact on the Exam. Instead, the record shows that the Exam commenced nearly a year before the meeting and resulted in a referral to Enforcement approximately three months before Claimant 2 met with the Exams Director.

[11] Claimant 2 concedes this fact in his/her application, noting that “the misconduct associated with [the Entity] was not mentioned in the [Covered Action] Order.”

[12] Claimant 2 also faults the Preliminary Determinations and the underlying record for not “specify[ing] what prompted the investigation into [Company’s] . . . practices.” But as evident from the Exams staff declaration in the record, which we credit, and as noted above, Examinations commenced the Exam based on its own risk-based approach and review of public sources and not based upon any information or allegations from an individual outside of the Commission. Claimant 2 also argues that Claimant 2’s counsel had been in contact with the Former Official since [Redacted] approximately six months before Claimant 2 submitted his/her tip. While Claimant 2 argues such communications may have assisted the staff or caused the commencement of the Exam, we are not persuaded. The record contains no indication that Claimant’s counsel’s communication with the Former Official influenced the commencement or course of the Exam. Further, such information, even if useful, was not submitted pursuant to the requirements of Exchange Act Rule 21F-9, which requires an individual to submit information on a Form TCR, which Claimant 2 did not do until [Redacted]. Accordingly, we are not persuaded by Claimant 2’s argument.

[13] See Exchange Act Rule 21F-10(e)(1).

SEC

98196

08/22/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by claimant [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed an action against [Redacted] (the “Company”) and *** individuals: [Redacted] and Claimant (collectively, the “Defendants”), charging Defendants with violations of the federal securities laws for [Redacted]. All of the Defendants, including Claimant, were charged with [Redacted]. Each Defendant, including Claimant, consented to a final judgment enjoining each Defendant, including Claimant, from violating the securities laws. In total, Defendants were ordered to pay approximately [Redacted] in disgorgement, [Redacted] in prejudgment interest, and [Redacted] in civil penalties. Of that, Claimant was ordered to pay [Redacted] in disgorgement, [Redacted] in prejudgment in interest, and a [Redacted] civil penalty.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because the submission upon which Claimant based his/her claim for award was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1) because Claimant made the submission after a request, inquiry, or demand that relates to the subject matter of Claimant’s submission was directed to Claimant by the Commission. The CRS further noted that Commission staff directed a subpoena to Claimant as an officer of the Company, followed by a subpoena requesting identical materials directed to Claimant at his/her home residence. Approximately four weeks later, Claimant provided his/her tip to the Commission at the same time Claimant responded to the subpoenas. The CRS preliminarily determined that Claimant’s information related to the same subject matter as the information called for in the subpoena.

Finally, the CRS stated that because Claimant’s submission was not made voluntarily, the CRS would not separately analyze whether Claimant is also excluded from award eligibility under Rule 21F-16.[fn1]

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determinations.[fn2] Claimant principally argues that the Covered Action involved [Redacted] and requests that OWB “view these as two separate situations and give [Claimant] a whistleblower award for information *** provided to the Staff relating to the [misconduct], which [Claimant] had no involvement with and was a victim of.” Claimant argues that Claimant’s culpability did not relate to any misconduct involving [Redacted] (the “First Misconduct”) perpetuated by [Redacted] other individual Defendants, but only to misconduct involving [Redacted] (the “Second Misconduct”).

Claimant also contends that Claimant contacted his/her attorney on [Redacted] eleven days before Clamant received a subpoena from the Commission. Claimant stated that Claimant was a victim of a scam, and that Claimant “would have pursued this [whistleblower] report years earlier, but [Claimant’s] report was delayed because [Redacted] repeatedly promised [Claimant] that [Claimant’s] money would be returned . . . . [Claimant’s] view at the time was that the [Second Misconduct was] all part of an effort to perpetrate the [First Misconduct].” Claimant also states that the Commission’s subpoena related to the Second Misconduct, not to the First Misconduct.

Lastly, Claimant contends that Claimant’s submission was the first report the Commission received relating to the First Misconduct, and that report “led to the successful prosecution” of [Redacted] Defendants.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] Under Exchange Act Rule 21F-4(a), a submission to the Commission is considered “voluntary” if, as relevant here, it is provided “before a request, inquiry, or demand that relates to the subject matter of [the] submission” is directed to the claimant or the claimant’s representative “[b]y the Commission” or in “connection with an investigation by . . . any other authority of the federal government.”[fn4] If the Commission directs a request, inquiry, or demand to a claimant or his/her representative before the claimant makes a submission, “[the claimant’s] submission will not be considered voluntary, and [the claimant] will not be eligible for an award.”[fn5] The purpose of the rule is to “creat[e] a strong incentive for whistleblowers to come forward early with information about possible violations of the securities laws rather than wait until Government or other official investigators ‘come knocking on the door.’”[fn6] Rule 21F-4(a)(1) establishes a “simple and straightforward test for when we will treat a whistleblower as having submitted information voluntarily; as relevant here, the whistleblower must provide his or her tip to the Commission before investigators direct a ‘request, inquiry, or demand’ to the whistleblower that relates to the subject matter of the tip.”[fn7] However, a claimant’s submission also will be considered voluntary if the claimant “voluntarily provided the same information to one of the other authorities identified above [in Rule 21F-4(a)(1)],” such as Congress, other authorities of the federal government, or a state attorney general or securities regulatory authority, “prior to receiving a request, inquiry, or demand from the Commission.”[fn8]

Claimant does not qualify for a whistleblower award in this matter because Claimant does not meet the voluntary submission requirement of Rule 21F-4(a). Enforcement staff issued two subpoenas to Claimant, both of which contained identical requests for production of documents. The record shows that both subpoenas requested documents relating to the First Misconduct as well as requests relating to the Second Misconduct. Claimant responded to the subpoenas approximately four weeks later and submitted a TCR at the same time. As stated in Claimant’s response to the Preliminary Determination, the First Misconduct “is the subject of [Claimant’s] whistleblower tip.” Enforcement staff confirmed, in a supplemental declaration, that the subpoenas requested documents relating to the First Misconduct and Claimant’s response to the subpoenas also related to the First Misconduct. Accordingly, because Claimant did not submit his/her tip before the Commission issued subpoenas to Claimant relating to the subject matter of Claimant’s tip, Claimant’s submission is not voluntary.

We are not persuaded by Claimant’s argument that “the subpoena[s] related to the [Second Misconduct], not to the [First Misconduct],” and that Claimant should receive an award based upon the information Claimant provided relating to the First Misconduct. As confirmed by staff in a supplemental declaration, which we credit, the subpoenas requested materials relating to both the First Misconduct and the Second Misconduct, and in response Claimant provided materials related to both. Because Claimant did not provide those materials until after Claimant received the subpoenas from the Commission, and Claimant’s tip related to the subject matter of the Commission’s subpoenas, Claimant’s submission cannot be considered voluntary pursuant to Rule 21F-4.[fn9]

Accordingly, Claimant is not eligible for a whistleblower award.[fn10]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and they hereby is, denied.

By the Commission.

[1] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] Exchange Act Rule 21F-4(a)(1)(i), 17 C.F.R. § 240.21F-4(a)(1)(i).

[5] Exchange Act Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2).

[6] Proposing Release for Whistleblower Rules, 75 Fed. Reg. 70488, 70,490 (Nov. 17, 2010); see also Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34,307 (June 13, 2011) (stating that a “whistleblower award should not be available to an individual who makes a submission after first being questioned about a matter (or otherwise requested to provide information) by the Commission staff acting pursuant to any of [its] investigative or regulatory authorities”).

[7] Order Determining Whistleblower Award Claim, Exchange Act Release No. 84046 at 8 (Sept. 6, 2018).

[8] Exchange Act Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2).

[9] To the extent that Claimant argues that his/her submission is voluntary because Claimant contacted his/her counsel regarding a whistleblower submission before Claimant received the subpoenas, we disagree. Exchange Act Rule 21F-4(a) requires an actual submission of information to the Commission or the other identified authorities to determine whether that submission is voluntary. Claimant did not submit his/her tip to the Commission or any other identified authorities until approximately four weeks after receiving the subpoenas.

[10] Claimant also notes in his/her response to the Preliminary Determination that Claimant’s submission “led to the successful prosecution” of [Redacted] However, Claimant’s argument is not relevant here. The CRS’s Preliminary Determination did not made any recommendation on this issue, and because Claimant did not submit his/her information voluntarily, Claimant is not eligible for an award on that ground alone. Further, while Claimant notes that “[Claimant]’s culpability is only in relation to the [Second Misconduct],” Claimant’s culpability was not analyzed by the CRS and was not a ground for the CRS’s preliminary denial recommendation. As such, we do not analyze this issue here and it is likewise not a basis for our denial.

CFTC

08/11/2023

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1, Claimant 2, Claimant 3, and Claimant 4 (collectively, “Claimants”) in response to Notice of Covered Action No. [Redacted] regarding [Redacted] “Covered Action”). The Claims Review Staff (“CRS”) evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165, promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26. On June 17, 2021, the CRS issued a Preliminary Determination recommending that Claimant 1 and Claimant 3 receive an award of ***% each, and that Claimant 2 receive an award of ***%. The CRS also recommended denying Claimant 4’s award application.

For the reasons set forth below, the CRS’s determination is adopted.

I. BACKGROUND.

[Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 and Claimant 3 each receive an award of ***% and Claimant 2 receive an award of ***%. Claimants did not respond to the Preliminary Determination. Thus, under Rule 165.7(h) 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination. Claimants are prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13, because they did not exhaust administrative remedies.

III. LEGAL ANALYSIS.

The CRS determined that Claimant 1, Claimant 2, and Claimant 3 have met all eligibility requirements for an award, and we concur. See 17 C.F.R. §§ 165.5(b), 165.6. Claimant 1 and Claimant 2 provided original information on a Commission Form TCR. Claimant 3 provided original information but did not file a Form TCR. According to Division of Enforcement (“Division”) staff, he/she intended to do so but had difficulty understanding or fulfilling the requirements for participating in the Whistleblower Program, evidently owing to [Redacted]. Claimant 3 specifically stated in his/her Form WB-APP that [Redacted]. The CRS determined that it would not be fair or equitable to penalize Claimant 3 for failing to meet the requirement of filing a Form TCR with the CFTC, when he/she had previously submitted a Form TCR to the [Redacted].[fn1] According to the CRS, his/her [Redacted] constitutes an “extraordinary circumstance” under Rule 165.5(c), 17 C.F.R. § 165.5. Taking Claimant 3’s circumstances into account, including Claimant 3’s not having a permanent address and staff’s reasonable efforts to support Claimant 3 in filing a CFTC Form TCR, the Commission finds it to be in the public interest and consistent with the protection of customers to find the whistleblower eligibility requirements satisfied here. Such a finding would reward Claimant 3 for his/her good faith efforts to report wrongdoing and assist the Commission, and it would encourage similar would-be whistleblowers to come forward in the future. But this finding should not in any way suggest that a putative whistleblower is relieved of the requirement to file a Form TCR merely because they first report to another government agency, and that same information is provided by a government agency to the Commission.

The Commission finds that Claimant 3 voluntarily provided original information to the Commission, and that this information led to the successful enforcement of the Covered Action, consistent with Rule 165.3(a). It is important to note that the [Redacted] complaint form includes an attestation like that in the Commission’s Form TCR. In his/her complaint, Claimant 3 certified that the information he/she provided was true and correct to the best of his/her knowledge, thus fulfilling a requirement equivalent to the Commission’s requirement for attestation under Rule 165.3(b).

Claimant 1, Claimant 2, and Claimant 3 each timely filed a Form WB-APP in response to a Notice of Covered Action, and provided explanations and assistance to Division staff. Further, Claimant 1, Claimant 2, and Claimant 3, do not fall into any of the categories of individuals ineligible for an award, as set forth in Rule 165.6(a), 17 C.F.R. § 165.6(a).

The CRS recommended that Claimant 1, Claimant 2, and Claimant 3, share an award amounting to ***% of the total monetary sanctions collected in the Covered Action. In particular, the CRS recommends that Claimant 2 receives an award of ***% while Claimant 1 and Claimant 3 each receive slightly higher awards of ***%. We agree with this determination. [Redacted]. If the Commission collects the full $[Redacted] ordered, the recommended awards would result in payments of $[Redacted] each to Claimant 1 and Claimant 3, and $[Redacted] to Claimant 2 (along with respective percentages of any post-judgment interest). [Redacted].

In arriving at these award percentages, the CRS applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of claimants’ award applications. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. Rule 165.9(b) provides a list of factors that may increase the award amount, and Rule 165.9(c) provides a list of factors that may decrease the award amount. However, the Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing documents containing direct evidence of violations could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

As applied, Claimant 1 caused the case to be opened and Claimant 3 provided the highest level of ongoing assistance and cooperation. Claimant 1’s information was sufficiently specific, credible, and timely to cause Division staff to open an investigation. The Commission then brought a successful covered action based in part on the conduct that was the subject of Claimant 1’s original information. The information from Claimant 2 and Claimant 3 significantly contributed to the success of the Covered Action.

After the investigation was opened, Claimant 1, Claimant 2, and Claimant 3 each provided ongoing cooperation and assistance to Division staff, which significantly contributed to the success of the Covered Action. According to Division staff, their level of cooperation was outstanding in terms of their willingness to submit documents and be interviewed as well as the level of detail that they provided. Division staff interviewed each of the claimants over the phone on multiple occasions. Their statements were consistent with their initial accounts and further bolstered the allegations. During his/her interview, Claimant 1 provided information on how the scheme operated, which Division staff used to direct its investigation. Claimant 2 and Claimant 3 provided numerous documents to the Division. Among the information and documents that they provided that were instrumental were [Redacted].

The detailed information that Claimant 1, Claimant 2, and Claimant 3 provided led Division staff to piece together and ultimately describe coherently [Redacted] the systematic and predatory nature of [Redacted] conduct. Division staff significantly relied on information provided by Claimant 1, Claimant 2, and Claimant 3 in [Redacted]. Division staff specifically referenced the information they provided in its [Redacted].

In addition to the assistance referenced above, Division staff found that Claimant 3 provided critical evidence and support to the Commission by furnishing a [Redacted]. The [Redacted] he/she provided was a necessary component in [Redacted], because Claimant 3 had [Redacted]. Overall, Division staff found that Claimant 3 provided the highest level of ongoing assistance and cooperation of the three meritorious claimants.

Claimant 2 also significantly contributed to the success of the Covered Action. Claimant 2’s Form TCR explained in detail how [Redacted]. Claimant 2’s detailed explanation served as a guide for Division staff to put together [Redacted].

The CRS has also determined to recommend that the Commission deny the award application of Claimant 4 because Claimant 4 failed to meet the requirements of Section 23 of the Act and the Rules. We agree with this determination. Claimant 4 did voluntarily submit information to the Commission on a Form TCR. However, the information Claimant 4 provided was unrelated to the Covered Action. Claimant 4 played no role in the Commission’s successful enforcement action, and no information he/she provided was used in the investigation. Division staff had not heard of Claimant 4 until the WBO informed them of his/her award claim. Accordingly, the information provided by Claimant 4 was not useful to the Commission’s investigation and, therefore, did not lead to the successful enforcement of the Covered Action.

IV. CONCLUSION.

It is hereby ORDERED that Claimant 1 and Claimant 3 each shall receive an award of ***% of monetary sanctions collected in the Covered Action, and that Claimant 2 shall receive an award of ***% of the monetary sanctions collected in the Covered Action. It is further ORDERED that Claimant 4’s whistleblower award be, and hereby is, denied.
By the Commission.

[1] [Redacted].

SEC

98054

08/04/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending whistleblower awards in connection with the above-referenced Covered Action and two related actions brought by another agency (collectively, the “Related Actions”).[fn1] The CRS recommended that: (a) joint claimants [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) receive a joint whistleblower award equal to [Redacted] percent (***%) of the monetary sanctions collected in the above-referenced Covered Action and [Redacted] percent (***%) of the monetary sanctions collected in Related Action 1; (b) claimant [Redacted] (“Claimant 3”) receive an award equal to *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action and [Redacted] percent (***%) of the monetary sanctions collected in Related Action 1; (c) claimant [Redacted] (“Claimant 4”) receive an award equal to *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action and [Redacted] percent (*** %) of the monetary sanctions collected in Related Action 1; (d) joint claimants [Redacted] (“Claimant 5”) and [Redacted] (“Claimant 6”) receive a joint whistleblower award equal to *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action and [Redacted] percent (***%) of the monetary sanctions collected in Related Action 2[fn2]; and (e) Claimant [Redacted] (“Claimant 7”) receive a whistleblower award equal to *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action and *** percent (***%) of the monetary sanctions collected in Related Action 2.

The CRS also recommended the denial of the award applications from [Redacted] (“Claimant 8”), and [Redacted] (“Claimant 10”).[fn3] Claimants 1, 2, 3, 4, 5, and 6 did not contest the Preliminary Determinations. Claimants 7, 8, and 10 submitted timely responses contesting the Preliminary Determinations.

After a review of the responses to the Preliminary Determinations and supplemental staff declarations, the CRS maintained the same recommendations with regard to Claimants 1, 2, 3, 4, 8, 9, and 10. Based upon a review of the Rule 21F-6 factors, the CRS recommended on reconsideration the same *** % award in connection with the Covered Action and a lower award of *** % in connection with Related Action 2 for joint Claimants 5 and 6, and the same ***% award to Claimant 7 in connection with the Covered Action and a higher award of *** % in connection with Related Action 2.

For the reasons discussed below, and based upon our own independent review of the materials before us, we agree with the recommendations of the CRS. Accordingly, the total aggregate award to Claimants 1, 2, 3, 4, 5, 6, and 7 in connection with the Covered Action and the two Related Actions is approximately $104 million.

We also deny the award claims of Claimants 8 and 10.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled cease-and-desist proceedings against [Redacted] (the “Company”), charging the Company with [Redacted] in [Redacted] (“Territory A”), [Redacted] (“Territory B”) [Redacted]. The Commission also alleged that within the Company’s [Redacted] (“Subsidiary”) [Redacted] in [Redacted] (“Territory C”) [Redacted]. The Commission charged the Company with [Redacted]. The Company agreed to pay disgorgement and prejudgment interest totaling [Redacted] to settle the charges.

On [Redacted] the Office of the Whistleblower posted the above-referenced Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn4] Claimants 1, 2, 3, 4, 5, 6, 7, 8, and 10 filed timely whistleblower award claims.

B. The Related Actions.

On [Redacted] the [Redacted] (the “Other Agency”) [Redacted] with [Redacted] the Company arising from the same facts as those at issue in the Covered Action. In Related Action 1, [Redacted] in Territory A, agreed to pay a penalty of [Redacted]. In Related Action 2, [Redacted] in Territory B, among other places, agreed to pay a penalty of [Redacted]. Claimants 1, 2, 3, 4, 5, and 6 sought a related action award in connection with Related Action 1, and Claimants 5, 6, 7, and 8 sought a related action award in connection with Related Action 2.

C. The Preliminary Determinations.

The CRS[fn5] issued Preliminary Determinations[fn6] recommending that: (a) joint Claimants 1 and 2 receive a joint whistleblower award equal to ***% of the monetary sanctions collected in the Covered Action and ***% of the monetary sanctions collected in Related Action 1; (b) Claimant 3 receive an award equal to ***% of the monetary sanctions collected in the Covered Action and ***% of the monetary sanctions collected in Related Action 1; (c) Claimant 4 receive an award of ***% of the monetary sanctions collected in the Covered Action and ***% of the monetary sanctions collected in Related Action 1; (d) Claimants 5 and 6 receive a joint whistleblower award equal to ***% of the monetary sanctions collected in the Covered Action and ***% of the monetary sanctions collected in Related Action 2; and (e) Claimant 7 receive a whistleblower award equal to ***% of the monetary sanctions collected in the above-referenced Covered Action and ***% of the monetary sanctions collected in Related Action 2. The CRS also recommended the denial of the award claims of Claimants 8 and 10.

The CRS recommended that Claimant 8’s and Claimant 10’s award claims be denied on the grounds that their information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of their information caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

For Claimant 8, the CRS also stated that much of Claimant 8’s information appeared to be derived from Clamant 8’s employment as an attorney for Subsidiary, and that Exchange Act Rule 21F-4(b)(4)(i) prohibits the Commission from considering as “original information” any information derived from privileged attorney-client communication. The CRS noted that because Claimant 8’s information appeared to be subject to the attorney-client privilege, much of Claimant 8’s information was redacted and/or withheld by a filter team from Enforcement staff assigned to the investigation (“Investigation”) that led to the Covered Action.

For Claimant 10, the CRS stated that Claimant 10 did not follow the procedures for anonymously submitting information to the Commission in connection with the TCR Claimant 10 cited as the basis for his/her award claim. Rule 21F-9(c) permits an individual to anonymously submit information to the Commission through an attorney, but prior to the attorney’s submission, the individual must provide the attorney with a completed Form TCR signed by the individual under penalty of perjury. The CRS stated that there was no information in the record demonstrating that Claimant 10 provided a signed Form TCR to his/her attorney before the TCR on which Claimant 10 based his/her claim was submitted to the Commission. In addition, the CRS stated that Claimant 10 had not shown that he/she submitted any original information to the Commission. The CRS stated that Enforcement staff reviewed Claimant 10’s submission and determined that Claimant 10 did not have any first-hand knowledge of the alleged misconduct and thus the staff declined to interview Claimant 10.

D. Claimant 7’s Response to the Preliminary Determination.

Claimant 7 submitted a timely written response contesting the CRS’s Preliminary Determination.[fn7] Among other things, Claimant 7 argues that he/she should be awarded at least half of the award in the Covered Action related to the misconduct in Territory B and in Related Action 2, i.e., Claimant 7 should receive an award of at least ***% of the Covered Action and ***% of Related Action 2. Claimant 7 contends that without his/her internal report to the Company, there would have been no internal investigation of the Company’s conduct in Territory B, nor would the Company have self-reported about that conduct to the Commission. Claimant 7 argues that under Rule 21F-4(c)(3), he/she is accordingly entitled to credit for “all of the information/results of [the Company’s Territory B] internal investigation” and that the volume of information Claimant 7 provided, in conjunction with the results of the Company’s internal investigation into misconduct in Territory B, would outweigh the value of information provided by Claimant 5 and Claimant 6 – and thus Claimant 7 is entitled to a larger award.

Claimant 7 further argues that his/her award was improperly decreased because the CRS relied upon inaccurate declarations and the CRS did not give Claimant 7 proper credit for whistleblower actions he/she took. For example, Claimant 7 notes that while the staff declarations indicate that Claimant 7 refused to sit for an interview, in fact Claimant 7 offered to be interviewed by Other Agency and Commission staff in [Redacted] and again in [Redacted] but neither the Other Agency nor Commission staff elected to do so. Claimant 7 provided an email to Other Agency staff in [Redacted] (forwarding a [Redacted] email from Claimant 7’s counsel to Commission and Other Agency staff) which Claimant 7’s counsel characterizes as ” literally begging ” (emphasis in original) Other Agency staff to contact Claimant 7 for an interview. In the email, Claimant 7’s attorneys provide social media profiles for “potential witnesses whose interviews might help your investigation,” including Claimant 7 and two other individuals. In the [Redacted] email, Claimant 7’s counsel noted that their client “didn’t want us to directly arrange an interview with you as that would establish a definitive link between [him/her] and the whistleblower.” They suggested, ” [i]f you want to talk to the whistleblower, we STRONGLY advise [Redacted] to contact directly all three people referenced in the attached [Redacted] email . . . and see if any of them (or at least one of them) would agree to be interviewed directly by you on these issues.” (emphasis in original). Claimant 7’s counsel provided Claimant 7’s email address in connection with “one of the three [social media] bio’s referenced.”

Claimant 7 also claims, among other things, that the Preliminary Determinations inaccurately characterize his/her assistance to the staff when they stated that Claimant 7 “did not provide any subsequent meaningful assistance.” Claimant 7 notes that he/she sent an email to Other Agency and Commission staff on [Redacted] approximately two weeks after submitting his/her TCR, containing information and a spreadsheet that supported the allegations of misconduct in Territory B. Claimant 7 states that he/she also assisted the Company in its internal investigation by sitting for an interview with the law firm conducting the Company’s internal investigation, and also by providing supplemental information to the Company.

E. Claimant 8’s Response to the Preliminary Determination.

Claimant 8 submitted a timely written response contesting the Preliminary Determination. Claimant 8 principally argues that, as a foreign lawyer working for the Subsidiary in [Redacted] the U.S. laws of privilege did not apply to Claimant 8 and that the Subsidiary waived any privilege when it asked Claimant 8 to participate in an internal investigation as a former employee. Claimant 8 also contends that he/she had “a detailed discussion with [Commission staff], who agreed that I did have highly relevant, original and valuable information which could assist the SEC in its investigation.” Claimant 8 contends that he/she provided “highly relevant, original and valuable information which could assist the SEC in its investigation.” As part of his/her request for reconsideration, Claimant 8 attached several documents to his/her response, including documents relating to his/her foreign legal practice certificate and the law of privilege.

F. Claimant 10’s Response to the Preliminary Determination.

Claimant 10 submitted a timely written response contesting the Preliminary Determination. Among other things, in his/her application for award, Claimant 10 argues that he/she was the “lead/organizing whistleblower” with other claimants to the Covered Action. In his/her response to the Preliminary Determinations, Claimant 10 claims that the attorneys representing other claimants “deceitfully excluded” Claimant 10 from their TCR submission and the attorneys “took advantage of [Claimant 10’s] ignorance in order to advance [the attorneys’] interests and the interests of others.” Claimant 10 also states that the attorney who submitted Claimant 10’s whistleblower application “deceitfully presented [himself/herself] as more than qualified to do the required work, but proved to be careless or just incompetent, and then [he/she] resigned at the most crucial point using a phony pretext as an excuse.”

Claimant 10 also argues that one of his/her prior attorneys signed an agreement preventing the attorney from “doing anything without [Claimant’s] consent.” Claimant 10 further argues that Claimant 10 “created the Case” and that he/she should receive “at least 15% of the award.” Claimant 10 contends that without his/her findings of misconduct, “there would have been no Case whatsoever.”

Claimant 10 also argues that after submitting materials to the Commission, he/she was informed by OWB to submit a TCR, which he/she did. Claimant 10 states that OWB never alerted him/her to any mistakes in the TCR or any other mistakes Claimant 10’s attorney may have made and thus never had the opportunity to “take corrective action promptly.” Claimant 10 also argues that the Commission’s “[p]enalty is not commensurate with the violations perpetrated by [the Company]” and Claimant 10 asks the Commission to “re-assess the penalty against [the Company] and imposes [ sic] the maximum amount allowed by the [law].”[fn8]

II. Analysis.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn9] Under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn10] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn11]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn12] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn13]

A whistleblower will also be deemed to have provided original information that led to the successful enforcement of a covered action if the whistleblower meets all the criteria of Exchange Act Rule 21F-4(c)(3), which requires the following to be established:

(1) the whistleblower reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time the whistleblower reported them to the Commission;

(2) the entity later provided the information to the Commission or provided results of an audit or investigation initiated in whole or in part in response to information the whistleblower reported to the entity;

(3) the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of [Rule 21F-4]; and

(4) the whistleblower submitted the same information to the Commission in accordance with the procedures set forth in Rule 21F-9 within 120 days of providing it to the entity.[fn14]

A. Claimants 1 and 2.

The record on reconsideration demonstrates that Claimant 1 and 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action and Related Action 1. Accordingly, Claimants 1 and 2 jointly qualify for a whistleblower award.

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that a joint award of ***% of the monetary sanctions collected in the Covered Action is appropriate.[fn15] In reaching that determination with regard to Claimants 1 and 2, we considered that Claimants 1 and 2’s information in part caused the staff to open the Investigation that led to the charges addressing misconduct in Territory A, and Claimants 1 and 2 provided their information to the staff before Claimants 3 and 4, who also provided information regarding Territory A, reported their information. Claimants 1 and 2, both foreign nationals, also provided ongoing assistance as the Investigation progressed, making themselves available for multiple interviews in addition to providing documents supporting the allegations of misconduct. We also recognize that Claimants 1 and 2 alleged retaliation and other hardships due to their reporting to the Commission.

For these same reasons, we find that a joint award of *** % is appropriate for Claimant 1 and 2 in connection with Related Action 1.

B. Claimant 3.

The record on reconsideration demonstrates that Claimant 3 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action and Related Action 1. Accordingly, Claimant 3 qualifies for a whistleblower award.

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of ***% of the monetary sanctions collected in the Covered Action is appropriate. In reaching that determination with regard to Claimant 3, we considered that although Claimant 3’s information was submitted after the Investigation was already open, Claimant 3, a foreign national, provided new information regarding misconduct in Territory A. Claimant 3 also provided ongoing assistance by appearing for multiple interviews with the staff and provided key documents that helped the staff advance the Investigation. We also recognize that Claimant 3 alleged retaliation and other hardships in connection to reporting to the Commission.

For these same reasons, we find that a joint award of ***% is appropriate for Claimant 3 in connection with Related Action 1.

C. Claimant 4.

The record on reconsideration demonstrates that Claimant 4 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action and Related Action 1. Accordingly, Claimant 4 qualifies for a whistleblower award.

A. Claimant 4 also provided ongoing assistance to the staff by providing documents and appearing for multiple interviews. We also recognize that Claimant 4 alleged retaliation and other hardships in connection to reporting to the Commission.

For these same reasons, we find that an award of ***% is appropriate for Claimant 4 in connection with Related Action 1.

D. Claimants 5 and 6.

The record on reconsideration demonstrates that Claimants 5 and 6 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action and Related Action 2. Accordingly, Claimants 5 and 6 qualify for a joint whistleblower award.

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that a joint award of ***% of the monetary sanctions collected in the Covered Action is appropriate. In reaching that determination with regard to Claimant 5 and 6, we considered that, although the sanctions ordered in the Covered Action focused on conduct in Territory A, Claimants 5 and 6 provided information related to misconduct in Territory B and Territory C that assisted the staff’s investigation. In addition to their initial tip, Claimants 5 and 6 provided documents and lists of other potential key witnesses and an assessment of the potential witnesses’ likelihood of cooperating. Claimants 5 and 6 were also interviewed by the staff over the course of several days and provided ongoing assistance as the staff’s investigation continued.

For these same reasons, we find that a joint award of *** % is appropriate for Claimants 5 and 6 in connection with Related Action 2.

E. Claimant 7.

The record on reconsideration demonstrates that Claimant 7 voluntarily provided original information that led to the successful enforcement of the Covered Action and Related Action 2 pursuant to Rule 21F-4(c)(3). The record shows that Claimant 7 reported internally to the Company regarding potential misconduct in Territory B, and that within 120 days of so doing, Claimant 7 reported the same information to the Commission. The Company subsequently began an internal investigation and provided information to the Commission that led to the successful enforcement of the Covered Action with regard to Territory B. Accordingly, Claimant 7 qualifies for a whistleblower award.

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, as well as our review of Claimant 7’s response to the Preliminary Determinations, we find that an award of ***% of the monetary sanctions collected in the Covered Action is appropriate. The record shows that Claimant 7’s information prompted the Company to begin an investigation regarding misconduct in Territory B and the results of that investigation, plus information provided by other claimants, was the basis for the charges regarding Territory B. Claimant 7 is credited with having participated in the Company’s internal compliance processes and the results of the Company’s internal investigation. Unlike other meritorious claimants in this matter, however, and unlike Claimants 5 and 6, whose information also concerned Territory B, Claimant 7 did not provide ongoing assistance to the staff, and Claimant 7 was not interviewed by the staff.[fn16] And while Claimant 7 argues that he/she should receive an award at least equal to if not greater than the award of joint Claimants 5 and 6, because the information from Claimant 7 only related to Territory B, we decline to make such an award. Claimants 5 and 6 also provided information relating to misconduct in Territory C in addition to misconduct in Territory B, whereas Claimant 7’s information was limited to Territory B. Further, as noted above, Claimants 5 and 6 provided ongoing assistance to Commission staff and Other Agency staff and were interviewed over several days, while Claimant 7 was not interviewed at all. Given these factors, we find that an award of ***% to Claimant 7 is appropriate.[fn17]

We also find that an award of *** % is appropriate for Claimant 7 in connection with Related Action 2. We base this award on the reasons discussed above, taking into consideration that Related Action 2 addressed misconduct in Territory B—about which Claimants 5, 6, and 7 provided information—but did not address conduct in Territory C, about which Claimants 5 and 6 but not Claimant 7 provided information. We also note that a supplemental declaration confirms that Claimant 7 was interviewed as part of an internal investigation by Subsidiary, and Subsidiary provided a summary of that information to Other Agency, which found it useful in its investigation.

F. Claimant 8.

Claimant 8 does not qualify for a whistleblower award. Because significant portions of the information submitted by Claimant 8 appeared to be derived from his/her employment as an attorney for Subsidiary, the TCR and subsequent information Claimant 8 submitted was deemed potentially privileged by an Enforcement filter team and either redacted or withheld from investigative staff.

Accordingly, Claimant 8’s information did not cause the staff to open the Investigation or to inquire concerning different conduct, nor did it significantly contribute to the Investigation. Claimant 8’s contention in his/her response to the Preliminary Determinations that his/her information is not privileged is not relevant—the staff did not review significant portions of Claimant 8’s information and thus Claimant 8’s information did not lead to the success of the Covered Action. As to Claimant 8’s contention in his/her response that staff said Claimant 8’s information was “highly relevant” and “valuable,” staff indicated in a supplemental declaration, which we credit, that while the staff spoke briefly with Claimant 8, the purpose of the conversation was to determine the nature of Claimant 8’s employment responsibilities at Subsidiary. When the staff learned of Claimant 8’s role as an in-house counsel, the staff ceased the conversation so as not to infringe upon any attorney-client communication.[fn18]

For these reasons, Claimant 8 is not eligible for an award.

G. Claimant 10.

Claimant 10 does not qualify for an award. The requirement of Exchange Act Rule 21F-9 to submit a tip in the prescribed manner on Form TCR serves important functions and is critical to the trackability, management, and reliability of tips.[fn19] Rule 21F-9(b) requires that for a claimant to be eligible for an award, the claimant must declare “under penalty of perjury at the time you submit your information . . . that your information is true and correct to the best of your knowledge and belief.” Rule 21F-9(c) requires that for anonymous submitters, “[p]rior to your attorney’s submission, you must provide your attorney with a completed Form TCR that you have signed under penalty of perjury.” And when the attorney makes the anonymous submission, the attorney is required to certify that the attorney has verified the submitter’s identity, reviewed the Form TCR for completeness and accuracy, and obtained the claimant’s “non-waiveable consent to provide the Commission with your original completed and signed Form TCR in the event that the Commission requests it.”

Claimant 10 does not meet this requirement. Claimant 10 relies upon the [Redacted] submission of a TCR (the “First TCR”) as the basis for his/her award application. The First TCR lists two anonymous whistleblowers and one “corroborating witness”; Claimant 10 does not claim to be any of those individuals, and when asked by OWB, Claimant 10 did not provide a copy of the First TCR signed under penalty of perjury. Under this threshold requirement, Claimant 10 does not meet the definition of a whistleblower. Claimant 10’s response to the Preliminary Determinations does not support a finding to the contrary.

In addition, Claimant 10’s information did not lead to the success of the Covered Action. Because Claimant 10 was not identified in the First TCR, Claimant 10 was unknown to the staff until Claimant 10 submitted another TCR over one year later (the “Second TCR”) claiming to be the “lead/organizing whistleblower” of the First TCR. The record shows that the staff determined that Claimant 10 did not have first-hand knowledge of the conduct alleged in the First TCR and did not interview Claimant 10 during the Investigation.[fn20] Nor did the staff find the Second TCR to be helpful for its investigation. Accordingly, Claimant 10’s information did not cause the staff to open the Investigation or to inquire concerning different conduct, nor did it significantly contribute to the Investigation.[fn21]

For these reasons, Claimant 10 is not eligible for an award.

III. Conclusion

Accordingly, it is hereby ORDERED that (1) joint Claimants 1 and 2 receive a joint whistleblower award equal to ***% of the monetary sanctions collected in the Covered Action and ***% of the monetary sanctions collected in Related Action 1; (b) Claimant 3 receive an award equal to ***% of the monetary sanctions collected in the Covered Action and ***% of the monetary sanctions collected in Related Action 1; (c) Claimant 4 receive an award equal to of the monetary sanctions collected in the Covered Action and ***% of the monetary sanctions collected in Related Action 1; (d) joint claimants Claimant 5 and Claimant 6 receive a joint whistleblower award equal to ***% of the monetary sanctions collected in the above-referenced Covered Action and ***% of the monetary sanctions collected in Related Action 2; and (e) Claimant 7 receive a whistleblower award equal to ***% of the monetary sanctions collected in the above-referenced Covered Action and ***% of the monetary sanctions collected in Related Action 2.

It is further ORDERED that Claimant 8’s and Claimant 10’s whistleblower award applications in the Covered Action be, and hereby are, denied.[fn22]

By the Commission.

[2] The CRS recommended that Claimant 5’s and 6’s claim for an award in connection with Related Action 1 be denied. Because Claimants 5 and 6 did not contest the preliminary denial, the CRS’s preliminary determination as to the denial of a related action award in connection with Related Action 1 became the final order of the Commission pursuant to Exchange Act Rule 21F-11(f), 17 C.F.R. § 240.21F-11(f).

[3] The CRS also recommended the denial of Claimants 9 and 11. Claimants 9 and 11 did not contest the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to each became Final Orders of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[4] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[5] Rule 21F-10(d) under the Exchange Act provides that the CRS will “evaluate all timely whistleblower award claims submitted on Form WB-APP in accordance with the criteria set forth in these rules.” 17 C.F.R. § 240.21F-10(d); see also Rule 21F-11(d).

[6] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[7] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[8] Claimant 10 made additional submissions of material after the 60 day window to submit a response to the Preliminary Determinations had passed. Because those materials were not submitted in a timely manner as required by Rule 21F-10(e), we decline to include them in the record for this whistleblower proceeding.

[9] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[10] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[11] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[12] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.

[13] Exchange Act Rel. No. 85412 at 8-9.

[14] Exchange Act Rule 21F-4(c)(3), 17 C.F.R. § 240.21F-4(c)(3).

[15] In assessing the appropriate award amount, Exchange Act 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.

[16] As noted above, Claimant 7 contests the statements in the Preliminary Determinations that Claimant 7 did not offer to be interviewed, arguing that he/she ” literally begged ” (emphasis in original) to be interviewed by Commission and Other Agency staff. Claimant 7’s support of this argument rests on emails from Claimant 7’s counsel to Commission and Other Agency staff, suggesting that staff interview multiple individuals but declining to identify which, if any, was Claimant 7. We are not persuaded by Claimant 7’s argument. In supplemental declarations, which we credit, Commission and Other Agency staff indicate that Claimant 7’s suggestion that the staff interview three individuals, one of whom might be Claimant 7, was not useful and not a reasonable means of accomplishing an interview nor helpful for either the Commission or the Other Agency’s investigations. Claimant 7 also contends that he/she was interviewed by Company counsel during the internal investigation, which we also considered with the other facts and circumstances of Clamant 7’s provision of information. A nonprivileged, factual recitation of Claimant 7’s interview was provided to the staff by Company counsel; Enforcement staff confirmed that the recitation of Claimant 7’s interview indicated that Claimant 7 did not want to be interviewed by Enforcement staff, and Enforcement staff accordingly determined that further efforts to interview him/her would be unproductive.

[17] Claimant 7 argues in the alternative that the CRS’s recommended award to Claimants 5 and 6 and Claimant 7 in the Covered Action should be divided equally among the three individuals. We decline to accept this argument. Our whistleblower awards are allocated based on the quality of information and assistance provided by a whistleblower or group of joint whistleblowers using the factors set forth in Rule 21F-6, not simply on the raw number of whistleblowers involved. See, e.g., Exchange Act Rule 21F-6(a), 17 C.F.R. § 240.21F-6(a).

[18] Claimant 8 also argues that his/her information was not privileged. Because Claimant 8’s information was withheld from investigative staff based on a belief that it was potentially privileged, investigative staff did not review significant portions of it. As a result, whether or not it was privileged, the information did not lead to the success of the Covered Action.

[19] See Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 94398 (March 11, 2022) at 3 (“The programmatic purposes of requiring whistleblowers to submit their information on Form TCR or through the online TCR portal include: allowing the Commission to promptly determine whether an individual who submits information is subject to heightened whistleblower confidentiality protections; helping the staff efficiently process the information and other documentation provided by the individual and assess its potential credibility; and assisting the Commission in eventually evaluating the individual’s potential entitlement to an award. Also, by submitting a tip on Form TCR, the submitter declares under penalty of perjury that the information is true and correct to the best of the submitter’s knowledge and belief. A tip that bypasses the TCR System may not contain the sworn declaration under penalty of perjury as to the veracity of the information.”).

[20] The record also does not show that Claimant 10 provided original information to the Commission. Original information may be based on either independent knowledge or independent analysis. Claimant 10 does not indicate what nonpublic information he/she gathered or contributed to the First TCR. Claimant 10 similarly does not show what independent analysis he/she provided. While Claimant 10 argues that he/she spent significant time researching and investigating misconduct in Territory A, Claimant 10 does not provide evidence showing how that research impacted the First TCR or the Covered Action. Nor does Claimant 10 show how the information “bridge[d] the gap” between the publicly available information and the potential violations of the federal securities laws. See Whistleblower Rules Amendments Adopting Release, 85 Fed. Reg. 70898, 70928 (Nov. 5, 2020) (discussing independent analysis). Furthermore, Claimant 10’s Second TCR did not provide any substantive additional information and referred back to the First TCR.

[21] We are not persuaded by other arguments in Claimant 10’s response to the Preliminary Determinations. The record does not support the contention that Claimant 10 was wrongfully excluded from the First TCR. Declarations from the submitters of the First TCR state that Claimant 10 provided no information that was used in the First TCR. Claimant 10 also argues in his/her response to the Preliminary Determinations that Claimant 10 was told by Claimant 10’s former attorney that “only persons can be whistleblowers, and not legal entities.” Claimant 10’s arguments regarding whether an individual or entity could qualify as a whistleblower are irrelevant; as noted above, the CRS did not recommend denying Claimant 10’s application for award on these grounds.

[22] To the extent that Claimants 8 and 10 applied for related action awards, because Claimants 8 and 10 do not qualify for an award in the Covered Action, Claimants 8 and 10 are not eligible for a related action award in connection with Related Action 1 or Related Action 2. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

SEC

08/02/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F- 4(c)(2) of the Exchange Act.[fn1]

By: Claims Review Staff.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[1] Claimant did not provide information that led to the successful enforcement of the Covered Action. The investigation that led to the Covered Action (the “Investigation”) was not opened based upon information from Claimant nor did Enforcement staff open the Investigation based upon information from [Redacted]. In addition, Claimant’s TCRs were all submitted to the Commission after the Covered Action was filed. Staff assigned to the Investigation did not communicate with Claimant before or during the Investigation.

SEC

07/28/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 2”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application(s) for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimants was never provided to used by staff handling the Covered Action or underlying investigation (or examination), and those staff members otherwise had no contact with Claimants. Therefore, Claimants did not provided information that led to the successful enforcement of the above-referenced Covered Action(s) within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 2 is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9, which Claimant did not do.[fn3]

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] [Redacted] Claimant 2 did not provide information that led to the successful enforcement of the Covered Action. The investigation that led to the Covered Action (the “Investigation”) was opened by the staff based upon news reports and not upon any information from [Redacted] Claimant 2. [Redacted]. Claimant 2 did not submit a TCR to the Commission. While Claimant 2 states that he/she provided information to other government entities, the staff did not receive any information from those entities that advanced the Investigation.

[3] Claimant 2 did not submit a TCR to the Commission. See Exchange Act Rule 21F-9(e) (“You must follow the procedures specified in paragraphs (a) and (b) of this section within 30 days of when you first provided the Commission with original information that you rely upon as a basis for claiming an award. If you fail to do so, then you will be deemed ineligible for an award in connection with that information (even if you later resubmit that information in accordance with paragraphs (a) and (b) of this section.”) While [Redacted] (the “Agency”) submitted a copy of Claimant 2’s complaint to the Agency as a TCR, that TCR was not submitted with a signed whistleblower declaration as required under Exchange Act Rule 21F-9(b). The record also does not unambiguously demonstrate that Claimant 2 otherwise qualifies for an award, thus Claimant 2 does not qualify for the Rule 21F-9(e) waiver.

SEC

97805

07/27/2023

I. Background.

A. The Covered Action.

On [Redacted] the commission instituted settled administrative and cease-and-desist proceedings against [Redacted] (the “Company”). The Commission’s Order charged the Company with [Redacted]. The Commission ordered the Company to pay [Redacted].

On [Redacted] the Office of the Whistleblower posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications with 90 days.[fn2] Claimants 1 and 2 each filed a timely whistleblower award claim.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn3] recommending that Claimant 1 receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected and that Claimant 2 receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected. In determining the award allocation between Claimants 1 and 2, the CRS considered that both Claimants 1 and 2 provided information that caused, in part, staff to open the Covered Action investigation, and both Claimants 1 and 2 provided substantial, helpful assistance.

C. Claimant 1’s Response to the Preliminary Determination.

Claimant 1 submitted a timely written response contesting the Preliminary Determination.[fn4] In his/her reconsideration request, Claimant 1 argues that his/her award percentage should be higher than Claimant 2’s award percentage given three factors: (i) the timing of Claimant 1’s and Claimant 2’s submissions, (ii) the relative importance of Claimant 1’s and Claimant 2’s contributions to the success of the Covered Action, and (iii) the source of Claimant 2’s information as it relates to the importance of Claimant 2’s contributions to the success of the Covered Action and suggests that Claimant 2 may have benefited from the scheme. Claimant 1 argues that his/her information had a more important part than Claimant 2’s information in causing the staff to open the Covered Action investigation because his/her information both opened an investigation into another entity (“Other investigation”)[fn5] and caused staff to plan to open an investigation into the Company. Claimant 1 also argues that his/her contributions to the success of the Covered Action vastly outweigh any relative contributions by Claimant 2.

II. Analysis.

The record demonstrates that Claimants 1 and 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn6] Accordingly, Claimants 1 and 2 are eligible for a whistleblower award.

[Redacted].

We find the award allocation is appropriate. Claimant 1’s arguments in his/her reconsideration request for a higher award percentage are largely based on speculation and do not support a higher award percentage allocation to Claimant 1.

First, as to the timing of the submissions, Claimant 1 provided information before Claimant 2, but staff opened the Other investigation based on Claimant 1’s tip. While staff planned to look into the culpability of the Company, staff did not open the Covered Action investigation until after it received Clamant 2’s detailed information. The record is clear that staff opened the Covered Action investigation based both on information developed from the Other investigation and Claimant 2’s tip, and that both Claimants 1 and 2 provided information that caused, in part, staff to open the Covered Action investigation.

Second, as to the significance of their information, Claimant 1 speculates that either Claimant 2 provided information before Claimant 1 that was not sufficient on its own to open the Covered Action investigation or that Claimant 2 provided information after Claimant 1 and stresses that Claimant 1’s information was sufficient by itself to cause the staff to plan to investigate the Company. Claimant 1 also argues that Claimant 2 would have to provide information not already known to the Commission that added to the Commission’s base of knowledge. As noted, Claimant 1 provided information before Claimant 2, but both Claimant 1’s and Claimant 2’s information caused staff to open the Covered Action investigation. In addition, the record is clear that Claimant 2 provided significant original information, including both independent knowledge and independent analysis, that differed from Claimant 1’s information and that was helpful to the success of the Covered Action.

Third, as to the source of their information, Claimant 1 makes incorrect assumptions about how Claimant 2 obtained information, speculating that Claimant 2 could have financially benefited from the misconduct at issue in the Covered Action, and argues that Claimant 1’s information is therefore either more significant or provided the direct causal link to the Covered Action investigation. Claimant 1’s assumptions are incorrect.

Based on the foregoing, we agree with the CRS’s determination that an equal award allocation is appropriate. Both Claimant 1 and Claimant 2 provided original information that contributed to the opening of the Covered Action investigation, and both Claimant 1 and Claimant 2 provided substantial, helpful assistance.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected in the Covered Action and that Claimant 2 shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] The CRS also preliminarily determined to recommend a denial of the award claim of another claimant, Claimant 3. Claimant 3 did not contest the Preliminary Determination. Accordingly, the preliminary denial as to Claimant 3 became the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] The Other investigation resulted in a separate enforcement action (“Other action”), which is pending. There is also parallel criminal litigation (“Criminal actions”).

[6] See Exchange Act Section 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).

[7] 17 C.F.R. § 240.21F-5(b); see also Exchange Act Rule 21F-5(a) (“[t]he determination of the amount of an award is in the discretion of the Commission”) and Exchange Act Rule 21F5(c) (“[i]f the Commission makes awards to more than one whistleblower . . . the Commission will determine an individual percentage award for each whistleblower”).

[8] [Redacted].

[9] [Redacted].

[10] [Redacted].

[11] [Redacted].

[12] It is premature to determine whether the Other action will result in its own Notice of Covered Action or whether it arises from the “same nucleus of operative facts” as the Covered Action for purposes of payment of a whistleblower award. See Exchange Act Rule 21F-4(d), 17 C.F.R. § 240.2F-4(d). Similarly, it is premature to determine whether the Criminal actions are “related actions.” See Exchange Act Rules 21F-3(b) and 21F-11, 17 C.F.R. §§ 240.21F-3(b), 240.2F-11.

SEC

97879

07/12/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”), which would result in a payment of over $9 million.[fn1] Claimant provided written notice stating that Claimant will not contest the Preliminary Determination.

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]
In determining the amount of award to recommend for the Claimant, we considered the following factors set forth in Rule 21F-6 of the Exchange Act as they apply to the facts and circumstances of the Claimant’s application: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the 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.

In making this preliminary recommendation, we considered, among other things, that the Claimant provided highly significant and detailed information that alerted Enforcement staff to the underlying conduct, prompting the opening of the investigation; his/her information bears a close nexus to the charges brought by the Commission in the Covered Action; he/she provided critical and ongoing assistance throughout the investigation, including meeting with Enforcement staff multiple times; Claimant repeatedly raised concerns internally; and that millions of dollars have been returned to harmed investors as a result of the Claimant’s information and assistance.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent (*** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] Claimant was a [Redacted] at the time Claimant obtained the information. As a result, the CRS considered whether Claimant’s information was “original information”. Under Rule 21F-4(b)(1), “[i]n order for [a] whistleblower submission to be considered original information, it must,” among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1). In turn, Rule 21F-4(b)(4)(iii)(B) provides that, unless an exception applies, “[t]he Commission will not consider information to be derived from [a whistleblower’s] independent knowledge or independent analysis” if the whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities,” 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). The CRS preliminarily determined that Rule 21F-4(b)(4)(iii)(B) did not apply here to disqualify Claimant’s information from treatment as original information pursuant to the 120-day exception in Rule 21F-4(b)(4)(v)(C), 17 C.F.R. § 240.21F-4(b)(4)(v) (C), because Claimant reported the information internally to his/her supervisor and then waited at least 120 days to report the information to the Commission.

[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

SEC

97838

07/05/2023

The Office of the Whistleblower issued a Preliminary Summary Disposition (“PSD”) recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 2”) in connection with the above-referenced covered action (the “Covered Action”). Claimant 2 filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant 2’s award claim is denied.[fn1]

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled cease-and-desist proceedings against [Redacted] (the “Company”) finding that the Company violated [Redacted]. According to the Commission’s order, the Company [Redacted]. The Company [Redacted]. To resolve the matter, the Company agreed to pay disgorgement [Redacted] and prejudgment interest [Redacted].

B. The Preliminary Summary Disposition.

On [Redacted] OWB issued the PSD in connection with the Covered Action recommending that the whistleblower award claim of Claimant 2 be preliminarily denied. OWB noted that the information provided by Claimant 2 was never provided to or used by staff handling the Covered Action or underlying investigation, and those staff members otherwise had no contact with Claimant 2. Therefore, Claimant 2 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. OWB also noted that Commission staff responsible for the underlying investigation in the Covered Action never received any information from Claimant 2 or had any communications with Claimant 2. As such, Claimant 2 did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

C. Claimant 2’s Response to the Preliminary Summary Disposition.

Claimant 2 submitted a timely written response (the “Response”) contesting the PSD.[fn2] In the Response, Claimant 2 wrote that: “Its apparent that none of my earlier tips, (since year of [Redacted] and last one in [Redacted] with valuable information provided to whistleblower attorney’s office first and then being directed then to contact help desk of whistleblower office with any questions further I have a proof of communication attached bellow.” (errors in original). Claimant 2’s Response appears to suggest that he/she submitted additional TCRs and other documents that were “clearly overlooked” with respect to his/her award claim made in connection with the Covered Action. Similarly, Claimant 2 suggests his/her information was overlooked, neglected, or ignored causing his/her tip not to be forwarded to investigative staff in a reasonable time. Claimant 2 also wrote that he/she included additional documents in his/her Response because they “prove[] that securities violations [] took place in [his/her] case.” Finally, Claimant 2’s Response takes issue with the “heavily redacted statements” in the Division of Enforcement (“Enforcement”) staff declaration (“Declaration”) and notes that the Declaration was seemingly “signed in [Redacted].”

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7] For the reasons discussed below, Claimant 2’s information does not merit a whistleblower award in the Covered Action because the record does not establish that the information led to a successful enforcement action, as required by Rule 21F-4(c).

First, the record demonstrates that the Commission’s investigation which led to the Covered Action (the “Investigation”) was opened before Claimant 2 submitted his/her information to the Commission. According to the Declaration, which we credit, the Investigation was opened in early [Redacted] as a result of the staff’s investigative efforts, and not as a result of any tip. Accordingly, Claimant 2’s information did not cause the staff to open the Investigation.

Second, the record shows that Claimant 2’s tip to the Commission did not cause the staff to inquire into different conduct or significantly contribute to the success of the Covered Action. Claimant 2’s Response takes issue with the indication in the Declaration that Claimant 2’s TCR, dated [Redacted] (“[Redacted] TCR”), did not involve securities violations and was neither received nor reviewed by the Commission staff assigned to the Investigation. Claimant 2’s Response suggests that he/she submitted additional TCRs and other documents that were not considered with respect to his/her award claim made in connection with the Covered Action, and that this “overlooked” information contributed to the Investigation.

According to a sworn declaration from OWB staff, which we credit, an additional search of the TCR system did not yield any TCRs submitted by the Claimant other than the [Redacted] TCR. Claimant 2 also points to other documents he/she included in his/her Response to prove that securities violations occurred. But, as reflected by the record, none of Claimant 2’s information, including attachments to the TCR, contributed to the success of the Covered Action given that Claimant’s information was neither received nor reviewed by the staff assigned to the Investigation.

Claimant 2’s Response also included an email exchange with staff of the SEC’s Office of Investor Education and Advocacy (“OIEA”) dated on or around [Redacted] However, nothing in this document suggests that any information provided by Claimant 2 was used in or had any impact on the charges brought by the Commission in the Covered Action. Further, the email exchange does not appear to contain any information about a securities law violation and the record does not indicate that it was shared with staff assigned to the Investigation. Instead, the email exchange reflects the OIEA staff’s referral of Claimant 2 to another agency.

Lastly, Claimant 2’s Response takes issue with the “heavily redacted statements” in the Declaration and notes that the Declaration was “signed in [Redacted].” Claimant 2’s concerns regarding the Declaration are misplaced. Claimant 2 received a copy of the Declaration upon request. As reflected by the Confidentiality Agreement that Claimant 2 signed, “… OWB may redact any information therein that relates to another claimant’s award application ….” To the extent that Claimant 2 is seeking an unredacted copy of the Declaration, Claimant 2 is not entitled to it. The redactions in the Declaration were properly made and in accordance with law to protect the identity of other claimants.[fn8] With respect to Claimant 2’s argument that the Declaration was “signed in [Redacted]” — it appears that the Declaration was inadvertently dated “[Redacted].” Upon discovery, the mistake was corrected and Enforcement staff dated the Declaration “[Redacted].” The revised date did not affect the substance of the Declaration. Accordingly, Claimant 2 received the appropriate information related to his/her claim.

For these reasons, Claimant 2 is not eligible for a whistleblower award in connection with the Covered Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant 2 in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[1] The Office of the Whistleblower (“OWB”) also preliminarily determined to recommend that the award applications of three other claimants be denied. None of these claimants submitted a request for reconsideration and, as such, the Preliminary Summary Dispositions with respect to their award claims became the Final Order of the Commission, pursuant to Rule 21F-18(b)(4).

[2] See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[5] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[7] Exchange Act Rel. No. 85412 at 8-9.

[8] See Exchange Act Rule 21F-12(b).

SEC

97831

07/03/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 3”) in connection with the above-referenced action (the “Covered Action”). The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition recommending the denial of the whistleblower award claim of [Redacted] (“Claimant 5,” and collectively, “Claimants”) in connection with the Covered Action. Each of the Claimants filed timely responses contesting the preliminary denials.[fn1] For the reasons discussed below, each of the Claimants’ award claims are denied.[fn2]

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted settled administrative and cease-and-desist proceedings against [Redacted] (together, the “Company”) alleging that the Company [Redacted]. The Commission charged the Company with violations of [Redacted]. The Commission also found that the Company [Redacted]. The Company agreed to pay a civil monetary penalty of [Redacted] to settle the matter.

On [Redacted], OWB posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant 3 submitted a timely whistleblower award claim. Claimant 5 submitted a whistleblower award claim on [Redacted], approximately seven months after the deadline for submitting whistleblower applications.

B. The Preliminary Denials and Claimants’ Responses.

1. Claimant 3.

i. The Preliminary Determinations as to Claimant 3.

The CRS issued Preliminary Determinations recommending that Claimant 3’s claim be denied because Claimant 3 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS stated that Claimant 3’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS preliminarily determined that Enforcement staff responsible for the investigation that led to the Covered Action (the “Investigation”) did not receive any information from, or have any communications with, Claimant 3.[fn3]

ii. Claimant 3’s Response to the Preliminary Determinations.

Claimant 3 submitted a timely written response contesting the Preliminary Determinations.[fn4] Claimant 3 principally argues that Claimant 3 began communicating with the Commission in [Redacted]. Claimant 3 notes that he/she initially submitted a tip to [Redacted] (“Other Agency A”) in [Redacted], approximately fifteen months earlier. Claimant 3 contends that he/she supplied information to Other Agency A which then contacted the Company. Claimant 3 states that when he/she had not heard from Other Agency A in some time, Claimant 3 called Other Agency A and was told to submit a tip to the Commission. Claimant 3 argues that “I was told to contact the SEC and file a tip with them. . . I sent my tip to the SEC, at their suggestion. You have our correspondence. . . . I feel I should receive an award because all the information to [Other Agency A] that was needed to start a claim was given by me. They had filed the same grievance before against them and I provided enough information to create a new case. The fact that this information was not in the reason for denial of my complaint concerns me.”

2. Claimant 5.

i. The Preliminary Summary Disposition as to Claimant 5.

OWB issued a Preliminary Summary Disposition to Claimant 5 recommending that Claimant 5’s claim be denied on the grounds that Claimant 5’s award application was untimely because Claimant 5 failed to submit the application to OWB within 90 days of the date of the Covered Action, as required by Rule 21F-10(b). OWB noted that the deadline to file award claims was [Redacted] ninety days after the posting of the Notice of Covered Action on [Redacted]. OWB received Claimant 5’s application on [Redacted] approximately seven months after the deadline. OWB also stated that Claimant 5 did not specify in his/her award application which TCR submission to the Commission formed the basis of his/her award application. OWB also stated that a search of the TCR system for Claimant 5’s tip identified the tip, but a designation in the TCR system indicated that Claimant 5’s tip was not forwarded to Enforcement staff in connection with any investigation.

ii. Claimant 5’s Response to the Preliminary Summary Disposition.

Claimant 5 submitted a timely written response contesting the Preliminary Summary Disposition. Claimant 5 argues that he/she provided information to [Redacted] (“Other Agency B”) in [Redacted] one month before the Commission filed the Covered Action. Claimant 5 also argues that he/she provided valuable information to the Commission and other government agencies regarding the Company’s misconduct. Claimant 5 also states that he/she spent significant time and energy on his/her efforts to address the Company’s misconduct, and that he/she has endured significant hardships during that time, including terminal illness and financial hardships.

Claimant 5 contends that he/she did not submit a whistleblower application in a timely manner because he/she believed that [Redacted]. Commission press release announcing whistleblower awards to two claimants in connection with two other actions, issued approximately two months after Claimant 5 submitted his/her award application for the Covered Action, was in fact an award to Claimant 5 for his/her reporting. Claimant 5 also argues that he/she communicated with Commissioners and the Ombudsman in [Redacted] approximately two months after the Covered Action was filed, informing them of the information contained in Claimant 5’s submission to Other Agency B three months earlier; Claimant 5 states that Commission staff told him/her the “SEC does not handle what I reported [and] gave other resources.” As a result, Claimant 5 argues he/she was “not allow[ed] . . . the 90 [day] window to file a claim for [the Covered Action or for other actions filed during the same month].” Claimant 5 also states that he/she “is a layman . . . doing the best [he/she] can.”

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn5] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn6] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn7]

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn8] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn9]

A claimant must also submit a whistleblower award claim within ninety days of the posting of a Notice of Covered Action (“NoCA”), as set forth in Exchange Act Rule 21F-10. This requirement serves important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claims process so that the Commission can make timely awards to meritorious whistleblowers.[fn10]

A. Claimant 3.

Claimant 3 does not qualify for a whistleblower award because his/her information did not cause the staff to open the Investigation, nor did Claimant 3’s information cause the staff to inquire into different conduct in or significantly contribute to the ongoing Investigation. As an initial matter, the record demonstrates that the Investigation was opened in [Redacted] based on the staff’s investigative efforts in connection with an earlier investigation and not based upon information provided by any claimant. The record also does not support Claimant 3’s contention that his/her submission to Other Agency A may have caused the staff to open the Investigation. A supplemental staff declaration, which we credit, confirms that the Investigation was not opened based upon any information from Other Agency A.

In addition, the record does not show that Claimant 3’s information caused the staff to inquire into different conduct or significantly contributed to the Investigation. Claimant 3’s TCR was not forwarded to staff assigned to the Investigation, nor did staff assigned to the Investigation receive any information from or communicate with Claimant 3 before or during the Investigation. Lastly, the staff confirms in the supplemental declaration that it did not receive, review, or use any information related to Claimant 3 from Other Agency A before or during the Investigation.

For these reasons, Claimant 3 is not eligible for a whistleblower award.

B. Claimant 5.

Claimant 5 is not eligible for a whistleblower award on the grounds that Claimant 5 did not submit his/her award application within ninety days of the posting of the NoCA; instead, Claimant 5 submitted his/her application approximately seven months late. To the extent Claimant 5 argues that the Commission should use its authority under Exchange Act Rule 21F-8(a) to waive the ninety-day filing requirement in the Covered Action, we decline.[fn11] Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive any of these procedures upon a showing of extraordinary circumstances.”[fn12] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn13] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn14]

Claimant 5 does not meet that “demanding showing” here. While Claimant 5 states that he/she is suffering a significant illness, the record does not demonstrate that Claimant 5’s illness prevented him/her from submitting a whistleblower application in a timely manner. Further, Claimant 5’s lack of awareness of the submission deadline does not rise to the level of an “extraordinary circumstance.” As we have said in a prior order when addressing other untimely whistleblower applications:

[T]he Commission is not obligated to notify a claimant of the posting of a NoCA or the deadline for submitting an award application. As we have explained, our whistleblower rules provide “for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim.” The NoCA for the Covered Action [was] clearly posted on the Commission’s website, along with the requisite deadline[]. Under our rules, that is all the notice that Claimant was due.

“[A] lack of awareness about the [whistleblower award] program does not . . . rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.” “A potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim.” Claimant’s failure to regularly monitor the Commission’s web page for NoCA postings is not an “extraordinary circumstance” that might trigger our discretion to excuse the fact that Claimant submitted the award application more than two years late.[fn15]

In addition, we are not persuaded by Claimant 5’s other contentions. While Claimant 5 argues that he/she provided information to Other Agency B in [Redacted] approximately one month before the Covered Action was filed, the record does not demonstrate that staff assigned to the Investigation received any information from Other Agency B during that time that advanced the Investigation. Claimant 5 submitted a TCR to the Commission in [Redacted] approximately seven months after the Commission filed the Covered Action.[fn16] Further, the staff confirmed, in a supplemental declaration, that the staff did not receive, review, or use any information from Claimant 5 before or during the Investigation.[fn17]

Accordingly, Claimant 5 is not eligible for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimant 3 and Claimant 5 in connection with the Covered Action be, and they hereby are, denied.[fn18]

By the Commission.

[1] The CRS also preliminarily denied the award claims of three other claimants. Those claimants did not seek reconsideration of the Preliminary Determinations, and therefore the denials of their claims were deemed to be the Final Orders of the Commission under Exchange Act Rule 21F-10(f).

[2] Pursuant to Exchange Act Rule 21F-18(b)(5), OWB determined that Claimant 5’s claim should be resolved in the same proceeding as Claimant 3’s claim through the claims adjudication procedures set forth in Rule 21F-10.

[3] While not a basis for the denial of Claimant 3’s claim, the CRS also stated that Claimant 3’s submission does not appear to be voluntary because Claimant 3 checked “no” to Question 8a in the Form WB-APP, which asks whether the claimant provided the information to the Commission prior to receiving a request, inquiry or demand for the information from the Commission or other authorities as set forth in Rule 21F-4(a).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[6] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[7] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[9] Exchange Act Rel. No. 85412 at 8-9.

[10] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34300 (June 13, 2011); Order Determining Whistleblower Award Claim, Release No. 88464 at 3 (Mar. 24, 2020).

[11] To the extent that Claimant 5 is asking that we invoke our exemptive authority under Section 36(a) of the Exchange Act to waive the timeliness requirement, we decline to do so for the reasons discussed herein. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” The circumstances here do not warrant invoking Section 36(a).

[12] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

[13] Order Determining Whistleblower Award Claim, Release No. 34-77368 at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S.Ct. 2005 (2018).

[14] See Order Determining Whistleblower Award Claim, Release No. 77368 at 3; see also Order Determining Whistleblower Award Claim, Release No. 82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 72178 (May 16, 2014).

[15] Order Determining Whistleblower Award Claim, Release No. 88464 at 3-4 (March 24, 2020) (internal citations omitted).

[16] Although not a separate ground for this denial, the record does not demonstrate that Claimant 5 provided information to the Commission that led to the success of the Covered Action.

[17] Further, Claimant 5’s argument that we consider the hardships he/she encountered does not warrant the granting of an award. While we may consider “any unique hardships experienced by the whistleblower as a result of his or her reporting,” such consideration does not apply to whether a claimant is eligible for an award, but instead to the amount of an award after a claimant has met all of the award eligibility criteria. See Rule 21F-6(b)(2)(vi). As discussed above, Claimant 5 has not met the eligibility criteria for an award. Accordingly, we need not consider Claimant 5’s argument regarding any hardships.

[18] To the extent that each of the Claimants seeks a related action award, neither Claimant is eligible. Because each of the Claimants is not eligible for an award for the Covered Action, each of the Claimants is not eligible for an award based on a related action by another government agency. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

SEC

07/03/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [Redacted] (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimant was never provided to or used by staff handling the Covered Action or underlying investigation (or examination), and those staff members otherwise had no contact with Claimant. Therefore, Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By Office of the Whistleblower.

[2] Claimant did not provide information that led to the successful enforcement of the Covered Action. The investigation that led to the Covered Action (the “Investigation”) was opened based upon investigative efforts of Commission staff. Claimant’s TCRs were all submitted after the Covered Action was filed with the court and did not contribute to the charges in the Covered Action. And while Claimant reported the misconduct to [Redacted] (the “Company”) on or about [Redacted], and the Company conducted its own investigation, Claimant did not provide the same information to the Commission until [Redacted], [Redacted], more than 120 days later. Claimant’s tips to [Redacted] (the “Firm”) are also not eligible for an award. While the Commission received information from the Firm, that information was in response to a Commission request to the Firm. In addition, the information from the Firm did not contribute to the charges in the Covered Action. Claimant accordingly does not qualify for an award under Rule 21F-4(c)(3) with regard to information provided to the Company or the Firm.

SEC

97826

06/30/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with the above-referenced Covered Action (the “Covered Action”) recommending that the whistleblower award application submitted by [Redacted] (“Claimant”) be denied. Claimant filed a timely response contesting the Preliminary Determination. For the reasons discussed below, the Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed settled administrative and cease-and-desist proceedings against [Redacted] (“Company”) alleging that the Company had violated the federal securities laws [Redacted]. In settlement, [Redacted] was ordered to pay [Redacted] in disgorgement, prejudgment interest, and civil penalties.

On [Redacted] the Office of the Whistleblower posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn1] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant’s claim for an award in the Covered Action be denied. The Preliminary Determination stated that Claimant did not provide information that led to the success of the Covered Action because Claimant’s information did not cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and thereafter bring an action based, in whole or in part, on, conduct that was the subject of the claimant’s information under Rule 21F-4(c)(1) of the Exchange Act; or significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant based the award claim on a tip that he/she had submitted to the Commission in [Redacted] (“Other Entity”), which was closed by the Commission’s Office of Market Intelligence with a disposition of “No Further Action” or “NFA”, and was not provided to investigative staff responsible for the Covered Action. Enforcement staff responsible for the Covered Action affirmed that they had not received any information from Claimant or had any communications with Claimant during the course of the Covered Action investigation.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn3] Claimant principally argues: (1) that he/she provided information to the [Redacted] and that the Commission’s action against the Company was based on an action brought by [Redacted] (2) that he/she provided information to staff in the Commission’s Office of the Whistleblower (“OWB”) also in *** (3) that the information he/she provided should have triggered a Commission investigation; (4) that he/she provided several tips to the Commission that were relevant to the allegations in the Covered Action; (5) that it is irrelevant that he/she did not have communications with the relevant investigative staff responsible for the Covered Action; and (6) he/she deserves a whistleblower award even if the investigative team responsible for the Covered Action did not receive his/her information.

II. Analysis.

Claimant’s information did not cause the Enforcement staff to open the Covered Action investigation. The record reflects that the investigation was opened in [Redacted] based on information from a source other than Claimant.

Claimant’s information also did not cause the Enforcement staff to inquire into different conduct, and did not significantly contribute to the success of the Covered Action. Enforcement staff responsible for the Covered Action provided a supplemental declaration, which we credit, confirming that they did not receive or review any information from Claimant and had no communications with him/her. Enforcement staff also clarified that they did not receive Claimant’s information from [Redacted] nor did they receive any referrals or information from [Redacted] that were used in the Covered Action. Similarly, Enforcement staff responsible for the Covered Action did not receive Claimant’s information from OWB staff. The supplemental declaration also confirms that Enforcement staff did not receive or review the various tips referenced by Claimant in his/her response, as they were either closed with an NFA disposition or referred to other Enforcement staff in connection with other matters. As such, none of Claimant’s information was used in or otherwise contributed to the success of the Covered Action.

Finally, we consider Claimant’s argument that he/she should receive an award even if the investigative team never received his/her information or had any communications with him/her, and that his/her tips should have triggered an investigation. As we have stated, “the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s information actually had on the investigation.”[fn10]

III. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] [Redacted].

[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[6] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).

[7] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[8] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 at 4 (Jan. 14, 2021); see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 at 9 (Mar. 26, 2019).

[9] Exchange Act Rel. No. 85412 at 8-9.

[10] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 92542 at 4 (Aug. 2, 2021) (quoting Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90872 at 4 (Jan. 7, 2021)) (internal quotation marks omitted).

SEC

97804

06/27/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claims submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) in connection with the above-referenced covered action (“Covered Action”). Claimant 1 and Claimant 2 filed timely responses contesting the preliminary denials.[fn1] For the reasons discussed below, Claimant 1’s and Claimant 2’s award claims are denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed the Covered Action in the [Redacted] (“Court”) against [Redacted] (collectively, “Defendants”). The Covered Action charged Defendants for [Redacted]. The Covered Action alleged that Defendants [Redacted]. The Covered Action also alleged that Defendants [Redacted]. On [Redacted] the Court entered a final judgment against Defendants that [Redacted]. The Court also imposed [Redacted] in monetary sanctions against Defendants.[fn2]

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn3] Claimant 1 and Claimant 2 filed timely whistleblower award claims.

B. The Preliminary Determination as to Claimant 1.

On [Redacted] the CRS issued a Preliminary Determination[fn4] recommending that Claimant 1’s claim be denied because Claimant 1 did not provide “original information” that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder.[fn5] First, the Preliminary Determination recommended a denial because Claimant 1’s information was based on publicly available information, primarily information from a website; Claimant 1’s tip (“Claimant 1 TCR”) did not contain any additional evaluation of or insight into the alleged misconduct separate and apart from what was obtained from the publicly available materials. Second, the Preliminary Determination recommended a denial because the information provided by Claimant 1 was already known to the Commission.

C. Claimant 1’s Response to the Preliminary Determination.

In response, Claimant 1 argues that he/she provided the Commission with information based on his/her independent knowledge and that he/she conducted independent analysis relevant to the Covered Action. Claimant 1 states that the information he/she provided to the Commission was based on information Claimant 1 obtained from various public and non-public sources, including [Redacted]. In support thereof, Claimant 1 attaches certain documents to his/her reconsideration request— including emails, text messages, and other miscellaneous materials—which Claimant 1 alleges contain information he/she relied upon before submitting the Claimant 1 TCR to the Commission. Claimant 1 asserts that his/her information was not otherwise easily obtained by the Commission [Redacted] — which Claimant 1 alleges was where certain of the relevant misconduct transpired—and that even though certain information was publicly available [Redacted] such information cannot be considered to be publicly available [Redacted].

Claimant 1 alleges that his/her information prompted the Commission to initiate the Investigation. Claimant 1 believes that the temporal proximity between the time that he/she submitted the Claimant 1 TCR to the Commission in [Redacted] and the opening of the Investigation in [Redacted] indicates that the Claimant 1 TCR caused the Investigation to be opened. Claimant 1 also states that it is possible that he/she submitted the anonymous tip referenced in the Preliminary Determination (“Anonymous Tip”).[fn6] Additionally, Claimant 1 states that OWB previously provided him/her with a copy of the Claimant 1 TCR but denied Claimant 1’s request to receive “all other related TCRs” and told Claimant 1 to contact the Commission’s Office of FOIA Services to request such information. Claimant 1 alleges that the other TCRs may contain information that demonstrates that Claimant 1 is entitled to an award for the Covered Action. Finally, Claimant 1 alleges that OWB discriminated against Claimant 1 due to [Redacted] and because he/she was unrepresented in connection with his/her award application.

D. The Preliminary Determination as to Claimant 2.

On [Redacted] the CRS issued a Preliminary Determination[fn7] recommending that Claimant 2’s claim be denied.[fn8] First, the Preliminary Determination recommended a denial because Claimant 2 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. In particular, the CRS preliminarily determined that Claimant 2, an attorney, submitted the Anonymous Tip on behalf of Claimant 2’s anonymous client, and the tip was closed with a designation of “no further action” after the Commission was unable to substantiate the allegations contained therein. The Anonymous Tip did not cause Commission staff (“Staff”) to open the Investigation. After opening the Investigation, Staff reviewed the Anonymous Tip; however, none of the information contained in the Anonymous Tip was used in the Covered Action, and Staff had no communications with Claimant 2 or Claimant 2’s anonymous client.

Second, the Preliminary Determination recommended a denial because Claimant 2 was not a “whistleblower” under Rule 21F-2(a)(1) of the Exchange Act with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Rule 21F-9(a) of the Exchange Act. The Preliminary Determination stated that Claimant 2 based his/her award claim upon a tip Claimant 2 submitted as counsel on behalf of an anonymous client. While Claimant 2’s anonymous client may have been a “whistleblower,” Claimant 2—who was acting as an attorney representing the anonymous client—was not a “whistleblower”.

E. Claimant 2’s Response to the Preliminary Determination.

In response, Claimant 2 alleges that he/she was the first individual to send the Commission information that led to the initiation of the Investigation and the Covered Action. Claimant 2 states that if his/her award claim is denied, the Commission must prove that either someone else earlier than Claimant 2 provided information that led to the Covered Action or that Claimant 2’s information did not lead to the Covered Action. Claimant 2 argues that he/she is an attorney by profession and that he/she submitted his/her claim as though Claimant 2 was representing himself/herself in connection with the Anonymous Tip. According to Claimant 2, he/she did not represent any other individual in connection with the submission of the Anonymous Tip. Claimant 2 alleges that instead, the source of the information contained within the Anonymous Tip was Claimant 2. Claimant 2 also complains that the record he/she received from OWB was insufficient. Claimant 2 alleges that the record did not constitute all of the relevant materials that should have been considered when Claimant 2’s award claim was evaluated at the Preliminary Determination stage.

II. Analysis.

A. Claimant 1.

We deny an award to Claimant 1 in connection with the Covered Action. To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn9] For a whistleblower submission such as the Claimant 1 TCR to be considered original information, it must be: (1) derived from a whistleblower’s “independent knowledge” or “independent analysis”; and (2) not already known to the Commission from any other source.[fn10] Claimant 1 did not provide the Commission with such information.

To start, Claimant 1 has represented to the Commission on multiple occasions that the information contained in the Claimant 1 TCR was based on publicly available sources. In the Claimant 1 TCR, dated [Redacted] Claimant 1 was asked: “What is the source of your information?” In response, Claimant 1 stated that the source of his/her information was only “[p]ublicly available information.” Claimant 1’s whistleblower award application, dated [Redacted] (“Claimant 1 WB-APP”), suggests that the Claimant 1 TCR information was based on “obvious information” and “website evidence.” Finally, Claimant 1 states in his/her reconsideration request that [Redacted]. [Redacted].

Claimant 1 alleges in his/her reconsideration request that [Redacted] — transpired between [Redacted]. Claimant 1 alleges that such communications made Claimant 1 suspect that [Redacted].

Notably, however Claimant 1 stated in the Claimant 1 TCR that he/she became aware of the alleged conduct on [Redacted]. This [Redacted] date does not coincide with the time period of when Claimant 1 allegedly learned information from [Redacted]. Instead, the [Redacted] date directly coincides with the timing of when Claimant 1 purports to have [Redacted] and the information contained therein that led Claimant 1 to conclude that [Redacted]. Regardless, the fact that [Redacted] was publicly available information [Redacted]. As such, it fails to satisfy the definition of “original information,” because it was derived from neither Claimant 1’s independent knowledge nor independent analysis.[fn11]

Moreover, the fact that [Redacted] was already known to the Commission from another source and therefore fails to satisfy the definition of “original information” under Section 21F-4(b).[fn12] In the Claimant 1 TCR, Claimant 1 alleged that [Redacted].[fn13] Here, the relevant information — [Redacted] — was already known to the Commission through another source. As confirmed by a supplemental Staff declaration (“Supplemental Declaration”), Staff reviewed [Redacted] after receiving the Claimant 1 TCR. [Redacted]. After staff reviewed [Redacted] Staff reached out to another investigation team in Enforcement working on an unrelated matter. This unrelate matter had originated in [Redacted]. As part of this unrelated matter, the other Enforcement investigation team had previously obtained information related to *** such information was in the Commission’s possession prior to the submission of the Claimant 1 TCR. Certain of this information revealed that [Redacted].

Thus, the information provided by Claimant 1 that was not available [Redacted] was already known to the Commission at the time that Claimant 1 submitted the Claimant 1 TCR. The Claimant 1 TCR therefore cannot be considered to be qualifying original information under Rule 21F-4(b)(1), as the information contained in the Claimant 1 TCR: (1) was not derived from Claimant 1’s “independent knowledge” or “independent analysis”; and (2) was already known to the Commission from another source.[fn14]

B. Claimant 2.

We deny an award to Claimant 2 in connection with the Covered Action. To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn15] Claimant 2 did not provide the Commission with such information.

As the Preliminary Determination correctly stated, Claimant 2 did not provide any information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS noted that Claimant 2 submitted the Anonymous Tip on behalf of Claimant 2’s client; the Anonymous Tip was closed with a designation of “no further action” after the Commission was unable to substantiate the allegations contained therein. Moreover, the Declaration confirmed under penalty of perjury that the Anonymous Tip did not play a role in the opening of the Investigation. The Declaration noted that Staff did not communicate with Claimant 2 or his/her anonymous client. Neither Claimant 2 nor his/her client provided any information other than the Anonymous Tip to Staff during the course of the Investigation. Further, the Declaration stated that none of the information contained in the Anonymous Tip helped advance the Investigation, and none of the information contained in the Anonymous Tip was used in, nor had any impact on, the charges brought by the Commission in the Covered Action. Additionally, there is no support for Claimant 2’s allegation that the record that formed the basis of the Preliminary Determination was insufficient. Pursuant to Rule 21F-12(a), the record materials included all publicly available materials from the Covered Action, the Anonymous Tip, Claimant 2’s whistleblower award application, and the Declaration.

Finally, we note that the Preliminary Determination recommended that Claimant 2’s claim should also be denied because Claimant 2 was not a “whistleblower” under the Rules with respect to the Covered Action. Claimant 2 argues that he/she is an attorney by profession and that he/she submitted his/her claim as though Claimant 2 was representing himself/herself in connection with the Anonymous Tip. However, even if Claimant 2 submitted the Anonymous Tip on behalf of himself/herself—and there was no separate, anonymous whistleblower that Claimant 2 represented—Claimant 2 is still not entitled to a whistleblower award because none of the information contained in the Anonymous Tip was used in, nor had any impact on, the charges brought by the Commission in the Covered Action.

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimant 1 and Claimant 2 in connection with the Covered Action be, and hereby are, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[2] As of the date of this Final Order, [Redacted] has been collected in connection with the Covered Action; at this time, it is not clear whether there will be any additional collections in connection with the Covered Action. Thus, if any whistleblower award were to be issued in this matter, the maximum award at this time would equal [Redacted] (30% of the monetary sanctions collected); this assumes that no additional collections are made in connection with the Covered Action.

[3] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[5] The record supporting the Preliminary Determination included the declaration (“Declaration”) of one of the Division of Enforcement (“Enforcement”) attorneys who was assigned to the investigation that led to the Covered Action (“Investigation”). See Exchange Act Rule 21F-12(a).

[6] The Anonymous Tip is a tip that Claimant 2, an attorney, submitted to the Commission on behalf of Claimant 2’s anonymous client. There is no indication in the record that Claimant 1 was this anonymous client or was connected in any way to the Anonymous Tip.

[7] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[8] The record supporting the Preliminary Determination included the Declaration.

[9] Exchange Act Section 21F(b)(1), 15 U.S.C. §78u-6(b)(1).

[10] Exchange Act Rule 21F-4(b)(1), 17 C.F.R. § 240.21F-4(b)(1).

[11] “Independent knowledge” means “factual information in [an individual’s possession] that is not derived from publicly available sources.” Exchange Act Rule 21F-4(b)(2), 17 C.F.R. § 240.21F-4(b)(2). “Independent analysis” means “examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.” Exchange Act Rule 21F-4(b)(3), 17 C.F.R. § 240.21F-4(b)(3).

[12] Exchange Act Rule 21F-4(b)(1)(ii), 17 C.F.R. § 240.21F-4(b)(1)(ii) (“In order for your whistleblower submission to be considered original information, it must be: . . . (ii) Not already known to the Commission from any other source, unless you are the source of the information.”).

[13] The substantive portion of Claimant 1’s TCR contained three sentences: [Redacted].

[14] Additionally, the Supplemental Declaration confirmed that [Redacted] was available for review in the United States, where Staff was based. Thus, there is no merit to Claimant 1’s contention that [Redacted] publicly available in the United States. The Declaration stated that outside of submitting the Claimant 1 TCR, Claimant 1 did not provide any information to Staff, and Staff never communicated with Claimant 1. Additionally, there is no evidence supporting Claimant 1’s assertions that the Commission is hiding other tips that Claimant 1 submitted to the Commission that are potentially relevant to his/her award application. The record reflects that OWB provided Claimant 1 with a copy of the Claimant 1 TCR, which Claimant 1 identified in his/her award application as the basis for Claimant 1’s claim for an award (and which is part of the underlying record). To the extent that Claimant 1 would like to review other TCRs he/she has submitted to the Commission, OWB was correct to direct Claimant 1 to the Commission’s Office of FOIA Services. Finally, there is no evidence supporting Claimant 1’s assertions that Claimant 1 was discriminated against due to [Redacted] or because he/she was unrepresented in connection with his/her award application.

[15] Exchange Act Section 21F(b)(1), 15 U.S.C. §78u-6(b)(1).

SEC

97803

06/27/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claim submitted by joint claimants Redacted (“Claimant 2”) and [Redacted] (“Claimant 3,” and collectively “Claimants”) in connection with the above-referenced covered action (the “Covered Action”). Claimants filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimants’ award claim is denied.[fn1]

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings against [Redacted] (the “Company”) alleging that *** [Redacted]. The Commission charged the Company with violations of [Redacted]. The Company agreed to pay a civil monetary penalty of [Redacted].

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations recommending that Claimants’ claims be denied because Claimants did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS stated that Claimants’ information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimants’ information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS preliminarily determined that Claimants provided information approximately two years after the investigation that led to the Covered Action (the “Investigation”) had begun, and that Claimants’ information was either duplicative of information that the staff already knew or was not relevant to the charges brought by the Commission in the Covered Action.

C. Claimants’ Response to the Preliminary Determinations.

Claimants submitted a timely written response contesting the Preliminary Determinations.[fn2] Claimants principally argue that “the information provided to [Enforcement staff] in the TCR, subsequent phone calls, and emails could only have been obtained by us over 10 years of direct correspondence and intimate knowledge of the processes and procedures at [the Company] . . . If [Enforcement staff] had all the information . . . required why the 3 subsequent phone calls? [Enforcement staff] must have needed more clarity or did not completely understand the data we provided or the data already in the Commission’s possession.” Claimants further argue that they were “integral in helping formulate the determinations made by the SEC.” Claimants also contend that they provided information which may have been used to negotiate the Commission’s settlement with the Company and that their information was not duplicative but instead “immeasurably additive and aided in the successful outcome of the case.”

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn4] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn5]

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7]

Claimants do not qualify for a whistleblower award in this matter because their information did not cause the staff to open the Investigation, nor did their information cause the staff to inquire into different conduct in or significantly contribute to the ongoing Investigation. First, the record demonstrates that the Investigation was opened based upon information developed by Commission staff in an earlier investigation approximately two years before Claimants submitted their TCR.

The record also shows that Claimants did not cause the staff to inquire into different conduct as part of an ongoing investigation, nor did the Claimants’ information significantly contribute to the success of the Investigation. While staff assigned to the Investigation reviewed Claimants’ TCR and spoke with Claimants on three occasions, to the extent that Claimants’ information was relevant to the Investigation, that information was already known to the staff. By the time that Claimants submitted their TCR, the Investigation had been ongoing for nearly two years, and the staff had received over 250,000 documents and taken testimony from six witnesses. The facts underlying Claimants’ allegations were already familiar to the staff assigned to the Investigation.

Although Claimants contend in their response that their information may have assisted the staff during settlement discussions with the Company, the record does not support this argument. A supplemental declaration from staff assigned to the Investigation, which we credit, confirms that the staff did not rely upon Claimants’ information during settlement discussions. The supplemental declaration also confirms that the staff was already aware of Claimants’ information.[fn8] As a result, Claimants’ information did not assist with settlement discussions or otherwise advance the Investigation.

Accordingly, Claimants’ are not eligible for a whistleblower award.[fn9]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimants in connection with the Covered Action be, and they hereby are, denied.

By the Commission.

[1] The CRS also recommended the denial of the award application from Claimant 1, who did not contest the Preliminary Determinations. Accordingly, the Preliminary Determination with respect to Claimant 1’s award claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[5] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[7] Exchange Act Rel. No. 85412 at 8-9.

[8] Claimants’ response also notes that the staff spoke with Claimants on three occasions, asking “if [Enforcement staff] had all the information . . . why the 3 subsequent phone calls?” This contention is not persuasive. As noted in the staff’s initial declaration, the staff first spoke with Claimants in [Redacted] to discuss their TCR and determine if Claimants had any information beyond their written submission. The second call, in [Redacted] was a follow-up call to determine if Claimants’ Redacted information might be relevant to a separate investigation relating to a different entity. Finally, the third call, in [Redacted] approximately two weeks before the Covered Action was filed, was initiated in response to an email from one of the Claimants to determine if Claimants had any additional information that might impact the Covered Action. However, to the extent the information provided by Claimants during these calls was relevant to the Investigation, it was already known to the staff through other investigatory sources.

[9] Claimants contend that the time frame of their TCR submission and the time period covered by the Covered Action “perfectly align” and that the Covered Action was filed a certain amount of time after the submission of their TCR “which [Claimants] believe is the typical timeframe for such an investigation and conclusion.” We do not find merit in this argument. As noted above, the record shows that the Investigation was opened years before the submission of Claimants’ TCR and that Claimants’ information was already known to the staff.

SEC

06/17/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”) and [Redacted] (collectively, “Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimants was never provided to or used by staff handling the Covered Action or underlying investigation (or examination), and those staff members otherwise had no contact with Claimants. Therefore, Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Office of the Whistleblower.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Investigative staff responsible for the Covered Action never received or reviewed any information from Claimants or had any communications with Claimants. As such, Claimants did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

97728

06/15/2023

The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition[fn1] (“PSD”) recommending the denial of the whistleblower award claims submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) in connection with the above-referenced covered action (the “Covered Action”). Claimant 1 and Claimant 2 each filed a timely response contesting the preliminary denial. For the reasons discussed below, the award claims of Claimant 1 and Claimant 2 are each denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled cease-and-desist proceedings against [Redacted] (the “Company”). According to the Order, the proceedings stem from [Redacted] by the Company, [Redacted]. The Order noted that the Company failed to [Redacted]. The Company also failed *** [Redacted]. As a result, the Company [Redacted]. The Company agreed to pay disgorgement and prejudgment interest totaling [Redacted].

On [Redacted] OWB posted the Notice for Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant 1 and Claimant 2 each filed timely whistleblower award claims.

B. The Preliminary Summary Disposition.

On [Redacted] OWB issued the PSD in connection with the Covered Action recommending that the whistleblower award claims of Claimant 1 and Claimant 2 be preliminarily denied. OWB noted that Claimant 1 and Claimant 2 each did not provide information that led to the success of the Covered Action because their information did not cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Securities Exchange Act of 1934 (“Exchange Act”); or significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. OWB also noted the information provided by Claimant 1 and Claimant 2 was never provided to or used by staff handling the Covered Action or underlying investigation (or examination), and those staff members otherwise had no contact with either Claimant 1 or Claimant 2. Therefore, Claimant 1 and Claimant 2 each did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder.

Claimant 1 and Claimant 2 each submitted a timely written response contesting the PSD.[fn2]

C. Claimant 1’s Response to the Preliminary Summary Disposition.

In Claimant 1’s response to the PSD (“Claimant 1 Response”), Claimant 1 generally discusses his/her mistrust of “people”, “corporat[ions]”, “law makers” and “government.” In this vein, Claimant 1 questions the veracity of the sworn declaration in support of the PSD denying his/her award claim. Claimant 1 also writes that the Commission indicated that the “investigation was opened in January [Redacted]. But [his/her] complaint was also made on January as well.” (bold in original). The Claimant 1 Response appears to question whether the Commission accurately determined the year the investigation of the Company was opened given that his/her TCR was submitted in the same month. Claimant 1 points out that even if the investigation had started prior to Claimant 1 submitting the information, the Covered Action was not finalized until after Claimant 1 submitted his/her information to the Commission, suggesting that his/her information may have been helpful in the Covered Action. Claimant 1 also takes issue with the record of materials provided to him/her and requests that additional documents be provided, including the “subpoena” issued to the Company and an “authorization” to initiate the investigation, for him/her to verify the year the investigation was opened. Claimant 1 requests that rules be amended to permit access to these documents as part of the process in contesting the preliminary denial.

D. Claimant 2’s Response to the Preliminary Summary Disposition.

In Claimant 2’s response to the PSD (“Claimant 2’s Response”), Claimant 2 principally focuses on a TCR that he/she submitted in [Redacted]. Specifically, Claimant 2 believes his/her TCR filed on [Redacted] (“[Redacted] TCR”), led to the opening of the Office of Compliance Inspections and Examinations’ (“OCIE”) exam of the Company that later resulted in OCIE’s referral to the Division of Enforcement (“Enforcement”) and the opening of an investigation. While Claimant 2 acknowledges that he/she “did not file specific information on [the Company]”, he/she believes that he/she is entitled to an award for providing the [Redacted] TCR that may have caused the examination of the Company and possibly other companies. Claimant 2 adds, “[a]s the writings below confirm and as explained in my original TCR on [the Company], I worked with the SEC from [Redacted] through the time of the beginning of the fines for violations of the anti-fraud provisions [Redacted].” Claimant 2 also contends that his/her work with Commissioners and staff at various Commission offices, such as the Office of Investor Education and Advocacy, served as an impetus for the examination that resulted in a referral that led to the Covered Action.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] Among other things, to be considered original information the submission must be provided to the Commission for the first time after July 21, 2010.[fn4] Additionally, and as relevant here, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8]

A. Claimant 1.

Claimant 1 does not qualify for a whistleblower award in this matter because his/her information did not cause the staff to open the investigation that led to the Covered Action (“the Investigation”), nor did Claimant 1’s information cause the staff to inquire into different conduct in or significantly contribute to the success of the Covered Action. Enforcement staff assigned to the Investigation reported that Claimant 1 provided no information that was used in or that contributed to the success of the Investigation or the Covered Action. As referenced above, Claimant 1 questioned the veracity of the Enforcement staff declaration in support of the PSD. According to the sworn Enforcement staff declaration, which we credit, Claimant 1’s tip was submitted on January [Redacted] approximately two years after the investigation of the Company was opened, and the tip was never forwarded to the staff assigned to the investigation that led to the Covered Action. A supplemental sworn declaration from OWB staff, which we also credit, confirmed the same.

None of Claimant 1’s information was used or considered by Enforcement staff in connection with the opening of the Investigation. Here, the two declarations each reflect that the Investigation was opened in January [Redacted] approximately two years before Claimant 1 submitted his/her tip. Enforcement staff assigned to the Investigation also noted that Claimant 1 did not provide any information that was used in the Investigation or the Covered Action. Based on the declarations, Claimant 1 cannot be credited with causing the staff to open the Investigation, causing the staff to inquire into different conduct, or significantly contributing to the success of the Covered Action.

The Claimant 1 Response also takes issue with the documents provided to him/her and requests that additional documents be provided, including the “subpoena” issued to the Company. Under the Commission’s whistleblower rules, a claimant is authorized to receive materials listed in Rule 21F-12 of the Securities Exchange Act of 1934 that formed the basis for the disposition with respect to his or her own award application. As such, OWB staff informed Claimant 1 of the record of materials that formed the basis of the disposition and provided him/her with a copy of the redacted Enforcement staff declaration, as it related to his/her award application, pursuant to Rules 21F-12 and 21F-18(c). The rules do not provide for Claimant 1 to receive additional documents such as the “subpoena” issued to the Company or “authorization.”[fn9]

For these reasons, Claimant 1 is not eligible for a whistleblower award in this matter.

B. Claimant 2.

Claimant 2 does not qualify for a whistleblower award in this matter because his/her information did not cause the staff to open the investigation or examination that led to the Covered Action, nor did Claimant 2’s information cause the staff to inquire into different conduct in or significantly contribute to the success of the Covered Action. As noted above, the Claimant 2 Response principally focuses on a [Redacted] TCR that Claimant 2 believes led to the OCIE exam that resulted in a referral to Enforcement, and references work with staff of other Commission offices.

Claimant 2 explains in his/her response to the PSD that he/she filed an additional TCR in [Redacted] as a result of rule changes to the whistleblower award program [Redacted]. Claimant 2 points to his/her information contained in a [Redacted] TCR, and believes his/her work with Commissioners and staff at various Commission offices led to items like the “[Redacted]”. which was the impetus for the OCIE exam that resulted in a referral that led to the Covered Action. While Claimant 2 may have had some interaction with staff of the Commission, such as the Office of Investor Education and Advocacy, the information in the record refutes that he/she made any contribution to the OCIE exam or the Covered Action.

At the outset, we note that the [Redacted] TCR was never received or reviewed by Enforcement staff that conducted the Investigation, and a supplemental declaration indicates that the OCIE exam team did not receive or review any information provided by Claimant 2. Indeed, OCIE staff reported that the referral to Enforcement was not based on information provided by Claimant 2 and Claimant 2 did not contribute to OCIE’s exam and/or the referral to Enforcement. Further, Enforcement staff assigned to the Investigation noted in its declaration that Claimant 2 provided no information that was used in or that contributed to the success of the Investigation or the Covered Action. Claimant 2 argues that his/her work with Commissioners and staff of Commission Offices served as the impetus for the OCIE exam; however, given that Claimant 2’s information was not received or reviewed by OCIE exam staff or Enforcement staff, there is no evidence in the record to support that he/she contributed in any way to the Covered Action.[fn10] Claimant 2 therefore cannot be credited with causing the staff to open the Investigation or significantly contributing to the success of the Covered Action given that his/her information did not contribute to the OCIE exam and was not used by Enforcement staff.[fn11]

For these reasons, Claimant 2 is not eligible for a whistleblower award in this matter.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimant 1 and Claimant 2 in connection with the Covered Action be, and they hereby are, denied.

By the Commission.

[1] See Exchange Act Rule 21F-18, 17 C.F.R. § 240.21F-18.

[2] See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[6] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[8] Exchange Act Rel. No. 85412 at 8-9.

[9] To the extent that Claimant 1 argues that the Commission “should change their laws/rules,” a response to a proposed summary disposition is not an appropriate vehicle to petition for a rulemaking change. To the extent that the Claimant 1 wishes to make such a request, Claimant must follow the established procedures. See 17 C.F.R. § 201.192.

[10] Claimant 2 generally references information provided to the SEC from “[Redacted]” but specifically names the *** TCR in his/her response.

[11] Claimant 2’s information also may not satisfy the “original information” requirement under the whistleblower rules. In the Claimant 2 Response, Claimant 2 wrote: “… as explained in my original TCR on [the Company], I worked with the SEC from *** ….” In order for a whistleblower submission to be considered original information, it must be provided to the Commission for the first time after July 21, 2010. See Rule 21F-4(b (1)(iv). To the extent Claimant 2 provided information to the Commission prior to July 21, 2010, that information would not satisfy the original information requirement.

CFTC

06/13/2023

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application on Form WB-APP from Claimant in response to the above-referenced Notice of Covered Action regarding [Redacted] (“Order” or “Covered Action”). The Order imposed monetary sanctions totaling [Redacted], of which [Redacted] has been collected.

The Claims Review Staff (“CRS”) has evaluated Claimant’s application in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165, promulgated pursuant to Section 23 of the Commodity Exchange Act (“Act”), 7 U.S.C. § 26. The CRS sets forth its Preliminary Determination as follows:

1. The CRS has determined to recommend that the Commission deny Claimant’s application because it fails to meet the requirements of Section 23 of the Act and the Rules.

2. Based on the record, the CRS acknowledges Claimant’s efforts in providing information to the Commission. However, Claimant’s information did not lead to the successful enforcement of the Covered Action, as defined by Rule 165.2(i), 17 C.F.R. § 165.2(i). Such information is a requirement for an award. See id. § 165.5(a):

Claimant’s information did not cause the Commission’s Division of Enforcement (“Division”) to open the investigation of [Redacted] (“Respondent”) leading to the Order. See id. § 165.2(i)(1). The Order states, and Division staff confirmed, that [Redacted]. Claimant does not claim to have provided the CFTC with any information potentially related to Respondent until [Redacted] after the start of the investigation.

Claimant’s information did not significantly contribute to the success of the Covered Action. See 17 C.F.R. § 165.2(i)(2). Division staff assigned to the Covered Action did not have contact with Claimant or Claimant’s information during their investigation of Respondent’s misconduct. They did not receive any information related to their investigation from, or discuss their investigation with, other members of Division staff, with whom Claimant communicated regarding Claimant’s submissions, but who did not work on the Covered Action or the underlying investigation. Thus, no information provided by Claimant was used in connection with the Covered Action. This fact is consistent with the absence of any mention of Respondent [Redacted] in the information that Claimant provided to the Commission.

Instead of Claimant’s information, Division staff assigned to the Covered Action relied on information they obtained from [Redacted].

SEC

97683

06/09/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $2.5 million, which is equal to *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

[Redacted].

Claimant made multiple submissions, including early in the Covered Action investigation, which included both independent knowledge and independent analysis, and provided continuing assistance, including participating in calls with investigative staff for the Covered Action. Claimant’s information significantly contributed to the success of the Covered Action by helping advance and expedite the Covered Action investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent (***%) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] See Exchange Act Section 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).

SEC

97612

05/30/2023

For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the SEC filed a litigated civil injunctive action in Federal District Court [Redacted] against [Redacted] (“the Firm”) and [Redacted] the firm’s [Redacted], alleging that the Firm violated [Redacted], and that [Redacted] violated [Redacted]. The SEC alleged that the Firm [Redacted], which were based on information [Redacted] (the “Company”), [Redacted]. On [Redacted], the court issued a final judgment including [Redacted].

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that Claimant’s award claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information, under Exchange Act Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action, under Exchange Act Rule 21F-4(c)(2). The CRS preliminarily determined that investigative staff responsible for the Covered Action received information from Claimant and had communications with Claimant, but the information and communications primarily concerned another covered action involving [Redacted] (“Other Entity”), for which Claimant already received an award. Claimant’s information did not contribute in any way to this Covered Action. In addition, the CRS preliminarily determined that Claimant did not provide original information as the limited information Claimant provided concerning the Firm was already known to the SEC staff.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn1] In the Response, Claimant argues that the SEC did not consult with or obtain input from Claimant’s central contact at the SEC in issuing the Preliminary Determination and that the recollection of the Enforcement staff member who provided a declaration was limited.

Claimant also argues in the Response that Claimant provided original information that caused staff to inquire concerning different conduct, or alternatively, significantly contributed to the success of the Covered Action. First, Claimant argues that no subpoena was issued to the Firm until after Claimant reached out to the SEC and submitted information and assisted staff. Second, Claimant argues that he/she provided his/her own conversations with [Redacted] and detailed the red flags that the Firm was aware of misconduct, including by [Redacted], which caused the SEC to focus on the Firm as a participant in the fraud. Third, Claimant argues that he/she was the key element that led to an investigation involving the Company being extended to the Firm, just as Claimant’s information extended that investigation to the Other Entity that was the defendant in the other covered action for which Claimant already received a whistleblower award. Claimant argues that the SEC only became aware of the substance of what inculpated the Firm as a direct result of Claimant stepping forward as a whistleblower.

D. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn2] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either (1) the original information caused the staff to commence an examination, open an investigation, or inquire into different conduct as part of a current examination or investigation and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn3] or (2) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn4]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn5] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn6]

Based on the record, which includes detailed declarations, which we credit, from the primary Enforcement attorneys responsible for the Covered Action investigation, including the one identified by Claimant in his/her Response, Claimant did not provide information that led to the success of the Covered Action. First, Claimant’s information did not cause Enforcement staff to identify or focus on the Firm. Rather, in connection with the investigation into the Company, staff sent a subpoena to the Firm in [Redacted], which was months before Claimant provided any information to the Commission. It was the information and documents provided by the Firm in response to the subpoena that caused staff to open the Covered Action investigation. As such, Claimant’s information did not cause the staff to open the Covered Action investigation or inquire into the Firm’s role in the misconduct.

Second, Claimant’s tips and information did not significantly contribute to the success of the Covered Action. Claimant’s information primarily concerned the Other Entity, at which [Redacted]. Further, while Claimant provided limited information about the Firm alleging that Firm personnel were aware of red flags with [Redacted], the staff already had received documents and information directly from the Firm that established this point. As such, Claimant provided no new information that was used in, or otherwise had any impact on, the Covered Action.

We therefore conclude that Claimant did not provide original information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder.

II. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[2] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[3] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[4] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[5] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.

[6] Exchange Act Rel. No. 85412 at 8-9.

SEC

05/30/2023

On [Redacted], the Claims Review Staff (“CRS”) issued a Preliminary Determination (the “[Redacted] PD”) related to Notice of Covered Action [Redacted], which was issued in connection with the Commission’s successful resolution of the above-referenced [Redacted] action (the “Covered Action”). The [Redacted] PD recommended that [Redacted] and [Redacted] (together, “Claimants”) receive a joint whistleblower award because Claimants voluntarily provided original information pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the CRS recommended that Claimants’ award be set in the amount of [Redacted] percent ([Redacted]) of the monetary sanctions collected or to be collected in the Covered Action. In reaching this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimants’ applications.[fn1]

At the time of the [Redacted] PD, the record supported finding that Claimants identified helpful pieces of information amid a large number of postings on a public message board and proposed a theory of wrongdoing that caused Enforcement staff to open the investigation that culminated in the Covered Action. The CRS viewed such efforts as sufficient to sustain a determination that Claimants had supplied “independent analysis” of the public postings, one of the avenues of satisfying the original information requirement for whistleblower eligibility.

Since the [Redacted] PD, however, new evidence has come to the CRS’s attention about the steps taken by the Division of Enforcement staff leading up to the opening of the investigation. Among other things, this new evidence now makes apparent that Claimants forwarded to staff an unusually large number of public message-board postings without filtering or otherwise identifying specific postings, and Claimants neither pieced together nor otherwise analyzed the postings in a way that bridged the gap between the publicly available postings forwarded to the Commission by Claimants were received and initially analyzed by two members of the Enforcement staff who were charged with reviewing incoming tips from the public. It was these two members of the Enforcement staff — not Claimants — who combed through the voluminous public postings provided by Claimants, conducted research on issues they detected therein, identified potential witnesses to interview, concluded that [Redacted] did appear to be engaged in [Redacted] (as alleged by some commenters on the message board itself), identified the small number of useful postings that contained [Redacted], and proposed a theory of the case that triggered the opening of the investigation already had been opened. In short, the new evidence now available to the CRS provides greater context demonstrating that the analysis that led to the opening of the investigation was undertaken by the Commission’s own staff rather than by Claimants.

In light of the new record evidence, the CRS no longer recommends that the Commission find that Claimants performed independent analysis. Consistent with the Commission’s previous statements, the mere supply of publicly available information, without more, cannot satisfy the original-information requirement for eligibility.[fn2] Accordingly, the CRS hereby issues this PD to recommend that the Commission deny Claimant’s award claim in this matter.

By: Claims Review Staff.

[1] The PD also recommended that Claimants be treated as joint whistleblowers.

[2] The Commission has explained that “independent analysis” requires that the whistleblower “do more than merely point the staff to disparate publicly available information that the whistleblower has assembled, whether or not the staff was previously aware of the information.” Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34312 (June 13, 2011). 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. Adopting Release for Amendments to Whistleblower Rules, Release No. 34-89963 (Sept. 23, 2020, at 122, available at https://www.sec.gov/rules/final/2020/34-89963.pdf. “[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.” Id. at 116.

SEC

97598

05/26/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of about $2 million, which represents [Redacted] percent (***) of the monetary sanctions collected in the Covered Action and that [Redacted] (“Claimant 2”) receive a whistleblower award of about $500,000, which represents *** percent (***) of the monetary sanctions collected in the Covered Action. Claimant 2 has contested the Preliminary Determinations. For the reasons discussed below, the CRS’s recommendations are adopted.[fn1]

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted a settled public administrative and cease-and-desist proceeding against [Redacted] (the “Firm”), [Redacted] finding that the Firm violated [Redacted]. Specifically, the Commission found that, from [Redacted] the Firm was [Redacted]. The Firm was also found to have [Redacted]. Among other relief, the Firm was ordered to pay disgorgement of [Redacted] prejudgment interest [Redacted] and a civil money penalty of [Redacted]. The amount of the monetary sanctions in the Covered Action has been fully collected.

The Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications for the Covered Action within 90 days.[fn2] Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations recommending that Claimant 1 and 2 receive whistleblower awards of *** and *** respectively, of the monetary sanctions collected in the Covered Action. In recommending that Claimant 1 receive [Redacted] larger award than Claimant 2, the CRS reasoned that Claimant 1’s information was more important to the investigation because Claimant 1’s information was received by the Commission several years before Claimant 2’s information. The CRS also recommended that Claimant 2’s award be decreased due to unreasonable reporting delay.

C. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 makes a number of arguments on reconsideration. First, Claimant 2 contends that the CRS failed to properly weigh the value of Claimant 2’s contribution to the investigation relative to Claimant 1’s, arguing that much of the information for which the CRS credited Claimant 1 was, in actuality, information Claimant 1 had received from Claimant 2.[fn3] Second, Claimant 2 contends that the CRS should have taken into account the fact that Claimant 2 was the one who provided certain information to Claimant 1 about [Redacted]. Third, Claimant 2 appears to dispute the CRS’s determination that Claimant 2 unreasonably delayed reporting his/her information to the Commission.[fn4] Fourth, Claimant 2 contends that Claimant 1 did not fully understand all the intricacies of [Redacted] and that the CRS should have taken this into account in recommending an award percentage. Fifth, Claimant 2 asserts that the Preliminary Determination’s award allocation to him/her “underestimated” Claimant 2’s value to the staff as a live witness to the events they investigated, Claimant 2’s willingness to testify at trial, and the value Claimant 2’s information provided to the staff in its settlement negotiations with the Firm’s counsel.

Finally, Claimant 2 asserts that the Preliminary Determination he/she received contained redactions which, Claimant 2 believes, would have shown that key evidence credited as having been provided to the Commission by Claimant 1 was, in fact, evidence that Claimant 2 had given to Claimant 1 with the understanding that Claimant 1 would then forward it to the Commission. Claimant 2 argues that these redactions were “inappropriate given the voluntary waiver of [Claimant 1] of [his/her] anonymous status generally in the context of being a whistleblower but in particular as it pertains to [Claimant 2].”

II. Analysis.

The record demonstrates that Claimant 1 and Claimant 2 each voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn5]

[Redacted].

We adopt the CRS’s recommendations on award allocations. In reaching our award determinations, we positively assessed the following facts in support of Claimant 1’s larger award: (1) Claimant 1’s tip was the initial source of the underlying investigation; (2) Claimant 1’s tip [Redacted] including at the Firm, that would have been difficult to detect without Claimant 1’s information; (3) Claimant 1 provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; (4) the Commission used information Claimant 1 provided to devise an investigative plan and to craft its initial document requests; (5) Claimant 1 made persistent efforts to remedy the issues, while suffering hardships; and (6) Claimant 1 was the main source of information for the investigation and an important source of information for the Covered Action.

In assessing Claimant 2’s important, but lesser, contribution to the success of the Investigation, the Commission notes that Claimant 2 was the first witness who was able to tell the staff that the Firm [Redacted] knew or should have known key facts about [Redacted] including that [Redacted]. Claimant 2 provided important information as a percipient witness which helped [Redacted] with factual details on those topics that went beyond what Claimant 1 had been able to provide. In addition, Claimant 2 provided information and documents, participated in staff interviews, and provided clear explanations to the staff regarding the issues that Claimant 2 brought to the staff’s attention. Claimant 2’s information gave the staff a more complete picture of how [Redacted] which the staff was able to use in settlement discussions with the Finn’s counsel [Redacted]. Finally, Claimant 2 suffered hardship as a result of his/her efforts to [Redacted].

Contrary to what Claimant 2 states in his/her reconsideration response, Claimant 2 ‘s assertion as to the importance to the Commission ‘s investigation of Claimant 2’s information about [Redacted] was, in fact, considered by the CRS and recognized in the Preliminary Determination. Further, there is no support in the record for Claimant 2’s assertion that, with the exception of information Claimant 2 provided to Claimant 1 about [Redacted] — a fact which Claimant 1 had acknowledged to the staff — the information Claimant 1 provided to the Commission came originally from information Claimant 2 had provided to Claimant 1. Indeed, most of the documentation Claimant 2 offered to support his/her contentions consisted of emails that Claimant 2 was copied on or forwarded in which Claimant 1 communicated with Commission [Redacted] staff; emails Claimant 1 wrote to Claimant 2 and others discussing Claimant 1’s thoughts about, or news concerning, the Commission’s ongoing investigation; and Claimant 1’s efforts to reach out to others to inquire about [Redacted]. While the staff acknowledged, as Claimant 2 notes, that it did not inquire about what specific information Claimant 2 had given to Claimant 1 beyond [Redacted]. Claimant 2’s response does not contain evidence of other specific information Claimant 2 gave to Claimant 1. Regarding Claimant 2 ‘s assertion that Claimant 1 did not fully comprehend [Redacted] when Claimant 1 reported to the Commission, this does not change the fact that the Commission first learned about the underlying misconduct from Claimant 1 and that it was Claimant 1’s tips that caused the Commission to open the investigation and informed the investigation’s initial steps. Moreover, Claimant 2’s argument does not change the fact that Commission staff found Claimant 1’s information and assistance helpful during the course of its investigation.

We also find no merit in Claimant 2’s assertion that the redactions made in the Preliminary Determination he/she received may have shown that information the CRS credited as having been provided to the Commission by Claimant 1 was, in fact, evidence that Claimant 2 had given to Claimant 1 with the understanding that Claimant 1 would then forward it to the Commission. The redacted Preliminary Determination received by Claimant 2 did not redact any information about Claimant 1 other than Claimant l ‘s name; the balance of the redactions concerned the other four whistleblowers who did not contest the Preliminary Determinations.[fn11] There is similarly no merit in Claimant 2’s contention that the redactions made in the Preliminary Determination as to Claimant 1 were improper or inappropriate because Claimant 1 had publicly disclosed his/her identity. Regardless of whether a whistleblower chooses to publicly disclose his/her identity as a whistleblower, the Commission has a legal obligation under Exchange Act Sec. 21F(h)(2) to “not disclose any information, including information provided by a whistleblower to the Commission, which could reasonably be expected to reveal the identity of a whistleblower,” except in certain limited circumstances not applicable here. Thus, the redaction of Claimant 1’s name in Claimant 2’s Preliminary Determination is a mandatory requirement under the law, not a discretionary decision by the CRS.[fn12]

Contrary to Claimant 2’s contention that the award allocation in the Preliminary Determination “underestimated” his/her value to the staff as a live witness, Claimant 2’s willingness to testify at trial, and the value Claimant 2’s information provided to the staff in its settlement negotiations with the Firm’s counsel, our order, in fact, discusses in detail and clearly recognizes the value to the Commission of Claimant 2 being a witness to key events and the usefulness of his/her information in settlement negotiations. With regard to Claimant 2’s contention about the potential but unrealized value of his/her testimony at trial, the Commission’s award determinations under Rule 21F-6 are based on whistleblowers’ actual contributions, not hypothetical ones.

Finally, we note that, in contrast to Claimant 1, who persistently alerted the Commission [Redacted] for a number of years before the investigation was opened, Claimant 2 delayed reporting to the Commission for several years. While Claimant 2 states that he/she was aware as early as [Redacted] ***. Claimant 2 did not report to the Commission until [Redacted] — at least five years after Claimant 2 was aware of the possible illegal nature of these transactions and four years after Claimant 2 left his/her former employer. During this period, the harm continued to investors who were unaware of the violative conduct. Accordingly, we find that Claimant 2 unreasonably delayed reporting to the Commission and that Claimant 2’s award percentage should be set at [Redacted].[fn13]

III. Conclusion.

Accordingly, it is hereby ORDERED that (1) Claimant 1 receive an award of [Redacted] percent (***) of the monetary sanctions collected in the Covered Action; and (2) Claimant 2 receive an award of *** percent (***) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] The CRS also preliminarily determined to recommend that the award applications of four other claimants be denied. None of these claimants submitted a request for reconsideration and, as such, the Preliminary Determinations with respect to their award claims became the Final Order of the Commission, pursuant to Rule 21F-10(f).

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] Claimant 2 states that “‘[b]ut for’ [Claimant 2] giving [Claimant 1] the specific and credible information and instructing [Claimant 1] persistently to alert the Commission to [Redacted] for a number of years before the investigation was opened, there may well not have been an investigation.” This constitutes, according to Claimant 2, “punish[ing] [Claimant 2] unfairly while praising [Claimant 1] who was [Claimant 2]’s proxy, under the ‘but for’ cause in the opening of the investigation while failing to accord [Claimant 2] the same credit.”

[4] While Claimant 2 does not explicitly state in his/her response that Claimant 2 believed the CRS erred in determining that he/she had unreasonably delayed reporting his/her information to the Commission, this argument is clearly implied by Claimant 2’s contention that, in the years before Claimant 2 filed his/her own TCR, he/she was providing important information to Claimant 1 with the understanding that Claimant 1 would then forward it to the Commission.

[5] See Exchange Act Section 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).

[11] See supra note 1.

[12] Claimant 2 also faults Claimant 1 for indicating that Claimant 2 would share in the whistleblower awards Claimant 1 expected to receive from the Commission and then not fulfilling his/her commitment to Claimant 2. However, Claimant 1’s supposed commitment is irrelevant to our analysis of the respective award percentages that each should receive.

[13] In setting the award percentage at [Redacted] we took into consideration certain facts in the record relevant to the issue of delay. Although the record demonstrates that Claimant 2 unreasonably delayed, we considered that Claimant 2 provided Claimant 1 with information [Redacted] knowing that Claimant 1 was forwarding this information to the Commission staff.

SEC

97601

05/26/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 3”) in connection with Covered Action [Redacted] (the “First Action”). Claimant 3 filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant 3’s award claim with regard to the First Action is denied.

The CRS also issued Preliminary Determinations recommending the denial of whistleblower award claims submitted by Claimant 3 and joint claimants [Redacted] (together, “Claimant 4,” and collectively with Claimant 3, “Claimants”) in connection with Covered Action [Redacted] (the “Second Action). The First Action and the Second Action arose from the same underlying enforcement investigation (the “Investigation”). Claimants filed timely responses contesting the preliminary denials. For the reasons discussed below, Claimants’ award claims with regard to the Second Action are denied.[fn1]

I. Background.

A. The Covered Actions.

i. The First Action.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings against [Redacted] (the “Respondent”) alleging that the Respondent [Redacted] (the “Company”). The Commission found that Respondent had violated [Redacted]. Respondent agreed to pay disgorgement of [Redacted].

ii. The Second Action.

On [Redacted] the Commission instituted settled cease-and-desist proceedings against the Company alleging that employees of the Company [Redacted]. The Commission found that the Company violated *** [Redacted]. The Company agreed to pay disgorgement of [Redacted] and a civil monetary penalty of [Redacted].

B. The Preliminary Determinations.

i. The First Action.

The CRS issued Preliminary Determinations in connection with the First Action recommending that Claimant 3’s claim be denied because Claimant 3 did not provide information that led to the successful enforcement of the First Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS stated that Claimant 3’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS preliminarily determined that the Investigation was opened based on news reports and not based on Claimant 3’s information. The CRS stated that Claimant 3’s tip was forwarded to staff responsible for a separate and unrelated investigation. Enforcement staff responsible for the Investigation did not receive any information provided by Claimant 3 and did not have any communication or contact with Claimant 3.

ii. The Second Action.

The CRS issued Preliminary Determinations in connection with the Second Action recommending that Claimants’ claims be denied because neither Claimant provided information that led to the successful enforcement of the Second Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS stated that Claimant 3’s and Claimant 4’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS stated that none of the Claimants provided any information that led to the opening of the Investigation or that was used in or contributed to the Investigation. The CRS preliminarily determined that staff responsible for the Investigation did not communicate with or receive any information from Claimant 3. The CRS preliminarily determined that while the staff reviewed Claimant 4’s information, Claimant 4’s information was submitted when the Investigation had already been substantially completed and after the First Action was brought and after settlement discussion had already begun with the Company. The CRS also stated that Claimant 4’s information did not relate directly to the settlement negotiation and did not impact the negotiations or otherwise contribute to the Investigation or the Second Action.

C. Claimant 3’s Response to the Preliminary Determinations.

Claimant 3 submitted a timely written response contesting the Preliminary Determinations in connection with the First Action and the Second Action.[fn2] Claimant 3 principally argues that Claimant 3’s information “led to the initiation [of] an investigation by the Commission that contributed to the recoveries made by the Commission and others, and/or otherwise provided information that contributed to such recoveries.” Claimant 3 argues that the Preliminary Determinations “rest entirely on the declaration of an affiant who neither knows nor claims to know how the information [Claimant 3] shared was used in the investigation.” Claimant 3 further argues that “it is clear that the information [Claimant 3] provided was communicated to [the Company] and that this information in turn contributed to the resolution of the Covered Actions.” Claimant 3 states that his/her counsel met with, provided information to, and exchanged “numerous emails” with Commission staff in [Redacted] regarding his/her tips, and these communications call into question the CRS’s Preliminary Determination that Claimant 3 did not have any contact with staff assigned to the Investigation. Claimant 3 also argues that he/she was denied access to “documents and information to which [Claimant 3] is statutorily entitled and which would have demonstrated [Claimant 3’s] right to the whistleblower award [Claimant 3] seeks.”

D. Claimant 4’s Response to the Preliminary Determinations.

Claimant 4 submitted a timely written response contesting the Preliminary Determinations in connection with the Second Action. Claimant 4 principally contends that Claimant 4 “identified a witness for the SEC and provided assistance in obtaining the cooperation of that witness.” Claimant 4 states that the Second Action Preliminary Determinations do not provide any discussion of the value of that witness’s information or whether it was used in the Investigation. Claimant 4 argues that the witness’s information “appeared to be extremely valuable” and Claimant 4 should receive credit for providing that information to the Commission. Claimant 4 also asks that the Commission exercise its exemptive authority under Exchange Act Section 36(a) and grant Claimant 4 an award.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn4] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn5]

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7]

A. Claimant 3.

Claimant 3 does not qualify for a whistleblower award in the First Action or the Second Action because his/her information did not cause the staff to open the Investigation, nor did Claimant 3’s information cause the staff to inquire into different conduct or significantly contribute to the ongoing Investigation. First, the record demonstrates that the Investigation was opened in [Redacted] based on public news reports, not based upon any information from Claimant 3. Claimant 3 submitted his/her TCR to the Commission in [Redacted] more than fifteen months after the Investigation was opened.

Second, Claimant 3’s information did not cause the staff to inquire into different conduct or significantly contribute to the Investigation. Staff assigned to the Investigation confirmed that the staff had no contact or communication with Claimant 3 before or during the Investigation, nor did staff assigned to the Investigation receive any information provided by Claimant 3 before or during the Investigation. Further, a supplemental staff declaration from the primary staff attorney assigned to the Investigation, which we credit, confirms that Commission staff who communicated with Claimant 3 (the “Other Staff”) were not assigned to the Investigation. And while staff assigned to the Investigation spoke with the Other Staff during the Investigation, that discussion did not relate to Claimant 3’s information, nor did any of the information shared in that discussion relate to the focus of the Investigation, advance the Investigation, or lead to the findings in the First or Second Action.[fn8] The record also does not support Claimant 3’s contention that “information [Claimant 3] provided was communicated to [the Company] and that this information in turn contributed to the resolution of the Covered Actions.” Other Staff communicated with Claimant 3’s counsel regarding a separate investigation, and Other Staff submitted document requests to the Company in [Redacted] However, Other Staff confirmed that they did not share Claimant 3’s information with the Company.[fn9] Accordingly, Claimant 3’s information did not significantly contribute to the Investigation or cause the staff to inquire into different conduct.

Lastly, Claimant 3’s argument that the Commission failed to provide certain information to Claimant 3 is not meritorious. Exchange Act Rule 21F-12(a) lists the materials that form the basis for the Preliminary Determinations and that Claimant 3 may request from the Commission.[fn10] “These rules do not entitle [Claimant 3] to obtain from the Commission any materials . . . other than those listed in paragraph (a) of this section.”[fn11] Claimant 3 requested and received the materials to which he/she was entitled under Rule 21F-12(a) and is entitled to no more.[fn12]

Accordingly, Claimant 3 is not eligible for an award in connection with the First Action or the Second Action.[fn13]

B. Claimant 4.

Claimant 4 is not eligible for a whistleblower award because Claimant 4’s information did not cause the staff to open the Investigation, to inquire into different conduct as part of an existing investigation, or significantly contribute to the Investigation. As previously stated, the Investigation was opened based upon news reports, not based upon information provided by any claimant. Claimant 4 submitted their first TCR in [Redacted] more than three years after the staff opened the Investigation and approximately one month after the First Action was filed, making public the findings with respect to the Respondent in the First Action and the factual basis for the findings in the Second Action with respect to the Company.

The information provided by Claimant 4 did not significantly contribute to the Investigation or cause the staff to inquire into additional conduct. At the time of Claimant 4’s submission, the Investigation was substantially complete and settlement negotiations with the Company were in progress. Claimant 4’s information, including information in their subsequent TCR submissions, was already known to the staff and did not assist the Investigation, nor did it otherwise impact the settlement negotiations with the Company. The staff reached out to the witness identified by Claimant 4 in [Redacted] approximately two months after the submission of Claimant 4’s initial tip, and had a teleconference with the witness in [Redacted] approximately three months later. The witness provided the staff with documents shortly after the teleconference. However, to the extent the information from the witness was relevant to the Investigation, the record shows the information was duplicative of information already known to the staff. By that time, the staff’s Investigation was substantially complete, and the witness’s information did not contribute to the Investigation or otherwise impact the settlement negotiations with the Company.[fn14]

Accordingly, Claimant 4 is not eligible for an award in connection with the Second Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that (1) Claimant 3’s whistleblower award applications in connection with the First Action and the Second Action be, and hereby are, denied; and (2) Claimant 4’s whistleblower award application in connection with the Second Action be, and hereby is, denied.

By the Commission.

[1] Claimant 3 submitted award applications in connection with both the First Action and the Second Action; for clarity, we refer to this claimant as “Claimant 3” in connection to both actions. Claimant 4 submitted an application only in connection with the Second Action. The CRS also recommended the denial of the award applications in connection with the Second Action from Claimants 1, 2, 5, and 6, none of whom contested the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to their award claims became the Final Orders of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[5] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[7] Exchange Act Rel. No. 85412 at 8-9.

[8] Claimant 3’s argument regarding the supposed deficiencies of the staff declaration is unpersuasive. That staff member confirms in a supplemental declaration that he/she was the “primary Enforcement attorney assigned to the [I]nvestigation.” Claimant 3 states that the staff was not aware of how Claimant 3’s information was used and argues that whether the “[declarant], personally, did not use the information [he/she] apparently obtained from the Separate Investigation, in order to advance the results of the case against [the Company] is . . . of no moment.” We disagree. As an initial matter, contrary to Claimant 3’s assertion, and as the supplemental declaration confirms, the staff did not obtain anything that advanced the Investigation from the other Commission staff who communicated with Claimant 3. Regardless, as the primary Enforcement attorney assigned to the Investigation, the staff has unique insight into the Investigation, how it progressed, and how the findings in the First and Second Actions came about. We find his/her declarations highly relevant and on point to a key question in this proceeding of whether the Claimants provided information that significantly contributed to the Investigation. The fact that the primary staff attorney assigned to the Investigation did not learn of Claimant 3’s information until after the First and Second Actions were instituted supports, along with other facts in the record, that Claimant 3’s information did not lead to the success of those actions.

[9] The record shows that the separate investigation was closed without any enforcement action by the Commission, and that Enforcement staff assigned to the separate investigation concluded that Claimant 3’s information did not include evidence of specific misconduct.

[10] See Exchange Act Rule 21F-10(e)(1).

[11] Exchange Act Rule 21F-12(b).

[12] Claimant 3 also states that 24 of 41 paragraphs of the staff declaration are redacted, and the Commission may not “arbitrarily redact information that otherwise should be provided.” To the extent that Claimant 3 is seeking an unredacted copy of the staff declaration, Claimant 3 is not entitled to it. We find the redactions in the staff declaration were properly made and in accordance with law to protect the identity of other claimants in this proceeding. See Exchange Act Rule 21F-12(b).

[13] We find no basis in the record supporting Claimant 3’s argument that his/her information was shared with the Company. Regardless, even if certain information was shared with the Company, there is no evidence that it had any impact on the Investigation, the settlement with the Company in the Second Action, or the findings in the First or Second Action.

[14] Claimant 4 has also requested that we invoke our exemptive authority under Section 36(a) of the Exchange Act to waive the eligibility requirements, arguing that Claimant 4 acted promptly even though Claimant 4 submitted information late in the Investigation, and therefore should receive an award. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” The circumstances here do not warrant invoking Section 36(a). One of the principal objectives of the whistleblower program is to incentivize individuals to come forward with potentially new and useful information that the staff may use in an investigation. As discussed above, Claimant 4 provided their information years after the Investigation was opened and one month after the First Action made public the factual basis of the findings in the Second Action. While Claimant 4 may have acted promptly, Claimant 4’s information was not useful to the staff and did not contribute to the Investigation. We also do not find that Claimant 4 presented any other compelling factors warranting the use of our exemptive authority under Section 36(a). Granting an exemption under these circumstances “is inconsistent with the statutory purpose of incentivizing whistleblowers to come forward early.” Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 92355 (July 9, 2021).

SEC

97600

05/26/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim jointly submitted by [Redacted] and [Redacted] (“Claimants”) in connection with the above-referenced covered action (the “Covered Action”). The Claimants filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimants’ award claim is denied.[fn1]

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed a complaint in federal district court (“District Court”) against [Redacted]. According to the Commission’s complaint [Redacted]. The Commission charged *** [Redacted].
The District Court issued partial final judgments against [Redacted] and issued final judgments against [Redacted]. The defendants were each enjoined from violating Sections [Redacted]. The final judgments also ordered each defendant to disgorge [Redacted]. The defendants were ordered to pay disgorgement, penalties, and prejudgment interest totaling over [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimants’ claim be denied because Claimants did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimants’ information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimants’ information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS preliminarily determined that investigative staff responsible for the Covered Action never received any information from, or had any communications with Claimants before or during the Investigation. Further, neither of the Claimants provided any information that was used in or that contributed to the success of the investigation or the Covered Action. The CRS also denied Claimants’ request for any related action awards on the grounds that because Claimants were not eligible for an award in the Covered Action, they are not eligible for an award in connection with any related action.[fn2]

C. Claimants’ Response to the Preliminary Determination.

Claimants submitted a timely written response contesting the Preliminary Determination (the “Response).”[fn3] First, Claimants contend in the Response that they likely filed their tips before the Commission commenced its investigation that led to the Covered Action, so their tips likely led to and/or significantly aided the Commission’s investigation that resulted in the Covered Action. Claimants argue that their three Form TCRs, submitted on [Redacted] must have contributed to the opening of the Commission’s investigation. Second, Claimants’ Response takes issue with the sufficiency of the record relied upon by the CRS in denying their claim for award. Claimants argue that, “[n]owhere in the Declaration or elsewhere in the SEC’s record supporting the Preliminary Determination is it stated or shown that any of the SEC investigators in the [Covered] Action did not review the Claimants’ TCRs (which concerned the [Redacted] alleged in the [Covered] Action).” In particular, Claimants take issue that the CRS relied upon a declaration from someone overseeing the investigation instead of “enforcement staff or investigators directly engaged in the investigation….” Finally, Claimants contend that they did not receive the entirety of the record because the declaration from Division of Enforcement (“Enforcement”) staff contained certain redactions.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn4] Among other things, to be considered original information the submission must be provided to the Commission for the first time after July 21, 2010.[fn5] Additionally, and as relevant here, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn6] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn7]

First, Claimants’ information did not cause the staff to open the investigation that led to the Covered Action (the “Investigation”). Here, the Commission opened the Investigation when staff in the [Redacted] identified a pattern of [Redacted]. Based on this information, a matter under inquiry was opened on [Redacted]. Although some of Claimants’ information was submitted prior to the opening of the Investigation, there is nothing in the record to suggest that any of Claimants’ information was used or considered by Enforcement staff assigned to the Investigation in connection with the opening of the Investigation. Likewise, the record does not demonstrate that Claimants’ information significantly contributed to the success of the Covered Action or caused the staff to inquire into different conduct that was later the subject of a successful Commission enforcement action. Indeed, sworn declarations from Enforcement staff assigned to the Investigation confirm that Claimants did not provide any information that was used in the Investigation or Covered Action.[fn10] Accordingly, Claimants cannot be credited with causing the staff to open an investigation or inquire into different conduct, or with significantly contributing to the success of the Covered Action.

Second, Claimants take issue with the sufficiency of the record relied upon by the CRS in denying their claim given that the record included a declaration from a supervisor instead of line investigative staff. In issuing its Preliminary Determination, the CRS relied in part on a declaration from an Assistant Regional Director assigned to the Investigation. The Assistant Regional Director stated that neither of the Claimants provided any information that was used in or that contributed to the success of the Investigation or Action. Although the Assistant Regional Director provided a sworn declaration that Claimants’ information was not used, Claimants took issue with his “managerial” or “supervisory” status and wrote that “[n]owhere in the Declaration or elsewhere in the SEC’s record supporting the Preliminary Determination is it stated or shown that any of the SEC investigators in the [Covered] Action did not review the Claimants’ TCRs (which concerned the [Redacted] alleged in the [Covered] Action).” (ital. added).

A supplemental declaration, which we credit, from the investigative staff who was assigned to the Investigation, affirms that none of Claimants’ information was received, reviewed, or used in the Investigation or Covered Action. Further, this supplemental declaration directly refutes Claimants’ argument that their Form TCRs may have contributed to the opening of the Investigation because the information was received prior to the opening of the Investigation or because staff assigned to the Investigation may have searched the TCR system. Indeed, the investigative staff that conducted the Investigation specified that, “I do not recall receiving, reviewing or using any Form TCRs, or any other information, submitted by [Claimants], or submitted on their behalf by legal counsel[fn11], in connection with the Investigation or Action.” We find that the record is sufficient to support a finding that Claimants’ information did not lead to the success of the Covered Action.

Lastly, Claimants take issue with certain redactions made to the declaration when they were provided the record materials. In their Response, Claimants wrote that the declaration had been redacted in a way that appears to remove explanatory information regarding the staff’s determination that Claimants did not cause or contribute to the Covered Action. This concern is misplaced. Claimants received the record materials as defined under Rule 21F-12. As reflected by the Confidentiality Agreement that Claimants (and their legal counsel) signed — “a claimant is authorized to receive only the materials listed in Rule 21F-12 that formed the basis for the determination with respect to his or her own award application.” Further, the agreement explains that “OWB may redact any information therein that relates to another claimant’s award application.” As further explained by OWB staff by email to the Claimants, and referenced by Claimants in their Response, “[t]he redacted portions of the declaration relate only to other claimants who applied for an award on this matter.” Based on our review, we note that Claimants received the record materials defined under Rule 21F-12 related to their own award application.

For these reasons, Claimants are not entitled to a whistleblower award in connection with the Covered Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimants in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[1] The CRS also preliminarily determined to recommend that the award applications of two other claimants be denied. None of these claimants submitted a request for reconsideration and, as such, the Preliminary Determinations with respect to their award claims became the Final Order of the Commission, pursuant to Rule 21F-10(f).

[2] See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[5] See Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[6] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[7] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[9] Exchange Act Rel. No. 85412 at 8-9.

[10] Claimants’ contention that staff must have used the information in Claimants’ TCRs because the Enforcement manual requires investigative staff to periodically search the TCR system is not relevant in light of staff’s declaration that they neither received nor reviewed Claimants’ information.

[11] The investigative staff’s declaration specifies Claimants’ legal counsel by name and firm.

SEC

97599

05/26/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claims submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2,” collectively “Claimants”) in connection with the above-referenced covered action (the “Covered Action”). Claimants each filed a timely response contesting the preliminary denials. For the reasons discussed below, Claimants’ award claims are denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings against [Redacted] (the “Company”), [Redacted] alleging that the Company [Redacted]. Among other things, the Commission alleged [Redacted]. The Commission charged the Company with violating [Redacted]. In addition to other relief, the Commission ordered the Company to pay a civil money penalty in the amount of [Redacted].

B. The Preliminary Determination.

The CRS issued Preliminary Determinations recommending that Claimants’ claims be denied because they did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimants’ information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. In particular, the CRS stated that investigative staff responsible for the Covered Action never received any information from, or had any communication with, either Claimant 1 or Claimant 2.

C. Claimant 1’s Response to the Preliminary Determinations.

Claimant 1 submitted a response (the “Claimant 1 Response”) contesting the Preliminary Determinations.[fn1] In addition to discussing certain of the factual allegations raised in his/her submission, Claimant 1 argues, among other things, that the TCR he/she submitted to the Commission in [Redacted] “should lead to many investigatory avenues with monetary sanctions.” Specifically, Claimant 1 contends that the TCR, which was about the [Redacted] (the “Entity”), related substantially to the subject matter of the Covered Action because “discussing [the Entity] . . . also means [the Company] . . . one cannot separate one from the other.” Claimant 1 argues that his/her tip constituted original information that may have assisted the Commission’s investigative efforts in the Covered Action or in other matters. Claimant 1 also believes that his/her tip might have been shared with other government agencies and Claimant 1 might be entitled to a related action award. Claimant 1 also requested that the Commission exercise its authority to waive compliance with the whistleblower rules because of the “considerable efforts I have made to explain very complex transactions and markets, which should prove valuable for current and future investigations.” Claimant 1 also requests that “the ‘same nucleus of operative facts’ rule be reviewed as it relates to my TCR and claims.”

D. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 submitted a response (the “Claimant 2 Response”) contesting the Preliminary Determinations. Claimant 2 argues, among other things, that the record relied upon by the CRS appears to be “insufficient.” Claimant 2 states that the staff declaration relied on by the CRS does not indicate whether the staff reviewed Claimant 2’s submissions, or whether any of the Commission staff Claimant 2 spoke to and shared information with used that information in the investigation that led to the Covered Action (the “Investigation”). Claimant 2 also states that he/she spent significant time and energy providing information to Commission staff, and met in person with Commission staff on at least two occasions. Claimant 2 states that there is a “clear nexus” between the information Claimant 2 provided the Commission and the violative conduct in the Covered Action. Claimant 2 states that he/she attended a meeting with five Commission staff (the “Other Staff”) in [Redacted] in [Redacted] and that he/she attended a second meeting with Commission staff in [Redacted] Claimant 2 also contends that he/she communicated with Commission staff for approximately fifteen months following the second meeting.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a claimant must, among other things, voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn2] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn3] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn4]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn5] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn6]

A. Claimant 1.

Claimant 1 does not qualify for an award because Claimant 1’s information did not lead to the successful enforcement of the Covered Action.[fn7] Enforcement staff assigned to the Investigation confirm that the Investigation was opened in [Redacted] Claimant 1 did not submit his/her TCR until [Redacted] over one year later. Further, the staff assigned to the Investigation confirmed, in a supplemental declaration, which we credit, that the staff did not receive or review Claimant 1’s TCR submission, and that Claimant 1’s information was not used in the Investigation or in the Covered Action.[fn8] Accordingly, we do not find Claimant 1’s argument regarding his/her TCR persuasive: even if Claimant 1’s discussion of the Entity equates to a discussion of the Company, Enforcement staff did not use the information.

Accordingly, Claimant 1 is not entitled to an award.[fn9]

B. Claimant 2.

Claimant 2 does not qualify for an award because Claimant 2’s information did not lead to the successful enforcement of the Covered Action. First, Claimant 2’s information did not cause the staff to open the Investigation. While Claimant 2 submitted several TCRs prior to the opening of the Investigation, the record shows, as stated above, that staff opened the Investigation based upon a [Redacted] referral from the Division of Examinations, not based upon any information from Claimant 2. In addition, the record does not show that Claimant 2’s information caused Examinations staff to commence the exam that led to the referral. While two of Claimant 2’s TCR submissions were forwarded to Examinations staff, those TCRs were forwarded to Examinations staff in the Commission’s [Redacted] in connection with a potential examination of a different entity, not the Company, and Examinations staff ultimately decided not to pursue the topic. In addition, based on a supplemental declaration prepared by OWB staff, which we credit, Examinations staff responsible for the [Redacted] referral do not recall reviewing any information from Claimant 2. And while Enforcement staff relied upon two other referrals from Examinations during the Investigation, the record also shows that Examinations staff responsible for those referrals also did not recall reviewing Claimant 2’s information.

Second, the record does not show that Claimant 2’s information significantly contributed to the success of the Covered Action or caused Enforcement staff to inquire concerning different conduct as part of the Investigation. Enforcement staff assigned to the Investigation confirm, in a supplemental declaration, which we credit, that the staff did not review or receive any of Claimant 2’s information, nor did they communicate with Claimant 2 before or during the Investigation. As stated above, the record also does not show that Claimant 2’s information caused Examinations staff responsible for the [Redacted] referral to inquire concerning different conduct.

We have considered Claimant 2’s argument that he/she met with certain Commission staff. Staff assigned to the Investigation confirmed in a supplemental declaration that the five Commission staff with whom Claimant 2 met and communicated were not assigned to the Investigation or the Covered Action; in addition, staff assigned to the Investigation did not receive or rely upon any information from the Commission staff cited by Claimant 2 relating to the Investigation or the Covered Action.

For these reasons, Claimant 1 and Claimant 2 are not entitled to an award.[fn10]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimant 1 and Claimant 2 in connection with the Covered Action be, and they hereby are, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[2] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[3] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[4] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[6] Exchange Act Rel. No. 85412 at 8-9.

[7] In addition, Claimant 1’s argument that his/her information may have assisted in other matters is not persuasive. Whistleblower awards are based upon the use of a claimant’s information in the Covered Action before us. Any contribution from a claimant to other Covered Actions will be addressed in those proceedings.

[8] Claimant 1 also requests that “the ‘same nucleus of operative facts’ rule be reviewed as it relates to my TCR and claims.” Exchange Act Rules 21F-4(d)(1) and 21F-4(d)(2) permit the Commission to treat certain administrative or judicial proceedings as a single Commission action if they “arise out of the same nucleus of operative facts.” However, neither rule is applicable here as Claimant 1 is not eligible for an award.

[9] We see no basis to exercise our exemptive authority under Section 36(a) of the Exchange Act here. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person … from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” However, granting an exemption where the record shows that the whistleblower’s information did not lead to the success of a covered action is contrary to the purpose of the whistleblower program, the public interest, and the protection of investors.

[10] Because Claimant 1 and Claimant 2 are not eligible for an award in the Covered Action, they are also not eligible for any related action award. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 34-86902 (Sept. 9, 2019).

SEC

97573

05/25/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $600,000 which represents [Redacted] percent (***) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

[Redacted]

In reaching this determination, the Commission considered that Claimant provided substantial, ongoing assistance, including communicating with Commission staff multiple times, and providing documents and testimony, which helped expedite the staff’s investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] (***%) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

SEC

97529

05/19/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed settled administrative and cease-and-desist proceedings against [Redacted] (the “Company”) and *** former Company executives (together with the Company, the “Respondents”). The Commission ordered that the Company cease and desist from committing or causing any violations and any future violations [Redacted]. The Commission charged certain individual Respondents with violations or aiding and abetting violations of those provisions as well as violations of Exchange Act Rules [Redacted]. The Respondents consented to more than [Redacted] in monetary sanctions, among other relief.

On [Redacted], the Office of the Whistleblower (“OWB”) posted a Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that Claimant’s claim be denied on the ground that Claimant did not provide information to the Commission voluntarily within the meaning of Exchange Act Rule 21F-4(a). In the [Redacted], the Company’s *** [Redacted] in response to an inquiry from the Commission’s Division of Enforcement (“Enforcement”), identified Claimant as an individual likely to have information about certain of the Company’s [Redacted] for its contract with [Redacted] (the “Contract”). Enforcement staff contacted [Redacted] counsel in [Redacted] to schedule an interview with Claimant. Counsel for the [Redacted] responded that the Company was arranging for individual representation for Claimant and once retained Claimant’s counsel would reach out to Enforcement staff directly. In [Redacted], individual counsel for Claimant contacted Enforcement staff. The CRS preliminarily determined to recommend that Claimant’s subsequent provision of information to the Commission be deemed involuntary because Enforcement staff’s request to speak with Claimant regarding [Redacted] relating to the Contract preceded Claimant’s (or his/her counsel’s) first communications to staff in connection with this matter. The CRS reasoned that because the Commission treats a request to an employer seeking information from a particular individual as a request directed to the employee for purposes of Rule 21F-4(a), Claimant’s information here was not provided voluntarily. The CRS also preliminarily determined to recommend that the Commission find that staff’s request to interview Claimant related to the same subject matter as Claimant’s later submission of information.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn1] Claimant principally argues that Claimant satisfied the voluntariness requirement because at the time [Redacted] received a request from Enforcement staff to speak with Claimant about the Contract, Claimant [Redacted] and was therefore adverse to the Company. Claimant also argues that even if his/her initial submission of information was not voluntary, he/she also voluntarily submitted information on “bigger issues” that caused Enforcement staff to expand its investigation. Finally, Claimant contends that even if he/she did not meet the standard for voluntariness, the Commission should use its authority under Section 36(a) of the Exchange Act to exempt him/her from compliance with the voluntariness requirement and grant him/her an award.[fn2]

II. Analysis.

A. Claimant’s Submission Was Not Voluntary.

1. The Commission Made a Request “Directed to” Claimant before Claimant Contacted the Commission with His/Her Information.

To qualify for an award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement by the Commission of a Federal court or administrative action in which the Commission obtains monetary sanctions totaling more than $1,000,000.[fn3] The “submission of information is made voluntarily … if [a whistleblower] provide[s the] submission before a request, inquiry, or demand that relates to the subject matter of [the] submission is directed to [the whistleblower] or anyone representing [the whistleblower] (such as an attorney) … [b]y [ inter alia] the Commission.”[fn4] “[W]e treat a request to an employer specifically seeking an interview of, or other information from a particular employee as ‘directed to’ that employee or the employee’s representative for purposes of Rule 21F-4(a)(1).”[fn5]

There is no dispute here that Enforcement staff told [Redacted] counsel in *** that they wished to speak with Claimant about the Contract. And there is no dispute that [Redacted] counsel communicated this request to Claimant’s counsel, and only then did Claimant’s counsel reach out to the Commission. Claimant argues, however, that when the Company reached out to his/her counsel, he/she was an employee in name only, as he/she *** [Redacted]. Although the Company continued to pay him/her, Claimant says that we should take into account that the Company was “adverse” to him/her.

We find this argument unpersuasive. To the extent that Claimant is suggesting that the Company did not communicate with Claimant’s counsel, that suggestion is not borne out by the evidence. Claimant’s counsel declared that he was aware at the time Claimant retained him that Enforcement staff already had made a request through [Redacted] to speak with Claimant. Moreover, antagonism between the employer and employee is irrelevant to the inquiry of whether there was a request for information “directed to” that employee. Accordingly, we find that Claimant’s submission of information was not “voluntary” under Rule 21F-4(a).

Our finding here is consistent with the purpose behind the voluntariness requirement. In the Adopting Release for the Whistleblower Rules, we expressed a concern with an employee front-running an investigation he/she is already aware of by reaching out to the Commission only after the Commission had made its interest in the employee’s information known through a request to the employer directed to the employee.[fn6] When Claimant’s counsel first contacted the Commission on Claimant’s behalf, Claimant’s counsel was aware through communications with Claimant’s employer of Enforcement staff’s request to speak with Claimant, and Claimant’s provision of information therefore was not voluntary. Deeming such a submission voluntary would do little to incentivize potential whistleblowers to proactively provide information to the Commission.

2. Claimant Did Not Submit Other Unrelated Information on a Voluntary Basis.

Claimant argues that even if the information he/she provided in response to Enforcement staff’s questions during his/her interviews was not voluntary, he/she “affirmatively and voluntarily” provided new information that alerted Enforcement staff to “bigger issues” with *** [Redacted] for the Contract. We disagree.

Once a putative whistleblower’s initial submission has been deemed not voluntary, a future submission by the same individual will not be deemed voluntary merely because it provides new information or expands the scope of an investigation. As we have explained,

The determination of whether an inquiry “relates to the subject matter” of a whistleblower’s submission will depend on the nature and scope of the inquiry and on the facts and circumstances of each case. Generally speaking, however, we will consider this test to be met—and therefore the whistleblower’s submission not to be “voluntary”—even if the submission provides more information than was specifically requested, if it only describes additional instances of the same or similar conduct, provides additional details, or describes other conduct that is closely related as part of a single scheme. For example, if our staff sends an individual an investigative request relating to a possible fraudulent accounting practice, we would ordinarily not expect to treat as “voluntary” for purposes of Rule 21F-4(a) a subsequent whistleblower submission from the same individual that describes additional instances of the same practice, or a different but related practice as part of an overall earnings manipulation scheme. However, the individual could still make a “voluntary” submission that described other, unrelated violations (e.g., Foreign Corrupt Practices Act violations).[fn7]

Claimant contends that he/she alerted Enforcement staff to “bigger issues” with the Company’s Contract. Claimant’s Response does not specify exactly what he/she means by “bigger issues.” To the extent that he/she means that he/she provided information about the overarching issues concerning how the Company’s failure to [Redacted] the Contract was [Redacted], we credit the declaration and supplemental declaration of the Enforcement declarant. Enforcement staff explained that the investigative team had identified the core issues with this [Redacted], including the decision to base [Redacted], before Claimant provided any information to staff. Any new information that Claimant provided concerned issues Enforcement staff already was investigating. And to the extent that Claimant contends that [Redacted] alerted Enforcement staff to “bigger issues” with the Contract, the contours of the Investigation already had been established by the time [Redacted]. Claimant’s attempts to raise “bigger issues” about the Contract with Enforcement staff amounted to “provid[ing] additional details” or “describ[ing] other conduct that is closely related as part of a single scheme” rather than an unrelated securities-law violation.

Claimant’s Response also appears to include within the “bigger issues” he/she raised his/her description of a [Redacted]. Providing new information to staff is not enough for a claimant to establish voluntariness in these circumstances. The illustrative example in the Adopting Release of “a different but related practice as part of an overall earnings manipulation scheme” is directly on point. As Enforcement staff explained, Claimant’s information fit in more generally with what staff had uncovered about the Company’s failure to [Redacted]. Staff viewed Claimant’s information as evidencing a specific illustration of the Company’s broader [Redacted] to conceal the effects of the problems with the Contract and not as a separate fraud. The [Redacted] was one chapter in a larger story—a story staff had been uncovering long before they spoke to Claimant.

We conclude that Claimant did not provide information sufficiently unrelated to the subject matter of Enforcement staff’s inquiries to him/her for him/her to satisfy the voluntariness requirement.

B. A Section 36(a) Exemption Is Not Appropriate Here.

Section 36(a) of the Exchange Act grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” In whistleblower matters, the Commission has found that the public interest warranted an exemption from a rule requirement in a limited number of cases where the unique circumstances of the particular matter raised considerations substantially different from those which had been considered at the time the rules were adopted, and a strict application of the rules would result in undue hardship, unfairness, or inequity.[fn8]

Claimant has not identified “unique circumstances” here that would warrant a Section 36(a) exemption from the voluntariness requirement. Rather, the Commission specifically considered in its Adopting Release the fact pattern of an employee first reporting to the Commission after his/her employer received a request for information targeting the employee. Claimant’s contention that he/she “affirmatively” brought information to the Commission’s attention finds little support in the record. Claimant waited more than two years to bring the [Redacted] to the attention of the Commission. And Claimant says that he/she did not decide whether to provide information to the Commission until after he/she became aware of Enforcement’s request for his testimony and had a chance to discuss [Redacted] issues with his/her counsel.[fn9] Equitable factors do not support exemptive relief for Claimant under Section 36(a).

Claimant cites two cases in which we have granted Section 36(a) exemptions from the voluntariness requirement, but both are distinguishable from the facts here. In Order Determining Whistleblower Award, Exchange Act Release No. 84046 (Sept. 6, 2018), the claimant did not know the information that later formed the basis for his/her tip to the Commission at the time he/she was interviewed by a federal agency, and when he/she later learned that information, he/she promptly reported it to the agency. In addition, we determined that the waiver would help minimize the hardship he/she encountered by reporting. Here, Claimant does not point to any information he/she learned after his/her interview that was provided to the Commission.

In Order Determining Whistleblower Claim, Exchange Act Release No. 72727 (July 31, 2014), on which Claimant also relies, the Commission found the claimant’s submission not to have been voluntary because a self-regulatory organization (“SRO”) contacted him/her before he/she contacted any relevant agency about the securities-law violation. But the SRO’s investigation was initiated based on a tip from another party that specifically identified the whistleblower’s efforts to raise the issue internally. The whistleblower was also misled that certain materials he/she had prepared were provided to the SRO, and the whistleblower continued to try to remediate the situation after the SRO investigation was closed. No “highly unusual circumstances” of this magnitude are present here.[fn10]

Although Claimant does not rely on Order Determining Whistleblower Claim, Exchange Act Release No. 86010 (June 3, 2019), that order also does not support an exemption here. There, another authority directed a request for information to relevant employees of a firm who had information about an issue, which included two claimants. The two claimants were not told about the other authority’s request when it was made and did not learn of the existence of the other authority’s investigation until several months after they reported their information to the Commission. The claimants left the firm prior to learning about the other authority’s investigation and reported the issue to the Commission. The two claimants’ own remedial efforts had indirectly prompted the other agency to open the investigation resulting in the request for information. Although we determined that the claimants’ submission was not voluntary, it was appropriate under those facts and circumstances to exempt the claimants from the voluntariness requirement under Section 36(a). Here, Claimant’s counsel admits that he knew that Enforcement staff had requested to interview Claimant prior to Claimant’s counsel contacting staff and Claimant providing information to the Commission.

In short, voluntariness is a critical component of the Commission’s whistleblower award program. Nothing prevented Claimant from reporting his/her information to the Commission prior to Enforcement’s request to interview him/her. To grant exemptive relief from the voluntariness requirement in these circumstances would undermine the Commission’s position that “a whistleblower award should not be available to an individual who makes a submission after first being … requested to provide information by the Commission staff ….”[fn11]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[1] See Exchange Act Rule (hereafter “Rule”) 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[2] Claimant alleges that the Preliminary Determination was “procedurally deficient” because, among other things, the CRS allegedly acted improperly by relying upon a staff declaration that was signed after issuance of the Preliminary Determination. The unsigned and signed versions of the declaration are identical except for the signature and markings such as “draft” and “privileged” such that the information relied upon by the CRS in its Preliminary Determination was not affected by the signature being affixed after the CRS met to approve the Preliminary Determination. See Order Determining Whistleblower Award Claims, Exchange Act Release No. 96669 at 5 n.13 (Jan. 17, 2023); Order Determining Whistleblower Award Claims, Exchange Act Release No. 94743 at 2 n.6 (Apr. 18, 2022). Claimant’s other complaints of procedural deficiency amount to contentions that the CRS did not take his/her arguments seriously. On the contrary, the CRS carefully considered Claimant’s arguments and requested a supplemental declaration from Claimant’s counsel to clarify an issue related to Claimant’s Response.

[3] Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[4] Rule 21F-4(a)(1), 17 C.F.R. § 240.21F-4(a)(1).

[5] Order Determining Whistleblower Claim, Exchange Act Release No. 86010 (June 3, 2019).

[6] Whistleblower Rules Adopting Release (Aug. 12, 2011) at 32 (“We believe that this approach strikes an appropriate balance between, on the one hand, permitting any submission to be considered ‘voluntary’ as long as it is not compelled, and, on the other hand, precluding a submission from being treated as ‘voluntary’ whenever a whistleblower may have become ‘aware of’ an investigation or other inquiry covered by the rule, regardless of whether the relevant authority contacted the whistleblower for information.”).

[7] Id. at 34-35.

[8] Order Determining Whistleblower Award Claim, Release No. 34-97450 , at 6 (May 8, 2023); see also Order Determining Whistleblower Award Claims, Release No. 34-90721 (Dec. 18, 2020) (claimant’s counsel used information from claimant to submit application as whistleblower on behalf of themselves); Order Determining Whistleblower Award Claims, Release No. 34-90580 (Dec. 7, 2020) (counsel misunderstood communications from staff about whether claimant met procedural requirements for participating in whistleblower program); Order Determining Whistleblower Award Claim, Release No. 34-86010 (June 3, 2019) (see below); Order Determining Whistleblower Award Claims, Release No. 34-84046 (Sept. 6, 2018) (see below).

[9] Claimant says in his/her Response that he/she needed to consult with his/her counsel “regarding whether to reach out to the SEC to provide [his/her] observations on the [Redacted] at [the Company]. It was certainly not a given that [he/she] would do so. . . .”

[10] Although not a basis for our denial of Claimant’s claim here, we observe that Claimant did not initially comply with the TCR-submission requirement and is not eligible for a waiver of the requirement under Rule 21F-9(e). Claimant was interviewed by Enforcement staff on [Redacted], but did not submit a TCR until [Redacted] Under Rule 21F-9(e), a claimant’s initial noncompliance with the TCR-submission requirement may be waived if he/she complied with the TCR-submission requirements within 30 days of learning of the requirements or retaining counsel to submit information to the Commission, whichever occurred first. Claimant retained counsel for the purpose of submitting information to the Commission no later than [Redacted] but did not submit a TCR until four months later. Thus, even if Claimant submitted his/her information voluntarily, only original information Claimant submitted on or after [Redacted], could be the basis for an award. @@Claimant contends that he/she [Redacted] raised broad concerns about the Company’s [Redacted] the Contract. According to Claimant, “[Redacted] counsel [Redacted] in an effort to conceal the real [Redacted] at the center of the . . . Contract.” Claimant forgot about the existence of these *** but submitted a TCR soon after the *** came to light as part of staff’s investigative efforts. Claimant implies that these circumstances justify his/her failure to timely submit a TCR. But Claimant states that by the time the [Redacted] *** came to light, he/she had been providing information to Enforcement staff for months, during which time he/she was represented by counsel for the purpose of submitting information to the Commission. When the *** came to light has no bearing on whether Claimant is eligible for a Rule 21F-9(e) waiver.

[11] Whistleblower Rules Adopting Release (Aug. 12, 2011) at 30.

SEC

97524

05/18/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $3,000, or thirty percent (30%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).

The presumption applies here because a maximum award would not exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to the award application, and the award claim does not trigger Rule 21F-16. Further, Claimant provided more than limited assistance, as Claimant provided significant information and details about the fraudulent scheme and relevant individuals and gave multiple interviews to Commission staff. Application of the presumption would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[2] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.

[3] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

SEC

97449

05/08/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] Claimant”) in connection with [Redacted] (“Covered Action”) and [Redacted] (“Other Action”). Claimant filed a timely response contesting the preliminary denial.[fn1] For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed the Covered Action in the [Redacted] (“Court”) against [Redacted] (“Defendants”) for their roles in [Redacted]. Defendants included [Redacted]. The Commission charged Defendants [Redacted]. In particular, the Covered Action alleged [Redacted] (“Entity”) and [Redacted] (“Individual”) [Redacted]. The Covered Action alleged that the Entity and certain of its employees [Redacted].

On [Redacted] the Court entered a final judgment against the Entity which [Redacted]. The Court also imposed [Redacted] in monetary sanctions against the Entity, which the Court [Redacted] (“Agency 1”) [Redacted].[fn2]

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn3] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination[fn4] recommending that Claimant’s claim be denied.[fn5] The Preliminary Determination recommended a denial because Claimant was not a “whistleblower” within the meaning of Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and reasoned that while Claimant provided information to [Redacted] Claimant was not manner that is required by Rule 21F-9(a), which Claimant did not do. The CRS preliminarily a whistleblower because Claimant did not provide information directly to the Commission via a TCR, as required by 15 U.S.C. § 78u-6(a)(6) and Rule 21F-2(a)(1).[fn6]

C. Claimant’s Response to the Preliminary Determination.

In response, Claimant argues that the Preliminary Determination must be vacated because Claimant purportedly provided “original information” to the Commission in multiple ways and that he/she qualifies as a “whistleblower” under the whistleblower program rules (“Rules”). Claimant states that he/she worked for and with various persons and entities charged in the Covered Action. Claimant states that in [Redacted] he/she voluntarily came forward as a confidential informant and had numerous communications with [Redacted] (“Agency 2”). Claimant states that from [Redacted] while he/she was not represented by counsel—Claimant provided Agency 2 with an extensive amount of original information. Claimant asserts that the Commission subsequently received his/her information from Agency 2; Claimant alleges that such information was the basis for and led to the success of the Covered Action. Thus, according to Claimant, he/she provided original information to the Commission under Rule 21F-4(b)(5).[fn7] Further, Claimant asserts that he/she later provided original information directly to the Commission by filing a TCR in [Redacted]. Claimant alleges that he/she thus satisfies Rule 21F-2(a)(1) and Rule 21F-9(a).

Claimant also argues that the Preliminary Determination must be vacated because it was not based on a complete factual record. Claimant alleges that the Declaration did not fully develop the scope of the information Claimant provided to Agency 2, which was then provided to the Commission and led to the Covered Action and its success. Claimant argues that in the absence of such complete information, the Commission should rely on and credit Claimant’s representations about the nature and importance of his/her information. Claimant argues that alternatively, the Commission should be required to make a more complete record.

Claimant argues that if the Commission determines that Claimant did not provide original information as defined by the Rules, then the Commission should waive Claimant’s non-compliance with the Rules and issue him/her an award. Specifically, Claimant states that if the Rules require that a TCR be filed with the Commission within 30 days of the provision of information to another regulatory agency (or within 30 days of the other agency providing the information to the Commission), then such a timing requirement should be waived in accordance with Rule 21F-8 and Section 36(a) of the Exchange Act. Claimant believes that a waiver is warranted because he/she complied with all other requirements of the Rules and significantly contributed to the success of the Covered Action at great personal risk and expense.[fn8]

II. Analysis.

We deny an award to Claimant in connection with the Covered Action. To qualify for an award under Section 21F of the Exchange Act, an individual must be a “whistleblower” within the meaning of Rule 21F-2(a)(1).[fn9] To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Rule 21F-9(a).[fn10] Under Rule 21F-9(a), an individual must submit his/her information directly to the Commission through one of the enumerated methods specified in that Rule.[fn11] Additionally, under Rule 21F-4(b)(5), “[t]he Commission will consider [a claimant] to be an original source of the same information that we obtain from another source if the information satisfies the definition of original information and the other source obtained the information from [the claimant] or [claimant’s] representative.”[fn12] Finally, Rule 21F-4(b)(7) specifies that if the claimant “provide[s] information to . . . any other authority of the Federal government . . . and [the claimant], within 120 days, submit[s] the same information to the Commission pursuant to [Rule 21F-9], as [the claimant] must do in order for [the claimant] to be eligible to be considered for an award , then, for purposes of evaluating [the claimant’s] claim to an award . . . the Commission will consider that [the claimant] provided information as of the date of [the claimant’s] original disclosure, report or submission to” the other authority.[fn13]

Here, although Claimant provided information to Other Agency 2, Claimant was not a “whistleblower” under the Rules because Claimant did not provide information directly to the Commission in accordance with the Rules.

The Declaration, which we credit, confirmed under penalty of perjury that the staff responsible for the Covered Action (“Staff”) did not have any direct dealings or contact with stated that in about [Redacted] Agency 2 reached out to Staff and began to share Claimant, nor did Staff even know Claimant’s name during the Investigation. The Declaration information that Agency 2 had previously obtained from Claimant. The information that Staff received from Agency 2 indicated that before Agency 2’s contact with Staff, Claimant provided Agency 2 with information about the Entity and the Individual. The Declaration noted that Claimant’s statement in his/her whistleblower award application–that Claimant “never directly reported violations to the Commission”—was true. At no point before or during the Investigation or the litigation of the Covered Action did Staff receive information directly from Claimant.

Instead, Claimant only submitted information directly to the Commission several years after all relevant events related to the Covered Action and Notice of Covered Action transpired. In [Redacted] the Commission filed the Covered Action in the Court. In [Redacted] the Court entered a final judgment against the Entity in the Covered Action. In [Redacted] OWB posted the Notice of Covered Action on the Commission’s public website. In [Redacted] Claimant filed a timely whistleblower award claim for the Covered Action with OWB through counsel. Redacted However, it was not until more than three and a half years later in [Redacted] that Claimant, for the first time, filed a TCR with the Commission. Because Claimant provided information to Agency 2, Claimant was required to submit the same information to the Commission within 120 days of submitting it to Agency 2 in order to be eligible to be considered for an award, pursuant to Rule 21F-4(b)(7). This, however, did not happen. Claimant is therefore ineligible for an award for the Covered Action.[fn14]

Claimant also did not submit his/her information on a TCR or sign the requisite whistleblower declaration in accordance with Rules 21F-9(a) and (b). A claimant must submit a TCR within 30 days of when the claimant first provides the Commission with information that the claimant relies upon as a basis for claiming an award. Should a claimant fail to comply with this procedure, the Commission will nonetheless waive the claimant’s noncompliance pursuant to the automatic waiver under Rule 21F-9(e). Rule 21F-9(e) applies when a claimant complies with the requirements of Rules 21F-9(a) or (b) “within 30 days of first obtaining actual or constructive notice about those requirements (or 30 days from the date [the claimant] retain[ed] counsel to represent [the claimant] in connection with [the claimant’s] submission of original information, whichever occurs first).”[fn15] Here, Claimant had constructive notice of the TCR filing requirement, at the very least, for three and a half years before he/she submitted a TCR to the Commission for the first time. In particular, Claimant’s counsel filed a whistleblower award claim on Claimant’s behalf in [Redacted] but did not file a Form TCR on Claimant’s behalf until [Redacted]. Claimant thus does not satisfy Rules 21F-9(a) and (b) and is not entitled to the automatic waiver under Rule 21F-9(e).

Claimant’s other arguments about why he/she should receive an award are unavailing. Because Claimant failed to satisfy Rule 21F-4(b)(7)’s 120-day submission requirement—thereby making him/her ineligible to be considered for an award—it is immaterial whether Claimant satisfies Rule 21F-4(b)(5). That Rule merely concerns the circumstances where a claimant is considered to be an original source of the same information the Commission obtains from another source. Moreover, there is no merit to Claimant’s argument that the Preliminary Determination was not based on a complete factual record. The record, which includes the Declaration, conclusively demonstrates that Claimant is not entitled to an award under the Rules. As confirmed by the Declaration, Claimant “never directly reported violations to the Commission” and Staff never received any information directly from Claimant.[fn16]

Finally, despite Claimant’s contentions otherwise, waiver of Claimant’s non-compliance with the Rules pursuant to Rule 21F-8 or Section 36(a) of the Exchange Act is not warranted. Under Rule 21F-8(a), “the Commission may, in its sole discretion, waive” the TCR filing requirement “upon a showing of extraordinary circumstances.”[fn17] We have explained that “the extraordinary circumstances exception is to be narrowly construed and applied only in limited circumstances.”[fn18] We have further explained that an extraordinary circumstance in the context of a late filing requires a claimant to show that the reason for the failure to timely file was beyond the claimant’s control.[fn19]

Claimant argues that it was beyond his/her control to timely file a TCR for several reasons. Claimant states that he/she began working with Agency 2 [Redacted]. Claimant asserts that he/she was unaware that the Commission’s whistleblower program existed and that no one from the government notified him/her about it. Claimant also states that he/she worked with Agency 2 as a confidential informant without representation by counsel for [Redacted]. However, none of these purported reasons excuse Claimant’s failure to file a timely TCR. As we have previously stated, a lack of awareness of the Commission’s whistleblower program does not rise to the level of an extraordinary circumstance.[fn20]

Applying Rule 21F-8(a)’s demanding standard here, we therefore find that Claimant has not demonstrated that his/her failure to timely file a TCR was caused by factors beyond his/her control. In light of the facts in this matter, we therefore find it inappropriate to invoke our discretionary authority to waive the Form TCR filing requirement under Rule 21F-8(a).

There is also no reason to invoke our Section 36(a) exemptive authority to waive Claimant’s non-compliance with the Rules. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” In whistleblower matters, the Commission has found that the public interest warranted an exemption from a rule requirement in a limited number of cases where the unique circumstances of the particular matter raised considerations substantially different from those which had been considered at the time the rules were adopted, and a strict application of the rules would result in undue hardship, unfairness, or inequity.[fn21] Given the factual circumstances involved here, we do not believe that any such considerations exist.

Here, as discussed previously, Claimant had constructive notice of the TCR filing requirement, at the very least, for three and a half years before he/she submitted a TCR to the Commission for the first time in [Redacted]. There is nothing in the record that excuses or provides a justifiable reason for the delay in the submission of the late-filed TCR. And, as we have stated previously, a claimant is not “relieved of the requirement to file a Form TCR merely because [he/she] first report[s] to another federal agency, and that agency provides the same information to the Commission.”[fn22] We thus conclude that it is inappropriate for us to invoke our Section 36(a) exemptive authority to waive Claimant’s non-compliance with the Rules.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action and the Other Action be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 1 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[2] [Redacted] Claimant has applied for a related action award in connection with the Other Action. The Preliminary Determination reasoned that because Claimant was not eligible for an award in the Covered Action, he/she was not eligible for an award in connection with any related action.

[3] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[6] See also Digit. Realty Tr., Inc. v. Somers, 138 S. Ct. 767 (2018); Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 80596 , n.9 (May 4, 2017).

[7] Claimant also states that he/she believes that certain questions that Agency 2 asked him/her during his/her work with Agency 2 originated from others, including from the Commission. Consequently, Claimant alleges that the Commission indirectly communicated with him/her via Agency 2.

[8] Claimant asserts that [Redacted] Claimant alleges he/she has struggled financially and suffered extreme hardship as a result of reporting his/her information to the government. Claimant states that he/she lost his/her job due to his/her whistleblowing [Redacted] Subsequently, Claimant could not find employment [Redacted] due to his/her contributions to the government’s prosecutions.

[9] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-2(a)(1), 17 C.F.R. § 240.21F-2(a)(1) (“You are a whistleblower for purposes of Section 21F of the Exchange Act (15 U.S.C. 78u-6) as of the time that, alone or jointly with others, you provide the Commission with information in writing that relates to a possible violation of the federal securities laws (including any law, rule, or regulation subject to the jurisdiction of the Commission) that has occurred, is ongoing, or is about to occur.”). See also 15 U.S.C. § 78u-6(a)(6) (“The term ‘whistleblower’ means any individual who provides, or 2 or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.”).

[10] Exchange Act Rule 21F-9(a), 17 C.F.R. § 240.21F-9(a).

[11] Id. (“To submit information in a manner that satisfies § 240.21F-2(b) and § 240.21F-2(c) of this chapter you must submit your information to the Commission by any of these methods: (1) Online, through the Commission’s website located at www.sec.gov, using the Commission’s electronic TCR portal (Tip, Complaint, or Referral); [or] (2) Mailing or faxing a Form TCR to the SEC Office of the Whistleblower . . .”).

[12] Exchange Act Rule 21F-4(b)(5), 17 C.F.R. § 240.21F-4(b)(5).

[13] Exchange Act Rule 21F-4(b)(7), 17 C.F.R. § 240.21F-4(b)(7) (emphasis added).

[14] Because Claimant is not eligible for an award in the Covered Action, Claimant is not eligible for an award in the Related Action. See Exchange Act Rule 21F-3(b)(1), (b)(2), 17 C.F.R. § 240.21F-3(b)(1), (b)(2); Exchange Act Rule 21F-11(a), 17 C.F.R. § 240.21F-11(a).

[15] Exchange Act Rule 21F-9(e)(1), 17 C.F.R. § 240.21F-9(e)(1).

[16] Claimant’s other arguments–that Claimant provided documents to Agency 2 that were instrumental to the Other Action and the Covered Action and that Claimant indirectly communicated with the Commission through questions he/she was asked by Agency 2–are immaterial to our conclusion to deny Claimant an award. Because Claimant did not satisfy Rule 21F-4(b)(7), Claimant is simply ineligible to be considered for an award based on the information he/she provided to Agency 2.

[17] Exchange Act Rule 21F-8(a); 17 C.F.R. § 240.21F-8(a).

[18] See, e.g., Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 77368 , 2016 WL 1019130, at *3 (Mar. 14, 2016), pet. denied sub nom. Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017).

[19] Id. Additionally, we have identified attorney misconduct or serious illness that prevented the applicant from making a timely filing as two examples of the demanding showing an applicant must make for us to consider exercising our discretionary authority to excuse an untimely filing under Rule 21F-8.

[20] Id. at 3; Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 72659 , at 5 (July 23, 2014) (“Claimants have it well within their control to learn about the whistleblower program’s existence and its requirements . . . they simply need to visit the Commission’s web page, which prominently features the relevant information about the program. Their failure to do so does not warrant equitable relief . . .”).

[21] See, e.g., Order Determining Whistleblower Award Claim, Rel. No. 34-86010 (June 3, 2019) (“voluntary” requirement of Rule 21F-4(a) waived where, among other factors, claimants were not notified of request from SRO that preceded their whistleblower submission); Order Determining Whistleblower Award Claims, Rel. No. 34-84046 (Sept. 6, 2018) (“voluntary” requirement waived where, among other factors, claimant learned the information he/she reported after he/she was interviewed by other agency); Order Determining Whistleblower Award Claims, Rel. No. 34-90721 (Dec. 18, 2020) (claimant’s counsel used information from the claimant to submit an application as a whistleblower on behalf of themselves); Order Determining Whistleblower Award Claims, Rel. No. 34-90580 (Dec. 7, 2020) (counsel misunderstood communications from the staff about whether the claimant met the procedural requirements for participating in the whistleblower program).

[22] Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 94797 , at 2 (Apr. 27, 2022).

SEC

97450

05/08/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with [Redacted] (“Covered Action”). Claimant filed a timely response contesting the preliminary denial.[fn1] For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted public administrative cease-and-desist proceedings against [Redacted] (“Respondent 1”)— [Redacted] —and [Redacted] (“Respondent 2”)— [Redacted] —(collectively, “Respondents”) for their roles in a [Redacted]. Respondent 1 [Redacted]. Respondent 2 [Redacted]. The Covered Action found that Respondents violated [Redacted] and that Respondent 2 caused certain violations by Respondent 1. Respondents consented to the Covered Action without admitting or denying the allegations and agreed to pay over [Redacted] in monetary sanctions.[fn2] Respondent 2 also agreed to [Redacted].

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn3] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination[fn4] recommending that Claimant’s claim be denied.[fn5] The Preliminary Determination recommended a denial for two reasons.

First, Claimant was not a “whistleblower” within the meaning of Rule 21F-2(b) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Rule 21F-9(a), which Claimant did not do. The CRS reasoned that Claimant was not a whistleblower for award purposes until Claimant submitted information on a TCR to the Commission in [Redacted]. In fact, four years passed between the time of Claimant’s [Redacted] in [Redacted] and Claimant’s TCR submission to the Commission in [Redacted]. Therefore, Claimant also was not eligible for the 120-day lookback provision set forth in Rule 21F-4(b)(7).[fn6]

Second, Claimant’s TCR submission was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1) because Claimant made the submission after a request, inquiry, or demand that relates to the same subject matter as the submission was directed to Claimant or anyone representing Claimant by the Commission.[fn7] Specifically, prior to Claimant submitting information to the Commission in [Redacted] Commission staff contacted Claimant’s counsel in [Redacted] and Claimant received a subpoena from the Commission in [Redacted]. Therefore, Claimant’s TCR submission was not voluntary because it was submitted only after the Commission inquired with Claimant relating to the same subject matter as Claimant’s submission.

C. Claimant’s Response to the Preliminary Determination.

In response, Claimant first argues that the Preliminary Determination erred in finding that Claimant was not a “whistleblower” within the meaning of Rule 21F-2(b) with respect to the Covered Action. According to Claimant, the Preliminary Determination [Redacted]. Claimant states that the Preliminary Determination’s 120-day argument is at best a technicality that is inconsistent with the public policy of rewarding legitimate, good faith whistleblowers. Claimant alleges that his/her TCR submission [Redacted] did not cause any prejudice to the Commission or any other entity or person because the Covered Action was [Redacted] not filed until [Redacted].

Claimant also argues that the Preliminary Determination erred in finding that Claimant’s TCR submission was not made voluntarily. Claimant asserts that he/she had been voluntarily cooperating with the Commission, in a variety of matters, for a number of years, dating back to *** Claimant alleges that his/her TCR was submitted prior to the date of his/her voluntary testimony with the Commission.

Finally, Claimant argues that even if he/she did not comply with the whistleblower program rules (“Rules”), the Commission should exercise its discretionary authority to waive requirements under the Rules and grant Claimant an award. Claimant alleges that the Covered Action contains claims that were based on facts contained in Claimant’s TCR and that Claimant has helped the government recover [Redacted] Citing a Commission order in which the Commission exercised its authority under Section 36(a) of the Exchange Act to award a whistleblower an award even though that whistleblower failed to comply with Rule 21F-9(d), Claimant alleges that the Commission has used its discretion in the past to grant claimants awards despite procedural deficiencies in their applications for whistleblower awards. Claimant believes that the interests of justice and fairness require that the Commission exercise its discretionary authority. Claimant alleges that he/she has suffered substantial hardship as a result of his/her whistleblowing.

II. Analysis.

We deny an award to Claimant in connection with the Covered Action because Claimant’s information submission was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1). Further, there is no compelling reason for us to exercise our discretionary authority to waive requirements under the Rules. Because the claim fails on the basis that Claimant did not submit the information to the Commission voluntarily, we decline to reach the merits of the issue whether Claimant is a “whistleblower” with respect to the Covered Action.

The Declaration, which we credit, confirmed under penalty of perjury that the staff responsible for the Covered Action (“Staff”) did not receive information directly from Claimant until [Redacted] only after Staff first contacted Claimant in [Redacted]. Specifically, in [Redacted]. Claimant wrote [Redacted] conducted an internal investigation. [Redacted] Respondent 1 self-reported to the Commission. The internal investigation and Respondent 1’s self-report validated many, but not all, of the allegations discussed in the [Redacted]. Respondent 1 made a presentation to Staff. During that presentation, Respondent 1 stated that [Redacted] caused Staff to expand the scope of the matter beyond Respondent 2 and certain of his/her direct reports. In [Redacted] Staff opened a matter under inquiry (“MUI”) as a result of the information contained in Respondent 1’s self-report and [Redacted]. In [Redacted] Staff converted the MUI into the Investigation, and in [Redacted] Staff obtained a Formal Order of Investigation.

According to the Declaration, in [Redacted] Staff reached out to Claimant’s then-counsel. Staff and Claimant’s then-counsel set up the logistics of Staff taking Claimant’s testimony. On [Redacted] Staff subpoenaed Claimant to provide documents and testimony about [Redacted]. On [Redacted] Claimant provided testimony before the Commission; Claimant produced substantive documents to the Commission in advance of that testimony. Staff did not receive any information regarding the [Redacted] directly from Claimant or *** then-counsel before Claimant’s document production and testimony before the Commission. On [Redacted]—four years after [Redacted]—Claimant submitted a TCR through *** new (and current) counsel to the Commission. In the TCR, Claimant reported information that was consistent with the information and documents Claimant provided to Staff and with Claimant’s testimony before the Commission.

Based on this factual record, Claimant’s information submission was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1).[fn8] For a claimant’s submission to be made voluntarily, it must be provided to the Commission “before a request, inquiry, or demand that relates to the subject matter of your submission is directed to you or anyone representing you (such as an attorney)” by the Commission.[fn9]

Here, Claimant only submitted information to the Commission Staff requested to schedule testimony with the Claimant and after Staff subpoenaed Claimant to provide documents and testimony. Claimant submitted his/her TCR on [Redacted]—four years after [Redacted]—which was also the same date that Claimant testified before the Commission. Claimant’s TCR related to the same subject matter as the subpoena that Staff issued Claimant.

None of Claimant’s arguments dissuade us from denying Claimant’s claim for award. Although Claimant states that he/she had been cooperating with the Commission dating back to at least *** Claimant’s prior contact with the Commission concerned misconduct involving allegations that [Redacted] the Commission brought an enforcement action related to this matter in *** Claimant’s other assertions—that the Preliminary Determination erred in not taking into account the [Redacted] that Claimant should be awarded for being a legitimate, good faith whistleblower; that Claimant’s TCR submission in did [Redacted] not cause any prejudice to the Commission because the Covered Action was not filed until [Redacted] and that Claimant has suffered substantial hardship after his/her whistleblowing—do not alter the fact that under the Rules, his/her information submission was made after the Commission’s request and was therefore not made voluntarily. *** Claimant is thus precluded from receiving an award for the Covered Action.

The circumstances in this matter do not warrant invoking our Section 36(a) exemptive authority to waive Claimant’s non-compliance with the Rules. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” In whistleblower matters, the Commission has found that the public interest warranted an exemption from a rule requirement in a limited number of cases where the unique circumstances of the particular matter raised considerations substantially different from those which had been considered at the time the rules were adopted, and a strict application of the rules would result in undue hardship, unfairness, or inequity.[fn11] Given the factual circumstances involved here, we do not believe that any such considerations exist.

Claimant submitted his/her information [Redacted] in [Redacted] *** but did not submit information to the Commission until [Redacted] Claimant only submitted information to the Commission after Staff contacted Claimant in [Redacted] and subpoenaed him/her in [Redacted] for documents and testimony. There is nothing in the record that excuses or provides a justification for the delay in the submission of the information to the Commission until after the Commission requested to schedule testimony with the Claimant. We thus conclude that it is inappropriate for us to invoke our Section 36(a) exemptive authority to waive Claimant’s non-compliance with the Rules.

As relevant to our Section 36(a) considerations, we also note that at the time that Claimant provided his/her information internally, Claimant [Redacted]. Here, Respondent 1 promptly self-reported misconduct to the Commission [Redacted]. Thus, Respondent 1’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law worked properly. [Redacted].

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[2] [Redacted] All monetary sanctions–including those imposed upon Respondents–have been paid in full.

[3] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[6] See Exchange Act Rule 21F-4(b)(7), 17 C.F.R. § 240.21F-4(b)(7) (“if the claimant “provide[s] information to . . . an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law, and [the claimant], within 120 days, submit[s] the same information to the Commission pursuant to [Rule 21F-9], as [the claimant] must do in order for [the claimant] to be eligible to be considered for an award, then, for purposes of evaluating [the claimant’s] claim to an award . . . the Commission will consider that [the claimant] provided information as of the date of [the claimant’s] original disclosure, report or submission.”).

[7] See Exchange Act Section 21F, 15 U.S.C. § 78u-6; Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3; Exchange Act Rule 21F-4(a)(1), 17 C.F.R. § 240.21F-4(a)(1).

[8] See Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3; Exchange Act Rule 21F-4(a)(1), 17 C.F.R. § 240.21F-4(a)(1).

[9] Exchange Act Rule 21F-4(a)(1), 17 C.F.R. § 240.21F-4(a)(1).

[10] [Redacted].

[11] See, e.g., Order Determining Whistleblower Award Claim, Rel. No. 34-86010 (June 3, 2019) (“voluntary” requirement of Rule 21F-4(a) waived where, among other factors, claimants were not notified of request from SRO that preceded their whistleblower submission); Order Determining Whistleblower Award Claims, Rel. No. 34-84046 (Sept. 6, 2018) (“voluntary” requirement waived where, among other factors, claimant learned the information he/she reported after he/she was interviewed by other agency); Order Determining Whistleblower Award Claims, Rel. No. 34-90721 (Dec. 18, 2020) (claimant’s counsel used information from the claimant to submit an application as a whistleblower on behalf of themselves); Order Determining Whistleblower Award Claims, Rel. No. 34-90580 (Dec. 7, 2020) (counsel misunderstood communications from the staff about whether the claimant met the procedural requirements for participating in the whistleblower program).

SEC

97438

05/05/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that: (1) [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected in (i) [Redacted] (“Covered Action”), (ii) [Redacted] (“Related Action 1”),[fn1] and (iii) [Redacted] (“Related Action 2”);[fn2] (2) [Redacted] (“Claimant 2”) be denied a whistleblower award; and (3) [Redacted] (“Claimant 3”) be denied a whistleblower award.[fn3] The award to Claimant 1 will result in a payment of approximately $279 million.[fn4]

Claimant 1 provided written notice of his/her decision not to contest the Preliminary Determination. Claimant 2 and Claimant 3 filed timely responses contesting the Preliminary Determination. For the reasons discussed below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action and the Related Actions.

On [Redacted] the Commission brought the Covered Action in the [Redacted] (“Court”). The Covered Action charged [Redacted] (“Company”) with [Redacted] by engaging in [Redacted]. The Covered Action alleged that [Redacted]. The Covered Action also alleged that [Redacted].

On [Redacted] the Court entered a final judgment against the Company that resolved the Covered Action. Among other things, the Company was ordered to pay disgorgement of [Redacted] and prejudgment interest of [Redacted]. The disgorgement and prejudgment interest, which totaled [Redacted] has been paid in full.

In [Redacted] (“Other Agency”) brought the Related Actions in the Court. The Other Agency’s [Redacted] related to the same [Redacted] the Commission charged in the Covered Action.[fn5] [Redacted] Related Action 1 [Redacted]. These monetary sanctions have been paid in full. In Related Action 2 [Redacted].

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn7] Claimants filed timely whistleblower award claims.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn8] recommending that the Commission: grant Claimant 1 an award equal to [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action and the Related Actions; and deny the award claims of Claimant 2 and Claimant 3 in the Covered Action and the Related Actions.[fn9]

C. The Preliminary Determination as to Claimant 2.

The Preliminary Determination recommended that the Commission deny Claimant 2’s claim because none of Claimant 2’s information led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily concluded that Claimant 2’s information did not either (1) cause the Commission to commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2).

The CRS also preliminarily concluded that Rule 21F-4(c)(3) did not apply. Under Rule 21F-4(c)(3), an individual provides original information that led to the successful enforcement of a judicial or administrative enforcement action where: (1) the individual reported “information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time [the individual] reported them to the Commission”; (2) “the entity later provided [the individual’s] information to the Commission, or provided results of an audit or investigation initiated in whole or in part in response to information [the individual] reported to the entity”; and (3) “the information the entity provided to the Commission satisfies either” Rule 21F-4(c)(1) or Rule 21F-4(c)(2).[fn10] Additionally, under Rule 21F-4(c)(3), the individual “must also submit the same information to the Commission in accordance with the procedures set forth in [Rule 21F-9] within 120 days of providing it to the entity.”

D. Claimant 2’s Response to the Preliminary Determination.

Claimant 2 submitted a timely, written response contesting the Preliminary Determination.[fn11] Claimant 2 argues that he/she qualifies for an award under Rule 21F-4(c)(1). Claimant 2 argues that his/her information caused the Commission to open the Investigation. Claimant 2 speculates that his/her allegations about [Redacted] at least partially motivated the Commission’s decision to convert its matter under inquiry regarding the Company (“MUI”) into the Investigation. Claimant 2 also argues that he/she qualifies for an award under Rule 21F-4(c)(3) because he/she reported information to the Commission within 120 days of reporting it to the Company.

E. The Preliminary Determination as to Claimant 3.

The Preliminary Determination recommended that the Commission deny Claimant 3’s claim because none of Claimant 3’s information led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily concluded that Claimant 3’s information did not either (1) cause the Commission to commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2). The CRS preliminarily determined that Claimant 3’s information concerned [Redacted] that was unrelated to the Investigation and the conduct charged in the Covered Action.

F. Claimant 3’s Response to the Preliminary Determination.

Claimant 3 submitted a timely, written response contesting the Preliminary Determination.[fn12] Claimant 3 alleges that the [Redacted] charged in the Covered Action is the same [Redacted] that Claimant 3 identified to the Commission. Claimant 3 states that he/she provided extensive information and documentation about the Company’s illicit activities. Claimant 3 argues that even though his/her information concerned alleged misconduct from [Redacted] and the Covered Action concerned misconduct from [Redacted] Claimant 3’s information was still relevant to the Commission and the charges in the Covered Action.

II. Analysis..

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission, *** and Claimant 1’s original information led to the successful enforcement of the Covered Action.[fn14] The record reflects that: (1) Claimant 1’s information was significant, as it caused Enforcement staff responsible for the Covered Action (“Staff”) to expand the Investigation from [Redacted] (2) Claimant 1’s information saved the Commission significant time and resources; and (3) Claimant 1 provided substantial, ongoing assistance, which included multiple written submissions, communications, and interviews. While Claimant 1’s information was important, it was submitted after the Investigation had already been opened and after Staff had already become aware of potential misconduct by the Company [Redacted]. Further, Claimant 1’s specific information only related to certain of the conduct that the Commission ultimately charged in the Covered Action.

In light of these considerations and the relevant factors specified in Rule 21F-6,[fn15] it is appropriate that Claimant 1 receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action.

We also find that the Related Actions constitute “related actions” under Rules 21F-3(b)(1) and [Redacted] and that Claimant 1 has satisfied the requirements of Rules 21F-3(b)(2) and [Redacted] for related action awards. The Related Actions were based in part on the same original information that Claimant 1 voluntarily provided to the Commission. Specifically, Claimant 1 voluntarily provided original information to the Commission, which was also provided to the Other Agency, and Claimant 1’s information led to the successful enforcement of the Related Actions.

In light of the considerations discussed above, it is appropriate that Claimant 1 receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Related Actions.

B. Claimant 2.

We deny an award to Claimant 2. To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn16] Claimant 2 did not provide the Commission with such information. Because Claimant 2 is not eligible for an award in the Covered Action, Claimant 2 is not eligible for an award in the Related Actions.[fn17]

Claimant 2’s information did not either (1) cause the Commission to commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation;[fn18] or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action.[fn19] We credit the Declaration, provided under penalty of perjury, which confirms that Claimant 2’s information did not advance or impact the Investigation. None of Claimant 2’s information was used in, nor had any impact on, the charges brought in the Covered Action. Further, the Covered Action did not contain any allegations [Redacted] which was the subject of Claimant 2’s information.

Claimant 2 contests these conclusions, asserting that his/her information about alleged [Redacted] at least partially motivated the decision for the MUI to be converted into the Investigation. Claimant 2’s arguments about this point are largely focused on the chronology of events related to the Commission’s investigative work and how such events were purportedly affected by Claimant 2’s information. Such arguments, however, are nothing more than speculation and are belied by the record.

As confirmed by the Declaration, in [Redacted] Staff opened the MUI based on [Redacted]. Staff opened the MUI to investigate whether the Company *** [Redacted]. Shortly after opening the MUI, Staff for the first time obtained and reviewed information that Claimant 2 had submitted to the Commission in [Redacted]. On or about [Redacted] Staff sent the Company a voluntary request seeking information and documents about certain matters, including alleged [Redacted] based on Claimant 2’s allegations.

On or about [Redacted] the MUI was converted to the Investigation. A supplemental declaration (“Supplemental Declaration”) of one of the Enforcement attorneys who was assigned to the Investigation, which we credit, confirms under penalty of perjury that Staff converted the MUI to the Investigation after Staff received a presentation from the Company on or about *** [Redacted] (“Company Presentation”). During the Company Presentation, Staff learned new information from the Company that was relevant to Staff’s inquiry into the Company. The Company Presentation did not concern any of Claimant 2’s information or allegations. The Company Presentation also did not concern any alleged misconduct [Redacted]. Accordingly, none of Claimant 2’s information had any effect on the conversion of the MUI to the Investigation.

Later in [Redacted] Staff contacted Claimant 2’s counsel to discuss Claimant 2’s allegations; during that discussion, Staff did not learn any new information from Claimant 2’s counsel. On or about [Redacted] Staff obtained a Formal Order of Investigation. The Declaration and Supplemental Declaration both confirm that Claimant 2’s information had no bearing on the opening of the MUI, the opening of the Investigation, or the issuance of the Formal Order of Investigation.

Additionally, Rule 21F-4(c)(3) does not apply here. First, Claimant 2 did not report his/her information through the Company’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time that Claimant 2 reported them to the Commission. Instead, Claimant 2 first submitted his/her information to the Commission in [Redacted]. Claimant 2 then reported his/her information to the Company at the end of [Redacted]. Claimant 2 then sent a supplemental submission to the Commission in [Redacted]. This supplemental submission was comprised of copies of an anonymous email that Claimant 2 sent to the Company in [Redacted] and [Redacted] email that Claimant 2 received in response from the Company. The substance of Claimant 2’s *** information was the same as the substance of Claimant 2’s [Redacted] information. Thus, Claimant does not satisfy the temporal requirements of Rule 21F-4(c)(3).[fn20]

Second, the Company did not initiate an audit or investigation in whole or in part in response to the information Claimant 2 reported to the Company. As confirmed by the Declaration, the Company began internal investigative work not in response to any tip or other information provided by Claimant 2, but rather in response to two internal complaints the Company received in [Redacted] regarding alleged [Redacted]. There is no support in the record for Claimant 2’s supposition that Claimant 2’s information prompted the Company to undertake investigative work because [Redacted] email from the Company stated that [Redacted] thereby allegedly suggesting that the Company was in the process of investigating Claimant 2’s allegations.[fn21]

Claimant 2’s other arguments are unavailing. Claimant 2’s complaint that the record does not suitably explain why Claimant 2’s allegations about misconduct [Redacted] lacked merit is misguided. As confirmed by the Declaration, Staff found no merit to Claimant 2’s allegations about alleged misconduct [Redacted] after reviewing information and documentation supplied by Claimant 2 and the Company. Neither the Covered Action nor the Related Actions concerned any misconduct [Redacted]. Further, Claimant 2’s complaint that the allegations related to [Redacted]—which prompted Staff to investigate the Company—purportedly lacked legitimacy is irrelevant. Regardless of the veracity of the [Redacted] allegations, those allegations are what prompted Staff to begin its investigative work into the Company, not Claimant 2’s information. Further, Claimant 2’s unsupported assertion that his/her information revealed important information about how the Company [Redacted] that was also present in the Covered Action is belied by the Declaration. The Declaration confirms that none of Claimant 2’s information was used in, nor had any impact on, the charges brought in the Covered Action.

Claimant 2 points to a prior final order in which we awarded a claimant even though there was “not a strong nexus between the [c]laimant’s information” and the resulting charges in the covered action.[fn22] The specific facts involved in that other final order, however, are not comparable to the facts involved here. Unlike the other final order, Claimant 2’s information did not prompt the Commission to begin its investigation of the Company; further, nothing about Claimant 2’s information regarding alleged misconduct [Redacted] led the Commission to begin an investigation that revealed misconduct [Redacted].

Finally, Claimant 2 complains about the alleged completeness of the record and requests that the Commission provide Claimant 2 with certain investigative files, including the opening narrative for the Investigation, the voluntary request that was sent to the Company in [Redacted] and third-party communications concerning Claimant 2’s information.[fn23] However, Claimant 2 is not entitled to these extra-record materials. We have appropriately considered all materials contemplated by the whistleblower program rules in reaching our conclusion to deny Claimant 2 an award. 24

C. Claimant 3.

We deny an award to Claimant 3. To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn25] Claimant 3 did not provide the Commission with such information. Because Claimant 3 is not eligible for an award in the Covered Action, Claimant 3 is not eligible for an award in the Related Actions.[fn26]

Claimant 3’s information did not either (1) cause the Commission to commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation;[fn27] or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action.[fn28] We credit the Declaration, provided under penalty of perjury, which confirms that Claimant 3’s information concerned *** [Redacted] that was unrelated to the Investigation and the conduct charged in the Covered Action. [Redacted] purportedly transpired from [Redacted] when Claimant 3 [Redacted]. However, the [Redacted] investigated by Staff and charged in the Covered Action concerned different misconduct that transpired from [Redacted]. Claimant 3 had no current information about the Company or any conduct it engaged in [Redacted]. Additionally, Staff did not open the Investigation based on Claimant 3’s information. Claimant 3’s information was not used in, and did not have any impact on, the charges brought by the Commission in the Covered Action.

None of Claimant 3’s arguments demonstrate why we should reach a different conclusion. There was no connection between Claimant 3’s [Redacted] and the [Redacted] charged in the Covered Action. Nothing in the record supports Claimant 3’s contention that Claimant 3’s alleged [Redacted] was the same misconduct charged by the Commission and the Other Agency merely because there was temporal overlap with the misconduct that the Other Agency charged (i.e., from [Redacted]).

Claimant 3’s other arguments are of no import. While the Declaration indicates that Claimant 3 provided information about a Company subsidiary called [Redacted] (“Subsidiary”), the Declaration does not state that Claimant 3 solely provided information about the Subsidiary and did not provide information about anything else, contrary to Claimant 3’s contentions. Further, there is no support in the record for Claimant 3’s assertion that the Preliminary Determination implicitly acknowledged that Claimant 3 provided original information merely because it did not specifically state that Claimant 3’s information was not original information. We conclude that there is nothing in the record that indicates that Claimant 3 provided any original information to the Commission that led to or significantly contributed to the underlying Covered Action.

Claimant 3 also takes issue with the Declaration’s statement that Claimant 3’s information about [Redacted] did not advance the Commission’s or the Other Agency’s investigations and had no bearing on the Covered Action or the Related Actions. According to the Declaration, the [Redacted] provided by Claimant 3 were [Redacted] did not point to any additional evidence or advance the Commission’s or the Other Agency’s investigations. Further, Claimant 3’s information about [Redacted] was not useful, as [Redacted] was not involved in the conduct charged in the Covered Action.

There is also no merit to the other arguments Claimant 3 raised in his/her response contesting the Preliminary Determination.[fn29] As such, we conclude that it is appropriate to deny an award to Claimant 3.

III. Conclusion.

Accordingly, it is hereby ORDERED that: (1) Claimant 1 shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action and the Related Actions; and (2) the whistleblower applications of Claimant 2 and Claimant 3 in connection with the Covered Action and the Related Actions be, and hereby are, denied.

By the Commission.

[2] The Preliminary Determination recommended that Related Action 1 and Related Action 2 (collectively, “Related Actions”) be deemed “related actions” under Rules 21F-3(b)(1) and [Redacted]

[3] The Preliminary Determination concluded that because Claimant 2 and Claimant 3 were not eligible for awards in the Covered Action, they were not eligible for awards in the Related Actions.

[4] The CRS also preliminarily determined to recommend that the award application of one other claimant be denied. That claimant did not submit a request for reconsideration and, as such, the Preliminary Determination with respect to this claimant became the Final Order of the Commission, pursuant to Rule 21F-10(f).

[5] The Other Agency charged the Company for misconduct [Redacted] however, unlike the Commission, the Other Agency did not charge the Company for [Redacted]

[6] [Redacted]

[7] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[8] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[9] The record supporting the Preliminary Determination included the declaration (“Declaration”) of one of the Division of Enforcement (“Enforcement”) attorneys who was assigned to the investigation that led to the Covered Action (“Investigation”). See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).

[10] Exchange Act Rule 21F-4(c)(3), 17 C.F.R. § 240.21F-4(c)(3).

[11] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[12] Id. [Redacted]

[13] [Redacted]

[14] See Exchange Act Section 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).

[15] In determining the amount of the award to Claimant 1, we considered the following factors set forth in Rule 21F-6 as they apply to the facts and circumstances of Claimant 1’s application: (1) the significance of information provided; (2) the assistance provided; (3) the 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.

[16] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[17] See Exchange Act Rule 21F-3(b)(1), (b)(2), 17 C.F.R. § 240.21F-3(b)(1), (b)(2); Exchange Act Rule 21F-11(a), 17 C.F.R. § 240.21F-11(a).

[18] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[19] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[20] Claimant 2 asserts that being required to report his/her information to the Company first before coming forward to the Commission would have forced him/her to expose himself/herself to retaliation at the cost of making a report. Such concerns, however, were not present here. Claimant 2 indicated in his/her whistleblower award application that [Redacted]

[21] In the alternative, Claimant 2 argues that the Commission should exercise its discretion to waive any timing requirement under Rule 21F-4(c)(3) that Claimant 2 report internally before reporting to the Commission. In light of the factual record in this matter, there is no reason to waive the timing requirement of Rule 21F-4(c)(3) in our discretion or to invoke our Section 36(a) exemptive authority, as Claimant 2 does not satisfy the other requirements under Rule 21F-4(c)(3).

[22] See Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 91933 (May 19, 2021).

[23] Claimant 2 states that he/she made a Freedom of Information Act (“FOIA”) request for such materials as part of his/her whistleblower award application submitted to OWB in Redacted FOIA requests must be submitted to the Commission’s Office of FOIA Services (“OFS”), the centralized unit that handles all FOIA requests for the Commission and whose website provides procedures on submitting requests directly to OFS. See Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 95714 (Sept. 9, 2022) (same).

[24] The whistleblower program rules state that the record upon which an award determination is made shall consist of sworn declarations provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a). There is no basis to disregard Rule 21F-12(a) and expand the record to include the Commission’s law enforcement files (as requested by Claimant 2), which is generally prohibited by Rule 21F-12(b). See Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b) (“These rules do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section [ i.e., Rule 21F-12(a)].”

[25] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[26] See Exchange Act Rule 21F-3(b)(1), (b)(2), 17 C.F.R. § 240.21F-3(b)(1), (b)(2); Exchange Act Rule 21F-11(a), 17 C.F.R. § 240.21F-11(a).

[27] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[28] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[29] Claimant 3 complains that his/her initial [Redacted] submission of information was not initially properly categorized by the Commission. After the Commission received Claimant 3’s tip, it was categorized with a disposition of “no further action” (“NFA”) because Claimant 3’s allegations were vague and/or insubstantial. However, Staff subsequently reviewed Claimant 3’s initial submission during Staff’s investigative work, reviewed all of Claimant 3’s ensuing submissions of information during the Investigation, and met with Claimant 3 and his/her counsel during in-person meetings in *** According to Staff, none of the information provided by Claimant 3 at any point in time advanced or impacted the Investigation or Covered Action. Claimant 3 also argues that the Declaration incorrectly asserted that the individuals Claimant 3 identified as potentially responsible for certain alleged misconduct no longer worked at the Company at the time of the Investigation. Claimant 3 alleges that many of the executives he/she identified to the Commission were still signing Company filings during the course of the Investigation. Despite Claimant 3’s assertions, the Declaration affirms that none of the individuals that Claimant 3 identified were involved in the conduct investigated by Staff or charged in the Covered Action. Finally, Claimant 3’s contention that he/she displayed great dedication and perseverance in providing his/her information is immaterial to our determination that Claimant 3 did not provide qualifying information that would entitle him/her to an award. The record conclusively demonstrates that none of Claimant 3’s information was used in, nor had any impact on, the charges brought by the Commission in the Covered Action.

SEC

97408

05/01/2023

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted a settled cease-and-desist proceeding [Redacted] (collectively, the “Company”). The Order Instituting Proceedings (“OIP”) charged the Company with [Redacted]. According to the OIP, *** [Redacted]. The Commission also charged the Company [Redacted].

The Company consented to the entry of the SEC’s order finding that [Redacted]. As part of the settled enforcement action, the Company agreed to pay [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn1] Claimant filed a timely whistleblower claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant’s claim be denied on the grounds that (1) Claimant did not provide original information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder, because the information provided by Claimant was already known to the Commission as the result of an examination conducted nearly a year before Claimant submitted information to the Commission; and (2) no information provided by Claimant led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c), because none of the information Claimant submitted was reviewed by the staff handling the investigation of the Covered Action or otherwise contributed to the success of the Covered Action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn3] In response to a request from OWB to provide proof that Claimant was the source of information contained in the [Redacted] (“Newspaper”), Claimant also provided an additional response with exhibits. In the Response, Claimant first contends that he/she provided original information to the Commission because (1) the SEC did not know or did not fully appreciate certain material features of [Redacted] prior to Claimant’s tip, specifically, that the Company was continuing [Redacted], and (2) Claimant was the original source of information published in the Newspaper on or about [Redacted] relating to the Company’s continued violations with respect to [Redacted]. Thus, Claimant argues that his/her information was not already known to the Commission as a result of the earlier examination.

Second, Claimant argues that his/her information led to the success of the Covered Action. Claimant argues that providing his/her information regarding the Company’s continued violations to the Newspaper resulted in a news article that prompted the staff to open the Covered Action investigation. Additionally, although the staff assigned to the Covered Action investigation states that they did not receive Claimant’s information, Claimant asserts that he/she provided information directly to a staff member with direct managerial responsibility for the investigation and to a staff member in the Division of Examinations (formerly known as the Office of Compliance Inspections and Examinations) (hereinafter, “Exams”) in *** and therefore, it must have been received by staff assigned to the investigation and utilized in connection with the Covered Action.

Third, Claimant requests to be allowed to depose certain members of the Commission staff and to review all emails, correspondence and other material regarding Claimant’s tip, as well as the administrative file for the investigation. Claimant also seeks all emails and other correspondence from the investigative team regarding certain news articles, all notes, emails and other material related to Claimant’s meetings with Commissions staff, and all emails and material from certain Commission staff related to this matter.[fn4]

II. Analysis.

A. Claimant Did Not Provide Original Information.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn5] Among other things, to be considered “original information,” information must be “[n]ot already known to the Commission from any other source, unless you are the original source of the information.”[fn6]

The record demonstrates that the information provided by Claimant relating to the Company’s [Redacted] was not original because it was already known to the Commission as a result of a Commission examination conducted nearly a year prior to Claimant’s submission. Claimant contends that the purported original information was not just the [Redacted], but that the Company was continuing [Redacted] even after Exams’ deficiency letter to the Company in [Redacted]. However, the Response offers no evidence for its assertion that the SEC did not know about or fully appreciate certain material features of [Redacted] and their continuing nature prior to his/her submission. Contrary to this argument, the record, which includes a supplemental declaration from Enforcement staff which we credit, demonstrates that the same [Redacted] issues that formed the basis for the Covered Action were already known to Commission staff from the examination. Moreover, the OIP charged the Company for, among other things, [Redacted] dating back to [Redacted]. Thus, the charges in the Covered Action were based on the same conduct already known to the staff as a result of the examination and were not focused on conduct by the Company occurring subsequent to the examination as argued by Claimant. The supplemental declaration by Enforcement staff also confirms that the Covered Action investigation was not prompted by any belief by the Commission or its staff that the Company had taken or not taken action in response to any direction or correspondence from Exams staff. Rather, the [Redacted] issues were known to the Commission as an ongoing practice [Redacted] since being identified in [Redacted].[fn7] Enforcement staff further confirmed that neither the timing of the investigation nor the resulting Covered Action were impacted in any way by the information provided by Claimant to the Commission. Furthermore, Claimant asserts that he/she provided examples of Company agreements that included [Redacted] provisions relating to [Redacted] by the Company subsequent to the examination. However, the declaration from the Exams staff and its exhibit, which we credit, demonstrates that Exam staff reviewed the Company’s [Redacted] as part of the examination. Because these agreements provided for [Redacted], Claimant has not demonstrated that the Company’s practices with respect to these agreements were unknown to Commission staff.

Claimant also argues that he/she provided original information because he/she was the original source of information published in the Newspaper concerning the Company’s *** [Redacted] occurring subsequent to the examination. In Claimant’s award application he/she stated that the information that formed the basis of the Newspaper article was a [Redacted] Company [Redacted] describing [Redacted]. Claimant further clarified that he/she obtained the [Redacted] Company *** pursuant to a FOIA request and then shared it with the Newspaper staff. Nevertheless, Claimant is ineligible for an award under Exchange Act Rule 21F-4(c) because the record demonstrates that the staff responsible for the Covered Action investigation never received a copy of the Company ***, which was not attached to Claimant’s submissions. Consequently, even if Claimant was the source of the Newspaper article, because Claimant did not provide the Commission the same information he/she gave to the Newspaper staff, Claimant cannot be considered the original source of information that led to the success of the Covered Action under Exchange Act Rule 21F-4(c).[fn8]

Furthermore, even if Claimant satisfies Exchange Act Rule 21F-4(b)(1)(iii) as a result of being the source of the Newspaper article, Claimant is unable to satisfy Exchange Act Rule 21F-4(b)(1)(ii) because, according to a supplemental staff declaration that we credit, the Newspaper article did not present new information regarding continued violations since the staff was already aware of the practice as evidenced by the [Redacted] Speech.

B. Claimant’s Information Did Not Lead to The Successful Enforcement of the Covered Action.

Claimant’s information also did not lead to the successful enforcement of the Covered Action. As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (1) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current… investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;”[fn9] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn10]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution to the success of the covered action.”[fn11] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against individuals or entities.[fn12]

The Response contends that the Commission launched and went forward with its investigation based on Claimant alerting the Commission staff via the Newspaper article of the Company’s continued violations. Furthermore, Claimant contends that it was not necessary to provide the same document that formed the basis for the Newspaper article to the Commission because the SEC launched and went forward with its investigation based on Claimant alerting the Commission staff of Company’s continued violations and not due to any particular document. As discussed above, Claimant’s argument that he/she prompted the opening of the investigation by being the source of the information published in the Newspaper article is without merit because the Commission staff was aware of the information in the Newspaper article from other sources. The declaration from the Enforcement staff, which we credit, explains that Enforcement staff did not open the investigation based on specific information contained in the Newspaper article or any other press article; rather it was news media attention following the [Redacted] Speech concerning [Redacted] that caused the opening of the investigation. Accordingly, Claimant’s information did not cause the opening of the investigation.[fn13]

Additionally, although Claimant argues that SEC managerial staff and Exams staff[fn14] attended meetings with Claimant, which concerned [Redacted], the standard for significant contribution is not whether Enforcement staff received a claimant’s information, but whether the information was new and meaningfully advanced the investigation. Thus, even if certain SEC staff received Claimant’s information and shared it with the Enforcement staff handling the investigation, that does not mean that the information meaningfully advanced the investigation. Rather, the record reflects that the Enforcement staff responsible for the investigation received critical information and materials from Exams staff who had conducted an exam a year prior to Claimant’s tip and further received cooperation from the Company’s counsel. While Claimant surmises that his/her information must have been utilized in the Covered Action investigation, the record does not demonstrate how his/her information made a significant or meaningful contribution to the investigation. As we have stated, “the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s information actually had on the investigation.”[fn15] Consequently, Claimant’s information was not used in the Covered Action investigation, did not cause staff to inquire into different conduct, and did not significantly contribute to the Covered Action.[fn16]

C. Claimant’s Request for Extra-Record Materials Is Denied.

Claimant argues that in order to ensure a complete record for review, he/she should be permitted to depose certain SEC staff members and to review emails, correspondence, and other material regarding Claimants’ filing, the administrative record for the Covered Action investigation, emails and correspondence regarding certain news articles, materials relating to Claimant’s meetings with SEC staff, and all emails and materials of certain SEC staff relating to the matter. The whistleblower rules permit an award claimant to request and receive a copy of information Claimant provided to the news media prompted the Company’s self-remediation of its the materials that form the basis of the Preliminary Determination.[fn17] Claimant made such a request and received a copy of the materials. The whistleblower rules, however, do not authorize a claimant to go on a fishing expedition to depose staff and to obtain copies of the SEC’s entire investigative file.[fn18] Moreover, the declaration of the Division of Enforcement staff is clear that Claimant’s information was not reviewed in connection with the Covered Action investigation and did not cause the staff to open its investigation, inquire into different conduct, or significantly contribute to the success of the Covered Action. Thus, we deny Claimant’s request for discovery of additional information.[fn19]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] As part of Claimant’s request, Claimant noted that the Commission staff member with managerial responsibility for the investigation did not produce a declaration. However, the primary Enforcement attorney responsible for the Covered Action submitted a detailed declaration, which we credit. Claimant also alleges that the CRS acted improperly by relying upon a declaration from Exams staff that was signed after issuance of the Preliminary Determination. The unsigned and signed versions of the declaration are identical except for the signature such that the information relied upon by the CRS in its Preliminary Determination was not affected by the signature being affixed after the CRS met to approve the Preliminary Determination. See Order Determining Whistleblower Award Claims, Exchange Act Release No. 94743 at 2 n.6 (Apr. 18, 2022).

[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[6] See Exchange Act Rule 21F-4(b)(1)(ii), 17 C.F.R. § 240.21F-4(b)(1)(ii).

[7] In fact, in [Redacted] gave a speech about the [Redacted] [Redacted] (“[Redacted] Speech”).

[8] We also note that to the extent Claimant relies on the information procured pursuant to a FOIA request as the basis for an award, such information cannot form a basis for an award because it is publicly available and therefore does not satisfy the definition of “independent knowledge” or, without more, the definition of “independent analysis” under Exchange Act Rule 21F-4(b)(2).

[9] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[10] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[12] Exchange Act Rel. No. 85412 at 8-9.

[13] The Response did not contest the CRS’s preliminarily determination rejecting Claimant’s assertion that the information Claimant provided to the news media prompted the Company’s self-remediation of its [Redacted]

[14] While the record reflects that the Exams staff, who provided a declaration in this matter, was involved in the examination of the Company and provided materials from the exam to the responsible Enforcement staff, the Exams staff was not a member of the Covered Action investigation, despite Claimant’s contrary conclusions.

[15] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 92542 at 4 (Aug. 2, 2021) (quoting Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90872 at 4 (Jan. 7, 2021)) (internal quotation marks omitted).

[16] The record demonstrates that Claimant’s information was considered in connection with a separate and unrelated investigation that was ultimately closed without enforcement action.

[17] See Exchange Act Rule 21F-10(e)(1)(i); 17 C.F.R. § 240.21F-10(e)(1)(i).

[18] Id. See also Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b) (noting that the whistleblower rules “do not entitle claimants to obtain from the Commission any materials (including pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section”).

[19] See Doe v. SEC, 729 F. App’x 1, 3 (D.C. Cir. 2018) (concluding that the Commission did not err by rejecting a claimant’s request to include additional materials in the administrative record, where the Commission’s determination was reviewable on the basis of materials already in the record); Order Determining Whistleblower Award Claim, Release No. 34-79294 (Nov. 14, 2016) (denying whistleblower award to claimant who argued that staff errors resulted in improper processing of submission, because information submitted did not actually lead to successful enforcement covered action), pet. rev. denied sub nom. Doe v. SEC, supra.

SEC

97397

04/28/2023

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted settled cease-and-desist proceedings against [Redacted]. According to the Commission’s order, [Redacted]. To resolve the matter, the Company agreed to pay disgorgement of [Redacted] prejudgment interest of [Redacted] and a [Redacted] civil penalty.

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1’s claim be denied because Claimant 1 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS reasoned that Claimant 1’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS noted that Claimant 1 provided information approximately four years after the investigation had been opened and the information was already known to the staff; as such, the information did not contribute to the investigation.

C. Claimant 1’s Response to the Preliminary Determination.

Claimant 1 submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2] In the Response, Claimant 1 wrote that: (1) “not all of [the] information provided to [the Commission] was known to [Enforcement staff] at the time, [and] relevant parts of it seem to have been ignored or dismissed; and (2) not all the senior officials at [the Company] [Redacted] were punished; [and] (3) not all the beneficiaries [Redacted] were identified and dismissed from [the Company.]” Claimant 1 contends that he/she provided information, including [Redacted] *** involved [Redacted], and believes that this information could not have come from the Company. Claimant 1 also urges the Commission to reopen the investigation to pursue [Redacted].

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7] For the reasons discussed below, Claimant 1’s information does not merit a whistleblower award in the Covered Action because the record does not establish that the information led to a successful enforcement action, as required by Rule 21F-4(c).

First, the record demonstrates that the Commission’s investigation which led to the Covered Action (the “Investigation”) was opened approximately four years before Claimant 1 submitted his/her information to the Commission. Accordingly, Claimant 1’s information did not cause the staff to open the Investigation.

Second, the record shows that Claimant 1’s tip to the Commission did not cause the staff to inquire into different conduct or significantly contribute to the Investigation. According to the sworn declaration from Enforcement staff assigned to the Investigation, which we credit, by the time Claimant 1’s TCR was submitted to the Commission in [Redacted], the Company had already identified all [Redacted]. Claimant 1’s TCR submission and provided substantial documentary evidence concerning [Redacted] to Enforcement staff responsible for the Investigation. Further, because the TCR did not provide any new information, Enforcement staff responsible for the Investigation did not contact Claimant 1, or seek additional information from him/her. Enforcement staff noted that none of Claimant 1’s information helped advance the Investigation nor did it have any impact on the charges brought by the Commission.

Lastly, Claimant 1’s Response takes issue with the result of the Investigation and asks that the Commission “reopen the investigation” to pursue [Redacted] based on the information he/she provided. Claimant 1’s Response appears to contain new and updated information that was not part of Claimant 1’s original TCR. But new information provided during the reconsideration phase of an award determination may not be the basis for an award. Moreover, the issue whether the Commission should reopen the investigation is outside the scope of this adjudication. In considering Claimant 1’s Response, the sole question before the Commission is whether Claimant 1 is eligible for a whistleblower award based on the information Claimant 1 provided to the Commission. As discussed above, Claimant 1’s information did not lead to the success of an enforcement action, as required by Rule 21F-4(c).

For these reasons, Claimant 1 does not qualify for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant 1 in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[5] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[7] Exchange Act Rel. No. 85412 at 8-9.

SEC

97396

04/28/2023

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed an action against [Redacted] (collectively, the “Defendants”), charging Defendants with violations of the federal securities laws, including [Redacted]. The Commission alleged violations of [Redacted]. On [Redacted] the court issued a final judgment ordering Defendants to pay [Redacted] in disgorgement and prejudgment interest and permanently enjoining Defendants from violating the federal securities laws. On [Redacted] the court issued an amended final judgment ordering Defendants to [Redacted].

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that Claimant 1’s claim be denied because Claimant 1 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimant 1’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 1’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS stated that the TCR Claimant 1 submitted was forwarded to staff on a different investigation, and that none of the other information Claimant 1 provided to the Commission had any impact on the charges in the Covered Action because the information was already known by investigative staff. The CRS stated that the Covered Action and the investigation from which the Covered Action originated (the “Investigation”) both stemmed from information obtained from a witness interviewed in connection with an earlier related investigation. The CRS also stated that Claimant 1 did not provide original information to the Commission. While Claimant 1 had communications with staff assigned to the Investigation, those communications contained only publicly available information and did not contain additional evaluation or insight separate and apart from the publicly available materials. Further, that information was already known to the staff.

C. Claimant 1’s Response to the Preliminary Determination.

Claimant 1 submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2] While stating that he/she did not have contact with staff assigned to the Investigation, Claimant 1 contended that he/she had extensive communications with Commission staff in the [Redacted] (“Regional Office”) beginning in [Redacted] including telephone and email communications, regarding the Defendants charged in the Covered Action. Claimant 1 also argues that he/she had communications with the [Redacted] (“Other Agency”) which may have contributed to the Commission’s Investigation. Claimant 1 notes that “[w]ithout the [Other Agency] taking interest ahead of . . . [the Commission], [the defendant] would no doubt still be in biz [sic]. I was the one who brought the [Other Agency] in.” Claimant 1 attached multiple emails with Commission and Other Agency staff, as well as with other individuals, in support of his/her contentions. Claimant 1 also argued that he/she provided certain “original, independent, non public” information to Commission staff in the Regional Office.

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

As an initial matter, the record shows that Claimant 1’s information did not cause Enforcement staff to open the Investigation. Enforcement staff confirms, in a sworn declaration, which we credit, that the Investigation was opened in [Redacted] based upon information derived from a witness interview in another investigation, not based upon any information provided by Claimant 1. Enforcement staff also confirmed, in a supplemental declaration, which we credit, that the staff assigned to the Investigation did not receive or review any information from the Regional Office or the Other Agency that caused the staff to open the Investigation.

The record also does not show that Claimant 1’s information caused Enforcement staff to inquire into different conduct or significantly contributed to the ongoing Investigation. Claimant 1’s TCR was forwarded to staff assigned to a different investigation, and as confirmed in the supplemental declaration, Enforcement staff did not receive or review Claimant 1’s TCR. And while Claimant 1 emailed certain Commission staff, at least one of whom was assigned to the Investigation, regarding potential misconduct involving the Defendants, the staff assigned to the Investigation who received the emails was already aware of the information in Claimant 1’s emails. Further, the record shows that Claimant 1’s emails consisted of publicly available information and did not relate to the information that formed the basis of the allegations in the Covered Action. The staff assigned to the Investigation also did not receive any information from the Regional Office or the Other Agency that advanced the Investigation. Lastly, Enforcement staff assigned to the Investigation confirm that they did not receive or review the additional emails Claimant 1 attached to the Response, nor did the staff assigned to the Investigation recall receiving any information from the individuals in the emails submitted by Claimant.[fn8]

For these reasons, Claimant 1 does not qualify for a whistleblower award.

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant 1 in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[5] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[7] Exchange Act Rel. No. 85412 at 8-9.

[8] We need not address Claimant 1’s argument that the information he/she provided to the Regional Office was “original, independent, [and] non public” because the record indicates that the staff assigned to the Investigation did not receive any information from the Regional Office that caused the staff to open the Investigation or advanced the Investigation. Even if Claimant 1 did provide “original, independent, non public” information to the Regional Office, the record demonstrates that this information did not lead to the success of the Covered Action and thus Claimant 1 is ineligible for an award on that ground alone.

SEC

97395

04/28/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the Redacted denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (“Covered Action”). Claimant filed a timely response contesting the preliminary denial. 1 For the reasons discussed below, Claimant’s claim is denied.

I. Background

A. The Covered Action

On the Commission filed the Covered Action 2 against [Redacted] *** (“Company”) and [Redacted] (collectively, “Defendants”). The Covered Action alleged that Defendants were involved in [Redacted]. Specifically, [Redacted]. The Company [Redacted]. However, the Company [Redacted]. The Covered Action charged Defendants with [Redacted]. In [Redacted] the Court ordered [Redacted] to pay a total of [Redacted] in disgorgement, prejudgment interest, and civil penalties. The Court also ordered defendant [Redacted] to pay [Redacted] in disgorgement, Redacted prejudgment interest, and civil penalties.

On [Redacted] Redacted the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn3] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination[fn4] recommending that Claimant’s claim be denied on two grounds.[fn5]

First, the Preliminary Determination recommended that the Commission deny Claimant’s claim because Claimant did not provide “original information” that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information was not derived from Claimant’s: (1) “independent knowledge,” as defined under Rule 21F-4(b)(2), but instead was derived entirely from “publicly available sources;” or (2) “independent analysis,” as defined under Rule 21F-4(b)(3), because the information did not include an examination and evaluation of information that “reveals information that is not generally known or available to the public.” The CRS reasoned that Claimant’s information was based on articles, press releases, and Commission filings—all of which were available publicly. Moreover, Claimant’s examination and evaluation of information derived from these publicly available sources did not reveal anything that was not otherwise apparent from reviewing the publicly available information.

Second, the Preliminary Determination recommended that the Commission deny Claimant’s claim because Claimant did not provide “original information” that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because Claimant’s information was already known to the Commission. The CRS preliminarily determined that Claimant’s information was already known to the staff responsible for the Covered Action (“Staff”) from other sources, including press releases and other tips.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn6] In the response, Claimant describes the process through which he/she obtained the information Claimant submitted to the Commission about the Company [Redacted]. This process included: reviewing and analyzing publicly available information about the Company; [Redacted] and taking other steps in determining whether [Redacted] may have existed based on information taken from publicly available sources such as Company press releases, Commission filings, financial websites, financial blogs, and Google searches.

Claimant argues that the evaluation he/she performed to identify and interpret the information he/she provided to the Commission meets the definition of “independent analysis”. Claimant asserts that his/her evaluation was “beyond what would be reasonably apparent to the Commission from publicly available information” and that Claimant’s analysis “bridged the gap” between the publicly available information and the possible securities violations. Claimant states that the Commission would not have discovered the [Redacted] charged in the Covered Action without his/her analysis. Claimant alleges that if his/her claim is denied, the Commission would be implicitly holding that an outsider like Claimant can never receive an award in a [Redacted] case and that such a conclusion would have a chilling effect on future [Redacted] complaints.

II. Analysis.

Claimant’s arguments are unavailing. As the Preliminary Determination correctly determined, none of Claimant’s information qualifies as “independent analysis”. Under the Rules, a whistleblower may satisfy the “original information” requirement by providing the Commission with “independent analysis”.[fn8] The Rules define “analysis” to mean an “examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.”[fn9]

We have explained that “independent analysis” requires that the whistleblower “do more than merely point the staff to disparate publicly available information that the whistleblower has assembled, whether or not the staff was previously ‘aware of’ the information.”[fn10] To qualify as “independent analysis,” a whistleblower’s submission “must provide evaluation, assessment, or insight beyond what would be reasonably apparent to the Commission from publicly available information. In assessing whether this requirement is met, the Commission [] determine[s] . . . whether the violations could have been inferred from the facts available in public sources.”[fn11] In order for a whistleblower 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.[fn12] “[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.”[fn13] Additionally, “non-experts may configure publicly available information in a non-obvious way that reveals patterns indicating possible violations that would not otherwise be 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.”[fn14]

Here, the Declaration as well as a supplemental declaration (“Supplemental Declaration”) of one of the Enforcement attorneys who was assigned to the Investigation—which we credit—confirmed under penalty of perjury that Claimant’s tip contained information that was in the public domain, including information from Company filings with the Commission and publicly available Company press releases. Claimant’s information was duplicative of information Staff received from other sources, including several tips that the Commission received from members of the public as well as complaints in the public domain. Staff did not have any communications with Claimant before or during the Investigation. Additionally, the Supplemental Declaration confirmed that the information as well as allegations of purported misconduct by the Company that Claimant included within his/her tip to the Commission were based upon readily discernible, publicly available information.

Based upon the record, we therefore conclude that Claimant’s information does not qualify as independent analysis. Claimant’s information was derived through the review and went beyond what was reasonably apparent to the analysis of publicly available information; however, none of Claimant’s analysis regarding [Redacted] went beyond what was reasonably apparent to the Commission staff from publicly available information. Claimant’s examination and evaluation of the publicly available information about the Company [Redacted] did not contribute any “significant independent information” that “bridge[d] the gap” between the publicly available information and the possible securities violations. Nothing about Claimant’s information was revelatory in utilizing publicly available information in a way that went beyond the information itself and afforded the Commission with important insights or information about possible violations.[fn15]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[2] The Covered Action was filed in the [Redacted] (“Court”).

[3] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[7] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[8] See Exchange Act Rule 21F-4(b)(1)(i), 17 C.F.R. § 240.21F-4(b)(1)(i).

[9] Exchange Act Rule 21F-4(b)(3), 17 C.F.R. § 240.21F-4(b)(3).

[10] Securities Whistleblower Incentives and Protections, 76 FR 34299, 34312 (June 13, 2011).

[11] Whistleblower Program Rules, 85 FR 70898, 70927-70928 (Nov. 5, 2020).

[12] Id. at 70928.

[13] Id.

[14] Id.

[15] Despite Claimant’s speculative assertions otherwise, nothing about our decision to deny Claimant’s claim holds—implicitly or otherwise—that an outsider can never receive an award in [Redacted] case. Further, nothing about our decision to deny Claimant’s claim is meant to have any chilling effect on future [Redacted] complaints. Instead, we have concluded in this instance that Claimant’s claim must be denied due to the specific facts and circumstances present here.

SEC

04/28/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [Redacted] (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application(s) for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimant(s) was never provided to or used by staff handling the Covered Action(s) or underlying investigation (or examination), and those staff members otherwise had no contact with Claimant(s). Therefore, Claimant(s) did not provide information that led to the successful enforcement of the above-referenced Covered Action(s) within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By Office of the Whistleblower.

[2] Claimant did not provide information that led to the successful enforcement of the Covered Action. The investigation that led to the Covered Action (the “Investigation”) was opened in [Redacted] based upon the staff’s investigative efforts in connection with other tips and information developed in a related investigation. The Investigation was opened approximately one month before Claimant first contacted the Commission. Claimant’s information did not cause the staff to open the Investigation. Staff assigned to the Investigation that led to the Covered Action did not recall reviewing or receiving any of Claimant’s information, nor did the staff recall communicating with Claimant. While Claimant states that Claimant spoke with staff from the [Redacted] Regional Office, staff assigned to the Investigation did not recall receiving or reviewing any information from [Redacted] staff related to the Investigation. The TCR System indicates that Claimant’s information was forwarded to staff assigned to a different investigation and not to staff assigned to the Investigation. Accordingly, Claimant provided no information that was used in or that contributed to the success of the Investigation.

SEC

04/14/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [Redacted] (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application(s) for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimant(s) was never provided to or used by staff handling the Covered Action(s) or underlying investigation (or examination), and those staff members otherwise had no contact with Claimant(s). Therefore, Claimant(s) did not provided information that led to the successful enforcement of the above-referenced Covered Action(s) within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant(s) failed to specify in the award application the submission pursuant to Rule 21F-9(a) on which the Claimant(s)’s claim for an award is based.[fn3]

By Office of the Whistleblower.

[2] Claimant did not provide information that led to the successful enforcement of the Covered Action. The investigation that led to the Covered Action (the “Investigation”) was opened in [Redacted] based upon information collected by Enforcement staff in a different investigation. One day before the Commission filed the Covered Action in federal court, Enforcement staff reviewed a [Redacted] examination report (the “Report”) relating to [Redacted]. The Report described an [Redacted] letter from Claimant and a subsequent meeting with Claimant. Staff assigned to the Investigation confirmed that the description of Claimant’s allegations in the Report did not appear to relate to the subject matter of the Investigation or the Covered Action. None of Claimant’s information was used in or advanced the Investigation or the Covered Action.

[3] In the field requiring a TCR number, Claimant listed “On File.” While Claimant provided a TCR submission date, OWB staff were unable to locate a TCR submission by Claimant around that date related to the respondents in the Covered Action.

SEC

97295

04/13/2023

[Redacted].

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent (*** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

SEC

97285

04/11/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of about $1 million, which represents [Redacted] percent (***) of the monetary sanctions collected in the above-referenced Covered Action. The CRS further recommended the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 2”).[fn1] Claimant 2 filed a timely response contesting the preliminary denial. For the reasons discussed below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed the settled covered action against [Redacted] (“Firm”), a registered broker-dealer, finding that the Firm [Redacted]. The Commission found that, [Redacted]. The Firm was found to have [Redacted]. Among other relief, the Firm was ordered to pay disgorgement of [Redacted] prejudgment interest of [Redacted] and a civil money penalty of [Redacted]. All amounts have been collected.

On [Redacted] the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. The 90-day deadline for this posting was [Redacted]. While Claimant 1 submitted his/her award application before the deadline, Claimant 2 did not submit his/her award application until more than 17 months after the deadline.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations recommending that Claimant 1 receive a whistleblower award of *** of the monetary sanctions collected in the Covered Action and that the award claim of Claimant 2 be denied because Claimant 2 failed to submit his/her claim for award to OWB within ninety days of the date of the Notice of Covered Action, as required under Rule 21F-10 of the Exchange Act.[fn3]

C. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 submitted a timely written request contesting the Preliminary Determinations.[fn4] In the reconsideration request, Claimant 2 contends that the Commission should exercise its authority under Exchange Act Rule 21F-8(a) to waive the award application deadline in the Covered Action. Claimant 2 asserts in support of his/her contention that at the time of the submission deadline, Claimant 2 was not represented by counsel and that, while he/she had submitted award claims for matters for which he/she had directly provided information, Claimant 2 was not aware that he/she could submit an award claim based on Commission enforcement actions brought against other entities arising out of the same investigation for which he/she had not provided specific information or given direct testimony. Claimant 2 concludes that it is unfair that Claimant 1, whom Claimant 2 asserts used Claimant 2’s information, is being rewarded while Claimant 2 is denied an award.[fn5]

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn6] [Redacted]. In reaching this determination, we considered that Claimant 1’s tip was the initial source of the underlying investigation and caused the opening of the investigation. Further, Claimant 1 provided the Commission’s investigative staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses, and helping staff understand complex fact patterns and issues related to the matters under investigation. Claimant 1’s information and assistance allowed the Commission to devise an investigative plan and to craft its initial document requests from the Firm and other entities. Finally, Claimant 1 was an important source of specific information for the Covered Action.

B. Claimant 2.

The requirement that claimants file whistleblower award claims within ninety days of the posting of a Notice of Covered Action (“NoCA”), set forth in Exchange Act Rule 21F-10, serves important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claims process so that the Commission can make timely awards to meritorious whistleblowers.[fn9]

Claimant 2 does not dispute that his/her award claim was submitted after the deadline specified in the Notice of Covered Action. Rather, as noted, Claimant 2 argues that the Commission should exercise its authority under Exchange Act Rule 21F-8(a) to waive the ninety-day filing requirement for the Covered Action. Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive any of the [information submission and claim making] procedures upon a showing of extraordinary circumstances.”[fn10] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn11] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn12] The critical question is whether the facts and circumstances that gave rise to the late-filing or other procedural deficiency were sufficiently beyond the control of the claimant to support an exercise of our discretionary authority under Rule 21F-8(a) to excuse the untimeliness.[fn13] Moreover, “[e]ven when circumstances beyond the applicant’s control give rise to the delay . . . an applicant must also demonstrate that he or she promptly arranged for the filing . . . as soon as reasonably practical thereafter.”[fn14]

Claimant 2 has failed to meet the demanding standard for showing that there were extraordinary circumstances beyond Claimant 2’s control that caused the failure to file his/her award claim by the deadline. Claimant 2’s stated belief that a claimant can only be eligible for an award if his or her tip or testimony to the Commission specifically mentioned the subject of the covered action does not excuse Claimant 2’s failure to file by the deadline. “[A] lack of awareness about the [whistleblower award] program does not . . . rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.”[fn15] Claimant 2’s limited understanding of the whistleblower rules is not an “extraordinary circumstance[]” that should trigger the Commission’s discretion to excuse the fact that Claimant 2 submitted his/her award application more than a year after the deadline. Further, while Claimant 2 was unrepresented at the time of the deadline for submitting his/her Form WB-APP, he/she still waited nearly a year after obtaining representation to file his/her award application. Accordingly, we do not believe it is appropriate here to exercise our discretionary authority under Rule 21F-8(a) to excuse Claimant 2’s untimely filing.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent (***) of the monetary sanctions collected in the Covered Action. It is further hereby ORDERED that the whistleblower award application of Claimant 2 in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[1] The CRS also preliminarily determined to recommend that the award application of one other claimant be denied. The claimant did not submit a request for reconsideration and, as such, the Preliminary Determination with respect to his/her award claim became the Final Order of the Commission, pursuant to Rule 21F-10(f) promulgated under the Securities Exchange Act of 1934, 17 C.F.R. § 240.21F-10(f).

[3] Exchange Act Rules 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred”) and 21F-10(b)(1) (“All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award”). See also Order Determining Whistleblower Award Claim, [Redacted] pet. for rev. denied sub nom. Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] Claimant 2 contends that, if the Commission were to exercise its discretionary authority to waive the late-filed award claim and consider his/her award claim, it should find that much of the information for which the CRS credited Claimant 1 with having provided first was, in actuality, information Claimant 1 had received from Claimant 2. Since, as discussed below, we have decided it is not appropriate here to exercise our discretionary authority to waive Claimant 2’s failure to submit his/her award claim by the deadline set out in the Notice of Covered Action, we have not addressed, and make no findings, on these contentions.

[6] See Exchange Act Section 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). [Redacted]

[9] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 64545 , 76 Fed. Reg. 34300, 34300. See also Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 96765 at 4 (Jan. 30, 2023); and Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 95711 at 2-3 (Sept. 9, 2022).

[10] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

[11] Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 96765 at 4 (Jan. 30, 2023) (internal citations omitted); Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 95711 at 3 (Sept. 9, 2022) (internal citations omitted).

[12] Id.

[13] Id.

[14] Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 96765 at 4 (January 30, 2023) (internal citations omitted).

[15] Id. at 5.

SEC

97229

03/31/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of over $9 million, which represents [Redacted] percent (***) of the monetary sanctions collected in the Covered Action and that [Redacted] (“Claimant 2”) receive a whistleblower award of more than $3 million, which represents [Redacted] percent (***) of the monetary sanctions collected in the Covered Action.[fn1] Claimant 2 has contested the Preliminary Determinations. For the reasons discussed below, the CRS’s recommendations are adopted.[fn2]

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled public administrative proceedings against [Redacted] (the “Firm”), a registered broker-dealer, finding that the Firm violated [Redacted]. In its enforcement action, the Commission found that, from [Redacted] the Firm [Redacted]. The Firm was also found to have [Redacted]. Among other relief, the Firm was ordered to pay disgorgement of prejudgment interest of [Redacted] and a civil money penalty of [Redacted].

On [Redacted] the Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn4] Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations recommending that Claimant 1 and 2 receive whistleblower awards of *** and ***, respectively, of the monetary sanctions collected in the Covered Action. In recommending that Claimant 1 receive [Redacted] larger award than Claimant 2, the CRS reasoned that Claimant 1’s information was more important to the investigation because Claimant 1’s information was received by the Commission several years before Claimant 2’s information. The CRS also recommended that Claimant 2’s award be decreased due to unreasonable reporting delay.

C. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 makes a number of arguments on reconsideration. First, Claimant 2 contends that the CRS failed to properly weigh the value of Claimant 2’s contribution to the investigation relative to Claimant 1’s, arguing that much of the information for which the CRS credited Claimant 1 was, in actuality, information Claimant 1 had received from Claimant 2. Second, Claimant 2 contends that the CRS should have taken into account the fact that Claimant 2 was the one who provided certain information to Claimant 1 about [Redacted]. Third, Claimant 2 contends that the CRS should have considered the specific and credible information Claimant 2 provided about an officer at the Firm, which was relevant to the Other Action filed by the Commission. Fourth, Claimant 2 asserts that this other officer [Redacted]. Fifth, Claimant 2 disputes the CRS’s determination that Claimant 2 unreasonably delayed reporting his/her information to the Commission. Sixth, Claimant 2 contends that Claimant 1 did not fully understand all the intricacies [Redacted] and that the CRS should have taken this into account in recommending an award percentage.

Finally, Claimant 2 asserts that the Preliminary Determination he/she received contained redactions which, Claimant 2 believes, would have shown that key evidence credited as having been provided to the Commission by Claimant 1 was, in fact, evidence that Claimant 2 had given to Claimant 1 with the understanding that Claimant 1 would then forward it to the Commission. Claimant 2 requests that he/she be provided with an unredacted copy of the Preliminary Determination to see whether this is, in fact, the case.

II. Analysis.

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amounts are appropriate.[fn5]

In reaching our award determinations, we positively assessed the following facts in support of Claimant 1’s larger award: (1) Claimant 1’s tip was the initial source of the underlying investigation; (2) Claimant 1’s tip exposed [Redacted] including at the Firm, that would have been difficult to detect without Claimant 1’s information; (3) Claimant 1 provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; (4) the Commission used information Claimant 1 provided to devise an investigative plan and to craft its initial document requests; and (5) Claimant 1 made persistent efforts to remedy the issues, while suffering hardships.

In assessing Claimant 2’s important, but lesser, contribution to the success of the Investigation, the Commission notes that Claimant 2 was the first witness who was able to tell the staff that the Firm [Redacted] knew or should have known key facts about [Redacted] including that [Redacted] Claimant 2 provided important information as a percipient witness which helped establish [Redacted] liability, with factual details on those topics that went beyond what Claimant 1 had been able to provide. In addition, Claimant 2 provided information and documents, participated in staff interviews, and provided clear explanations to the staff regarding the issues that Claimant 2 brought to the staff’s attention. Claimant 2’s information gave the staff a more complete picture of how [Redacted] which the staff was able to use in settlement discussions with the Firm’s counsel [Redacted].

Contrary to what Claimant 2 states in his/her reconsideration response, two of Claimant 2’s objections were, in fact, considered by the CRS and recognized in the PD: (1) the importance to the Commission’s investigation of Claimant 2’s information about [Redacted] and (2) the specific importance to the success of the Covered Action of Claimant 2’s information about the Firm and the respondent in the Other Action.

Further, there is no support in the record for Claimant 2’s assertion that, with the exception of information [Redacted] Claimant 2 provided to Claimant 1 about [Redacted] — a fact which Claimant 1 had acknowledged to the staff and which the CRS noted in the PD — the information Claimant 1 provided to the Commission came originally from information Claimant 2 had provided to Claimant 1. Indeed, most of the documentation Claimant 2 offered to support his/her contentions consisted of emails that Claimant 2 was copied on or forwarded in which Claimant 1 communicated with Commission or [Redacted] emails Claimant 1 wrote to Claimant 2 and others discussing Claimant 1’s thoughts about, or news concerning, the Commission’s ongoing investigation; and Claimant 1’s efforts to reach out to others to inquire about [Redacted]. While the staff acknowledged, as Claimant 2 notes, that it did not inquire about what specific information Claimant 2 had given to Claimant 1 beyond the information about [Redacted]. Claimant 2’s response does not contain evidence of other specific information Claimant 2 gave to Claimant 1. Claimant 2’s contention about the importance to the investigation and the Covered Action of his/her providing information about a second officer of the Firm is belied by the fact that the Commission did not charge that officer in connection with its investigation into the Firm’s misconduct.[fn7] With regard to Claimant 2’s assertion that Claimant 1 did not fully comprehend [Redacted] this does not change the fact that the Commission first learned about the underlying misconduct from Claimant 1 and that it was Claimant 1’s tips that caused the Commission to open the investigation and informed the investigation’s initial steps. Moreover, Claimant 2’s argument does not change the fact that Commission staff found Claimant 1’s information and assistance helpful during the course of its investigation.

We also find no merit in Claimant 2’s assertion that he/she should be provided with an unredacted copy of the Preliminary Determination to examine whether the redactions in the copy he/she received might have contained key evidence that the CRS credited as having been provided to the Commission by Claimant 1 when it was possibly evidence that Claimant 2 had given to Claimant 1 with the understanding that Claimant 1 would then forward it to the Commission. The redacted Preliminary Determination received by Claimant 2 did not redact any information about Claimant 1 other than Claimant 1’s name; the balance of the redactions concerned the other three whistleblowers who did not contest the Preliminary Determination.[fn8] There is similarly no merit in Claimant 2’s contention that the redactions made in the Preliminary Determination as to Claimant 1 were improper or inappropriate because Clamant 1 had publicly disclosed his/her identity. Regardless of whether a whistleblower chooses to publicly disclose his/her identity as a whistleblower, the Commission has a legal obligation under Exchange Act Section 21F(h)(2) to “not disclose any information, including information provided by a whistleblower to the Commission, which could reasonably be expected to reveal the identity of a whistleblower,” except in certain limited circumstances not applicable here. Thus, the redaction of Claimant 1’s name in Claimant 2’s Preliminary Determination is a mandatory requirement under the law, not a discretionary decision by the CRS.[fn9]

Finally, we note that, in contrast to Claimant 1, who persistently alerted the Commission [Redacted] for a number of years before the investigation was opened, Claimant 2 delayed reporting to the Commission for several years. While Claimant 2 states that he/she was aware as early as [Redacted] *** Claimant 2 did not report to the Commission until [Redacted] — at least *** years after Claimant 2 was aware of the possible illegal nature [Redacted] and [Redacted] years after Claimant 2 left his/her former employer. During this period, the harm continued to investors who were unaware of the violative conduct. Accordingly, we find that Claimant 2 unreasonably delayed reporting to the Commission and that Claimant 2’s award percentage should be set at [Redacted].[fn10]

III. Conclusion.

Accordingly, it is hereby ORDERED that (1) Claimant 1 receive an award of [Redacted] percent (***) of the monetary sanctions collected in the Covered Action; and (2) Claimant 2 receive an award of [Redacted] percent (***) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] The investigation that gave rise to the Covered Actions also produced another related enforcement action — [Redacted] (the “Other Action”) — that was not posted as a covered action because the monetary sanctions in that matter did not exceed $1 million. The Commission considers the Other Action to be part of the Covered Action under Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(d)(1) for purposes of determining the award amount because the Other Action arose from the same nucleus of operative facts as the Covered Action.

[2] The CRS also preliminarily determined to recommend that the award applications of three other claimants be denied. None of these claimants submitted a request for reconsideration and, as such, the Preliminary Determinations with respect to their award claims became the Final Order of the Commission, pursuant to Rule 21F-10(f).

[3] The amount ordered in the Other Action was a civil money penalty of [Redacted]

[4] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[5] In assessing the appropriate award amount, Exchange Act 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.

[6] [Redacted].

[7] To the extent that Claimant 2 is arguing that he/she should be awarded because of assistance provided to the other agency, this is without merit since Claimant 2 has not applied for a related action award in this matter.

[8] See supra note 2.

[9] Claimant 2 also faults Claimant 1 for indicating that Claimant 2 would share in the whistleblower awards Claimant 1 expected to receive from the Commission and then not fulfilling his/her commitment to Claimant 2. However, Claimant 1’s supposed commitment is irrelevant to our analysis of the respective award percentages that each should receive. Finally, Claimant 2 requests that after the CRS had the opportunity to review Claimant 2’s response, he/she “should be provided with further opportunity to make submissions to the Commission, in person or in writing.” There is no provision under the rules for whistleblowers to continue to send reconsideration materials after submitting their reconsideration request and we, accordingly reject this request.

[10] In setting the award percentage at [Redacted] we took into consideration certain facts in the record relevant to the issue of delay. Although the record demonstrates that Claimant 2 unreasonably delayed, we considered that Claimant 2 provided Claimant 1 with information [Redacted] knowing that Claimant 1 was forwarding this information to the Commission staff.

SEC

97226

03/31/2023

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled cease-and-desist proceedings against [Redacted] (the “Company”) alleging that the Company [Redacted]. The Commission charged the Company with violations of [Redacted]. The Company agreed to pay disgorgement, prejudgment interest, and a civil monetary penalty totaling [Redacted].

B. The Preliminary Determinations.

C. Claimant 1’s Response to the Preliminary Determinations.

Claimant 1 submitted a timely written response contesting the Preliminary Determinations.[fn1] Claimant 1 principally argues that he/she provided original information about the misconduct that led to the opening of the Investigation and the success of the Covered Action. Claimant 1 states that he/she has been “submitting data concerning [the Company] . . . to the SEC since [Redacted],” one year before the staff opened the Investigation. Claimant 1 further noted that he/she had prior contact with other government agencies, including the [Redacted] (collectively, the “Other Agencies”), that concerned the misconduct. Claimant 1 provided copies of correspondence with the Other Agencies as well as with Commission staff in the [Redacted] Office and the Office of the Whistleblower. Claimant 1 questioned the data sharing practices within the Commission and the federal government more generally since the declaration prepared by the staff assigned to the Investigation states that the staff assigned to the Investigation never received any materials from Claimant 1, while Claimant 1 provides evidence of numerous submissions to the Commission staff, as well as Other Agencies. Claimant 1 also contends that the declaration prepared by staff assigned to the Investigation did not comport with Claimant 1’s submissions, since the staff declaration stated that the Investigation was opened based upon a self-report from the Company, while Claimant 1 argues that he/she provided information to the Other Agencies before the Investigation began.

D. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 submitted a timely written response contesting the Preliminary Determinations. Claimant 2 states that he/she provided information regarding the misconduct at issue to the Commission in [Redacted] Claimant 2 also states that he/she was contacted by Commission staff in the [Redacted] Office (“Other Commission Staff”) in [Redacted] and had an in-person meeting with Other Commission Staff in [Redacted]. Claimant 2 also states that he/she was contacted by Other Commission Staff again in [Redacted]. Claimant 2 contends that the CRS did not account for the possibility that his/her “extensive internal reports, while at [the Company], comprised or led to the original information that [the Company] later self-reported.” Claimant 2 states that he/she had “performed extensive investigations” into misconduct while employed by the Company and that Company personnel ignored his/her concerns of misconduct. Claimant 2 argues that his/her information “may have been the original source of information that [the Company] uncovered” in 2017 and then self-reported to the Commission. Claimant 2 also calls into question the accuracy of the investigative staff declaration on the grounds that the staff declaration states that the staff did not communicate with Claimant 2, when Claimant 2 met with Other Commission Staff in [Redacted]. Claimant 2 argues that his/her information might have indirectly reached staff assigned to the Investigation. Claimant 2 claims that his/her information may have “furthered the SEC’s investigation or provided it with additional leverage in its settlement negotiations with [the Company].”

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn2] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn3] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn4] In addition, “[t]he Commission will consider you to be an original source of the same information that we obtain from another source if the information satisfies the definition of original information and the other source obtained the information from you or your representative.”[fn5]

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7]

(3) the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of [Rule 21F-4]; and

(4) the whistleblower submitted the same information to the Commission in accordance with the procedures set forth in Rule 21F-9 within 120 days of providing it to the entity.[fn8]

A. Claimant 1.

Claimant 1 does not qualify for a whistleblower award in this matter because his/her information did not cause the staff to open the Investigation, nor did Claimant 1’s information cause the staff to inquire into different conduct in or significantly contribute to the ongoing Investigation. As an initial matter, the record demonstrates that the Investigation was opened based on a self-report from the Company and not based on any information from Claimant 1. There also is not sufficient evidence in the record indicating that Claimant 1’s information played a part in causing the Company to make its self-report to the Commission. A supplemental staff declaration, which we credit, also confirms that the staff did not receive any information from the Other Agencies that prompted the opening of the Investigation. Accordingly, Claimant 1’s information did not cause the staff to open the Investigation.

The record also does not show that Claimant 1’s information caused the staff to inquire into different conduct or significantly contributed to the Investigation. The staff assigned to the Investigation confirmed that Claimant 1’s information was not received, reviewed, or used by the staff during the Investigation, nor did the staff communicate with Claimant 1 during the Investigation. Nor was Clamant 1’s information received indirectly by Commission staff assigned to the Investigation. A supplemental staff declaration, which we credit, confirms that the staff did not receive any information from the Other Agencies that advanced the Investigation, and thus any such information that Claimant 1 provided to the Other Agencies did not significantly contribute to the Investigation or cause the staff to inquire into different conduct. The supplemental staff declaration also confirms that the [Redacted] Office staff with whom Claimant 1 corresponded were not assigned to the Investigation nor communicated with staff assigned to the Investigation regarding the subject matter of the Investigation.[fn9] Thus Claimant 1’s information did not cause the staff to inquire into different conduct or significantly contribute to the success of the Investigation.[fn10]

For these reasons, Claimant 1 is not eligible for a whistleblower award in this matter.

B. Claimant 2.

Claimant 2 is not eligible for a whistleblower award because Claimant 2’s information did not cause the staff to open the Investigation, to inquire into different conduct as part of an existing investigation, or significantly contribute to the Investigation. As previously stated, the Investigation was opened based upon a self-report from the Company, not based upon information provided by Claimant 2. There also is not sufficient evidence in the record — and Claimant 2 has not provided any additional information as part of *** reconsideration request — indicating that Claimant 2’s information played a part in causing the Company to make its self-report to the Commission. Accordingly, Claimant 2’s information did not cause the staff to open the Investigation.

The supplemental staff declaration confirms that staff assigned to the Investigation did not receive, review, or use any of the information provided in Claimant 2’s TCR submissions or supplemental submissions. While Claimant 2 may have spoken with Other Commission Staff in [Redacted] the supplemental staff declaration confirms Other Commission Staff were not assigned to the Investigation nor did staff assigned to the Investigation communicate with Other Commission Staff regarding the subject matter of the Investigation. Accordingly, Claimant 2’s communications with Other Commission Staff did not significantly contribute to the Investigation, nor did it cause Commission staff to inquire into different conduct. Further, the record does not support the argument that Claimant 2’s information played a role in the Company’s decision to self-report to the Commission.[fn11]

Claimant 2’s response also raises the question of whether his/her information qualifies for an award pursuant to Exchange Act Rule 21F-4(c)(3).[fn12] While the record shows that Claimant 2 reported information internally at the Company, the record does not demonstrate that Claimant 2’s information was a cause or basis for the Company reporting any information to the Commission. Based on the supplemental staff declaration, Commission staff are not aware of any information indicating that Claimant 2’s reports played any part in the Company’s decision to report misconduct to the staff. Accordingly, the record does not show that Claimant 2 meets the requirements for an award under Rule 21F-4(c)(3).[fn13]

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimants in connection with the Covered Action be, and they hereby are, denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e). Rule 2F-10(e) permits claimants to submit their “written response and supporting materials within sixty (60) calendar days of the date of the Preliminary Determination, or if a request to review materials is made pursuant to paragraph (e)(1) of this section, then within sixty (60) calendar days of the Office of the Whistleblower making those materials available for [their] review.” Claimant 1 made a timely submission within the sixty day window. However, Claimant 1 also made subsequent “updated” submissions over the next two years. Submissions made outside this sixty-day window by Claimant 1 are untimely and accordingly not considered as part of the record.
[2] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[3] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[4] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[5] See Exchange Act Rule 21F-4(b)(5), 17 C.F.R § 240.21F-4(b)(5).
[6] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[7] Exchange Act Rel. No. 85412 at 8-9.
[8] Exchange Act Rule 21F-4(c)(3), 17 C.F.R § 240.21F-4(c)(3).
[9] The correspondence from OWB consists of letters acknowledging Claimant 1’s TCR submissions and whistleblower application submissions and do not demonstrate that Claimant 1’s information in any way assisted Commission staff.
[10] We also do not find persuasive Claimant 1’s arguments regarding sharing of information among Commission staff and among other regulatory agencies in general. As stated above, the record demonstrates that staff assigned to the Investigation did not receive, review, or use any information from Claimant 1, nor did staff assigned to the Investigation receive any information from the Other Agencies that advanced the Investigation. Likewise, staff assigned to the Investigation did not receive information that advanced the Investigation from the [Redacted] Office staff with whom Claimant 1 corresponded.
[11] The record also does not support Claimant 2’s contention that his/her information furthered the staff’s investigation or provided the staff with additional leverage. Indeed, as stated above, the staff assigned to the Investigation confirmed that they did not review, receive, or use any information provided by Claimant 2.
[12] Exchange Act Rule 21F-4(c)(3), 17 C.F.R § 240.21F-4(c)(3).
[13] To the extent that Claimant 2 is requesting that we exercise our discretionary authority pursuant to Section 36(a) of the Exchange Act to grant Claimant an award, we decline to do so. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person … from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” However, “the broad objective of the whistleblower program is to enhance the Commission’s law enforcement operations . . . [by incentivizing whistleblowers] to provide the Commission with timely, useful information that the Commission might not otherwise have received.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34326 (June 13, 2011). Granting an exemption under circumstances where the record does not show the whistleblower provided information that led to the success of a covered action is contrary to the purpose of the whistleblower program, the public interest, and the protection of investors. As a result, we find that Claimant 2 has not met his/her burden to demonstrate any considerations that would satisfy the requirements for us to exercise our Section 36(a) authority. Similarly, to the extent that Claimant 2 asks the Commission to waive requirements using its discretionary authority under Rule 21F-8(a), Claimant 2 has not met the burden of showing the “extraordinary circumstances” necessary for such relief.

SEC

97228

03/31/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claims submitted by [Redacted] (“Claimant 1”), [Redacted] (“Claimant 3”), and [Redacted] (“Claimant 4”) (collectively, the “Claimants”) in connection with the above-referenced covered action (the “Covered Action”). Claimants filed timely responses contesting the preliminary denials. For the reasons discussed below, Claimants’ award claims are denied.[fn1]

I. Background.

A. The Covered Action.

The investigation that led to the Covered Action (the “Investigation”) was opened by Enforcement staff in [Redacted] after staff reviewed news reports indicating potential misconduct by [Redacted] (the “Company”). On [Redacted], the Commission filed a complaint against the Company in federal district court alleging the Company [Redacted]. The Commission alleged that [Redacted]. On [Redacted], the court entered final judgment ordering the Company to pay a *** [Redacted] civil penalty and permanently enjoining the Company from future violations of the securities laws.

B. The Preliminary Determinations and Claimants’ Responses.

On [Redacted], the CRS issued Preliminary Determinations recommending that Claimants’ claims be denied.

1. Claimant 1.

i. Preliminary Determinations.

The CRS preliminarily determined that Claimant 1 was not a “whistleblower” as defined under the Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-2(a)(1) because Claimant 1 did not provide information regarding a potential securities law violation to the Commission in the form and manner required by Rule 21F-9. The CRS noted that Claimant 1 submitted information on a Form TCR in [Redacted], approximately ten months after Claimant 1’s initial meetings with Commission staff in [Redacted]. The CRS noted that the information provided by Claimant 1 in the [Redacted] TCR did not substantially assist the staff in its investigation and was not used in, nor contributed to, the charges brought by the Commission in the Covered Action.

The CRS also preliminarily determined that Claimant 1’s submission to the Commission was not made voluntarily as required by Exchange Act Rules 21F-3 and 21F-4(a)(1). A submission to the Commission is considered “voluntary” if, as relevant here, it is provided “before a request, inquiry, or demand that relates to the subject matter of [the] submission” is directed to the claimant or the claimant’s representative “[b]y the Commission” or in “connection with an investigation by . . . any other authority of the federal government.”[fn2] In particular, the CRS stated that Claimant 1 made his/her submission to the Commission after a request, inquiry, or demand by Commission staff and other federal agencies that related to the same subject matter as Claimant 1’s submission. The CRS noted that Claimant 1 did not submit information to any of the entities enumerated in Rule 21F-4(a) prior to being contacted by the Commission. The CRS also stated that whistleblowers do not meet the requirement of making a voluntary submission pursuant to Rule 21F-4(a) by providing information to the news media or foreign authorities.

ii. Claimant 1’s Response to the Preliminary Determinations.

Claimant 1 submitted a timely written response (“Claimant 1’s Response”) contesting the Preliminary Determinations.[fn3] Claimant 1 argues that he/she complied with the “form and manner” requirements of Rule 21F-9 because he/she submitted a TCR within 30 days of learning of the requirement. Claimant 1, a foreign national, contends that Claimant 1 was not aware of the TCR requirement until he/she met with his/her current counsel, and that none of his/her prior attorneys informed Claimant 1 of the existence of the Dodd-Frank Act or the TCR filing requirements. Claimant 1 also argues that he/she had not engaged any of his/her prior counsel with regard to the Dodd-Frank Act and was therefore not represented for purposes of a whistleblower submission until [Redacted]. Claimant 1 contends that once he/she became aware of those requirements, Claimant 1 submitted a TCR within 18 days. Claimant 1 also asserts that “there is no requirement that a whistleblower submit the same information provided to the news media to the SEC within a certain number of days to qualify for an award.” Claimant 1 also states that he/she provided the information to other federal agencies before submitting his/her TCR.

Next, Claimant 1 argues that he/she “voluntarily provided ‘original information’ . . . through the news media, as permitted by the [Dodd-Frank Act].” Claimant 1 states that his/her information was “voluntarily” provided to the Commission effective the date Claimant 1 disclosed the information thorough the news media. Claimant 1 also contends that he/she qualifies as an original source of the information provided to the Commission via the news media, and submits a declaration from a journalist who worked with Claimant 1 in support of that contention.

Claimant 1 also argues that the Commission, “in an apparent oversight committed during the rulemaking process,” did not include disclosures initially made to the news media within the definition of a voluntary submission. Claimant 1 states that such initial disclosures to the news media are authorized under the Dodd-Frank Act. Claimant 1 notes that the “SEC should have addressed third-party news media disclosures in their implementing rules,” but “the failure of the SEC to create a rule covering initial whistleblower disclosures of original information to the news media does not negate this Congressionally established right.” Because, according to Claimant 1, the Commission did not address this concern, Claimant 1 argues that the Commission must interpret its rules in way that permits voluntary disclosures to the news media.

Claimant 1 also argues that because of “the failure of the SEC to approve specific rules applicable to news media whistleblowers, the only published SEC rules that can be lawfully applied to media whistleblowers” are Rules 21F-10 and 21F-11, which pertain to the submission of whistleblower award applications. Claimant 1 further contends that statutes covering other whistleblower programs, such as those of the Internal Revenue Service and the Department of Justice, provide “carve-outs” for disclosures to the news media, and the failure to address such disclosures to the media in the Commission’s whistleblower rules “undermined the First Amendment.” Claimant 1 also states that the Preliminary Determinations ignore the impact that Claimant 1’s disclosures had on the public interest and ignores the whistleblower program’s goal of deterring wrongdoing. Lastly, Claimant 1 argues that the Commission should waive the voluntary submission and TCR submission requirements at issue here and grant Claimant 1 an award due to the quality of his/her submissions.[fn4]

2. Claimant 3.

i. Preliminary Determinations.

The CRS preliminarily determined that Claimant 3’s claim be denied because Claimant 3 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant 3’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS noted that the staff did not communicate with Claimant 3 and that Claimant 3 was not the source of, or impetus for, the Commission’s investigation and the information provided by Claimant 3 did not contribute to the charges brought in the Covered Action.

ii. Claimant 3’s Response to the Preliminary Determinations.

Claimant 3 submitted a timely written response (“Claimant 3’s Response”) contesting the Preliminary Determinations. Claimant 3 contends that he/she is entitled to “review the full administrative record,” and that the Commission has “omitted” the declarations of several other Enforcement staff who were listed in the press release pertaining to the Covered Action. Claimant 3 states that “[t]he SEC’s failure to provide the Whistleblower access to the full administrative record in this matter requires the SEC to vacate its Preliminary Determination, and allow the Whistleblower to prepare a response based on the full administrative record.” Claimant 3 also argues that he/she provided information to other federal and state agencies, and that “the omitted declarations from the agencies themselves, do not allow the administrative record to reflect the participation of any of these federal, or non-federal agencies . . . .” Claimant 3 further argues that the staff declaration relied upon by the CRS is based upon the staff’s “limited knowledge” and that relevant personnel at other government agencies “must contribute to the full administrative record.”

3. Claimant 4.

i. Preliminary Determinations.

The CRS preliminarily determined that Claimant 4’s claim be denied because Claimant 4 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant 4’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS noted that Claimant 4’s information was not the impetus for opening the Investigation, nor did it contribute to the charges in the Covered Action, and that staff did not communicate with Claimant 4.

The CRS also preliminarily determined that Claimant 4 failed to submit his/her application for award to the Commission within 90 days of the posting of the Notice of Covered Action, as required by Rule 21F-10(b). The CRS noted that Claimant 4’s application for award was received 74 days after the notice period for the Covered Action closed.

ii. Claimant 4’s Response to the Preliminary Determinations.

Claimant 4 submitted a timely written response (“Claimant 4’s Response”) contesting the Preliminary Determinations. Claimant 4 argues that he/she is entitled to an award in connection with the Covered Action because he/she provided information about the Company to the Commission in *** seven years before the Covered Action was filed. Claimant 4 argues that “had the SEC Employees acted upon my Fraud TIP in ***, [the Company] would not have likely done the other Fraud TIP and each one in between, from [a seven year period] my window of entitlement, as I see it, within which to calculate my Whistleblower award.” Claimant 4’s Response did not address the CRS’s preliminary determination that Claimant 4 submitted his/her whistleblower award application after the 90-day submission window had closed.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn5] Under Exchange Act Rule 21F-4(a), a submission to the Commission is considered “voluntary” if, as relevant here, it is provided “before a request, inquiry, or demand that relates to the subject matter of [the] submission” is directed to the claimant or the claimant’s representative “[b]y the Commission” or in “connection with an investigation by . . . any other authority of the federal government.”[fn6] If the Commission directs a request, inquiry, or demand to a claimant or his/her representative before the claimant makes a submission, “[the claimant’s] submission will not be considered voluntary, and [the claimant] will not be eligible for an award.”[fn7] The purpose of the rule is to “creat[e] a strong incentive for whistleblowers to come forward early with information about possible violations of the securities laws rather than wait until Government or other official investigators ‘come knocking on the door.’”[fn8] Rule 21F-4(a)(1) establishes a “simple and straightforward test for when we will treat a whistleblower as having submitted information voluntarily; as relevant here, the whistleblower must provide his or her tip to the Commission before investigators direct a ‘request, inquiry, or demand’ to the whistleblower that relates to the subject matter of the tip.”[fn9] However, a claimant’s submission also will be considered voluntary if the claimant “voluntarily provided the same information to one of the other authorities identified above [in Rule 21F-4(a)(1)],” such as Congress, other authorities of the federal government, or a state attorney general or securities regulatory authority, “prior to receiving a request, inquiry, or demand from the Commission.”[fn10]

Under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if, as relevant here, either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn11] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn12]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn13] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn14]

The requirement of Exchange Act Rule 21F-9 to submit a tip in the prescribed manner on Form TCR or through the Commission’s TCR System serves similarly important functions and is critical to the trackability, management, and reliability of tips.[fn16] Exchange Act Rule 9(e), adopted in 2020, provides a limited exception to this filing requirement, stating that claimants must comply with the procedures for submitting information described in Rules 21F-9(a) and (b) within 30 days of providing the Commission with the original information to be relied upon as a basis for claiming an award. In addition, it provides for an automatic waiver of the TCR filing requirement where a claimant can show that he or she complied with the submission requirements of the rule within 30 days of “first obtaining actual or constructive notice about those requirements (or 30 days from the date you retain counsel to represent you in connection with your submission of original information, whichever occurs first);” and “[t]he Commission can readily develop an administrative record that unambiguously demonstrates that you would otherwise qualify for an award.”[fn17]

A. Claimant 1.

Claimant 1 does not qualify for an award. The record shows that Claimant 1 did not meet the voluntary submission requirement of Rule 21F-4(a), or the form and manner requirements of Rule 21F-9. For clarity, we summarize the record with regard to Claimant 1 as follows:

The [Redacted] published articles on [Redacted], regarding [Redacted].[fn18] Enforcement staff opened the Investigation in *** *** based upon review of the news reports. The staff became aware of Claimant 1 from those news reports, as they were reportedly based, in part, on Claimant 1’s information and included statements from him/her. On [Redacted], two days after the articles were published, *** [Redacted] issued a letter to Claimant 1 requesting that Claimant 1 provide documents and appear for an interview. In [Redacted], Enforcement staff learned that other government agencies were attempting to interview Claimant 1. On [Redacted], Enforcement staff emailed foreign counsel for Claimant 1, and asked that staff be allowed to participate in any interview Claimant 1 gave to other government agencies. The record shows this was the first contact between Commission staff and Claimant 1 or his/her representatives.

On [Redacted], Enforcement staff and other government staff interviewed Claimant 1 at the offices of Claimant 1’s initial U.S. counsel (“Initial Counsel”). The information provided by Claimant 1 at that interview did not substantially assist the Commission in bringing the charges in the Covered Action.[fn19] Following the interview, and beginning in [Redacted], the staff made several requests for information to Claimant 1 through Initial Counsel. Initial Counsel initially did not respond, and on [Redacted], Initial Counsel told Enforcement staff that Claimant 1 would not respond to the staff’s requests.

Claimant 1 submitted a TCR on [Redacted], more than one year after the Investigation was opened, more than eleven months after the staff first contacted Claimant 1 requesting an interview, and more than ten months after the staff interviewed Claimant 1. In [Redacted], through new counsel, Claimant 1 sat for an interview and submitted an additional TCR. The information provided by Claimant 1 in [Redacted] was either duplicative of information Claimant 1 provided previously or not material to the allegations or charges in the Covered Action.

i. Voluntary Submission of Original Information.

The record shows that Claimant 1 did not make a voluntary submission to the Commission.[fn20] [Redacted] issued a request for documents and an interview to Claimant 1 related to the subject matter of his/her tip on [Redacted]. Enforcement staff first contacted Claimant 1 through his/her counsel regarding the subject matter of his tip in [Redacted], prior to receiving any information or contact from Claimant 1. Enforcement staff, along with other government agencies, interviewed Claimant 1 one month later. [Redacted] thus directed to Claimant 1 a “request, inquiry, or demand” related to the subject matter of Claimant 1’s information before Claimant 1 provided his/her information to [Redacted]. And likewise the Commission directed its own “request, inquiry, or demand” related to the subject matter of Claimant 1’s information to Claimant 1 before Claimant 1 provided his/her information to the Commission.

Further, Claimant 1’s provision of information to foreign government entities does not satisfy Rule 21F-4(a).[fn21] Claimant 1 states that he/she provided information to various foreign governmental entities, none of which are among those entities enumerated in Rule 21F-4(a). When adopting the whistleblower rules, the Commission explicitly declined to include foreign governments among the other enumerated entities in Rule 21F-4(a): “We have also determined not to expand the list of authorities in Rule 21F-4(a) to include foreign authorities. Foreign authorities operate under different legal regimes, with different standards. Further, as some commenters pointed out, whether and under what circumstances the Commission may receive information obtained by a foreign authority is more uncertain than is the case of other Federal authorities, and state Attorneys General or securities regulators. In addition, we may have limited ability to evaluate the scope of a request from a foreign authority to an individual, and whether it relates to the subject matter of the individual’s whistleblower submission.”[fn22] Accordingly, Claimant 1’s submission of information to the Commission is not voluntary pursuant to Rule 21F-4.

Claimant 1 argues that the Dodd-Frank Act allows disclosures to the news media to be considered “voluntary” because the Dodd-Frank Act defines “original information” as, among other things, information that is “not exclusively derived . . . from the news media, unless the whistleblower is a source of the information.”[fn23] However, whether Claimant 1’s information is “original information” is irrelevant: The CRS did not make a recommendation on that issue, and it was not a basis for the Preliminary Determinations. A voluntary submission is a separate and independent requirement for a whistleblower award,[fn24] and the original information requirement is not a substitute for the voluntary submission requirement.[fn25] The record demonstrates that [Redacted] and Commission staff contacted Claimant 1 regarding the subject matter of his/her submission before Claimant 1 provided information to either of them or any other Rule 21F-4(a) enumerated entity.

We also decline to accept Claimant 1’s argument that the Commission should interpret its rule in a way that equates the news media to the other enumerated authorities in Rule 21F-4(a)(2). This argument is contrary to the plain text of the rule. In addition, Claimant’s proffered interpretation would create difficulties in the implementation of 21F-4(a).

Accordingly, Claimant 1 has not met the voluntary submission requirement for a whistleblower award as set forth in Rule 21F-4(a).[fn26]

ii. TCR Filing Requirements.

The record also shows that Claimant 1 did not follow the procedural TCR filing requirements of Rule 21F-9 and therefore his/her claim must be denied on this independent ground. Rule 21F-9 requires, among other things, that claimants submit information on Form TCR within 30 days of providing their information to the Commission. Claimant 1 first submitted a TCR to the Commission in [Redacted], more than ten months after first providing information to Enforcement staff in [Redacted] that he/she relies upon for his/her claim for award. Accordingly, Claimant 1 has not met the requirements of Rule 21F-9.

Claimant 1 argues that he/she was not personally aware of the TCR filing requirements, and when Claimant 1 became aware, he/she quickly submitted a TCR. But under Rule 21F-9(e), if a claimant has counsel, which Claimant 1 did, then the claimant is considered to have constructive notice of the filing requirements. Claimant 1 was represented by Initial Counsel at the [Redacted] interview with the Commission, and thus had constructive the notice of the TCR filing requirements and the obligation to file a TCR within 30 days of the interview pursuant to Rule 21F-9. Claimant 1 further argues that Initial Counsel did not represent him/her with regard to the Dodd-Frank Act. But Rule 21F-9(e) charges a claimant with constructive notice of the filing requirements when claimants “retain counsel to represent [claimant] in connection with [claimant’s] submission of original information.”[fn27] Here, as evidenced by Initial Counsel’s engagement agreement provided in Claimant 1’s response to the Preliminary Determinations, Initial Counsel was retained “in connection with [Claimant 1’s] efforts to provide information to the U.S. government.” Initial Counsel represented Claimant 1 at the interview with Enforcement staff and staff from other government agencies. Based on these facts and circumstances, we find that Initial Counsel represented Claimant 1 with regard to his/her submission to the Commission, and that Claimant 1 was thus on notice of the TCR filing requirements as of [Redacted].[fn28]

Accordingly, Claimant 1 did not submit a TCR pursuant to the Commission’s filing requirements, and thus Claimant 1 is not eligible for an award on this independent ground.[fn29]

B. Claimant 3.

Claimant 3 does not qualify for an award. The staff confirmed that the information in Claimant 3’s tips to the Commission was already known to the staff assigned to the Investigation. The staff also did not communicate with Claimant 3 during the course of the Investigation. Further, the staff confirmed that Claimant 3’s information did not cause the staff to open the Investigation or have any impact on the Investigation or the charges brought in the Covered Action.

Claimant 3’s arguments regarding the administrative record are unavailing. The whistleblower rules permit an award claimant to request and receive a copy of the materials that form the basis of the Preliminary Determinations as to that claimant.[fn30] Claimant 3 made such a request and received a copy of those materials, and thus Claimant 3 was provided the “full administrative record” to which he/she is entitled. The whistleblower rules do not entitle access to declarations that do not exist, nor entitle access to the files of other agencies.[fn31] And as evident from the record, Claimant 3’s information did not lead to the success of the Covered Action.

Accordingly, Claimant 3 is not entitled to an award.

C. Claimant 4.

Claimant 4 does not qualify for an award. As noted above, the staff declaration confirms, under penalty of perjury, that the Investigation began in *** following review of news articles. Further, the staff declaration confirms that Enforcement staff assigned to the Investigation did not receive any information from Claimant 4 during the Investigation, and that the staff did not have any communication with Claimant 4. While Claimant 4 argues in the Claimant 4 Response that he/she provided information to the Commission about the Company as early as ***, there is no information in the record supporting the contention that such information in any way contributed to the success of the Covered Action.[fn32] Accordingly, we find that Claimant 4’s information did not lead to the success of the Covered Action.

In addition, Claimant 4’s Response did not contest the CRS’s recommendation that Claimant 4’s claim be denied on the additional ground of Claimant 4’s application not being submitted within ninety-days of the posting of the NoCA. By failing to timely present any argument to the Commission during the reconsideration stage as to this other ground for denial, Claimant 4 has forfeited the opportunity to contest this ground.[fn33]

For both of these reasons, Claimant 4 is not entitled to an award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimants 1, 3, and 4 in connection with the Covered Action be, and hereby are, denied.[fn34]
By the Commission.

[1] The CRS also preliminarily denied the award claim of Claimant 2. That claimant did not seek reconsideration of the Preliminary Determination, and therefore the denial of his/her claim was deemed to be the Final Order of the Commission under Exchange Act Rule 21F-10(f).
[2] Exchange Act Rule 21F-4(a)(1)(i), 17 C.F.R. § 240.21F-4(a)(1)(i).
[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e) (stating that a claimant may submit a written response contesting the Preliminary Determinations “within sixty (60) calendar days of the date of the Preliminary Determination, or if a request to review materials is made . . ., then within sixty (60) days of the Office of the Whistleblower making those materials available for your review.”). Pursuant to Exchange Act Rule 21F-10(e)(1), claimants have thirty days from the date of the Preliminary Determinations to request the materials that formed the basis for the CRS’s Preliminary Determinations. Claimant 1 did not submit such a request and thus did not receive the record materials.
[4] After the sixty-day window to submit a response to the Preliminary Determinations had passed, Claimant 1 made several other submissions contesting the CRS’s recommendations. In [Redacted], approximately three months after the window for submitting a response had passed, Claimant 1 submitted a “Request for Exemptive Relief from Exchange Act Rules 21F-4 and 21F-9,” comprising more than 400 pages, followed by several amendments over the following year, the most recent of which was submitted in [Redacted], approximately fifteen months after the window for submitting a response had passed. In [Redacted], approximately eight months after the window for submitting a response had passed, Claimant 1 submitted a “request for mediation” to the Commission’s General Counsel of almost 150 pages. Because these materials were submitted after the sixty-day window for submissions established by Rule 21F-10(e) had passed, we decline to include them as part of this whistleblower proceeding. We did accept and incorporate into the record of this proceeding a corrected response to the Preliminary Determinations from Claimant 1 submitted in [Redacted]; the corrected response did not include new arguments or evidence, but only updated certain erroneous legal citations in Claimant 1’s initial submission. In addition, in, Claimant 1 submitted a motion for argument before the Commission. However, we do not believe that the circumstances here warrant using Section 36(a) or Rule 21F-8(a) to depart from the procedures already set forth in Rule 21F.
[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[6] Exchange Act Rule 21F-4(a)(1)(i), 17 C.F.R. § 240.21F-4(a)(1)(i).
[7] Exchange Act Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2).
[8] Proposing Release for Whistleblower Rules, 75 Fed. Reg. 70488, 70,490 (Nov. 17, 2010); see also Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34,307 (June 13, 2011) (stating that a “whistleblower award should not be available to an individual who makes a submission after first being questioned about a matter (or otherwise requested to provide information) by the Commission staff acting pursuant to any of [its] investigative or regulatory authorities”).
[9] Order Determining Whistleblower Award Claim, Exchange Act Release No. 84046 at 8 (Sept. 6, 2018).
[10] Exchange Act Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2).
[11] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[12] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[13] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[14] Exchange Act Rel. No. 85412 at 8-9.
[15] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34300 (June 13, 2011); Order Determining Whistleblower Award Claim, Release No. 88464 at 3 (Mar. 24, 2020).
[16] See Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 94398 (March 11, 2022) at 3 (“The programmatic purposes of requiring whistleblowers to submit their information on Form TCR or through the online TCR portal include: allowing the Commission to promptly determine whether an individual who submits information is subject to heightened whistleblower confidentiality protections; helping the staff efficiently process the information and other documentation provided by the individual and assess its potential credibility; and assisting the Commission in eventually evaluating the individual’s potential entitlement to an award. Also, by submitting a tip on Form TCR, the submitter declares under penalty of perjury that the information is true and correct to the best of the submitter’s knowledge and belief. A tip that bypasses the TCR System may not contain the sworn declaration under penalty of perjury as to the veracity of the information.”).
[17] Exchange Act Rule 21F-9(e), 17 C.F.R § 240.21F-4(e).
[18] As part of Claimant 1’s response to the Preliminary Determinations, Claimant 1 submitted an affidavit from the author of the [Redacted] article indicating that Claimant 1 had been in contact with the author since ***, [Redacted] and was a key source for a [Redacted], article by the same author that was published by the [Redacted] approximately ten months before the [Redacted] articles that were reviewed by Enforcement staff.
[19] The record indicates that Claimant 1, through Initial Counsel, also provided documents to the [Redacted] in [Redacted] pursuant to a subpoena.
[20] Claimant 1’s whistleblower award application acknowledges that Claimant 1 received a request from an enumerated agency before Claimant 1 provided his/her information. In his/her award application, Claimant 1 responded “No” to the question “Did you provide the information identified [in the claimant’s tip] before you (or anyone representing you) received any request, inquiry or demand that relates to the subject matter of your submission (i) from the SEC, . . . or (iii) in connection with an investigation by the Congress.”
[21] Exchange Act Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2).
[22] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34,308 n.74 (June 13, 2011).
[23] 15 U.S.C. § 78u-6(a)(3).
[24] See 15 U.S.C. § 78u-6(b)(1) (“the Commission . . . shall pay an award . . . to 1 or more whistleblowers who voluntarily provided original information to the Commission that led to the successful enforcement of the covered judicial or administrative action . . . .” (emphasis added).
[25] Claimant 1 also argues that the Commission’s 2011 whistleblower rulemaking was inadequate in failing to include the news media as one of the enumerated entities to which Claimant 1’s submission would be considered voluntary under Rule 21F-4(a)(1), and that consequently, only Rules 21F-10 and 21F-11 are applicable to Claimant 1. To the extent that Claimant 1 is challenging the Commission’s 2011 rulemaking, such arguments are beyond the scope of this adjudication.
[26] Claimant 1 has requested that we invoke our exemptive authority under Section 36(a) of the Exchange Act to waive the voluntary requirement. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” The circumstances here do not warrant invoking Section 36(a). One of the principal objectives of Section 21F of the Exchange Act “is to promote effective enforcement of the federal securities laws by providing incentives for persons with knowledge of misconduct to come forward and share their information with the Commission.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34,308 (June 13, 2011). Granting an exemption under these circumstances “is inconsistent with the statutory purpose of incentivizing whistleblowers to come forward early.” Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 92355 (July 9, 2021).
[27] Exchange Act Rule 21F-9(e)(1), 17 C.F.R. § 240.21F-9(e)(1).
[28] Claimant 1 does not argue he/she meets all of the requirements for the Rule 21F-9(e) waiver of noncompliance. Even if Claimant 1 did, Claimant 1 would not merit a waiver. As discussed above, Claimant 1 did not make a voluntary submission, and thus the record does not “unambiguously demonstrate[ ] that [Claimant 1] would otherwise qualify for an award,” a necessary element for the Rule 21F-9(e) waiver. Exchange Act Rule 21F-9(e)(2), 17 C.F.R. § 240.21F-9(e)(2).
[29] Claimant 1 also seeks a Section 36(a) exemption for the Form TCR filing requirement. The circumstances here do not warrant invoking Section 36(a).
[30] See Exchange Act Rule 21F-10(e)(1)(i), 17 C.F.R. § 240.21F-10(e)(1)(i).
[31] As part of the materials, Claimant 3 was provided with a copy of the single staff declaration that informed the CRS’s Preliminary Determinations. The other declarations cited in Claimant 3’s Response do not exist. And contrary to Claimant 3’s view that the staff declaration was based on the limited knowledge of one attorney, the declaration, which we credit, states that it was based on the declarant’s knowledge as well as information provided by other Commission staff. Claimant 3 also seeks materials from at least three other governmental agencies which allegedly received information from Claimant 3. But because Claimant 3 is not eligible for an award for the Covered Action, Claimant 3 is not eligible for an award based on a related action by another government agency. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018). Accordingly, there is no need for Commission staff to contact staff from any other government agency because Claimant 3 does not qualify for a related action award. Claimant 3 has received the record materials to which he/she is entitled.
[32] While Claimant 4’s Response provided some documents that were allegedly part of Claimant 4’s *** submission, Claimant 4 did not provide any submission number or identify any tip in support of his/her argument.
[33] Cf. Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f) (“Your failure to submit a timely response contesting a Preliminary Determination will constitute a failure to exhaust administrative remedies, and you will be prohibited from pursuing an appeal pursuant to § 240.21F-13 of this chapter.”).
[34] To the extent that Claimants seek a related action award, none are eligible. As already noted, a related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable Commission covered action in the first instance. Because Claimants are not qualified for an award in connection with the Covered Action, Claimants are ineligible for a related action award.

SEC

97227

03/31/2023

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted a settled administrative action against [Redacted] (“Investment Adviser”), a registered investment adviser, and [Redacted] (the “Investment Adviser Officer”), its [Redacted], in connection with [Redacted]. The Commission found that [Redacted]. Further, the Commission found that *** [Redacted]. As a result of this conduct, the Commission found that [Redacted]. In addition, the Commission found that *** [Redacted]. Among other relief, the Commission ordered the Investment Adviser and the Investment Adviser Officer to pay a total of [Redacted] in disgorgement, prejudgment interest, and civil monetary penalties.[fn1]

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant’s award claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information, under Exchange Act Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action, under Exchange Act Rule 21F-4(c)(2). The CRS preliminarily determined that Claimant’s information was not the impetus for opening the investigation that led to the Covered Action (“Investigation”) and that, while investigative staff responsible for the Covered Action met with Claimant, Claimant’s information was duplicative of information that the investigative staff had already received from staff in the Division of Examinations, formerly known as the Office of Compliance Investigations and Examinations (“OCIE”), pursuant to an examination of the Investment Adviser and other sources. In addition, the CRS preliminarily determined that Claimant provided information that ultimately was not part of the Investigation or Covered Action. Therefore, Claimant did not provide any information that helped advance the Investigation or was used in, or had any impact on, the charges brought by the Commission in the Covered Action. Finally, the CRS preliminarily determined that, because Claimant is not eligible for an award in connection with the Covered Action, she/he is also not eligible for an award in connection with any related action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2] In the Response, Claimant states that she/he had contacted *** [Redacted] (“Other Agency”) in [Redacted], immediately following [Redacted], and had filed a TCR[fn3] with the Commission after being instructed to do so by the Other Agency. The Response asserts that Claimant “synthesized and summarized” information for the Commission, including during an in-person meeting with Commission investigative staff, and was told that her/his leads were “very helpful.” According to the Response, Claimant discussed with investigative staff a conversation relating to *** [Redacted] that Claimant had with [Redacted] and provided investigative staff with handwritten notes [Redacted]. The Response also states that Claimant discussed [Redacted] with investigative staff, and that, in addition to providing examples of [Redacted] at the request of Enforcement staff, Claimant highlighted how the [Redacted], suggested various charges that could be brought, and outlined [Redacted]. Finally, the Response appears to suggest that information Claimant conveyed to the Other Agency may have contributed to the success of the Covered Action.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn4] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either (1) the original information caused the staff to commence an examination, open an investigation, or inquire into different conduct as part of a current examination or investigation and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (2) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8]

Claimant does not qualify for an award under either of the above-described provisions. First, according to a declaration provided by the Enforcement staff responsible for the Covered Action, which we credit, Enforcement staff opened the Investigation as a Matter Under Inquiry on [Redacted] after staff review of a news article that discussed [Redacted]. On that same date, Enforcement staff and staff from OCIE jointly decided that OCIE staff would conduct an examination of, among others, the Investment Adviser. The Claimant’s tip was submitted over two months later, on [Redacted]. As such, neither the examination of the Investment Adviser nor the Investigation were opened based on information provided by Claimant. In addition, the record demonstrates that Claimant’s tip did not cause the Commission to inquire concerning different conduct as part of the ongoing examination or Investigation, as Enforcement staff and OCIE staff were already aware of the material facts alleged by Claimant by the time Claimant submitted the tip.

Second, the information provided by Claimant in the TCR and in subsequent contacts with Enforcement staff did not significantly contribute to the success of the Covered Action. While Claimant met with Enforcement staff on one occasion, contacted the staff numerous times via telephone and email, and provided a number of documents to staff at the in-person meeting and afterward, the record demonstrates that none of the information Claimant provided helped advance the Investigation or was used in, or had any impact on, the charges brought by the Commission in the Covered Action. The vast majority of the information Claimant provided was duplicative of information Enforcement staff had already received from OCIE staff and other sources, and the information Claimant provided that was not duplicative, such as [Redacted] notes, was not helpful to Enforcement staff and/or was not related to the issues being investigated.

The Response contends that Claimant aided the staff by synthesizing and summarizing information and providing [Redacted] at the request of Enforcement staff, and was told that her/his leads were “very helpful.” The Response may also suggest that information Claimant provided to the Other Agency may have contributed to the success of the Covered Action. We address each of these claims in turn.

First, to the extent that the assertion regarding synthesizing and summarizing information is intended to support an argument that the information Claimant provided would qualify as “independent analysis” under whistleblower program rules and therefore satisfy the “original information” criterion for award eligibility,[fn9] that argument is not relevant to the disposition of this claim. Even assuming, for argument’s sake, that Claimant’s information would qualify as “independent analysis,” the record is clear, as discussed above, that Claimant’s information did not lead to the success of the Covered Action.[fn10]

Second, Claimant’s argument that she/he assisted Enforcement staff by providing [Redacted] is unavailing for the same reason. Whether requested by Enforcement staff or not,[fn11] information provided by a whistleblower can only support award eligibility if the information provided leads to the successful enforcement of the Covered Action. As discussed above, the record is clear that none of the information or materials supplied by Claimant proved useful to Enforcement staff.

Third, as to statements from Enforcement staff regarding the helpfulness of Claimant’s tips, the record demonstrates that, while Enforcement staff stated in an email that Claimant’s tips were very helpful, that statement was an attempt to acknowledge and thank Claimant for Claimant’s willingness to attempt to assist the staff, not to convey any legal conclusion regarding Claimant’s eligibility for an award. As discussed above, notwithstanding this statement, the information Claimant provided did not help advance the Investigation and was not used in, and had no impact on, the charges brought by the Commission in the Covered Action.

Finally, to the extent the Response suggests that information Claimant provided to the Other Agency may have contributed to the success of the Covered Action, that argument is unavailing. As explained in the Supplemental Declaration, which we also credit, all of the documents the Commission received from the Other Agency came from sources other than Claimant. Based on this record, we conclude that none of the information Claimant provided was used in, or had any impact on, the charges brought by the Commission in the Covered Action, nor did any of Claimant’s information help advance the Investigation.

We therefore conclude that Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. As a result, Claimant is not eligible for an award with respect to the Covered Action. Accordingly, Claimant is also not eligible for any related action award.[fn12]

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied. It is further ORDERED that Claimant’s whistleblower award application for a related action award be, and hereby is, denied.
By the Commission.

[1] There is a separate ongoing action against [Redacted] that arose out of the same investigation. [Redacted].
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] The TCR System is the Commission’s electronic database which records and stores information received from whistleblowers and others about potential securities law violations and records staff action taken with regard to tips, complaints, and referrals (“TCRs”) entered into the system.
[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).
[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[8] Exchange Act Rel. No. 85412 at 8-9.
[9] To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action. See Rule 21F-4(b), 17 C.F.R. § 240.21F-4(b). “Independent analysis” means an “examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.” Rule 21F-4(b)(3), 17 C.F.R. § 240.21F-4(b)(3).
[10] See, as relevant in this instance, Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).
[11] In a supplemental declaration (“Supplemental Declaration”), Enforcement staff assigned to the Covered Action has stated that he does not recall specifically asking Claimant to provide [Redacted] but that, as a matter of standard practice, he encourages potential whistleblowers to submit to the staff any information they believe may be useful.
[12] On her/his whistleblower award application, Claimant applies for a related action award in connection with an enforcement action brought by the Other Agency. Because Claimant is not eligible for an award for the Covered Action, she/he is also not eligible for any related action award. See Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5); Exchange Act Rules 21F-3(b)(1) and 21F-11(a), 17 C.F.R. § 240.21F-3(b)(1) and 17 C.F.R. § 240.21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019). Moreover, [Redacted].

SEC

97202

03/27/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that (i) [Redacted] (“Claimant 1”) receive a whistleblower award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in connection with the above referenced Covered Action (the “Covered Action”); (ii) [Redacted] (“Claimant 2”) receive a whistleblower award equal to *** percent (***%) of the monetary sanctions collected, or to be collected, in connection with the Covered Action; and (iii) the whistleblower award applications submitted by [Redacted] (“Claimant 3”) and [Redacted] (“Claimant 4”) in connection with the Covered Action be denied. Each of the Claimants filed a timely response contesting the Preliminary Determination.

After review of the reconsideration requests and additional information submitted by Claimant 4, we find Claimant 4 to be eligible for an award. Accordingly, we reallocate a maximum thirty percent award among Claimants 1, 2, and 4 and (i) award Claimant 1 [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action, equal to over $21,000, (ii) award Claimant 2 *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action, equal to over $5,000, and (iii) award Claimant 4 *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action, equal to over $5,000. We deny an award to Claimant 3.

I. Background.

A. The Covered Action.

In [Redacted], staff in the United States Securities and Exchange Commission’s (“Commission”) Division of Enforcement (“Enforcement”) opened a matter under inquiry to investigate certain conduct by [Redacted] (the “Company”), a public company in the business of [Redacted]. On [Redacted], the Commission filed a civil action in federal district court charging the Company and [Redacted] its officers with violations of [Redacted] of the federal securities laws. [Redacted] [Redacted] The Commission’s Complaint alleged, among other things, that the Company [Redacted].

On [Redacted], the district court entered a Final Judgment by consent in favor of the Commission that ordered [Redacted] the Company’s officers [Redacted] to pay a civil penalty of [Redacted]. The [Redacted] continued to trial, and the jury returned a verdict finding [Redacted]. After the trial, the court [Redacted]. On [Redacted], the Court entered a Final Judgment ordering the Company to pay [Redacted] and the [Redacted] to pay [Redacted].

On [Redacted], the Company filed [Redacted] (the “Bankruptcy Action”). On [Redacted], the [Redacted] Plan *** [Redacted] of the Company became effective. The plan established [Redacted]. As part of the plan, the Commission received [Redacted] and agreed that any distributions [Redacted] would be reallocated to investors. [Redacted].

As to [Redacted] the [Redacted] ordered [Redacted]. On [Redacted], on remand, the district court ordered (i) [Redacted] to pay [Redacted] (ii) the *** to pay [Redacted] (iii) the *** [Redacted] to pay [Redacted] and (iv) the [Redacted].

On [Redacted], the Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within ninety days. Claimant 1, Claimant 2, and Claimant 4 submitted timely award claims on Form WB-APP. Claimant 3 submitted a claim on Form WB-APP on [Redacted], almost two months after the deadline.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn1] recommending that Claimant 1 receive a whistleblower award of *** % and Claimant 2 receive a whistleblower award of *** % of the monetary sanctions collected, or to be collected, in the Covered Action.

The CRS recommended that Claimant 4’s application be denied because Claimant 4 did not submit information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. In reaching the Preliminary Determination, the CRS noted that (i) the Enforcement staff opened the underlying investigation more than three years before Claimant 4 submitted his/her tip to the Commission; (ii) Claimant 4 did not testify at trial [Redacted]; (iii) although Claimant 4’s information assisted the staff in preparing the Commission’s motion [Redacted] the court denied that motion [Redacted] *** and (iv) Claimant 4’s assistance in the bankruptcy proceedings does not qualify as having “led to the successful enforcement of” the Covered Action under Section 21F(b)(1) because it did not contribute to the process leading to the entry of the Final Judgment and consequent relief in the Commission’s favor and also did not result in the subsequent entry of any additional relief for the violations alleged by the Commission.

The CRS also recommended that Claimant 3’s application be denied because Claimant 3 did not submit information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. In reaching the Preliminary Determination, the CRS noted that (i) the Enforcement staff opened the underlying investigation more than two years before Claimant 3 submitted his/her tip to the Commission; (ii) Claimant 3’s information was not new or meaningful to the success of the Covered Action; (iii) Claimant 3 was not called to testify at the trial in the Covered Action; and (iv) while Claimant 3 identified a potential witness, Enforcement staff did not present that witness at trial. The CRS also recommended that Claimant 3’s application be denied because Claimant 3 failed to meet the deadline for applying for an award in connection with the Covered Action and submitted a Form WB-APP almost two months late.[fn2]

C. Claimants’ Responses to the Preliminary Determinations.

Claimant 1 submitted a timely written response contesting the Preliminary Determination.[fn3] Specifically, Claimant 1 argues, alternatively, that (i) Claimant 1’s award should be based on the amount that the Commission was “able to collect” rather than the amount it actually collected; (ii) Claimant 1’s award should be based on any amounts collected by the bankruptcy trustee and distributed to defrauded investors; or (iii) the Commission should use its discretion under Section 36(a)(1) of the Exchange Act to exempt Claimant 1 from the whistleblower program rules and issue an appropriate award amount.

Claimant 2 submitted a timely written response contesting the Preliminary Determination. Specifically, Claimant 2 argues that the Commission should use its discretion to award [Redacted] to Claimant 2. Claimant 2 asserts that this award amount is necessary in order for Claimant 2 to recover the losses Claimant 2 suffered as a result of [Redacted] the Covered Action.

Claimant 4 submitted a timely written response contesting the Preliminary Determination. Specifically, Claimant 4 argues that Claimant 4 is entitled to an award because Claimant 4’s information led to the success of the Covered Action. Claimant 4 claims that (i) Claimant 4 would have been an important witness were Claimant 4 allowed to testify at the trial; (ii) Claimant 4 provided new information and documents, including certain documents that the Commission introduced as evidence at trial; (iii) Claimant 4 identified a critical witness (“Witness”) for the Commission at the trial; and (iv) Claimant 4 provided significant information and supporting evidence, including [Redacted] that would have been helpful to the Commission in connection with [Redacted] and that helped in the appointment of the bankruptcy trustee. Claimant 4 also claims that even if staff were already aware of the Witness, he/she provided new, important information by telling staff that the Witness would make a good witness for the SEC at trial because of the [Redacted]. In addition, pursuant to a request from the Office of the Whistleblower (“OWB”), Claimant 4 provided information indicating that the Commission used [Redacted] provided by Claimant 4 in obtaining additional relief in the remanded Final Judgment.

Claimant 3 submitted a timely written response contesting the Preliminary Determination. Specifically, Claimant 3 argues that Claimant 3 is entitled to an award because Claimant 3’s information led to the success of the Covered Action by saving the Commission time and resources in focusing on the key documents and issues. Claimant 3 claims that: (i) Claimant 3 had multiple communications with Enforcement staff during the litigation; (ii) during the trial, Enforcement staff relied on the information Claimant 3 provided, namely, that there was [Redacted] (iii) while the Commission may already have had the information described in (ii), Claimant 3’s provision of this information saved significant Commission resources; and (iv) Claimant 3 initially was asked to testify at the trial, but ultimately did not do so. Claimant 3 did not provide any explanation as to why Claimant 3 submitted the WB-APP late.
Upon further questioning by OWB as to the reason for the late WB-APP, Claimant 3’s current counsel explained that Claimant 3 had been previously represented by another attorney, who had represented Claimant 3 with respect to all actions concerning the whistleblower submission and claim process. According to Claimant 3’s current counsel, on [Redacted], Claimant 3 was conducting an internet search regarding the status of the SEC enforcement proceeding and discovered that a Notice of Covered Action had been posted. Prior to that time, Claimant 3 was unaware of the Notice of Covered Action process, the existence or need to file Form WB-APP, or of the time requirements for filing. Claimant 3 sent the information he/she had found during the search on [Redacted] to his/her then-attorney, who then submitted the WB-APP the following day, [Redacted].[fn4] Claimant 3’s current counsel asks that the Commission waive the filing deadline.

III. Analysis.

A. Claimant 1.

1. Award Analysis.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that significantly contributed to the success of the Covered Action.[fn5] In reaching this determination, we assessed, among other things, the following facts: (i) Claimant 1 provided information early in the investigation, beginning just three months after the Commission staff opened the matter; (ii) Claimant 1’s information saved the staff time and resources in conducting its investigation and included [Redacted] that the staff likely would not have uncovered without Claimant 1’s help; (iii) Claimant 1 provided continuing assistance, including communicating with the staff on many occasions and providing voluminous documents to the staff; and (iv) there is a close nexus between Claimant 1’s information and several paragraphs in the Commission’s Complaint.

The CRS preliminarily determined that the aggregate award in this matter should be at the statutory maximum and that Claimant 1 should receive a ***% award and that Claimant 2 should receive a *** % award because Claimant 1’s information was more significant and Claimant 1 provided extraordinary ongoing assistance. Since then, Exchange Act Rule 21F-6(c) was adopted creating a presumption of a statutory maximum award of 30% where: (i) the maximum award would be $ 5 million or less; (ii) the claimant’s application presents no negative award factors under Rule 21F-6(b) – i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—and (iii) the award claim does not trigger Rule 21F-16.[fn6] The Commission may depart from the presumption if: (i) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (ii) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn7]

The 30% presumption applies in this matter. Based on current collections, the statutory maximum award is approximately $ 32,000, and the Commission does not reasonably anticipate that future collections would cause the statutory maximum award to exceed $ 5 million. No negative factors are associated with Claimant 1’s application, Claimant 1 bears no responsibility for the misconduct, and Claimant 1 did not benefit financially from the wrongdoing. There is nothing in the record that suggests Claimant 1 unreasonably delayed in reporting information to the Commission or interfered with the Company’s internal compliance or reporting systems. Also, there is no reason to depart from the presumption of the statutory maximum award. Claimant 1 provided more than limited assistance. Furthermore, there are no public interest, investor protection, or programmatic concerns that would warrant departure from a 30% award.

Based on these factors and all aspects of the record, and after considering Claimant 1’s contributions relative to Claimant 2’s and Claimant 4’s contributions, we find that an award of *** % is appropriate for Claimant 1.

2. Request for Reconsideration.

We disagree with Claimant 1’s contention that Claimant 1’s award calculation should be based on a larger amount than the Commission collected in connection with the Covered Action. Claimant 1 notes that Exchange Act Rule 21F-5(b) provides, in part, that the amount of an award “will be at least 10 percent and no more than 30 percent of the monetary sanctions that the Commission and the other authorities are able to collect.” Claimant 1 asserts that the Commission was “able to collect” a much larger amount of monetary sanctions than it in fact did collect in the Covered Action, because it voluntarily subordinated its interest in the Bankruptcy Action to the interests of defrauded investors. As such, Claimant 1 argues that Claimant 1’s award should be based on the amount that the Commission could have collected rather than the amount that the Commission actually collected.

First, Claimant 1’s argument is based on an incorrect factual premise, as Claimant 1 assumes that the Commission could have collected the full [Redacted] had it not voluntarily subordinated its interest in the bankruptcy proceeding. The [Redacted] million civil penalty against the Company would have been disallowed or subordinated in the bankruptcy as a matter of law. At best, the Commission, as a general unsecured creditor, could only have been able to recover a fraction of the disgorgement.[fn8] Contrary to Claimant 1’s assertions, the Commission did not simply walk away from a collection of [Redacted], because it would only have been able to collect a de minimis amount, and any such collections would have been dependent upon the Commission winning on appeal.

Second, we decline to follow Claimant 1’s interpretation of Rule 21F-5(b) because it is at odds with the statute that it is designed to implement. Congress established the statutory minimum and maximum whistleblower awards as “(A) not less than 10 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions; and (B) not more than 30 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions.”[fn9] Because the statutory maximum whistleblower award is based on the amount actually collected in connection with the Covered Action, we cannot base the amount of Claimant 1’s award on a higher amount that the Commission may have been able to but did not collect.

Third, calculating whistleblower award payments based on what the Commission hypothetically “was able to collect,” but did not, would introduce uncertainty, inconsistency, and could delay the processing of award claims.

We also disagree with Claimant 1’s argument that the award should be based on any amounts collected in the Bankruptcy Action. As we noted in connection with the adoption of several rule amendments, “our statutory authority does not extend to paying whistleblower awards for recoveries in bankruptcy proceedings or other proceedings that may in some way ‘result from’ the Commission’s enforcement action and the activities of the whistleblower.”[fn10] Under Section 21F of the Exchange Act, the Commission is authorized to pay whistleblower awards only on the basis of monetary sanctions that are imposed in a covered judicial or administrative action or related action. A covered judicial or administrative action means an “action brought by the Commission under the securities laws that results in monetary sanctions exceeding $ 1,000,000.”[fn11] A related action must be brought by one of the authorities specified in the statute.[fn12] Bankruptcy proceedings are not brought by either the Commission acting under the securities laws or by one of the designated related-action authorities, and orders to pay money that result from bankruptcy proceedings are not imposed in Commission covered actions or related actions.

Finally, we deny Claimant 1’s request that the Commission use its discretion under Section 36(a)(1) of the Exchange Act to exempt Claimant 1 from the requirements under the whistleblower program and set Claimant 1’s award amount above the statutory limit. Section 36(a)(1) provides that “the Commission, by rule, regulation, or order, may conditionally or unconditionally exempt any person…from any provision or provisions of [the Exchange Act] or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.”[fn13] We have used this discretionary authority to exempt whistleblowers from certain of the program’s rules under limited circumstances.[fn14] However, the limitation on the amount of the award to be issued in connection with any Covered Action was set by statute, and we have never used our discretion under Section 36(a)(1) of the Exchange Act to exempt a whistleblower from a statutory requirement or to approve an award amount above the statutory limit. The text of the statute reflects a clear congressional design to grant awards of no more than 30 percent of the amounts collected. Congress established the same framework for awards to be paid to whistleblowers in cases brought by the Commodity Futures Trading Commission[fn15] and under the Anti-Money Laundering Act.[fn16] Given the clarity and consistency of the statutory design for whistleblower awards, the Commission does not believe it would be appropriate to use its exemptive authority to award an amount above the statutory limit even in cases such as this one, where a higher award amount might otherwise be warranted.

B. Claimant 2.

1. Award Analysis.

The record demonstrates that Claimant 2 voluntarily provided original information to the Commission that significantly contributed to the success of the Covered Action. In reaching this determination, we assessed, among other things, the following facts: (i) Claimant 2 voluntarily submitted information to the Commission staff approximately nine months after the investigation was opened and before the Commission had filed its complaint against the Company; (2) Claimant 2 participated in an initial phone call with staff, provided documents related to Claimant 2’s [Redacted], and provided ongoing assistance to the staff; (3) Claimant 2’s information included information that was not previously known to the staff, and the information informed the direction of the staff’s investigation and the charges ultimately brought against the Company.

As noted above, the presumption of a statutory maximum award of 30% applies in this matter. Based on all aspects of the record, and after considering Claimant 2’s contributions relative to Claimants 1’s and Claimant 4’s contributions, we find that an award of ***% is appropriate for Claimant 2.

2. Request for Reconsideration.

We decline Claimant 2’s request that we set Claimant 2’s award amount at [Redacted]. As discussed above, the limit for a whistleblower award to all meritorious claimants in the aggregate is set by statute at 30% of the amount collected of the monetary sanctions imposed in the action or related actions. Even if Claimant 2 were the sole meritorious claimant, which Claimant 2 is not, a 30% award would be less than the amount Claimant 2 requests. We decline to set Claimant 2’s award above the statutory limit. Further, whistleblower award payments are based on the amounts collected in the underlying Covered Action, not the amount of loss suffered by the claimant.

C. Claimant 4’s Award Analysis.

The record demonstrates that Claimant 4 voluntarily provided original information to the Commission that significantly contributed to the success of the Covered Action. Specifically, we find that the [Redacted] provided by Claimant 4 were helpful to the Commission in obtaining additional relief in the remanded Final Judgment.[fn17]

As noted above, the presumption of a statutory maximum award of 30% applies in this matter. Based on all aspects of the record, and after considering Claimant 4’s contributions relative to Claimants 1’s and Claimant 2’s contributions, we find that an award of ***% is appropriate for Claimant 4.

D. Claimant 3.

Claimants must give the Commission information in the form and manner that the Commission requires in order to be eligible for a whistleblower award.[fn18] The Commission’s rules require Claimants to file any application for a whistleblower award on Form WB-APP.[fn19] Further, the Form WB-APP must be filed within ninety days from the date of the Notice of Covered Action or the claim will be barred.[fn20] Claimants bear the ultimate responsibility to learn about and follow the Commission’s rules regarding the award application process.[fn21]

The requirement that claimants file whistleblower award claims within ninety days of the posting of a Notice of Covered Action serves important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that the Commission can make timely awards to meritorious whistleblowers.[fn22]

Notwithstanding these important programmatic functions, the whistleblower program rules recognize that there may be rare situations where an exception should be made. To allow for this, Rule 21F-8(a) of the Exchange Act provides that “the Commission may, in its sole discretion, waive” the filing requirements “upon a showing of extraordinary circumstances.”[fn23] The Commission has explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn24] The Commission has identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before the Commission will consider exercising its discretionary authority to excuse an untimely filing.[fn25] The Commission has previously found that “a lack of awareness about the [whistleblower award] program does not . . . rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.”[fn26] “A potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim.”[fn27]

Claimant 3’s lack of awareness of the NoCA posting or of the 90-day deadline is not an “extraordinary circumstance” that would excuse his/her failure to submit a timely Form WBAPP. Nothing interfered with his/her ability to monitor the Commission’s web page or submit an application by the 90-day deadline. Furthermore, there are no unique circumstances here that might support the Commission’s exercise of its separate, discretionary authority under Section 36(a) of the Exchange Act to exempt Claimant 3 from the 90-day filing deadline.[fn28]
We therefore conclude that Claimant 3 failed to submit a claim for award on Form WBAPP to the Office of the Whistleblower within ninety days of the date of the Notice of Covered Action as required under Rule 21F-10(b) of the Exchange Act and that, as a result, Claimant 3 is ineligible for an award with respect to the Covered Action.[fn29]

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 receive an award of [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action; Claimant 2 receive an award of *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action; Claimant 4 receive an award of *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action; and that Claimant 3’s award application be denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[2] Exchange Act Rules 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred”) and 10(b)(1) (“All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award”).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] We note that the dates provided by Claimant 3’s counsel do not comport with other aspects of the record. Claimant 3 faxed the WB-APP to OWB on [Redacted], and the WB-APP was dated [Redacted]. As such, Claimant 3 must have become aware of the NoCA filing by no later than [Redacted], and not on *** [Redacted].

[5] See Exchange Act Section 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).

[6] Exchange Act Rule 21F-16 applies only when the claimant was ordered to pay sanctions or an entity whose liability was based substantially on conduct that the claimant directed, planned or initiated was ordered to pay sanctions in connection with the covered action. Rule 21F-16 is not applicable here.

[7] Exchange Act Rule 21F-6(c)(1)(iv).

[8] The payout rate to unsecured creditors, like the Commission, was only *** %. Therefore, the Commission could only have collected *** % of the final disgorgement, which at best would he been [Redacted] of the *** of disgorgement.

[9] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[10] See Whistleblower Program Rules, Release No. 34-899963 , 2020 WL 5763381, at *12 (Sept. 23, 2020).

[11] Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1).

[12] See Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5).

[13] 15 U.S.C. § 78mm(a)(1).

[14] See, e.g., Order Determining Whistleblower Award Claims, Release No. 34-90580 (Dec. 7, 2020) (providing whistleblower with exemption from the TCR filing requirements under Rules 21F-9(a) and (b)); Order Determining Whistleblower Award Claims, Release No. 34-86010 (June 3, 2019) (providing whistleblower with exemption from the voluntary requirement under Rule 21F-4(a)).

[15] 7 U.S.C § 26(b)(1).

[16] 31 U.S.C. § 5323(b)(1).

[17] We note that the other information provided by Claimant 4 did not significantly contribute to the success of the Covered Action, because, for example, the Enforcement staff had already obtained the information through other sources.

[18] See Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

[19] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[20] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[21] See Order Determining Whistleblower Award Claim, Release No. 34-72659, at 5 (July 23, 2014).

[22] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34343 (June 13, 2011); Order Determining Whistleblower Award Claims, Release No. 95711 (Sept. 9, 2022); Order Determining Whistleblower Award Claims, Release No. 88464 (Mar. 24, 2020); Order Determining Whistleblower Award Claims, Release No. 96765 (Jan. 30, 2023).

[23] 17 C.F.R. § 240.21F-8(a).

[24] Order Determining Whistleblower Award Claims, Release No. 77368 , at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018).

[25] Order Determining Whistleblower Award Claim, Release No. 77368 ; Order Determining Whistleblower Award Claim, Release No. 82181 (Nov. 30, 2017).

[26] Order Determining Whistleblower Award Claims, Release No. 95711 (Sept. 9, 2022) (citing to Order Determining Whistleblower Award Claim, Release No. 88464 (Mar. 24, 2020)).

[27] Id. The whistleblower rules provide “for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim.” Id; see also Order Determining Whistleblower Award Claims, Release No. 96765 (Jan. 30, 2023) (finding that claimant’s lack of awareness about the whistleblower program and limited understanding of the whistleblower rules “failed to meet the demanding standard for showing that there were extraordinary circumstances”).

[28] Cf. Order Determining Whistleblower Award Claims, Release No. 92086 (June 2, 2021) (exercising Section 36(a) exemptive authority to waive the 90-day deadline where the claimant faced “unique obstacles” to timely filing the claim).

[29] Because Claimant 3 is ineligible for an award based on the late filing of a Form WB-APP, we decline to consider whether Claimant 3’s information led to the success of the Covered Action.

SEC

97205

03/27/2023

The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition[fn1] recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 2”) in connection with the above-referenced covered action (the “Covered Action”). Claimant 2 filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant 2’s award claim is denied.[fn2]

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled administrative and cease and desist proceedings in the Covered Action, charging [Redacted] (the “Company”) with violating [Redacted]. The Commission’s order alleged that the Company [Redacted]. The Company agreed to pay a civil penalty of [Redacted] to settle the charges.

B. The Preliminary Summary Disposition.

On [Redacted] OWB issued a Preliminary Summary Disposition recommending that Claimant 2’s claim be denied because Claimant 2’s information was not provided to or used by Enforcement staff assigned to the investigation that led to the Covered Action (the “Investigation”) and therefore did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. OWB determined that Claimant 2’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. OWB stated that staff assigned to the Investigation never received any information from Claimant 2 or had any communication with Claimant 2, and as such Claimant 2’s information was not used in and had no impact on the Investigation or the Covered Action.

C. Claimant 2’s Response to the Preliminary Summary Disposition.

Claimant 2 submitted a timely written response contesting the Preliminary Summary Disposition (the “Response”).[fn3] Claimant 2 principally argues that Claimant 2 provided information to [Redacted] (the “Other Organization”) by telephone on or about [Redacted] approximately six months before the staff opened the Investigation. Claimant 2 states that he requested that the Other Organization investigate the Company “for several reasons such as lack of supervision, potential Ponzi scheme, and suspicious activity.” Claimant 2 argues that his/her communications with the Other Organization were shared with Commission staff and led to the successful enforcement of the Covered Action.

Claimant 2 also argues that while he/she did not submit a TCR to the Commission at the time of his/her telephone call to the Other Organization, Claimant 2 was not aware of the TCR filing requirements. Among other things, Claimant 2 contends that the 2020 whistleblower rule amendments permit the Commission to waive compliance with the filing requirements of Exchange Act Rule 21F-9 in certain circumstances, and Claimant 2 also states that the Commission has discretionary exemptive authority under Exchange Act Rule 21F-8(a) and Exchange Act Section 36(a).

II. Analysis.

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

First, the record shows that Claimant 2 did not provide the Commission with information that caused the staff to open an examination or investigation or caused the staff to inquire into different conduct. According to a supplemental staff declaration, the Investigation was opened by Enforcement staff in [Redacted] based upon an [Redacted] referral (the “Referral”) from the Commission’s Office of Compliance Inspections and Examinations, now the Division of Examinations, and not based upon any information from Claimant 2. Commission staff have confirmed, in a supplemental declaration, which we credit, that the Referral was based on an examination (the “Exam”) begun in [Redacted] approximately five months before Claimant 2 contacted the Other Organization. The supplemental declaration also confirms that the Exam was initiated based on information from sources within the Commission. And while the Referral indicates that staff assigned to the Exam communicated with Other Organization staff prior to commencing the Exam in [Redacted] those communications occurred at least five months before Claimant 2 contacted Other Organization with his/her information. Accordingly, the record demonstrates that Claimant 2’s information did not cause Commission staff to commence an examination or open the Investigation.

In addition, the record shows that Claimant 2’s information did not significantly contribute to the Exam or to the Investigation or cause Commission staff to inquire into different conduct. Enforcement staff assigned to the Investigation did not receive any information provided by Claimant 2, nor did they communicate with Claimant 2 before or during the Investigation. In addition, Enforcement staff confirm in a supplemental declaration that they did not receive any new information from the Other Organization that materially advanced the Investigation or assisted the staff in bringing the charges in the Covered Action. Staff assigned to the Exam also confirmed that they did not receive any information from the Other Organization in or after [Redacted] the time of Claimant 2’s communication with the Other Organization–that assisted with their examination or caused them to look into other conduct.[fn9]
For these reasons, we deny Claimant’s whistleblower award claim.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-18, 17 C.F.R. § 240.21F-18.
[2] OWB also preliminarily denied the award claim of four other claimants. These claimants did not seek reconsideration of the Preliminary Summary Disposition, and therefore the denial of their claims was deemed to be the Final Order of the Commission under Exchange Act Rule 21F-18(b)(4).
[3] See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3). Claimant 2 also made several submissions to the Commission after the deadline to contest the Preliminary Summary Disposition had passed. See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3) (requiring claimant to submit a response to the Commission within thirty days of the date of the Preliminary Summary Disposition or the date OWB sends the staff declaration to the claimant.) Because those submissions were untimely, they were not considered by the Commission.
[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[8] Exchange Act Rel. No. 85412 at 8-9.
[9] Claimant 2 contends on reconsideration that the Commission should grant *** a waiver of the TCR requirement pursuant to its authority under either Rule 21F-8(a) or Section 36(a) of the Exchange Act. We construe this as an argument for waiving the requirements of both Rule 21F-4(b)(7) and Rule 21F-9, which together stand for the proposition that a claimant who provides information to “Congress, any other authority of the Federal government, a state Attorney General or securities regulatory authority, any self-regulatory organization, or the Public Company Accounting Oversight Board,” among other entities, see Rule 21F-4(b)(7), must provide the same information to the Commission within 120 days in accordance with the TCR requirements. Because Claimant 2 does not meet the “led-to” criteria for an award, we find that Claimant 2’s arguments regarding his/her TCR submission are moot. In addition, we decline to exercise our discretionary exemptive authority under Section 36(a). Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person … from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” However, “the broad objective of the whistleblower program is to enhance the Commission’s law enforcement operations . . . [by incentivizing whistleblowers] to provide the Commission with timely, useful information that the Commission might not otherwise have received.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34326 (June 13, 2011). Granting an exemption under circumstances where the record does not show the whistleblower provided information that led to the success of a covered action is contrary to the purpose of the whistleblower program, the public interest, and the protection of investors. As a result, we find that Claimant 2 has not met his/her burden to demonstrate any considerations that would satisfy the requirements for us to exercise our Section 36(a) authority. Similarly, to the extent that Claimant 2 asks the Commission to waive requirements using its discretionary authority under Rule 21F-8(a), Claimant 2 has not met the burden of showing the “extraordinary circumstances” necessary for such relief.

SEC

03/17/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [Redacted] (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application(s) for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this dete1mination is marked below as follows:

By Office of the Whistleblower.

[1] Claimant did not provide information that led to the successful enforcement of the Covered Action. The investigation that led to the Covered Action was opened based upon a self-report from the respondent. Staff assigned to the investigation that led to the Covered Action did not recall receiving or reviewing any information provided by Claimant, nor did the staff recall communicating with Claimant. The TCR System indicates that Claimant’s TCR was forwarded to staff assigned to a different investigation and not forwarded to staff assigned to the investigation that led to the Covered Action. Accordingly, Claimant provided no information that was used in or that contributed to the success of the investigation.

SEC

03/13/2023

In response to the above-referenced Notice(s) of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim(s) from [Redacted] (“Claimant”) for the above referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim(s) in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application(s) for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim(s).[fn1] The basis for this determination is marked below as follows:

Claimant(s) failed to specify in the award application the submission pursuant to Rule 21F-9(a) on which the Claimant(s)’s claim for an award is based.

By: Office of the Whistleblower.

[1] To the extent Claimant applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, Claimant is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Investigative staff responsible for the Covered Action never received or reviewed any information from Claimant or had any communications with Claimant. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

97051

03/07/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Joint Claimants”) jointly[fn1] receive a whistleblower award of approximately $500,000, which is equal to *** percent ( *** %) of the amount collected in the above-referenced Covered Action (“Covered Action”). The recommendation of the CRS is adopted. The record demonstrates that the Joint Claimants voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn2]

[Redacted].

The Joint Claimants promptly provided significant information to another agency, which shared it with the Commission staff, alerting Commission staff to the fraudulent conduct, and prompting the opening of the investigation. Thereafter, the Joint Claimants submitted a TCR and provided continuing helpful assistance to the Commission staff, including meeting with them and providing additional important information and documents concerning their allegations.

Accordingly, it is hereby ORDERED that the Joint Claimants shall receive an award of *** percent ( *** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

CFTC

03/03/2023

The Commodity Futures Trading Commission (“Commission”) received a related action award application on Form WB-APP from Claimant for [Redacted] (“Action” or “Order”), an action by [Redacted] (“Authority”). Claimant associated this Action with [Redacted] (“Covered Action” or “CFTC Order”), the Covered Action that was the subject of the above-referenced Notice of Covered Action. The instant Order imposed monetary sanctions of [Redacted].

1. The CRS has determined to recommend that the Commission deny Claimant’s application because it fails to meet the requirements of Section 23 of the Act and the Rules.

2. A related action must be “based on the original information that the whistleblower voluntarily submitted to the Commission and led to a successful resolution of the Commission judicial or administrative action.” See 17 C.F.R. § 165.11(a)(2).

3. The instant Action was not based on any information from Claimant because Claimant’s information was not shared with the Authority by Claimant or the Commission. See CFTC Whistleblower Award Determination No. 21-WB-07, 2021 WL 6753647 (Oct. 15, 2021), at 6.

Claimant’s related action award application contains the concession that Claimant did not provide any substantive information directly to staff of the Authority.

Division of Enforcement (“Division”) staff assigned to the investigation leading to the Covered Action did not share any files from the Covered Action, identify Claimant as a whistleblower, or disclose that a whistleblower had contributed information to the Authority. Division staff had only high-level conversations with the Authority [Redacted].

The Authority did not receive any of Claimant’s information from the Commission. Staff of the Authority reported having no documents from the Commission in their files related to the instant Action. Nor were staff of the Authority aware of any information from the Commission, including from any whistleblowers, that contributed to the Authority’s Action.

4. According to staff of the Authority, the instant Action stemmed from [Redacted].

CFTC

03/03/2023

The Claims Review Staff (“CRS”) has evaluated Claimant’s award claim for the Citi Action in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165, promulgated pursuant to Section 23 of the CEA, 7 U.S.C. § 26. The CRS sets forth its Preliminary Determination for Claimant as follows:

1. The CRS has determined to recommend that the Commission deny the applications because they do not the meet requirements for an award.

2. [Redacted] led to the Division opening its investigation.

3. Claimants did not contribute [Redacted] Division staff [Redacted] did not contact any of Claimants or use their submissions to investigate, bring, [Redacted]. Division staff had not heard of Claimant 1 or Claimant 2 until the Whistleblower Office informed staff of their whistleblower award applications.

4. [Redacted].

Division team had no contact with Claimant 3. [Redacted]. Thus, Claimants’ information did not lead to the successful enforcement [Redacted].

CFTC

03/03/2023

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application from Claimant in response to the above-referenced Notice of Covered Action. The corresponding enforcement actions are [Redacted].

The Claims Review Staff (“CRS”) has evaluated Claimant’s award claim [Redacted] in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165, promulgated pursuant to Section 23 of the CEA, 7 U.S.C. § 26. The CRS sets forth its Preliminary Determination for Claimant as follows:

1. The CRS has determined to recommend that the Commission deny the application because it does not meet the requirements for an award.

2. The Division’s investigation [Redacted].

[Redacted].

5. The responsible attorney [Redacted] never spoke to Claimant [Redacted]. Claimant’s information was not used [Redacted].

SEC

97015

03/02/2023

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings in the Covered Action, charging [Redacted] (collectively, the “Respondents”) with violations of the federal securities laws. The Commission alleged that [Redacted] (collectively, the “Individuals”) [Redacted]. The Commission also alleged that the Individuals [Redacted]. The Respondents were ordered to pay, jointly and severally, disgorgement of [Redacted] prejudgment interest of [Redacted] plus a civil monetary penalty of [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS noted that the investigation which led to the Covered Action (the “Investigation”) was opened before Claimant submitted his/her tip to the Commission, and the CRS also stated that none of the information provided by Claimant contributed to or was otherwise used in the Investigation because it was duplicative of information already received by Enforcement staff.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn1] Among other things, Claimant principally argues that he/she provided information to [Redacted] (the “Firm”) which helped the Firm secure judgments against several individuals allegedly involved in the misconduct at issue in the Covered Action. Claimant also argues that he/she provided information to the Commission in his/her whistleblower award application about other misconduct, but that the staff never sought additional information from him/her in response. Lastly, Claimant states that he/she communicated with Enforcement staff after the settled Covered Action was instituted and provided “substantial information” about “more serious misconduct[ ]” involving a larger fraudulent scheme than was charged by the Commission. Claimant also stated that he/she submitted an additional TCR in [Redacted] over fifteen months after the Covered Action was instituted. Claimant also asks the Commission should consider that Claimant suffered hardship during the time he/she provided information to the Commission.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn2] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn3] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn4]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn5] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn6]

Claimant does not qualify for an award. First, the record demonstrates that the Investigation was opened based upon a self-report in [Redacted] approximately two months before Claimant submitted his/her TCR. Accordingly, Claimant’s information did not cause the staff to open the Investigation.

Second, the record shows that Claimant’s information did not significantly contribute to the success of the Covered Action or cause the staff to inquire into different conduct as part of a current investigation. Claimant submitted his/her initial tip to the Commission approximately two months after the Investigation began. By this time, the staff had already gathered information from other sources, including from the self-report and Claimant’s information was duplicative of what the staff already knew. In addition, a former supervisory attorney confirms, in a supplemental declaration, which we credit, that the Commission was not a party to the actions brought by the Firm, and any information Claimant provided to the Firm did not advance the Investigation. The supplemental declaration also confirms that Claimant’s communications with the staff after the filing of the Covered Action did not advance the Investigation or contribute to the charges in the Covered Action. Similarly, Claimant’s [Redacted] TCR did not contribute to the Investigation or the charges in the Covered Action because the Commission had already brought the settled Covered Action over a year earlier. Accordingly, Claimant’s information did not significantly contribute to the Investigation or cause staff to inquire into different conduct.

For these reasons, Claimant is not entitled to an award.[fn7]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[2] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[3] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[4] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[5] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[6] Exchange Act Rel. No. 85412 at 8-9.
[7] Claimant’s Response also argues that he/she provided information about other misconduct which the Commission allegedly did not investigate. Any such alleged misconduct and the staff’s decision whether to investigate the allegations, however, are not relevant to this whistleblower award proceeding, which addresses whether Claimant voluntarily provided original information that in fact led to the success of the Covered Action. See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1). In addition, Claimant also argues that the Commission should deny any whistleblower award to insiders at the Respondents. This argument is moot, as Claimant is the only applicant for an award in connection with this Covered Action. Further, Claimant’s argument that we consider the hardships he/she encountered do not warrant the granting of an award. While we may consider “any unique hardships experienced by the whistleblower as a result of his or her reporting,” such consideration does not apply to whether a claimant is eligible for an award, but instead to the amount of an award after a claimant has met all of the award eligibility criteria. See Rule 21F-6(b)(2)(vi). As discussed above, Claimant has not met the eligibility criteria for an award. Accordingly, we need not consider Claimant’s argument regarding any hardships.

SEC

96983

02/27/2023

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed a complaint in federal district court in the [Redacted] (“District Court”) against [Redacted] (“Defendant 1”), [Redacted] (“Defendant 2”) and [Redacted] (“Defendant 3”), alleging that the defendants engaged in a fraudulent scheme to [Redacted]. In [Redacted], the Commission settled with [Redacted] and dismissed its claims against [Redacted].

Following a [Redacted] order granting [Redacted] (collectively, “Defendants”), the Commission reached settlement agreements with Defendants, and the District Court issued final judgments against Defendants on [Redacted]. In total, the District Court ordered Defendants to pay [Redacted] in disgorgement, prejudgment interest, and civil penalties.

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination recommending that the claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder.[fn1] The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2). The CRS preliminarily determined that Claimant’s information did not significantly contribute to the investigation that resulted in the Covered Action (the “Investigation”) because Claimant’s information was redundant of information already developed from other sources and therefore, staff did not rely on any information that Claimant provided, and Claimant’s information did not contribute in any way to the success of the litigation.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2] Claimant principally argues that the materials Claimant provided to Enforcement staff and Claimant’s willingness to testify at trial were factors in securing the cooperation of [Redacted] and settlements with Defendants. The Response contends that Claimant provided information about a broader scheme and attempts to thwart the Commission’s investigation, as well as information the Commission would not otherwise have access to, and that this information helped revive a stalled investigation. Further, Claimant questions why staff would have asked Claimant to testify, or identified Claimant to Defendants and their counsel as a potential witness, if staff did not view Claimant as a helpful witness or the information Claimant provided as materially helpful to the Commission’s case. Finally, the Response asserts that staff disclosed Claimant’s identity as a whistleblower to Defendants and their counsel.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2),[fn4] respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either (1) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (2) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8]

Claimant does not qualify for an award under either of the above-described provisions. First, the record demonstrates that the Investigation was opened in [Redacted] more than three years before Claimant began providing information to the Commission. Accordingly, Claimant’s information did not cause the staff to open the Investigation. Moreover, as attested in a supplemental declaration provided by Enforcement staff, Claimant’s information did not cause the Commission to inquire into different conduct as part of the Investigation.

Second, although Claimant’s information related in part to conduct that formed the basis of the Covered Action, it did not significantly contribute to the success of the Covered Action. In the Response, Claimant takes issue with the statement in the Initial Declaration that Enforcement staff did not view Claimant’s documents as materially helpful to the Commission’s case. Claimant asserts that while the Commission’s complaint was filed several months prior to Claimant’s initial contact with the Commission, Claimant provided information about a broader scheme involving additional entities and individuals, as well as attempts to thwart the Investigation. Claimant maintains that, after a meeting at [Redacted], Enforcement staff told Claimant that the Investigation had been stalled and without the information and knowledge provided by Claimant, staff “never would have known who the key players were, where to look, or how the business operated.” As stated under penalty of perjury in a supplemental declaration, Enforcement staff assigned to the Investigation has no recollection of having said this, and it is not consistent with the facts, given that the Commission had already filed its detailed complaint. As the record demonstrates, the documents provided by Claimant were largely redundant of materials already within the Commission’s possession, and staff did not view the new documents Claimant provided as materially helpful.

Claimant further states that, given the variety of sources from which the documents and information provided by Claimant were derived, it is “highly unlikely” that the materials received from Claimant were “largely redundant” of materials that were already in the Commission’s files.[fn9] Claimant contends that the Commission could not have previously been in receipt of all of the information provided by Claimant because the Commission “wouldn’t have been aware of or have access to” some of the information. But it should be emphasized that the Commission’s inquiry into eligibility under Rule 21F-4(c) does not relate to whether a claimant had special access to certain information. Rather, the Rule 21F-4(c) inquiry is focused on whether the information, regardless of its origin, actually led to the success of the action. Here, the record demonstrates that the information provided by Claimant that was not already within the Commission’s files did not significantly contribute to the success of the Covered Action. In a supplemental declaration, Enforcement staff has confirmed that none of the information initially provided to the Commission by Claimant saved the Commission time or resources in conducting the Investigation, led the Commission to inquire into different conduct or bring additional charges or charges against additional individuals or entities, or was otherwise helpful. Further, as discussed below, the record demonstrates that Claimant’s information did not otherwise significantly contribute to the success of the Covered Action.

Claimant also disputes the statement in the Initial Declaration that Enforcement staff did not view Claimant as a helpful witness given their belief that Claimant’s demeanor would undermine Claimant’s credibility. Claimant asserts that, following an interview with Enforcement staff, Claimant was asked if he/she would be willing to testify against the Defendants and Claimant agreed to do so. Sometime later, according to Claimant, Enforcement staff informed Claimant that Defendants had been notified of Claimant’s cooperation and of the evidence Claimant had provided, and that Claimant’s email address and phone number had been provided to counsel for Defendants [Redacted]. Claimant questions why staff would have asked Claimant to testify, or identified Claimant as a potential witness to Defendants and their counsel, if the staff did not view Claimant as a helpful witness or the information Claimant provided as materially helpful to the Commission’s case. As previously discussed, and as supported by the supplemental declaration, the information Claimant provided had no impact on the charges brought in the Covered Action. Further, the supplemental declaration explains that staff disclosed Claimant’s name and contact information, consistent with the Commission’s obligations under Federal Rule of Civil Procedure 26(a) to disclose potential witnesses, before staff had finished evaluating Claimant’s information.

Claimant also contends that the materials Claimant provided to the staff and the disclosure to Defendants and their counsel of Claimant’s cooperation with the Investigation and willingness to testify at trial were factors in securing the cooperation of [Redacted]. The record does not support this assertion. Although the Commission obtained the cooperation [Redacted], Enforcement staff has confirmed, in a supplemental declaration, that Enforcement staff did not raise the possibility of Claimant testifying, or otherwise discuss with [Redacted] any of the materials or information provided by Claimant prior to securing the cooperation of [Redacted], nor did [Redacted] ever indicate or suggest that Claimant’s willingness to testify or the materials Claimant provided played any role in the decision to cooperate.

Nor does the record support Claimant’s assertion that Claimant’s willingness to testify or the information Claimant provided played a meaningful role in securing settlement agreements with the Defendants. In the Initial Declaration, Enforcement staff confirmed that staff negotiated a resolution to the Covered Action without using Claimant as a witness or relying on any of the materials Claimant provided. Further, Enforcement staff has confirmed in a supplemental declaration that the settlement discussions were not based upon or aided by any information provided by Claimant. Rather, the record demonstrates that these discussions were facilitated by the receipt of a favorable ruling on [Redacted] in [Redacted] and neither the Claimant’s identity nor any of the information Claimant provided was used by staff to support that motion. The supplemental declaration further confirms that the [Redacted] relied upon by staff in preparing that motion were developed independently of any information provided by Claimant and that neither the Defendants nor counsel for Defendants [Redacted] indicated or suggested, at any point during settlement negotiations, that Defendants’ decisions to settle were influenced, even in part, by Claimant’s willingness to testify or any of the materials Claimant provided.

Finally, Claimant asserts that staff disclosed Claimant’s identity as a whistleblower to Defendants and their counsel and that such disclosure “is evidence that the information [Claimant] provided led to the cooperation, deal negotiation, and ultimately the SEC’s enforceable action.” According to Claimant, “the SEC’s exposure of my identity as a whistleblower, the information I provided, and the evidence I provided would have caused opposing counsel to consider and take into account those facts when deciding and weighing the option of going to trial or negotiating a deal with the SEC.” Claimant’s assertion is not supported by the record. In a supplemental declaration, Enforcement staff has confirmed that, although Claimant was identified as a potential witness in the Commission’s Rule 26(a) disclosures [Redacted], staff responsible for the Covered Action never disclosed to Defendants or their counsel that Claimant was an SEC Whistleblower.

For these reasons, Claimant is not entitled to an award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] The record supporting the Preliminary Determination included the declaration (“Initial Declaration”) of one of the primary Division of Enforcement (“Enforcement”) attorneys assigned to the Covered Action. The whistleblower rules contemplate that the record upon which an award determination is made shall consist of, as relevant here, a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] We construe the Response as applicable only to subsections 1 and 2 of Rule 21F-4(c). Consequently, the analysis that follows addresses only those two subsections of the provision.
[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).
[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[8] Exchange Act Rel. No. 85412 at 8-9.
[9] Claimant also contests the statement in the Initial Declaration that Claimant provided “several” bankers’ boxes of documents to the Commission, asserting that [Redacted] boxes were provided. This detail is not material to our decision. In evaluating whether information provided by a Claimant has “significantly contributed to the success” of the covered action, we look not to the quantity of information provided, but rather to whether the information “made a substantial and important contribution” to the success of the covered action. See note 7, supra. Nevertheless, Enforcement staff has confirmed in a supplemental declaration that Claimant provided approximately [Redacted] boxes of materials to investigative staff.

SEC

96971

02/24/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of whistleblower award claims submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered actions (the “Covered Actions”). Claimant filed a timely response contesting the preliminary denials. For the reasons discussed below, Claimant’s award claims are denied.

I. Background.

A. The Covered Actions.

On [Redacted] the Commission instituted settled cease-and-desist proceedings in Covered Action [Redacted] against [Redacted]. (the “Company”), [Redacted]. The Commission alleged that [Redacted]. The Commission alleged that [Redacted]. The Commission charged the Company with violating [Redacted]. The Company agreed to pay a civil money penalty of [Redacted] settle the Commission’s charges.

On [Redacted] the Commission instituted settled cease-and-desist proceedings in Covered Action [Redacted] against [Redacted] (“Respondents”). The Commission alleged that the Respondents [Redacted]. The Commission charged Respondents with violations of [Redacted]. Respondents agreed to pay a civil money penalty of [Redacted] to settle the Commission’s charges.

On [Redacted] the Commission instituted settled cease-and-desist proceedings in Covered Action [Redacted] against [Redacted] and [Redacted]. The Commission alleged that [Redacted]. In addition, the Commission alleged that [Redacted]. The Commission charged [Redacted] with violating [Redacted] and with violating [Redacted].

On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant submitted timely applications for award for the Covered Actions.

B. The Preliminary Determinations.

On [Redacted] the CRS issued Preliminary Determinations[fn1] recommending that Claimant’s award claims for the Covered Actions be denied because Claimant did not provide information that led to the successful enforcement of the Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS stated that staff in the Commission’s Office of Market Intelligence (“OMI”) closed Claimant’s tip with a disposition of “no further action planned” and did not forward the tip to Enforcement staff in connection with any matter, including the Covered Actions.

The CRS also preliminarily recommended denying an award to Claimant because Claimant was not a “whistleblower” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Actions. To qualify as a whistleblower, an individual must, among other things, provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9(a), which Claimant did not do. The CRS stated that Claimant did not submit information on Form TCR or online, through the Commission’s website. In addition, Claimant did not sign the whistleblower declaration as required under Exchange Act Rule 21F-9(b).

C. Claimant’s Response to the Preliminary Determinations.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determinations.[fn2] In the reconsideration request, Claimant contends that he/she submitted information on Form TCR on [Redacted] in response to correspondence from OWB. Claimant also argues that the whistleblower award applications he/she filed after [Redacted] “all have a nexus with these claims.” Claimant attached to his/her response certain correspondence with OWB, including a copy of one of Claimant’s TCR submissions, dated [Redacted] and correspondence regarding other covered actions.

Claimant does not argue in his/her response that the information in his/her TCR submissions led to the success of the Covered Actions.

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7]

There is no evidence in the record that Claimant’s information led to the successful enforcement of any of the Covered Actions. Claimant’s initial submission was sent to OWB in the form of a letter dated [Redacted] Claimant’s information was not submitted on a Form TCR nor did Claimant declare under penalty of perjury that the information in the letter was true and correct to the best of his/her knowledge. Claimant’s letter was uploaded to the Commission’s TCR system by OWB staff the following month and the letter was assigned a TCR number (the “First TCR”). The record shows that OMI staff closed the First TCR with a disposition of “no further action” because the First TCR was vague and insubstantial. OMI staff did not forward the First TCR to staff assigned to any of the Covered Actions or to staff assigned to any other matter; the staff assigned to each of the three Covered Actions did not receive or review Claimant’s information.

Claimant correctly points out in the Response that he/she made a second submission on or about [Redacted] on Form TCR (the “Second TCR”). Nevertheless, the record indicates that the Second TCR also did not lead to the success of the Covered Actions. Based upon a supplemental declaration from OWB staff, which we credit, the record shows that OMI staff also closed the Second TCR with a disposition of “no further action” because the Second TCR was also vague and insubstantial. OMI staff did not forward the Second TCR to staff assigned to any of the Covered Actions or to staff assigned to any other matter. Further, OWB staff confirmed in a supplemental declaration, which we credit, that the separate Commission staff assigned to each of the Covered Actions did not receive or review Claimant’s information. Accordingly, there is no evidence in the record that Claimant’s information led to the success of any of the Covered Actions.[fn8]
For the above reasons, Claimant is not entitled to an award in connection with the Covered Actions.[fn9]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimant in connection with the Covered Actions be, and they hereby are, denied.
By the Commission.

[1] In the Preliminary Determinations, the CRS also recommended denying an award to Claimant in six other Covered Actions. Claimant withdrew his/her applications for award in those six other matters.
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[5] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[6] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[7] Exchange Act Rel. No. 85412 at 8-9.
[8] Regardless, Claimant’s Response did not contest the CRS’s recommendation that Claimant’s claims be denied on the ground that Claimant’s information did not lead to the success of any of the Covered Actions. By failing to timely present any argument to the Commission during the reconsideration stage as to this ground for denial, Claimant has forfeited the opportunity to contest this ground for denial. Cf. Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f) (“Your failure to submit a timely response contesting a Preliminary Determination will constitute a failure to exhaust administrative remedies, and you will be prohibited from pursuing an appeal pursuant to § 240.21F-13 of this chapter.”); Order Determining Whistleblower Award Claim at 4, Release No. 95033 (June 3, 2022) (citing Exchange Act 21F-10(f) and stating that claimant failed to present timely arguments during the reconsideration stage regarding two other separate grounds of denial, and thus claimant forfeited the opportunity to contest those grounds for denial).
[9] Claimant also attached to his/her Response certain correspondence with OWB; however, this correspondence is either duplicative of information already in the record or pertains to other Notices of Covered Action and not the Covered Actions at issue in this proceeding.

SEC

96970

02/24/2023

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings in the Covered Action, charging [Redacted] (collectively, the “Respondents”) with violations of [Redacted]. The Commission found that Respondents [Redacted]. The Commission charged [Redacted]. In addition, the Commission found that [Redacted]. The Commission also alleged that the Respondents [Redacted]. To settle the charges, Respondents agreed to pay [Redacted] in disgorgement and prejudgment interest, and a civil monetary penalty of [Redacted]

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS also noted that the information Claimant submitted did not cause the staff to open the Investigation and Claimant’s information was not used in the successful enforcement of the Covered Action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn1] Claimant argues that the record before the CRS was “deficient of information justifying denial of an award” to Claimant because the staff relied upon a single Enforcement staff declaration, while Claimant alleges that “many other SEC staff members” worked on the matter, including staff that Claimant spoke to and met with. Claimant states that he/she submitted his/her information in [Redacted] with supplements in [Redacted] and [Redacted]. Claimant also states that he/she met with Commission staff at the staff’s request in [Redacted] in [Redacted] and then in [Redacted] in [Redacted]. Claimant argues that the information in his/her [Redacted] supplement “specifically named [Redacted] associated with [Respondents] and cited language from [Respondents’] [Redacted] which upon information and belief, was used by the SEC in the [Covered Action].” Because the Covered Action addresses misconduct that occurred between [Redacted] Claimant alleges that his/her “detailed filings and industry insight very likely contributed in a material way to . . . the need [to] bring an enforcement action.” Claimant also argues that even if staff assigned to the Investigation did not receive information from Claimant directly, the staff may have received and relied upon information that Claimant provided to other staff at the Commission.

Claimant requests that Claimant be allowed to depose the Enforcement staff member who prepared the declaration “and others involved in the investigation,” and that Claimant be allowed to review “all documentation the [CRS] utilized,” and that Claimant receive “all emails, correspondence, and other material regarding [Claimant’s] filing, as well as the administrative file for the [Investigation].”

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn5] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn6] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

As an initial matter, the record shows that Claimant’s information did not cause Enforcement staff to open the Investigation, either directly or indirectly. Enforcement staff confirms, in a sworn declaration, which we credit, that the Investigation was opened in [Redacted] following a referral from the Commission’s Division of Examinations (“Examinations”),[fn7] not because of information from Claimant. Examinations staff began an examination of Respondents in [Redacted] and the staff declaration also confirms that that the examination of Respondents was not initiated based on Claimant’s information. While one Examinations staff assigned to the examination of Respondents attended the [Redacted] meeting with Claimant, the record shows that the information Claimant provided during the meeting was not new or helpful and did not cause Examinations staff to commence the examination of Respondents. In addition, while one attendee at the [Redacted] meeting (the “Attendee”) was the co-chief of the specialized Enforcement unit that opened the Investigation over one year later, staff assigned to the Investigation confirmed that they did not receive, review, or use information from the Attendee that caused or contributed to the opening of the Investigation.

The record also does not show that Claimant’s information caused Enforcement staff or Examinations staff to inquire into different conduct or significantly contributed to the ongoing Investigation. A supplemental declaration from OWB staff confirms that Examinations staff did not find Claimant’s information useful during Examinations staff’s exam. And the record also shows that Enforcement staff assigned to the Investigation did not find Claimant’s TCR submissions or any of its supplements useful during the course of the Investigation. Enforcement staff assigned to the Investigation also did not have any communication with Claimant or Claimant’s counsel during the Investigation.

Claimant’s argument that his/her meetings with Commission staff in [Redacted] and [Redacted] and supplemental submissions contributed either directly or indirectly to the Investigation, is not supported by the record. A supplemental staff declaration, which we credit, confirms that none of the staff assigned to the Investigation attended the [Redacted] meeting in [Redacted]. The supplemental declaration also confirms that Investigation staff did not recall receiving or reviewing any information from Commission staff based in [Redacted] relating to the subject matter of the Investigation. As for the [Redacted] meeting, as noted above, while an Examinations staff member who was assigned to the exam of the Respondents attended this meeting, the record shows that Examinations staff did not find that Claimant’s information was useful. Further, none of the information Claimant provided at the [Redacted] meeting was used in the Investigation. And staff assigned to the Investigation confirmed that Claimant’s initial and supplemental TCR submissions did not contribute to the staff’s Investigation. Accordingly, while Claimant provided information to the Commission prior to the opening of the Investigation, the record shows that Claimant’s information did not assist the staff during the Investigation or contribute to the Covered Action and Claimant’s argument that the staff may have received and relied upon information originating from Claimant through other Commission staff is not persuasive.

Lastly, Claimant’s argument that the record is “deficient” is not meritorious. The record is based upon declarations sworn under penalty of perjury from one of the primary staff attorneys assigned to the Investigation, as well as the submissions made by Claimant. To the extent that Claimant seeks declarations from staff members he/she spoke with, such information is unnecessary: the record already shows that Examinations staff who attended one of the meetings did not find the Claimant’s information new or helpful. The supplemental declaration from OWB confirms that Claimant’s information did not cause the commencement of the exam, nor was Claimant’s information useful during the exam. Further, Claimant is not entitled to depose Commission staff assigned to the Covered Action, nor is Claimant entitled to “all emails, correspondence, and other material regarding [Claimant’s] filing” or the Commission’s investigative file. Exchange Act Rule 21F-12(a) lists the materials that form the basis for the Preliminary Determination and that Claimant may request from the Commission.[fn8] “These rules do not entitle [Claimant] to obtain from the Commission any materials . . . other than those listed in paragraph (a) of this section.”[fn9] Claimant requested and received the materials to which he/she was entitled under the Rule 21F-12(a) and is entitled to no more.[fn10]

For these reasons, Claimant does not qualify for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

CFTC

02/21/2023

The Commodity Futures Trading Commission (“Commission”) received whistleblower
award applications from four claimants in response to the above-referenced Notice of Covered
Action regarding [Redacted] (the “Covered Action”). The Claims Review Staff (“CRS”) issued a
Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the
amount of [Redacted] of the monetary sanctions collected, or to be collected, in the
Covered Action. This recommended percentage would yield an award payment of [Redacted]
based on the funds collected in the Covered Action to date.[fn1]
The recommendation of the CRS with respect to Claimant 1 is adopted. We find that the
record demonstrates that he/she voluntarily provided original information to the Commission that
led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the
Commodity Exchange Act, 7 U.S.C. § 26(b)(1). In the underlying matter, Claimant 1 voluntarily
provided original information to another agency, which later provided the Commission with the
same information. The information Claimant 1 provided was sufficiently specific, credible, and
timely to cause the Commission to open an investigation. Then, after providing the initial
information that led to the opening of the investigation, Claimant I provided additional, ongoing support to Division of Enforcement (‘”Division”) staff by participating in a telephonic interview.
Information provided during the interview prompted further inquiry by Division staff to
determine whether the [Redacted]. The Commission later brought
a successful covered action based in part on conduct that was the subject of the original
information provided by Claimant 1. Claimant 1 has also met all eligibility requirements for an
award, including filing a Form TCR with the Commission. See 17 C.F.R. §§ 165.S(b), 165.6.
Finally, Claimant 1 does not fall into any of the categories of individuals ineligible for an award.
as set forth in 17 C.F.R. § 165.6(a).
In addition, the Preliminary Determination recommended that the award applications
submitted by Claimant 2, Claimant 3, and Claimant 4 be denied. The Preliminary Determination
found that the information provided by Claimant 2, Claimant 3, and Claimant 4 was: (1) publicly
available or already known to Division staff and not original information; and/or (2) not useful to
the Commission’s investigation and, therefore, did not lead to the successful enforcement of the
Covered Action. Claimant 2, Claimant 3, and Claimant 4 did not submit a request for
reconsideration of the Preliminary Determination; therefore, the Preliminary Determination
denying their claims for award has become the Final Order of the Commission. 17 C.F.R.
§ 165.7(h).
It is hereby ORDERED that Claimant I shall receive an award of [Redacted] of
the monetary sanctions collected, or to be collected, in the Covered Action. By the Commission.

[1] [Redacted].

CFTC

02/21/2023

The Commodity Futures Trading Commission (“Commission” or “CFTC”) received whistleblower award applications from five claimants in response to the above-referenced Notice of Covered Action regarding [Redacted] (“Covered Action”). The Claims Review Staff (CRS) issued a Preliminary Determination recommending denial of all claims.

Claimant 1 requested reconsideration of the Preliminary Determination.[fn1] Claimant 1 wrote only that “[t]he documents provided by the CFTC do not include the signed statements of the CFTC employees, other than [a single declarant], who contributed to Notice of Covered Action No. [Redacted].” Claimant 1 did not challenge the content of the single declaration, and the CRS determined that no additional Commission staff needed to prepare signed statements for the record for this award determination to show that Claimant 1’s information did not lead to the successful enforcement of the Covered Action. See 17 C.F.R. §§ 165.2(i), 165.5(a) (2021). The Commission agrees with the CRS’s determination. Therefore, it is ORDERED that Claimant 1’s whistleblower award claim be, and hereby is, denied. By the Commission.

[1] The other four claimants did not submit a request for reconsideration. so the Preliminary Determination has become the Commission’s Final Order with respect to their award applications. 17 C.F.R. § 165.7(h) (2021).

CFTC

02/21/2023

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application from [Redacted] (“Claimant”) in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted].

The Claims Review Staff (“CRS”) evaluated Claimant’s application in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165, promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26. On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant’s application be denied because his/her application fails to meet the requirements of Section 23 of the Act and the Rules. On [Redacted], Claimant submitted a timely request for reconsideration of the Preliminary Determination. After reviewing Claimant’s arguments for reconsideration and the additional evidence that the Commission’s Whistleblower Office (“WBO”) obtained in relation to Claimant’s reconsideration request, the CRS recommended that the Commission deny Claimant’s application.

For the reasons set forth below, we agree with the CRS’ determination. Accordingly, Claimant’s award application is denied.

I. BACKGROUND.

On [Redacted], the CRS issued a Preliminary Determination recommending denying the Claimant’s whistleblower award application because his/her application fails to meet the requirements of Section 23 of the Act and the Rules. Although Claimant voluntarily provided the Commission with original information, this information did not lead to the successful enforcement of a judicial or administrative action. The CRS determined that the Commission’s Division of Enforcement (“Division”) concluded its investigation before the Claimant submitted his/her information. Moreover, it determined that the Commission did not commence its investigation as a result of Claimant’s TCR submissions, and that no information provided by Claimant was used in connection with the [Redacted] or contributed to the resolution of the investigation.

Claimant sought reconsideration of that determination based on possible assistance that he/she provided to the [Redacted] in a related, [Redacted] investigation. In his/her brief letter, Claimant states that he/she submitted information to the [Redacted], and that the preliminary determination does not analyze his/her submissions. Claimant notes that the Commission’s press release on the [Redacted] acknowledges the valuable assistance provided by the [Redacted]. Claimant provided no additional documents in support of his/her argument.

II. LEGAL ANALYSIS.

Upon review of the record, we determine that Claimant did not provide information that led to the successful enforcement of the Covered Action.

To be eligible for an award, a Claimant must have provided information that led to the successful resolution of the covered action. See CEA§ 23(b)(1), 7 U.S.C. § 26(b)(1); Rules 165.2(i), 165.5(a), 17 C.F.R. §§ 165.2(i), 165.5(a). In its Preliminary Determination, the CRS found that the information that Claimant submitted to the Commission did not lead to the successful resolution of the [Redacted] investigation.

In Claimant’s request for reconsideration. Claimant requested an analysis of the information he/she provided the [Redacted], both of which assisted the Commission in its investigation. However, Claimant’s description and documentation of this information contain nothing related to the Covered Action beyond the information in his/her TCR submissions that the CRS already considered in its Preliminary Determination. In terms of the [Redacted] use of his/her information, Claimant only cites the Commission’s press release regarding the [Redacted]. Claimant makes no attempt to connect any facts in the press release to his/her submissions to the [Redacted], and did not allege any facts, which, if proven true, would support a conclusion that his/her information contributed to the Commission’s investigation of [Redacted].

Furthermore, WBO staff interviewed [Redacted] staff who were either involved in the [Redacted] investigation and/or had communicated with Claimant. Based on these interviews, and its review of the record on reconsideration, the CRS found that Claimant did not provide the [Redacted] information that could have significantly contributed to the Commission’s investigation of [Redacted]. Because the Claimant did not provide the Commission with information that significantly contributed to the [Redacted], the CRS recommended that Claimant’s award application be denied. We agree with the CRS’s determination and the recommendation of the CRS with respect to Claimant’s award application is adopted.

III. CONCLUSION.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

SEC

96923

02/14/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination[fn1] recommending that [Redacted] (“Claimant”) receive a whistleblower award of thirty percent (30%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Exchange Act Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30% where (1) the maximum award would be $5 million or less; (2) none of the negative award factors under Rule 21F-6(b)—i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present; and (3) the award claim does not trigger Rule 21F-16.[fn3] The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn4]

The presumption applies here because it is not reasonably anticipated that a maximum award would exceed $5 million, and the award application presents no negative factors under
Rule 21F-6(b), nor does it trigger Rule 21F-16. In addition, the presumption is not overcome. Claimant provided more than limited assistance, and there are no public interest, investor
protection, or programmatic concerns that would warrant departure from a 30% award here. Claimant saved Enforcement staff time and resources in conducting the investigation. Claimant
provided meaningful information that advanced the investigation and assisted in establishing the underlying misconduct. Claimant provided continuing assistance throughout the investigation,
including providing documents and meeting with the staff. Claimant also acted quickly in trying to expose the misconduct.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action. [fn5]

By the Commission.

[2] See Exchange Act Section 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).

[3] Exchange Act Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.

[4] Exchange Act Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv).

[5] The Court in the Covered Action entered a final judgment against the defendants, ordering that they pay [Redacted]. The Court ordered that the defendants’ payment obligation shall be offset by an amount equal to the Order of Restitution entered and the forfeiture ordered against [Redacted] in a parallel criminal action [Redacted]. While Claimant did not apply for an award claim in connection with the criminal action, because the SEC judgment is satisfied through the restitution and forfeiture ordered in the criminal action, Claimant will still benefit from collections made in the criminal action. And the Commission would not pay twice on the same amount collected. To date, there have been no collections in the Covered Action or the parallel criminal action.

SEC

02/13/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] Tue basis for this determination is marked below as follows:

Claimant did not provide info1mation that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Co1mnission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F- 4(c)(2) of the Exchange Act.[fn2]

Claimant is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide info1mation regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9(a), which Claimant did not do.[fn3]

By: Claims Review Staff.

[2] Claimant did not provide information that led to the successful enforcement of the Covered Action. The Covered Action investigation was opened based upon allegations contained in TCRs submitted by other individuals prior to the submission of Claimant’s [Redacted] TCR. While Commission staff interviewed Claimant in [Redacted] along with other investors, Claimant’s information was duplicative of information the staff had already received from other sources. Claimant’s [Redacted] TCR also did not contribute to the Covered Action. Although the staff interviewed Claimant again in [Redacted] in connection with potential litigation, the staff did not use Claimant’s information because the matter settled shortly thereafter. Accordingly, Claimant’s information also did not cause the staff to open the investigation or contribute to the success of an existing investigation.

[3] With regard to Claimant’s TCR submitted on or about [Redacted] Claimant did not sign the whistleblower declaration as required under Exchange Act Rule 21F-9(b). Claimant retained counsel in [Redacted] and submitted a second TCR less than 30 days later on or about [Redacted]. Claimant signed the whistleblower declaration in the [Redacted] TCR. However, the record does not unambiguously demonstrate that Claimant otherwise qualifies for an award, thus Claimant does not qualify for the Rule 21F-9(e) waiver.

SEC

96887

02/13/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted](“Claimant”) receive a whistleblower award of almost $3 million, which is equal to *** percent ( *** %) of the amounts collected, or to be collected, in the above-referenced Covered Action (“Covered Action”) and *** percent ( *** %) of the monetary sanctions collected, or to be collected, in a related criminal action, [Redacted] (“Related Action”).[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determinations.

The recommendations of the CRS are adopted.[fn2] The record demonstrates that Claimant voluntarily provided the same original information to the Commission and to the criminal authorities, and that this information led to the successful enforcement of both the Covered Action and the Related Action.[fn3]

[Redacted]

In addition, Claimant provided highly significant information to Enforcement staff during an existing investigation that helped the Enforcement staff understand the mechanics of the fraudulent offering scheme; and Claimant provided critical and substantial ongoing assistance throughout the investigation, communicating with Enforcement staff on multiple occasions that conserved time and resources and helped the Commission identify previously unknown entities and individuals involved in the fraud.

The Claims Review Staff also preliminarily determined to recommend to the Commission that the Commission grant Claimant a whistleblower award equal to *** percent ( *** %) of the monetary sanctions collected, or to be collected, in the above-referenced Related Action.

In making this determination, we find that (i) the above-referenced criminal action constitutes a “related action” to the Covered Action within the meaning of Exchange Act Section 21F(a)(5) and Rule 21F-3(b) promulgated thereunder; (ii) the original information that Claimant provided to the Commission that led to the successful enforcement of the Covered Action also led to the successful enforcement of the Related Action; and (iii) Claimant otherwise satisfies the award criteria for a “related action” set forth in Exchange Act Section 21F and the rules promulgated thereunder. We also find that the Related Action has a more direct or relevant connection to the Commission’s whistleblower program than to another whistleblower program, including [Redacted](“Other Agency”) whistleblower program. [fn5] This is because the Related Action primarily charged the defendant with securities fraud in connection with [Redacted], similar to the Commission’s own charges in the Covered Action.

Accordingly, it is ORDERED that Claimant shall receive a whistleblower award of almost $3 million, which is equal to *** percent ( *** %) of the amounts collected, or to be collected, in the above-referenced Covered Action and *** percent ( *** %) of the monetary sanctions collected, or to be collected, in the Related Action.

By the Commission.

[1] The CRS preliminarily determined to recommend denying the award claim of Claimant in connection with two other enforcement actions stemming from the same investigation, [Redacted]. Claimant did not file a written response. Accordingly, the preliminary denials of those award claims have become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] The CRS also preliminarily determined to recommend denying the award claim of two additional claimants who did not file a written response. Accordingly, the preliminary denials of those award claims have become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[3] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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). See also In the Matter of Claim for Award, Release No. 34-84046 (Sept. 6, 2018) (for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”) (citing Exchange Act Rule 21F-11(c); 17 C.F.R. § 240.21F-11(c)).

[4] [Redacted].

[5] We understand that Claimant is also seeking a whistleblower award for the Related Action from the Other Agency, but that the Other Agency has not yet adjudicated Claimant’s award claim. The Commission’s rules do not permit a claimant to obtain a “double recovery” on the same enforcement action. Pursuant to Exchange Act Rule 21F3(b)(3)(iii)(C), Claimant’s award in the Related Action “shall be conditioned on the claimant making an irrevocable waiver of any claim to an award from the [the Other Agency]. The claimant’s irrevocable waiver must be made within 60 calendar days of the claimant receiving notification of the Commission’s Final Order.”

SEC

02/06/2023

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively “Claimants”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 1 failed to specify in the award application the submission pursuant to Rule 21F-9(a) on which the Claimant l ‘s claim for an award is based.[fn3]

By: Office of the Whistleblower.

[2] Claimants 1 and 2 did not provide information that led to the successful enforcement of the Covered Action. Claimant 1’s information was submitted after the underlying investigation was already open. The information Claimant 1 provided was either not relevant to the investigation, publicly available and already known to the staff, duplicative of information the staff had already received from other sources, or unable to be substantiated. After receiving Claimant 1’s tips, the staff did not communicate or have any in-person meetings with Claimant 1. Claimant 2’s information was submitted after the Commission had filed the Covered Action in federal district court. After receiving Claimant 2’s tips, the staff did not have any communication or in-person meetings with Claimant 2. Claimant 2’s information did not contribute to the staff’s investigation and did not have any impact on the charges brought by the Commission.

[3] Claimant 1’s whistleblower application did not list any specific TCRs, but stated that Claimant 1 submitted “[m]any.”

SEC

01/30/2023

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Claimant did not provide info1mation that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as pa1t of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F- 4(c)(2) of the Exchange Act.[fn2]

Claimant is not a ”whistleblower” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the fo1m and manner that is required by Exchange Act Rule 21F-9, which Claimant did not do.[fn3]

By: Office of the Whistleblower.

[2] Claimant did not provide information that led to the successful enforcement of the Covered Action. The investigation that led to the Covered Action was opened based upon a press article from [Redacted]. While Claimant provided information to Commission staff and other government agency staff in [Redacted], Claimant’s information was either duplicative of information the staff already had or not relevant to the staff’s investigation. In addition, the staff did not recall receiving any information from [Redacted] enforcement agencies that related to or originated from Claimant that advanced the staff’s investigation or the charges in the Covered Action. After the [Redacted] interview, Commission staff did not have any further contact with Claimant prior to filing the Commission’s complaint in [Redacted]. Because Claimant’s TCR was submitted in [Redacted], after the filing of the Commission’s complaint, Claimant’s TCR did not contribute to the investigation or the Covered Action. Claimant’s information did not advance the staff’s investigation or contribute to the charges in the Commission’s complaint.

[3] Claimant submitted [Redacted] Form TCR on [Redacted] more than three years after Claimant provided information to the staff that Claimant relies upon as a basis for Claimant’s claim for award. See Exchange Act Rule 21F-9(e) (“You must follow the procedures specified in paragraphs (a) and (b) of this section within 30 days of when you first provide the Commission with original information that you rely upon as a basis for claiming an award. If you fail to do so, then you will be deemed ineligible for an award in connection with that information (even if you later resubmit that information in accordance with paragraphs (a) and (b) of this section).”).

SEC

96765

01/30/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of about $1 million, which represents *** percent (***) of the monetary sanctions collected in the above-referenced Covered Action. The CRS further recommended the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 2”).[fn1]

Claimant 2 filed a timely response contesting the preliminary denial.[fn2] For the reasons discussed below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed the settled covered action against [Redacted] (“Firm”), a registered broker-dealer, finding that the Firm [Redacted]. In its enforcement action, the Commission found that [Redacted]. [Redacted] the Firm [Redacted]. The Firm was found to have [Redacted]. Among other relief, the Firm was ordered to pay disgorgement of [Redacted], prejudgment interest of [Redacted], and a civil money penalty of [Redacted], all of which amounts have been collected.

On [Redacted], the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. The 90-day deadline for this posting was [Redacted]. While Claimant 1 submitted his/her award application before the deadline, Claimant 2 did not submit his/her award application until more than a year after the deadline.

B. The Preliminary Determinations.

On [Redacted], the CRS issued Preliminary Determinations recommending that Claimant 1 receive a whistleblower award of *** percent of the monetary sanctions collected in the Covered Action and that the award claim of Claimant 2 be denied because Claimant 2 failed to submit his/her claim for an award to OWB within ninety days of the date of the Notice of Covered Action, as required under Rule 21F-10 of the Exchange Act.[fn4]

C. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 submitted a timely written request contesting the Preliminary Determinations.[fn5] In the reconsideration request, Claimant 2 contends that the Commission should use its authority under Exchange Act Rule 21F-8(a) to waive the award application deadline in the Covered Action. Claimant 2 asserts in support of his/her contention that at the time of the submission deadline, Claimant 2 was not represented by counsel and that, while he/she had submitted award claims for matters for which he/she had directly provided information, Claimant 2 was not aware that he/she could submit an award claim based on Commission enforcement actions brought against other entities arising out of the same investigation for which he/she had not provided specific information or given direct testimony. Claimant 2 concludes that it is unfair that Claimant 1, whom, Claimant 2 asserts, used Claimant 2’s information, is being rewarded while Claimant 2 is denied an award.[fn6]

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn7] [Redacted]. In reaching this determination, we considered that Claimant 1’s tip was the initial source of the underlying investigation and caused the opening of the investigation. Further, Claimant 1 provided the Commission’s investigative staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation. Claimant 1’s information and assistance allowed the Commission to devise an investigative plan and to craft its initial document requests from the Firm and other entities. Finally, Claimant 1 was an important source of specific information for the Covered Action.

B. Claimant 2.

Claimant 2 does not dispute that his/her award claim was submitted after the deadline specified in the Notice of Covered Action. Rather, as noted, Claimant 2 argues that the Commission should exercise its authority under Exchange Act Rule 21F-8(a) to waive the ninety-day filing requirement for the Covered Action. Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive any of the [information submission and claim making] procedures upon a showing of extraordinary circumstances.”[fn11] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn12] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn13] The critical question is whether the facts and circumstances that gave rise to the late-filing or other procedural deficiency were sufficiently beyond the control of the claimant to support an exercise of our discretionary authority under Rule 21F-8(a) to excuse the untimeliness.[fn14] Moreover, “[e]ven when circumstances beyond the applicant’s control give rise to the delay … an applicant must also demonstrate that he or she promptly arranged for the filing … as soon as reasonably practical thereafter.”[fn15]

Claimant 2 has failed to meet the demanding standard for showing that there were extraordinary circumstances beyond Claimant 2’s control that caused the failure to file his/her award claim by the deadline. Claimant 2’s stated belief that a claimant can only be eligible for an award if his or her tip or testimony to the Commission specifically mentioned the subject of the covered action does not excuse Claimant 2’s failure to file by the deadline. “[A] lack of awareness about the [whistleblower award] program does not … rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.” Claimant 2’s limited understanding of the whistleblower rules is not an “extraordinary circumstance[]” that should trigger the Commission’s discretion to excuse the fact that Claimant 2 submitted his/her award application more than a year after the deadline. Further, while Claimant 2 was unrepresented at the time of the deadline for submitting his/her Form WBAPP, he/she still waited nearly a year after obtaining representation to file his/her award application. Accordingly, we do not believe it is appropriate here to exercise our discretionary authority under Rule 21F-8(a) to excuse Claimant 2’s untimely filing.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of *** percent (***) of the monetary sanctions collected in the Covered Action. It is further hereby ORDERED that the whistleblower award application of Claimant 2 in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[2] Claimant 1 provided written notice of his/her decision not to contest the Preliminary Determination.

[3] [Redacted].

[4] Exchange Act Rules 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of
Covered Action to file a claim for an award based on that action, or the claim will be barred”) and 21F-10(b)(1) (“All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award”). See also Order Determining Whistleblower Award Claim, [Redacted] pet. for rev. denied sub nom. Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018).

[5] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[6] Claimant 2 contends that, if the Commission were to exercise its discretionary authority to waive the late-filed award claim and consider his/her award claim, it should find that much of the information for which the CRS credited Claimant 1 with having provided first was, in actuality, information Claimant 1 had received from Claimant 2. Since, as discussed below, we have decided it is not appropriate here to exercise our discretionary authority to waive Claimant 2’s failure to submit his/her award claim by the deadline set out in the Notice of Covered Action, we have not addressed, and make no findings, on these contentions.

[7] See Exchange Act Section 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).

[8] [Redacted].

[9] [Redacted].

[10] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 64545, 76 Fed. Reg. 34300, 34300. See also Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 95711 at 2-3 (Sept. 9, 2022); and Order Determining Whistleblower Award Claim, Release No. 88464 at 3 (Mar. 24, 2020).

[11] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

[12] Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 95711 at 3 (Sept. 9, 2022); Order Determining Whistleblower Award Claim, [Redacted] pet. for rev. denied sub nom.
Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018).

[13] Id.

[14] Id.

[15] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 94398 at 10 (Mar. 11, 2022)
(internal citations omitted).

[16] Order Determining Whistleblower Award Claim, Exchange Act Release No. 95038 at 6 (June 3, 2022)
(internal citations omitted).

SEC

96767

01/30/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced civil action (“Civil Action”) as well as [Redacted] hereinafter collectively referred to as the “Covered Action”. Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

In [Redacted] Division of Enforcement (“Enforcement”) staff (“Staff”) opened an investigation (“Investigation”) concerning alleged misconduct by [Redacted] and [Redacted] and [Redacted] (collectively, “Defendants”). The Investigation focused on [Redacted] and was opened based on a referral from [Redacted].

In [Redacted] the Commission filed [Redacted][fn1] alleging that [Redacted] the District Court issued [Redacted] the District Court issued [Redacted].

Staff did not become aware of Claimant until [Redacted]. Claimant contacted the Commission about a complaint he/she had submitted to the Commission in [Redacted]. In the Civil Action, the Commission did not allege that [Redacted]. Beginning in [Redacted], Staff had regular contact with Claimant. Claimant provided Staff with information relating to [Redacted] and other matters. However, Claimant’s information was duplicative of information that Staff had already received or developed on its own.

In [Redacted] Claimant informed Staff that [Redacted]. Claimant sent Staff [Redacted]. Claimant also provided Staff with other documentation related to [Redacted]. Before Claimant informed Staff about [Redacted] Staff was not aware of its existence.

Based on Claimant’s information about [Redacted] the Commission filed a motion [Redacted] (“Motion [Redacted]”) The Commission argued that [Redacted]. In support of its Motion [Redacted] the Commission included as an exhibit a declaration signed by Claimant that detailed [Redacted]. In [Redacted] the District Court issued (“[Redacted] Order”) that found [Redacted]. Although the District Court ordered [Redacted] there was no recovery.

In [Redacted] the District Court effectively resolved the Civil Action by issuing an order that, among other things, required [Redacted] to pay monetary sanctions totaling [Redacted] which the Receiver was to return to defrauded investors. ***

In [Redacted] the Commission filed the [Redacted] and the [Redacted].[fn5]

[Redacted] the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn6] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination[fn7] On recommending that Claimant’s claim be denied[fn8] primarily on two grounds.[fn9] The CRS also recommended that the [Redacted] and the [Redacted] be treated as part of the Covered Action.

First, the CRS preliminarily determined that Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(3) and 21F-4(c) because any information provided did not: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information under Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2). The CRS preliminarily determined that Staff opened the Investigation based on a referral from [Redacted] Claimant’s information did not significantly contribute to the success of the Covered Action because it was already known to Staff or concerned matters that did not become part of the Covered Action. Although Claimant’s information resulted in the Motion [Redacted] that motion as well as the [Redacted] Order did not affect the ultimate disposition of the Covered Action. In addition, the [Redacted] Order did not impose any monetary sanctions.

Second, the CRS preliminarily determined that certain of Claimant’s information did not constitute “original information” that led to the successful enforcement of the Covered Action within the meaning of Exchange Act Section 21F(b)(1) and Rules 21F-3(a)(2) and 21F-4(b). The CRS reasoned that some of Claimant’s information derived entirely from publicly available sources and did not include any examination or evaluation that revealed information that was not generally known or available to the public.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn10] Claimant makes five arguments.

First, Claimant argues that his/her information did lead to the successful enforcement of the Civil Action within the meaning of Rule 21F-4(c) because his/her information about [Redacted] directly resulted in the Motion [Redacted] which in turn caused [Redacted]. Claimant asserts that his/her assistance with the Motion [Redacted] significantly contributed to the success of the Civil Action in several ways. Claimant states that his/her assistance prevented [Redacted] from causing over [Redacted] in investor losses.[fn11] Claimant also asserts that his/her assistance allowed the District Court to issue [Redacted] via the [Redacted] Order, which prevented future harm to investors and the securities markets while also preserving Defendants’ assets. Claimant further argues that his/her assistance allowed the Commission to avoid substantial costs and preserve resources that would have been incurred had [Redacted] continued. Claimant also alleges that without his/her information, there would have been even more investors harmed, who in turn would have diluted the assets available for the victims of the original fraud. Moreover, Claimant contends that his/her assistance, the Motion [Redacted] and the [Redacted] Order supported the Commission’s efforts to obtain the [Redacted] final judgment in the Civil Action.

Second, Claimant argues that the Motion [Redacted] was an integral part of the Civil Action, and thus, the CRS erroneously considered his/her assistance in support of the Motion *** [Redacted] to be outside of the same proceeding as the Civil Action.

Third, Claimant argues that even if the Motion [Redacted] were a different proceeding from the Civil Action, the conduct at issue in the Motion [Redacted] and the [Redacted] Order involved the same type of fraudulent activity charged in the Civil Action and therefore, [Redacted] misconduct was merely a continuation of the original [Redacted]. According to Claimant, because the two proceedings arose out of the same nucleus of operative facts, the proceeding triggered by the Motion [Redacted] must be treated as the same Commission action by operation of Rule 21F-4(d).

Fourth, Claimant argues that there is no authority to support the conclusion that Claimant is not entitled to an award because the [Redacted] Order did not impose any monetary sanctions.

Finally, Claimant argues that the Preliminary Determination must be vacated because it was not based on a consideration of all relevant factors under the Rules or on a complete factual record. Claimant alleges that the Declaration stated in conclusory terms that Claimant’s non-[Redacted] information did not advance or impact the Investigation.

II. Analysis.

We address each of Claimant’s arguments in turn.
First, we consider whether Claimant’s information led to the successful enforcement of the Civil Action within the meaning of Rule 21F-4(c), as Claimant contends. A whistleblower’s original information will be deemed to lead to a successful enforcement action if either: (1) the original information caused Commission staff to commence an examination, open or reopen an investigation, “or to inquire concerning different conduct as part of a current examination or investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information, pursuant to Rule 21F-4(c)(1);[fn12] or (2) the conduct was already under examination or investigation by the Commission, and the original information “significantly contributed to the success of the action,” pursuant to Rule 21F-4(c)(2).[fn13] In determining whether the “significantly contributed” prong is met, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn14]

We find, based on the evidence in the record, that Claimant did not provide original information that “led to” the successful enforcement of a covered action within the meaning of Rules 21F-4(c)(1) or (c)(2). The Declaration, which we credit, stated under penalty of perjury that Staff opened the Investigation that resulted in the Civil Action based on a referral from [Redacted] and not because of Claimant’s information. The Declaration explained that although Claimant provided information about [Redacted] this information did not advance the Investigation because it was duplicative of information Staff already had. The Declaration further explained that although Claimant provided new information in [Redacted]—this time about [Redacted]—the new information was only used in the Motion [Redacted] which did not affect the ultimate dispositions of the Civil Action, the [Redacted] or the [Redacted]. In sum, the Declaration explained that notwithstanding Staff’s use of Claimant’s information about [Redacted] in the Motion [Redacted] none of Claimant’s information was used in, or had any impact on, the charges, litigation, or resolution of the Covered Action.

Claimant’s response to the Preliminary Determination generally focuses on Claimant’s provision of information about [Redacted]. With respect to [Redacted] as distinct from the Investigation and allegations in the Covered Action, the Declaration confirmed that Staff was not previously aware of Claimant’s information about [Redacted]. The Declaration also stated that Staff successfully used Claimant’s information about [Redacted] in the Motion [Redacted] to persuade the District Court to [Redacted]. Although [Redacted] was ordered by the District Court to [Redacted] as the Declaration explained, no money had been raised in [Redacted] and thus, there was no monetary relief. Moreover, the Declaration stated that the Motion [Redacted] and the [Redacted] Order did not affect the ultimate disposition of the Civil Action, which did not include any allegations concerning the [Redacted] fraud. We conclude in light of these facts and circumstances that Claimant’s information did not lead to the successful enforcement of the Civil Action.

Claimant also argues that his/her information and assistance allowed the District Court to [Redacted] via the [Redacted] Order; in turn, the [Redacted] Order prevented future harm to investors and the securities markets while also preserving Defendants’ assets for the benefit of harmed investors in the Civil Action. However, while the [Redacted] Order [Redacted] no money had been raised [Redacted] and thus, there was no recovery. Moreover, in both [Redacted] and then again in [Redacted] several months before the District Court issued the [Redacted] Order in [Redacted] the District Court *** [Redacted][fn15]

Second, Claimant argues that his/her information, the Motion [Redacted] and the [Redacted] Order supported the Commission’s efforts to obtain a final judgment in the Civil Action and thus, the Motion [Redacted] should be regarded as the same proceeding as the Civil Action. Assuming that the Motion [Redacted] is part of the proceeding, nothing about the Motion [Redacted] the [Redacted] Order, or Claimant’s information had any bearing on the rest of the Civil Action, which concerned distinct misconduct.[fn16]

Third, Claimant contends that even if the Motion [Redacted] were a separate proceeding, it arose out of the same nucleus of operative facts as the Civil Action and thus, it should be part of the Covered Action by operation of Rule 21F-4(d). We disagree with this interpretation. The animating purpose of Rule 21F-4(d) is to include additional collections, as appropriate, so that a meritorious whistleblower would receive the full payment to which he/she is entitled.[fn17] We decline to interpret Rule 21F-4(d) to allow the inclusion of a proceeding that results in the imposition of no monetary sanctions. Moreover, even if Rule 21F-4(d) allowed a proceeding with no sanctions to be added to a Covered Action, the Motion [Redacted] here would still fail the same-nucleus-of-operative-facts test. As noted above, the Motion *** [Redacted] concerned transactions that were not the subject of the Civil Action.[fn18]

Fourth, Claimant’s contention that his/her information need not lead to monetary sanctions is misplaced. As explained above, the Claimant’s information did not lead to the success of the Covered Action, without regard to whether the information led specifically to monetary sanctions. But, for the sake of argument, if we considered the Motion [Redacted] to be a separate action, then the text of Exchange Act Section 21F requires a claimant to have provided information that led to the successful enforcement of a “covered judicial or administrative action,” defined to mean a Commission action resulting in sanctions of more than $1 million.[fn19] In fact, while the [Redacted] Order [Redacted] and thus, there was no recovery. The charges that the Commission brought in the Civil Action, and which led to the imposition of monetary sanctions exceeding $1,000,000, concerned conduct that was distinct from the conduct involved in the Motion [Redacted] and the [Redacted] Order.

Finally, the Preliminary Determination considered all relevant factors under the Rules, and it was based on an appropriate record, which included: (1) the Declaration; (2) all of Claimant’s submissions; and (3) documents filed in the Covered Action. Claimant has pointed to no additional documents he/she believes should be part of the record or which the Preliminary Determination failed to consider, and the Commission is aware of no such additional documents.

Claimant’s assertions about the failures of the Declaration to specifically explain why Claimant’s non-[Redacted] information did not advance or impact the Investigation are unavailing. The Declaration comprehensively set forth the fact that Claimant’s non-[Redacted] information was already known or was not used by Staff.[fn20]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and hereby is, denied.
By the Commission.

[1] This action was brought in the U.S. District Court for the [Redacted] (“District Court”).
[2] [Redacted].
[3] [Redacted].
[4] [Redacted].
[5] For the purposes of evaluating Claimant’s claim for award, we are treating the Civil Action [Redacted] as a single Covered Action because the proceedings arose out the same nucleus of operative facts. See Exchange Act Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(l).
[6] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[7] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[8] The CRS also preliminarily determined that Claimant is not eligible for an award in connection with any related action. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See Exchange Act Rule 21F-3(b)(1), (b)(2); 21F-11(a).
[9] The record supporting the Preliminary Determination included the declaration of one of the Enforcement attorneys who was assigned to the Investigation (“Declaration”). The whistleblower program rules (“Rules”) contemplate that the record upon which an award determination is made shall consist of, as relevant here, a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s whistleblower award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).
[10] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[11] Claimant asserts that [Redacted].
[12] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[13] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[14] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[15] In his/her reconsideration request, Claimant cites to a letter (“[Redacted] Letter”) written by [Redacted] dated [Redacted] to [Redacted]. The [Redacted] Letter responded to a letter from [Redacted] concerning communications received by [Redacted] from Claimant relating to the Commission’s case against [Redacted]. Claimant has cited to the [Redacted] Letter in support of his contention that he/she is entitled to an award. Nothing about this letter changes our determination to deny Claimant an award, as its only relevance is to acknowledge that Claimant provided the Commission with information that was helpful to the Motion [Redacted] and the [Redacted] Order.
[16] Claimant asserts that the Motion [Redacted] and the [Redacted] Order were included as [Redacted] in support of the Commission’s motion *** [Redacted] in the Civil Action. [Redacted]. This, however, is of no import. The Commission’s only reference to the Motion [Redacted] and the [Redacted] Order throughout its [Redacted] was a single paragraph in the procedural history section.
[17] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300, 34,328 (June 13, 2011) (explaining that under Rule 21F-4(d)(1), “if a qualified whistleblower provided us with original information that led to the successful enforcement of any one of the proceedings, we will make an award to that whistleblower for 10 to 30 percent of the total monetary sanctions collected in those proceedings”).
[18] See id. at 34,327 n.238 (explaining that the same-nucleus-of-operative facts test under Rule 21F-4(d)(2) is met where the newer allegations “grow[] out of the same transaction or series of connected transactions” as the older allegations) (internal quotation marks omitted).
[19] Exchange Act Section 21F(a)(1), 15 U.S.C. 78u-(a)(1) (defining “covered administrative or judicial action”); id. 78u-6(b)(1) (general standard for payment of awards).
[20] Additionally, Claimant has not cited any legal authority to support his/her contention that a declaration must amass a list of concrete examples and details regarding the usefulness (or lack thereof) of a claimant’s information in order constitute substantial evidence supporting a whistleblower award claim determination. Moreover, a claimant cannot allege purported deficiencies in a declaration as a backdoor way to seek discovery of the Commission’s law enforcement files, which is generally prohibited by Rule 21F-12(b).

SEC

96705

01/19/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award equal to [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”), that [Redacted] (“Claimant 2”) receive a whistleblower award equal to *** percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action, and that [Redacted] (“Claimant 3”) receive a whistleblower award equal to *** percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action. Based on anticipated distributions to harmed investors by the court-appointed receiver in the Covered Action, we expect that the awards in this matter will total around $18 million. The CRS also preliminarily recommended that the award claim of [Redacted] (“Claimant 4”) should be denied.[fn1] Claimant 1 provided written notice of his/her decision not to contest the Preliminary Determinations and Claimants 2, 3, and 4 filed timely responses contesting the Preliminary Determinations. After reviewing the arguments of Claimants 2, 3, and 4 and the additional staff declaration, which we credit, the CRS confirmed its original recommendations. For the reasons discussed below, the CRS’s recommendations are adopted with respect to Claimant 1, Claimant 2, Claimant 3, and Claimant 4.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed [Redacted]. According to the complaint, [Redacted]. The complaint also alleged that [Redacted]. The complaint alleged that [Redacted]. The SEC alleged [Redacted] the Commission obtained a final judgment as [Redacted] the Commission obtained a separate final judgment as to [Redacted].
According to the court’s order, the entity defendants’ obligation to pay disgorgement and prejudgment interest would be satisfied by the amounts collected by the court-appointed receiver to be set forth in the receiver’s final report and accounting to the court. To date, the receiver has recovered [Redacted].
On the Office of the Whistleblower (“OWB”) posted the above-referenced Notice of Covered Action on the Commission’s website, inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimants 1, 2, 3, and 4 filed timely whistleblower claims.

B. The Preliminary Determinations.

On [Redacted] the CRS issued Preliminary Determinations[fn3] recommending that the Commission find that Claimants 1, 2 and 3 voluntarily provided original information to the Commission that led to the successful enforcement of the referenced Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder and that: (1) Claimant 1 receive an award of ***% of the monetary sanctions collected or to be collected in the Covered Action; (2) Claimant 2 receive an award of ***% of the monetary sanctions collected or to be collected in the Covered Action; and (3) Claimant 3 receive an award of ***% of the monetary sanctions collected or to be collected in the Covered Action. The CRS further preliminarily determined to recommend that the award claim of Claimant 4 be denied because Claimant 4 did not provide original information that “led to” the success of the Covered Action as required under Exchange Act Rule 21F-4(c). The CRS also preliminarily determined that Claimant 4 is not eligible for the automatic waiver under Exchange Act Rule 21F-9(e) in connection with Claimant 4’s failure to submit information in the form and manner required under Exchange Act Rules 21F-9(a) and (b).

C. Claimants 2, 3, and 4’s Responses to the Preliminary Determinations.

Claimant 2 submitted a timely written response contesting the Preliminary Determinations.[fn4] Specifically, Claimant 2 contends that he/she submitted a TCR earlier than the date stated in the initial staff declaration, and therefore, his/her submission was prior to the staff’s opening of the investigation and obtaining of the formal order of investigation. Based on the claim of an earlier date of submission, Claimant 2 argues that his/her information played a role in the investigation opening and as a result, he/she should receive a higher award percentage.[fn5] Claimant 2 also argues that the CRS failed to explain how his/her information was “duplicative” of information provided by Claimant 1.

Claimant 3 submitted a timely written response contesting the Preliminary Determinations.[fn6] Specifically, Claimant 3 argues that Claimant 3 should receive a higher award because he/she provided new information that was central to the Covered Action and that without his/her information, the Commission would have been unable to prove its claims. Claimant 3 also argues that the vast scope of information he/she provided was critical to the staff’s investigation. Therefore, Claimant 3 argues that a higher award percentage is appropriate.

Claimant 4 submitted a timely written response contesting the Preliminary Determinations.[fn7] Claimant 4 argues that his/her information concerning [Redacted] activities regarding the [Redacted] were the focus of his/her tip and likely not duplicative of information provided by other witnesses. More specifically, Claimant 4 contends that his/her information was not duplicative of information already known to the SEC because [Redacted]. Claimant 4 also contends that he/she provided information to the staff about ***. Claimant 4 further contends that he/she referred the staff to an individual who had contacts with [Redacted] and that the staff interviewed this individual in [Redacted] Additionally, after Claimant 4 submitted his/her information, Enforcement staff communicated that Claimant 4’s assistance had been helpful. Based on these facts, Claimant 4 argues that his/her information contributed to the Covered Action and he/she should receive an award.

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1, a [Redacted] insider, voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 1 qualifies for a whistleblower award. Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of [Redacted] percent (*** %) is appropriate.[fn8] Claimant 1’s information alerted Commission staff to the fraudulent scheme alleged in the Covered Action, and was the main basis for opening the investigation that resulted in the Covered Action. Claimant 1 provided Enforcement staff with detailed and highly significant information that advanced the staff’s investigation, saved considerable Commission time and resources, and had a significant impact on the overall success of the enforcement action. Claimant 1 also provided ongoing assistance by, among other things, participating in voluntary interviews and providing supporting documents to the staff.

B. Claimant 2.

The record demonstrates that Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 2 qualifies for a whistleblower award. Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of *** percent (*** %) is appropriate. While much of Claimant 2’s information was duplicative of information first provided by Claimant 1, Claimant 2’s information included new information relating to certain charges filed in the Covered Action. Claimant 2’s assistance consisted of a voluntary interview and providing documents to the staff. Overall, Claimant 2’s contribution was significantly less than the contribution of Claimant 1, whose information was the main cause of the staff opening its investigation and was provided earlier in time.
Contrary to Claimant 2’s response, his/her information did not contribute to the staff’s opening of the investigation. Based on the date Claimant 2’s counsel signed the whistleblower declaration, Claimant 2 argues that his/her tip was submitted prior to the date the staff opened the investigation. However, the record, including a supplemental declaration provided by staff assigned to the Covered Action investigation, which we credit, demonstrates that Claimant 2’s counsel mailed the Form TCR to the SEC and the tip was not uploaded to the Commission’s TCR system and distributed to staff handling the Covered Action investigation until after the investigation was opened. Thus, Claimant 2’s information did not contribute to the opening of the investigation and Claimant 2’s overall contribution to the Covered Action was not as significant as that of Claimant 1. While Claimant 2 also argues that the CRS failed to explain how his/her information was “duplicative” of information provided by Claimant 1, the Commission credits the original staff declaration, which contains sufficient evidence that some of Claimant 2’s information was duplicative of information received from Claimant 1. As a result, Claimant 2 has not demonstrated that a greater award percentage is warranted.

C. Claimant 3.

The record demonstrates that Claimant 3 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 3 qualifies for a whistleblower award. Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of *** percent (*** %) is appropriate. While much of Claimant 3’s information was duplicative of information previously provided by Claimant 1 and Claimant 2, Claimant 3 provided limited new information that assisted the staff with respect to certain false statements alleged in the Covered Action. Any additional assistance by Claimant 3 was limited to providing documents and participating in an interview after the Covered Action was filed. Overall, Claimant 3’s contributions were significantly less than the contribution of Claimant 1, whose information was the main cause of the staff opening its investigation and was provided earlier in time. Furthermore, Claimant 3’s contribution was also significantly less than the contribution of Claimant 2, whose information was also provided earlier in time. Additionally, Claimant 3’s information was provided after significant progress had already been made by staff in the investigation.
Contrary to Claimant 3’s assertions in his/her response, the record does not support that his/her information was “central” to the success of the Covered Action. Although Claimant 3’s information supported certain allegations of false statements made by the defendants, the complaint contained numerous other allegations regarding false statements made by defendants derived from other sources, as well as allegations concerning the defendants’ misappropriation of investor funds. Furthermore, although Claimant 3 argues that he/she provided voluminous supplemental submissions to the staff, the record demonstrates that the staff had already made significant progress in the investigation by the time Claimant 3 submitted this information, much of which was already known to the staff from other sources. Claimant 3, therefore, has not demonstrated that his/her information warrants a greater award percentage.

D. Claimant 4.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn9] As relevant here, information will be deemed to have led to a successful enforcement action if it “caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation,” and the Commission thereafter brought a successful action based in whole or in part on conduct that was the subject of the claimant’s original information,[fn10] or was “about conduct that was already under examination or investigation by the Commission” and the “submission significantly contributed to the success of the action.”[fn11] In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the Covered Action.[fn12]
The record reflects that Enforcement staff opened the investigation mainly based on information submitted by Claimant 1. Additionally, most of the information provided by Claimant 4, which was provided after the opening of the investigation and after information was submitted by other claimants, was already known to Enforcement staff, and any additional information provided by Claimant 4 did not significantly contribute to the Covered Action.
Contrary to Claimant 4’s assertions, the supplemental declaration from the Enforcement staff, which we credit, confirms that Claimant 4’s information relating to [Redacted] did not cause staff to expand the investigation or allow them to recommend charges against additional defendants or additional charges against the defendants; nor did the information save the staff significant time or resources. First, the record demonstrates that information relating to [Redacted] was already known to the staff at the time Claimant 4 submitted his/her tip and Claimant 4’s information at most corroborated information known to the staff from other sources months before Claimant 4’s submission. To the extent Claimant 4 provided additional information related to [Redacted] the Covered Action did not include any claims related to [Redacted]. Therefore, we conclude that Claimant 4’s additional information on [Redacted] conduct cannot satisfy Exchange Act Rules 21F-4(c)(1) or 21F-4(c)(2). Second, with respect to the individual purportedly identified by Claimant 4 who this [Redacted] this individual provided the staff with information that was duplicative of information the staff had learned from other sources. Third, [Redacted], the staff referenced [Redacted] that supported the Commission’s claims that defendants made material misrepresentations. While [Redacted] referenced [Redacted] that was specifically mentioned by Claimant 4 in his/her tip, as well as [Redacted] that Claimant 4 had identified [Redacted] the Commission’s allegations concerning these misrepresentations were also supported by evidence previously gathered in the investigation from other sources. The inclusion of [Redacted] did not have a significant impact on the Commission’s ability to [Redacted], as there were [Redacted] other [Redacted] with the same or similar misrepresentations that staff obtained from sources other than Claimant 4, as well as first-hand accounts from harmed investors, that were used in support of [Redacted] Furthermore, the identification of [Redacted] which is public information, would not constitute “original information”.[fn13] Fourth, although Enforcement staff communicated by email that Claimant 4’s assistance had been “helpful,” the staff also explained in the email that they had already received a substantial amount of information by the time Claimant 4 submitted his/her tip. According to the staff’s supplemental declaration, the staff’s email was not intended to convey any legal conclusion regarding Claimant 4’s eligibility for an award; rather, the staff’s email was an effort to communicate that Claimant 4’s information was helpful in that it corroborated other information they had previously received from other sources. Thus, Claimant 4 did not provide original information that led to the successful enforcement action and his/her award claim should be denied.
Claimant 4 also did not submit information in the form and manner required under Exchange Act Rules 21F-9(a) and (b), which require the submission of information on Form TCR or online through the Commission’s website, and that a whistleblower sign the required whistleblower declaration. Claimant 4 originally submitted information in an email and did not submit a Form TCR with the required whistleblower declaration until approximately two years later. Based on the record, Claimant 4 is not eligible for the automatic waiver under Exchange Act Rule 21F-9(e), which waives the TCR filing requirement for otherwise meritorious whistleblowers who submit their information within 30 days of obtaining actual or constructive notice of the TCR filing requirement, because the record demonstrates that Claimant 4 did not provide information that led to the success of the Covered Action. Claimant 4 did not address his/her failure to satisfy Exchange Act Rules 21F-9(a) and (b) in his/her request for reconsideration. Since Claimant 4 failed to contest this ground for denial during the reconsideration stage, we note that Claimant 4 has forfeited the opportunity to contest this ground by failing to timely present arguments to the Commission.[fn14]

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 receive an award equal to [Redacted] *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action, that Claimant 2 receive an award equal to *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action, and that Claimant 3 receive an award equal to *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action.[fn15]
It is further ORDERED that Claimant 4’s whistleblower award application in the Covered Action be, and hereby is, denied.
By the Commission.

[1] The CRS also recommended the denial of the award application of one other claimant, who did not contest the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to that award claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] Claimant 2 also argues in his/her response that he/she should not receive a lower award percentage due to any reporting delay. However, the CRS did not recommend any decrease in Claimant 2’s award due to unreasonable reporting delay.

[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[7] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[8] In assessing the appropriate award amount, Exchange Act 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.

[9] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[10] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[11] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[12] See Order Determining Whistleblower Award Claims, Release No. 34-85412 , March 26, 2019; Order Determining Whistleblower Award Claims, Release No. 34-82897 , March 19, 2018; see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).

[13] In order for information derived from publicly available sources to qualify as original information, it must be derived from the whistleblower’s “independent analysis.” See Rule 21F-4(b), 17 C.F.R. § 240.21F-4(b). “Independent analysis” means an “examination and evaluation of information that may be publicly available, but which reveals information that is not already known or available to the public.” Rule 21F-4(b)(3), 17 C.F.R. § 240.21F-4(b)(3).

[14] Cf. Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f) (“Your failure to submit a timely response contesting a Preliminary Determination will constitute a failure to exhaust administrative remedies, and you will be prohibited from pursuing an appeal pursuant to § 240.21F-13 of this chapter.”).

[15] Amounts distributed by the court-appointed receiver to harmed investors as relief for the securities law violations shall be included as collected monetary sanctions upon which the awards may be based. See 2020 Whistleblower Rules Adopting Release, 85 Fed. Reg. 70898, 70905 n.63 (Nov. 5, 2020).

SEC

96708

01/19/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above referenced covered action (the “Covered Action”).[fn1] Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the Commission charged [Redacted] in the Covered Action. According to the Commission’s complaint, [Redacted]. According to the Commission’s complaint, [Redacted]. The complaint alleged that [Redacted]. According to the Commission’s complaint, [Redacted].

The Commission’s complaint, which was filed in the [Redacted], charged [Redacted]. The Commission’s complaint also charged [Redacted]. The Commission sought permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against each of the defendants. In addition, the Commission’s complaint [Redacted]. [Redacted].

[Redacted], the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimant filed a timely whistleblower claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn3] recommending that Claimant’s claim be denied on the grounds that Claimant did not submit “original information” to the Commission because the information was obtained in connection with Claimant’s legal representation of his/her employer, [Redacted] (“Employer”), and therefore, the information was not derived from Claimant’s independent knowledge or independent analysis.[fn4] Claimant served as an attorney for the Employer. Claimant also participated in [Redacted]. Claimant learned the information that was the subject of Claimant’s submission to the Commission by virtue of Claimant’s role as an attorney at the Employer and Claimant’s role in providing legal services in connection with [Redacted]. The CRS preliminarily determined that no exception would permit Claimant to disclose the information for Claimant’s own benefit in a whistleblower submission. As such, the CRS preliminarily determined that Claimant is not eligible to receive an award in connection with the Covered Action.[fn5]

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn6] Claimant asserted that he/she is eligible for a whistleblower award because his/her information satisfies exceptions pursuant to 17 C.F.R. § 205.3(d)(2) of the Commission’s Standards of Professional Conduct for Attorneys (“Attorney Conduct Rules”)[fn7] and the Florida Rules of Professional Conduct (“RPC”).

Claimant first contends that by providing his/her tip to the SEC, Claimant intended to prevent an issuer from committing or abetting the commission of a material violation that would cause significant financial injury to the investors as permitted under 17 C.F.R. § 205.3(d)(2)(i). Although Claimant’s tip focused on [Redacted] (hereinafter, “Third Party”) misappropriation of investor funds, Claimant now contends that his/her goal was not solely to prevent the Third Party from committing a crime, but also to prevent his/her client, the Employer, as well as [Redacted] (hereinafter, “Employer’s Manager”) and the affiliated entities within the [Redacted] (hereinafter, “Project”) from committing a crime. According to Claimant, the tip included *** [Redacted] transferred to various entities including the Employer and other entities controlled by the Employer’s Manager.[fn8] Claimant asserts that the purpose of his/her tip was therefore to alert the SEC to investigate the entire Project, including tracing all investor funds and investigating all affiliated persons and entities, including Claimant’s client, the Employer. Claimant also contends that he/she provided additional information to the SEC following the initial tip, most of it relating to the activities of the Employer, the Employer’s Manager, and affiliated entities. Claimant acknowledges that he/she did not yet have “smoking gun” proof of misconduct by the Employer, the Employer’s Manager, or the other entities as he/she did for the Third Party at the time Claimant made the whistleblower submission, but Claimant had “suspicions” that the interests of investors were not being protected by the Employer, Employer’s Manager, or *** (hereinafter, “Limited Partnership”).[fn9]

Claimant further contends that he/she brought his/her concerns to the Employer’s Manager before reporting to the SEC, but “did not feel *** actions effectively addressed the situation.”[fn10] Claimant states that he/she believed disclosure to the SEC and the parties involved becoming aware of the SEC investigation would encourage law-abiding behavior by those parties and prevent investors from being defrauded. Claimant also asserts that because the Limited Partnership had used his/her services for [Redacted] in furtherance of the criminal scheme, he/she was attempting to “rectify the consequences of a material violation by the issuer that caused, or may cause, substantial injury to the financial interest or property of … investors in the furtherance of which the attorney’s services were used,” and thus, disclosure was permitted pursuant to 17 C.F.R. § 205.3(d)(2)(iii).

Second, Claimant argues that he/she also qualifies for an exception pursuant to the RPC. Claimant contends that he/she satisfies RPC 4-1.6(b) which requires disclosure of confidential information under specified circumstances, because Claimant believed the disclosure was necessary to prevent his/her client, the Employer, from committing or being an accessory to crimes, as well as to protect investors from fraud perpetrated by the Third Party, the Employer’s Manager or any other entities involved in the Project. Claimant further argues that he/she was permitted to disclose the information pursuant to RPC 4-1.6(c), which allows disclosure under certain circumstances, including to serve the client’s interest, because Claimant believed that disclosure would serve his/her client’s interest by potentially preventing further misappropriation by the Third Party, possibly recovering funds that had been misappropriated, and helping lead to the successful completion of the Project that his/her client was sponsoring. Additionally, Claimant argues that pursuant to RPC 4-3.3 regarding candor toward the tribunal, he/she was permitted to disclose the information because Claimant suspected the Employer and/or himself/herself (unknowingly) made false statements to [Redacted] (“Other Agency”). Claimant states that he/she considered the SEC whistleblower submission as the best way to bring the conduct at issue to the proper authorities’ attention since the Other Agency did not have a process whereby Claimant could report this conduct. Finally, Claimant argues that since he/she believed some of the statements in the offering documents were or had become inaccurate, Claimant believed it was his/her duty under RPC 4-4.1 to disclose the information to the SEC in order to correct false statements of material fact, specifically regarding expenditures of funds.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn11] Exchange Act Rule 21F-4(b)(4)(ii) provides that the Commission “will not consider information to be derived from [an individual’s] independent knowledge or independent analysis” if the individual “obtained the information in connection with the legal representation of a client on whose behalf [the individual or his/her] employer or firm is providing services and [the individual] seek[s] to use the information to make a whistleblower submission for [his/her] own benefit; unless disclosure would otherwise be permitted by an attorney pursuant to the Attorney Conduct Rule, the applicable state attorney conduct rules, or otherwise.”

Because Claimant obtained the information he/she submitted to the Commission in connection with his/her legal representation of the Employer, in order to be eligible for a whistleblower award, Claimant must qualify for an exception under the Attorney Conduct Rule, or under the applicable state attorney conduct rules. The Attorney Conduct Rule provides that “[a]n attorney appearing and practicing before the Commission in the representation of an issuer may reveal to the Commission, without the issuer’s consent, confidential information related to the representation to the extent the attorney reasonably believes necessary: (i) [t]o prevent the issuer from committing a material violation[fn12] that is likely to cause substantial injury to the financial interest or property of the issuer or investors….” Claimant contends that he/she meets the requirements under this rule because Claimant worked on the Limited Partnership’s [Redacted],[fn13] and he/she intended to prevent the Limited Partnership from committing or abetting the commission of a material violation (misappropriation) that would cause significant financial injury to its investors. However, for the exception to be applicable, the attorney must be “appearing and practicing” before the Commission which requires that legal services be provided “to an issuer with whom the attorney has an attorney-client relationship….”[fn14]

First, neither the Limited Partnership nor any of the Project’s affiliated entities are “issuers” for purposes of the Attorney Conduct Rule because they are all private companies. Section 205.2(h) defines issuer as “an issuer (as defined in section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c)), the securities of which are registered under 12 of that Act… or that is required to file reports under section 15(d) of that Act… or that files or has filed a registration statement that has not yet become effective under the Securities Act of 1933… the term ‘issuer’ includes any person controlled by an issuer, where an attorney provides legal services to such person on behalf of, or at the behest, or for the benefit of the issuer, regardless of whether the attorney is employed or retained by the issuer.”[fn15] Claimant argues that the Employer, Employer’s Manager, the Third Party, [Redacted], and [Redacted] also fall within the definition of issuer because the Employer’s Manager and Third Party marketed and sold securities in connection with the Project though the Employer, the Limited Partnership, [Redacted] and ***. However, when discussing Section 205.2(h), the Adopting Release focuses on public issuers only.[fn16] While Section 205.2(h) references the general definition of an issuer under Exchange Act Section 3(a)(8), that phrase is modified by the requirement for registration under Exchange Act Section 12. Thus, Claimant’s argument fails because none of the entities at issue ever registered with the Commission under Section 12 of the Exchange Act, were required to file reports under Section 15 of the Exchange Act, or had filed a registration statement under the Securities Act. Therefore, none of them are issuers for the purposes of the Attorney Conduct Rule.[fn17]

Second, even if the Limited Partnership or any of the Project’s affiliated entities or individuals satisfied the definition of issuer for purposes of the Attorney Conduct Rule, there is no evidence in the record that Claimant had an attorney-client relationship with any entity or individual other than the Employer. In fact, Claimant’s response only refers to the Employer as his/her client and Claimant previously represented to the Commission that he/she did not work for the Third Party, [Redacted] (the entity that owned the Limited Partnership) or any related entity. Claimant further represented that while the Employer’s Manager was the [Redacted] of the Employer, only the Employer was Claimant’s client. Therefore, while Claimant may have performed some services with respect to the Limited Partnership’s [Redacted], the record does not demonstrate that the Limited Partnership was ever Claimant’s client as Claimant only identifies Employer as being his/her client.[fn18]

Claimant also does not qualify for any exception under the applicable state attorney conduct rules. According to the RCP, “[a] fundamental principle in the client-lawyer relationship is that, in the absence of the client’s informed consent, the lawyer must not reveal information relating to the representation,” whether it was obtained from the client itself or from a third party.[fn19] The information Claimant provided to the SEC was client confidential information because it was related to the representation of his/her client, the Employer. As such, Claimant could only disclose it if the disclosure is authorized under an exception to the duty of confidentiality. Because the conduct at issue in the Covered Action occurred in Florida and Claimant was acting as an in-house counsel in Florida, Claimant agrees that the RPC apply here.[fn20] RPC 4-1.6(a) provides that a lawyer must not reveal information relating to the representation of a client unless the client gives informed consent or in the event of certain narrow exceptions, discussed below. There is no evidence in the record that Claimant received informed consent to submit the information to the Commission from the Employer or its owner, the Employer’s Manager.

First, RPC 4-1.6(b) provides that a lawyer must reveal confidential information to the extent the lawyer reasonably believes necessary to prevent a client from committing a crime or to prevent a death or substantial bodily harm to another. Although Claimant alleged that the Third Party misappropriated investor funds and that this conduct may have been ongoing, RPC 4-1.6(b) only applies where disclosure is necessary to prevent the client from committing a crime. As discussed above, Claimant has acknowledged that only the Employer was his/her client. Claimant’s response states that “since my client, [the Employer], knew about the misappropriation by [the Third Party], its failure to correct or disclose that misappropriation would also be a crime (or make it an accessory to a crime) that would cause substantial harm to investors, and this was one potential crime by my client that I sought to prevent.” First, Claimant has not specified the criminal offense he/she thought the Employer was about to commit. Further, we do not believe RPC 4-1.6(b) mandated Claimant’s disclosure because the record fails to demonstrate that Claimant reasonably believed his/her disclosures were necessary to prevent the Employer from committing a crime. Reasonableness is determined under an objective standard, and a lawyer’s suspicion or speculation that his/her client is committing a crime is insufficient to trigger RPC 4-1.6(b). While RPC 4-1.6(b) permits limited disclosure of client confidential information when a lawyer reasonably believes disclosure is necessary to prevent the client from committing a future or ongoing crime, it does not permit a lawyer to disclose a client’s past or completed fraudulent acts except where reasonably necessary to prevent the future death or substantial bodily harm to another. Here, the record does not establish that at the time Claimant disclosed information to the Commission, Claimant had information that the Employer knew of the Third Party’s misappropriation or had any role in the Third Party’s alleged ongoing misconduct. At most, the information in Claimant’s tip showed past transfers of investor funds to the Employer, some or all of which may have been legitimate according to Claimant. Claimant acknowledges that he/she only had “concerns” about his/her client’s conduct and “suspicions” that the interests of investors were not being protected by his/client and others. Concerns and suspicions do not satisfy the requirements of RPC 4-1.6(b).[fn21]

Second, RPC 4-1.6(c)(1), among other things, provides that a lawyer may disclose confidential information “to the extent the lawyer reasonably believes necessary … to serve the client’s interest unless it is information the client specifically requires not be disclosed.” Claimant asserts that he/she was permitted to disclose the information in his/her tip because he/she believed it would serve the Employer’s interest by potentially preventing further misappropriation by the Third Party, possibly recovering funds that had been misappropriated, and help lead to the successful completion of the Project that his/her client was sponsoring. Claimant contends that disclosure to the SEC would lead to his/her client making more diligent efforts to ensure that investor funds were used only for Project-related purposes and that such efforts would be in his/her client’s best interests. However, all of the interests described by Claimant serve the interests of the Limited Partnership investors rather than the interests of his/her client. Moreover, Claimant does not demonstrate how exposing his/her client to an SEC investigation and/or enforcement action based on suspicions would be in his/her client’s interest. As a result, we have no basis to conclude that Claimant was permitted to disclose the information pursuant to RPC 4-1.6(c)(1).

Third, RPC 4-3.3 provides that a lawyer shall not, among other things, knowingly make a false statement of fact or law to a tribunal, fail to correct a false statement previously made to the tribunal by the lawyer, fail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client, or offer evidence that the lawyer knows to be false. Claimant argues that under this rule, if a lawyer suspects his/her client has made false statements to a tribunal such as the Other Agency, “the lawyer shall take reasonable remedial measures,” which could include disclosure pursuant to RPC 4-3.3(4). Claimant’s argument is misplaced. Claimant does not explain how the Other Agency was acting in an adjudicative capacity with respect to the information his/her client provided.[fn22] Claimant also does not describe what information his/her client provided to the Other Agency or why it was false. Nevertheless, even if the Other Agency met the definition of a tribunal, to the extent Claimant or his/her client provided any false information to the Other Agency, Claimant does not demonstrate why disclosure of confidential information to the SEC was a reasonable remedial measure nor does he/she demonstrate why the disclosure was necessary. Furthermore, the rule only discusses disclosure of confidential information to the tribunal itself– it does not permit disclosure of confidential information to an entirely separate entity, which in this case was the SEC.

Finally, RPC 4-4.1 states that in the course of representing a client, “a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by rule 4-1.6.” Claimant argues that since he/she believed some of the [Redacted] were or had become inaccurate, Claimant believed it was his/her duty under RPC 4-4.1 to disclose the information to the SEC in order to correct false statements of material fact, specifically regarding expenditures of funds. For the reasons discussed above, Claimant’s disclosure was prohibited by RPC 4-1.6. Because this rule does not permit disclosure that is prohibited by RPC 4-1.6, Claimant’s disclosure of information was not permissible under RPC 4-4.1.

Based on the record in this case, Claimant was neither required nor permitted to reveal the information at issue to the Commission under the Attorney Conduct Rule or the RPC. Thus, Claimant’s information cannot be considered as derived from Claimant’s independent knowledge or analysis. We therefore find that Claimant is ineligible for an award under Rule 21F-4(b)(4)(ii).

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and hereby is, denied.
By the Commission.

[1] The Commission received two other award claims in this matter. One claim was withdrawn and another claim was preliminarily denied by the Office of the Whistleblower through the preliminary summary disposition process, which subsequently became the final order of the Commission through operation of law pursuant to Rule 21F-18(b)(4).
[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[4] See Exchange Act Rule 21F-4(b)(4)(ii), 17 C.F.R. § 240.21F-4(b)(4)(ii).
[5] The CRS did not address Claimant’s award claim in connection with a related action because it cannot consider such a claim until a final judgment has been entered in that action and Claimant submits a new related action claim for award in connection with that judgment. However, award eligibility in an SEC Covered Action is a prerequisite to receiving an award in connection with a related action. See Rule 21F-3(b), 17 C.F.R. § 240.21F-3(b). Because Claimant is not eligible to receive an award in the Covered Action, Claimant will also be ineligible for any future related action claim.
[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[7] 17 C.F.R. § 205.3(d)(2).
[8] Claimant acknowledges that some of these fund transfers may have been legitimate. According to Claimant’s declaration attached to his/her response, Claimant contends that he/she knew the documents included in the tip showed expenditures to the Employer’s Manager and his affiliated entities that would likely be investigated and he/she sought to avoid producing any attorney-client privileged information from his/her client. Furthermore, Claimant states that he/she focused on wrongdoing by the Third Party in the initial allegations because Claimant feared retaliation by the Employer if the whistleblower submission came to light.
[9] Claimant further states that he/she had heard that the Employer’s Manager had allowed the Limited Partnership to provide investor funds to the Third Party in order to finance the Third Party’s ***. Claimant’s declaration states that “while I did not have documentary proof of collusion between [the Employer’s Manager] and [the Third Party] (and therefore did not allege as such), I considered the tip would lead to an SEC investigation of the entire money trail, and would uncover any wrongdoing by [the Employer, the Employer’s Manager] or [Redacted].”
[10] According to Claimant, the Employer did not have a compliance department or compliance officer for Claimant to report his/her concerns to, and Claimant did not believe that further reporting to the Employer’s Manager would be useful in preventing harm to investors. Claimant resigned from the Employer due to increasing concerns about the Employer’s Manager almost a year after submitting Claimant’s tip.
[11] Exchange Act Section 21F(b)(1), 15 U.S.C. § 7u-6(b)(1).
[12] Pursuant to § 205.2(i), the term “material violation” means “a material violation of an applicable United States federal or state securities law, a material breach of fiduciary duty arising under United States federal or state law, or a similar material violation of any United States federal or state law.” 17 C.F.R. § 205.2(i).
[13] Pursuant to § 205.2(g), “in the representation of an issuer” means “providing legal services as an attorney for an issuer, regardless of whether the attorney is employed or retained by the issuer.” 17 C.F.R. § 205.2(g).
[14] See 17 C.F.R. § 205.2(a)(2)(i) (emphasis added).
[15] 17 C.F.R. § 205.2(h).
[16] Adopting Release for the Implementation of Standards of Professional Conduct for Attorneys, Release Nos. 33-8185; 34-47276; IC-25919 (Aug. 5, 2003).
[17] Because 17 C.F.R. § 205.3(d)(2)(iii) also requires the attorney to have an attorney-client relationship with the issuer, disclosure pursuant to this rule was also not permitted.
[18] Furthermore, Claimant does not demonstrate how disclosure of information related to the Third Party’s past misappropriation of investor money was necessary to prevent the Limited Partnership from committing a future material violation. Claimant admits that he/she only had “suspicions” that the interests of investors were not being protected by the Employer, the Employer’s Manager, or the Limited Partnership. Thus, Claimant has not demonstrated that he/she had a reasonable belief at the time of his/her submission that the Limited Partnership intended to commit a future material violation. Accordingly, the record does not demonstrate that disclosure of confidential information to the SEC was necessary to prevent an “issuer” from engaging in a material violation.
[19] See RPC 4-1.6(a) commentary (“The confidentiality rule applies not merely to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source.”).
[20] Although Claimant was also a [Redacted] licensed attorney, the [Redacted] Rules of Professional Conduct are less favorable for Claimant. The [Redacted] equivalent of RPC 4-1.6 permits disclosure of a client’s confidential information only in instances to prevent a criminal act that would result in death or serious bodily injury.
[21] Overall, RPC 4-1.6 sets a high bar for disclosure of confidential information. See Florida Bar v. Knowles, 99 So.3d 918, 922 (Fla. 2012) (client’s statement that she would lie in court to avoid deportation did not establish a sufficient basis for respondent to reasonably believe client would commit perjury). See also U.S. v. McCorkle, 2000 WL 133759 at *30 (M.D. Fla Jan 14, 2000) (noting the exceptions to RPC 4-1.6(a) are “narrow”). The commentary to RPC 4-1.6 states that while a lawyer must reveal information in order to prevent a client from committing a crime, “[i]t is admittedly difficult for a lawyer to ‘know’ when the criminal intent will actually be carried out, for the client may have a change of mind.” Furthermore, the commentary notes that the lawyer “should seek to persuade the client to take suitable action” and that in “any case, disclosure adverse to the client’s interest should be no greater than the lawyer reasonably believes necessary to the purpose.” Here, Claimant fails to demonstrate that he/she had any knowledge that his/her client intended to carry out a crime or what, if anything, Claimant did to try to persuade his/her client to take suitable action. Moreover, Claimant’s tip concerned only past conduct of others and did nothing to prevent his/her client from committing a crime. See Florida Bar v. Dunagan, 731 So.2d 1237, 1242 (Fla. 1999) (disclosure of confidential information unrelated to narrow purpose of preventing a client from committing a crime violates RPC Rule 4-1.6(b)).
[22] Chapter 4 of the RPC defines tribunal as “a court, an arbitrator in a binding arbitration proceeding, or a legislative body, administrative agency, or other body acting in an adjudicative capacity. A legislative body, administrative agency, or other body acts in an adjudicative capacity when a neutral official, after the presentation of evidence or legal argument by a party or parties, will render a binding legal judgment directly affecting a party’s interests in a particular matter.”

SEC

96669

01/17/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claims submitted by [Redacted] (“Claimant 1”), [Redacted] (“Claimant 3”), and [Redacted] (“Claimant 4,” and collectively “Claimants”) in connection with the above-referenced covered action (the “Covered Action”). Claimants filed timely responses contesting the preliminary denials. For the reasons discussed below, Claimant 1’s, Claimant 3’s, and Claimant 4’s award claims are denied.[fn1]

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled cease-and-desist proceedings against [Redacted] (the “Company”) alleging that the Company [Redacted]. The Commission charged the Company with [Redacted]. The Company agreed to pay a civil monetary penalty of [Redacted].

B. The Preliminary Determinations.

On [Redacted] the CRS issued Preliminary Determinations recommending that Claimants’ claims be denied because Claimants did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS stated that Claimants’ information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS preliminarily determined that the investigation which led to the Covered Action (the “Investigation”) was opened based upon information reported in the news media and not in response to any information provided by any of the Claimants. The CRS also preliminarily determined that none of the Claimants’ information significantly contributed to the success of the Covered Action. Enforcement staff assigned to the Investigation received Claimant 1’s information approximately four months after the Investigation was opened, and the staff was already aware of the underlying conduct alleged in Claimant 1’s complaint. In addition, while Claimant 1 provided certain information to the Commission about Claimant 1’s family experiences, none of the information advanced the Investigation or otherwise impacted the charges brought by the Commission in the Covered Action. The CRS stated that staff assigned to the Investigation did not receive or review any information from Claimant 3 or Claimant 4 and that none of their information advanced or contributed to the Investigation or the Covered Action.

C. Claimant 1’s Response to the Preliminary Determinations.

Claimant 1 submitted a timely written response contesting the Preliminary Determinations.[fn2] Claimant 1 principally argues that a tip he/she submitted to the Commission in [Redacted] in conjunction with an earlier tip from [Redacted] was the “catalyst” for the Investigation as well as for the media articles and the Company’s disclosure of the misconduct. Claimant 1 also argues that he/she had been in a dispute with the Company since [Redacted] approximately seven years prior to the issuance of the Covered Action, and that the Company was aware of the wrongdoing since at least that time. Claimant 1 contends that he/she alerted the Company to his/her whistleblower complaints approximately ten days before the Company began publicly disclosing the misconduct. Claimant 1 requests that the Commission “re-open their investigation of [Company’s] fraud to penalize [Company] with a substantially more significant and appropriate financial fine, and to require [the Company] to pay disgorgement of their ill-gotten gains . . . .”

D. Claimant 3’s Response to the Preliminary Determinations.

Claimant 3 submitted a timely written response contesting the Preliminary Determinations. Claimant 3 principally contends that the tip he/she submitted to the Commission on [Redacted] less than a week before media reports of the Company’s misconduct, was the “impetus” for opening the Investigation. Claimant 3 further argues that his/her information persuaded the Company’s personnel to acknowledge the misconduct, cooperate with the staff, and enter into a settlement with the Commission, and that none of the staff’s Investigation would have occurred without the initial tip he/she submitted. Claimant 3 also argues that because the staff declaration relied upon by the CRS was signed after the date of the Preliminary Determinations, the CRS “came illegally to such conclusion,” and instead the CRS should have recommended an award to Claimant 3. Claimant 3’s response also cites to 30 other TCRs, all submitted after the Covered Action was instituted, in support of his/her claim for award.

E. Claimant 4’s Response to the Preliminary Determinations.

Claimant 4 submitted a timely written response contesting the Preliminary Determinations. Claimant 4 principally contends that the CRS had “no basis in fact or law, to arrive at such an egregious and inaccurate conclusory statement regarding [Claimant 4’s] original, personal, firsthand, fact information therein properly submitted.” Claimant 4 alleges that he/she provided the staff with original information, and that Claimant 4 filed a lawsuit in [Redacted] approximately 6 years before the Covered Action was filed, that was a “gold mine for any State interested in prosecuting violations . . . committed by [the Company].” Claimant 4 argues that he/she is the original source of the violations cited in the Covered Action, stating that “[a]ny relevant facts reported in above news media, predating these media reports, came directly from the only original source of this firsthand fact information pertaining to [the Company] . . . , facts that were extracted from [Claimant 3’s lawsuit].”

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn4] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn5] In addition, “[t]he Commission will consider you to be an original source of the same information that we obtain from another source if the information satisfies the definition of original information and the other source obtained the information from you or your representative.”[fn6]

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8]

A. Claimant 1.

Claimant 1 does not qualify for a whistleblower award in this matter because his/her information did not cause the staff to open the Investigation, nor did Claimant 1’s information cause the staff to inquire into different conduct in or significantly contribute to the ongoing Investigation. The record demonstrates that the Investigation was opened based on public news articles regarding the Company’s misconduct, not based upon Claimant 1’s information, and staff assigned to the Investigation did not receive or review Claimant 1’s [Redacted] tip. There is also no evidence in the record showing that Claimant 1’s information was the original source of the press articles that were the impetus for the staff to open the Investigation.[fn9] Further, the record does not contain sufficient evidence to show that Claimant 1’s information caused or contributed to the Company’s decision to begin an internal investigation or report to the Commission.[fn10]

And while the staff communicated with Claimant 1 after the Investigation was opened, Claimant 1’s information did not advance or significantly contribute to the Investigation or cause the staff to inquire into different conduct. By the time that the staff spoke with Claimant 1 in or about [Redacted] the staff was already aware of the misconduct based upon self-disclosures by the Company and meetings with Company representatives. The staff also confirmed in a supplemental declaration that Claimant 1’s information did not advance the Investigation or contribute to the charges in the Covered Action. For these reasons, Claimant 1 is not eligible for a whistleblower award in this matter.[fn11]

B. Claimant 3.

Claimant 3 is not eligible for a whistleblower award because Claimant 3’s information did not cause the staff to open the Investigation, to inquire into different conduct as part of an existing investigation, or significantly contribute to the Investigation. As previously stated, the Investigation was opened based upon articles in the press, not based upon information provided by any claimant. Staff assigned to the Investigation did not recall receiving any information from Claimant 3, nor did the staff recall communicating with Claimant 3. The staff further confirmed in a supplemental declaration that the staff did not recall receiving or reviewing the [Redacted] tip that Claimant 3 asserts caused the staff to open the Investigation, nor did the staff recall receiving or reviewing any of the other TCR submissions listed in Claimant 3’s response. The staff also confirmed that the staff did not recall receiving any information from Claimant 3 or communicating with Claimant 3. And there is no evidence in the record that Claimant 3’s information was the original source of the press articles that were the impetus for the staff to open the Investigation, or that Claimant 3’s information caused the Company to cooperate and enter into a settlement with the Commission.[fn12] Accordingly, Claimant 3 is not entitled to an award.[fn13]

C. Claimant 4.

Claimant 4 does not qualify for a whistleblower award because Claimant 4’s information did not cause the staff to open the Investigation, to inquire into different conduct as part of an existing investigation, or significantly contribute to the Investigation. Staff assigned to the Investigation did not recall receiving any information from Claimant 4, nor did the staff recall communicating with Claimant 4. To the extent that Claimant 4 argues that his/her [Redacted] lawsuit was the original source of information used by the staff, there is no evidence in the record supporting such a conclusion. Staff assigned to the Investigation confirmed in a supplemental declaration that the staff did not recall receiving or reviewing any information from the [Redacted] lawsuit filed by Claimant 4. In addition, there is insufficient evidence in the record to conclude that Claimant 4’s lawsuit was the original source of the allegations in the media articles which caused the staff to open the Investigation.[fn14] Staff assigned to the Investigation also confirmed that the allegations of misconduct in the [Redacted] lawsuit were not alleged in the Covered Action. Accordingly, Claimant 4 is not entitled to an award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimants in connection with the Covered Action be, and they hereby are, denied.
By the Commission.

[1] The CRS also recommended the denial of the award application from Claimant 2 who did not contest the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to Claimant 2’s award claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[5] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[6] See Exchange Act Rule 21F-4(b)(5), 17 C.F.R § 240.21F-4(b)(5).
[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[8] Exchange Act Rel. No. 85412 at 8-9.
[9] Enforcement staff also confirmed, in a supplemental declaration, which we credit, that the staff was not aware of any information indicating that the news articles at issue were based upon Claimant 1’s information.
[10] Accordingly, Claimant 1 is not eligible for an award pursuant to Exchange Act Rule 21F-4(c)(3). Rule 21F-4(c)(3) permits an individual to receive an award if, among other things, the individual reports original information through an entity’s internal whistleblower, legal, or compliance procedures and the entity later provides that information to the Commission or provides the results of an audit or investigation initiated in whole or in part by the individual to the Commission. To qualify for an award under Rule 21F-4(c)(3), an individual must also submit the same information to the Commission within 120 days of providing it to the entity. Claimant 1 also did not meet this requirement. Claimant 1 submitted his/her initial TCR to the Commission in [Redacted] while Claimant 1’s prior correspondence with the Company allegedly reporting misconduct occurred as late as [Redacted] more than six months (and therefore more than 120 days) earlier.
[11] Claimant 1’s request that the Commission re-open the investigation of the Company and assign larger penalties to the Company is misplaced. Demands to re-open the staff’s investigation are beyond the scope of this whistleblower award proceeding, which addresses whether claimants voluntarily provided original information that in fact led to the success of the Covered Action. See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[12] To the extent that Claimant 3 argues that the Commission has not provided him/her with the documents to which Claimant 3 is entitled, Claimant 3’s arguments are unpersuasive. Claimant 3 was provided with the record materials relied upon by the CRS, as permitted under Rule 21F-12. To the extent Claimant 3 argues that he/she has not received documents pursuant to Freedom of Information Act (“FOIA”) requests Claimant 3 filed with the Commission, Claimant 3’s FOIA requests are beyond the scope of this whistleblower award proceeding.
[13] Claimant 3 also alleges that the CRS acted improperly by relying upon a staff declaration that was signed after issuance of the Preliminary Determinations. The unsigned and signed versions of the declaration are identical except for the signature such that the information relied upon by the CRS in its Preliminary Determinations was not affected by the signature being affixed after the CRS met to approve the Preliminary Determinations. See Order Determining Whistleblower Award Claims, Exchange Act Release No. 94743 at 2 n.6 (Apr. 18, 2022).
[14] In any event, we are not denying Claimant 4 on the grounds of original information under Rule 21F-4(b), but because Claimant 4’s information did not lead to the success of a Commission enforcement action under Rule 21F-4(c).

SEC

96656

01/13/2023

I. Background.
A. The Covered Action.
On [Redacted], the Commission instituted an administrative proceeding charging [Redacted] with violating [Redacted]. Among other relief, the Commission ordered [Redacted] which was fully collected by the Commission. On [Redacted], the Office of the Whistleblower posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn1] Claimants 1 and 2 each filed a timely whistleblower award claim.

B. The Preliminary Determinations.
The CRS issued Preliminary Determinations[fn2] recommending that Claimant 1 receive a whistleblower award in the amount of *** percent (***%) of the monetary sanctions collected and that Claimant 2’s claim be denied. The Preliminary Determination explained that Claimant 2 is ineligible for an award because Claimant 2 did not provide information that led to the success of the Covered Action. Claimant 2’s information did not cause Commission staff to open an investigation or inquire into different conduct in an existing investigation or significantly contribute to the success of the Covered Action. Commission staff reviewed Claimant 2’s tip, but the allegations were vague and conclusory, and staff closed the tip with no further action planned. Commission staff responsible for the Covered Action investigation did not communicate with Claimant 2, and Claimant 2’s information did not advance the investigation in any way.[fn3]

C. Claimant 2’s Response to the Preliminary Determination.
Claimant 2 submitted a timely written response contesting the Preliminary Determination.[fn4] Specifically, Claimant 2 argues in response to the Preliminary Determination that (i) there is a factual nexus between Claimant 2’s tip and the Covered Action and Commission staff should not have found Claimant 2’s tip to be “conclusory”[fn5]; (ii) Claimant 2 may have been the “original source” of the information that prompted staff to open the Covered Action investigation because Claimant 2 provided information to law firms in an effort to retain counsel and submitted information close in time to another tip mentioned in the record; (iii) Claimant 2 should be treated as a joint claimant with Claimant 1 and given an award; and (iv) there were redactions in the record provided to Claimant 2, which diminished Claimant 2’s ability to adequately assess all circumstances and/or devise an appropriate response.

II. Analysis.
A. Claimant 1.
The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn6] Accordingly, Claimant 1 qualifies for a whistleblower award.

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn7] Claimant 1 submitted a tip and additional information that helped Commission staff shape its investigative strategy, identify witnesses, and draft document and information requests and subpoenas, saving Commission time and resources during the investigation. In addition, Claimant 1 provided substantial ongoing assistance to investigative staff and had internally reported concerns prior to submitting information to the Commission.

B. Claimant 2.
To qualify for an award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn8] As relevant here, information will be deemed to have led to a successful enforcement action if it was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation . . . or to inquire concerning different conduct as part of a current . . . investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information.”[fn9] Alternatively, information will be deemed to have led to a successful enforcement action where the information was “about conduct that was already under examination or investigation by the Commission” and the “submission significantly contributed to the success of the action.”[fn10] In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn11]

Claimant 2’s information does not satisfy Exchange Act Rule 21F-4(c)(1) because it did not cause the Covered Action investigation to be opened or cause staff to inquire into different conduct in the Covered Action investigation. Claimant 2 submitted a tip three years before the opening of the Covered Action investigation. According to Commission staff, Claimant 2’s allegations were vague and conclusory, and Commission staff did not open an investigation based on Claimant 2’s tip. According to the Commission’s TCR system, staff closed Claimant 2’s tip with no further action planned.

In addition, Claimant 2’s information does not satisfy Exchange Act Rule 21F-4(c)(2) because it did not significantly contribute to the success of the Covered Action. As part of the Covered Action investigation, Commission staff responsible for the investigation reviewed Claimant 2’s tip, but found it did not provide information that would advance the investigation, facilitate investigative staff’s development of targeted subpoena or document requests, allow staff to conserve resources, reveal the roles of any particular individuals involved in potential misconduct, or otherwise contribute to the success of the Covered Action. None of the staff responsible for the Covered Action investigation recall communicating with Claimant 2 before or during the investigation.

Claimant 2’s argument in Claimant 2’s response that there is a factual nexus between Claimant 2’s tip and the Covered Action is not dispositive of Claimant 2’s award eligibility. Claimant 2’s information did not cause staff to open the Covered Action investigation or inquire concerning different conduct or significantly contribute to the success of the Covered Action. As a result, Claimant 2’s information did not lead to the success of the Covered Action. Award eligibility is based on whether a whistleblower’s information actually contributes to the success of a covered action, not on what staff “should have or could have” done with the information.[fn12]

Claimant 2’s argument that Claimant 2 may have been the “original source” of the information that prompted staff to open the Covered Action investigation because Claimant 2 provided information to law firms in an effort to retain counsel and submitted information close in time to another tip mentioned in the record is speculative and not supported by the record. The record is clear that Claimant 1’s initial submissions were the impetus for the opening of the investigation. While Claimant 1 was represented by counsel, Claimant 1 learned the information submitted to the Commission through [Redacted] and not from Claimant 1’s counsel. Moreover, Claimant 2 does not name any counsel or law firm in Claimant Redacted 2’s response and merely mentions consulting firms [Redacted]. Claimant 1’s counsel is [Redacted]. In addition, the tip referenced in the record and submitted around the same time as Claimant 2’s information was not submitted by Claimant 1. Claimant 1 began submitting information to the Commission almost three years after the Commission received that tip, and it was Claimant 1’s information that was the impetus for the opening of the investigation.

Claimant 2’s argument that Claimant 2 should be treated as a “joint whistleblower” with Claimant 1 is misplaced. Pursuant to Rule 21F-2(a)(1), “[y]ou are a whistleblower [for purposes of Section 21F of the Exchange Act (15 U.S.C. 78u-6) as of the time that], alone or jointly with others, you provide the Commission with information” in writing that relates to a possible violation of the federal securities laws. Claimants 1 and 2 did not submit a tip jointly, act jointly during the course of the Covered Action investigation, nor apply jointly for a whistleblower award.

Finally, Claimant 2’s argument that the Office of the Whistleblower’s (“OWB”) redactions to the record provided to Claimant 2 unfairly diminished Claimant 2’s ability to adequately assess all circumstances and/or devise an appropriate response is unavailing. Under Rule 21F-12(b), OWB may make redactions as necessary to comply with any statutory restrictions, which includes protecting the identity of other whistleblowers in the matter. The redactions to the record provided to Claimant 2 were done in accordance with Rule 21F-12(b).

We therefore conclude that Claimant 2’s information did not lead to the successful enforcement of the Covered Action, and that, as a result, Claimant 2 is ineligible for a whistleblower award.

IV. Conclusion.
Accordingly, it is ORDERED that Claimant 1 shall receive an award of *** percent (*** %) of the monetary sanctions collected in the Covered Action and that Claimants 2’s whistleblower award application be, and hereby is, denied.
By the Commission.
[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d). Redacted
[3] The Preliminary Determination also noted that Claimant 2 appears to have submitted a Redacted claim for a related action award based on information Claimant 2 provided to [Redacted]. The Commission staff is unaware of [Redacted] action, and even if there was one, Claimant 2 is not eligible for a related action award because Claimant 2 is not eligible for an award in connection with the Covered Action. Claimant 2 did not address any related action claim in Claimant 2’s response to the Preliminary Determination.
[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[5] Claimant 2 also argues that “it is possible” Claimant 2’s tip provided insights that “bridged the gap” and enhanced Commission staff’s knowledge of the overall fraudulent scheme and Commission staff improperly designated Claimant 2’s tip as requiring no further action and should have conducted additional fact-finding.
[6] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F3(a), 17 C.F.R. § 240.21F-3(a). While Claimant 1’s initial submissions were the impetus for the opening of the Covered Action investigation, Claimant 1’s initial submissions were not accompanied by a Form TCR. Claimant 1, however, thereafter submitted a Form TCR through counsel with new information that significantly contributed to the success of the Covered Action, thereby establishing an independent basis for Claimant 1’s award eligibility.
[7] In assessing the appropriate award amount, Exchange Act 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.
[8] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[9] Exchange Act Rule 21F-4(c)(1).
[10] Exchange Act Rule 21F-4(c)(2).
[11] See Order Determining Whistleblower Award, Whistleblower File No. 2019-4, at 9, 2019 SEC LEXIS 615 at *16 (Mar. 26, 2019); see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).
[12] See Order Determining Whistleblower Award Claim, Release No. 34-79294 (Nov. 14, 2016) (denying whistleblower award to claimant who argued that staff errors resulted in improper processing of submission, on grounds that the information submitted did not actually lead to successful enforcement of covered action), pet. rev. denied sub nom. Doe v. SEC, 729 F. App’x 1 (D.C. Cir. 2018); see also Order Determining Whistleblower Award Claim, Release No. 34-88667 (Apr. 16, 2020) (“We must look to whether the Claimant’s information actually contributed to the success of the Covered Action, not whether ‘it should have or could have,’ as Claimant urges us to do.”).

SEC

96667

01/13/2023

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings in the Covered Action, charging [Redacted] (the “Company”) with violations of [Redacted]. The Commission’s order stated that the Company [Redacted]. The Commission’s order alleged that the Company [Redacted]. To settle these charges, the Company agreed to pay a civil monetary penalty of [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS noted that the investigation which led to the Covered Action (the “Investigation”) was opened based on a source other than Claimant. Further, the CRS noted that staff assigned to the Investigation never received any information from Claimant or had any communications with Claimant.

C. Claimant’s Response to the Preliminary Determination

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn1] Claimant argues that the record before the CRS was “deficient of information justifying denial of an award” to Claimant because the staff relied upon a single Enforcement staff declaration, while Claimant alleges that “many other SEC staff members” worked on the matter, including staff that Claimant spoke to and met with. Claimant argues that while the staff declaration states that Claimant’s tip was forwarded to staff assigned to a separate matter, the record does not identify the separate matter. Claimant also argues that he/she met with Commission staff at the staff’s request in [Redacted] in [Redacted] and then in [Redacted] in [Redacted] and that these meetings “formed the basis upon which the SEC brought an enforcement action against ***.” Claimant further contends that even if the staff assigned to the Investigation did not receive information directly from Claimant, the staff likely received and relied upon information Claimant provided to other Commission staff. Claimant requests that Claimant be allowed to depose the Enforcement staff member who prepared the declaration “and others involved in the investigation,” and that Claimant be allowed to review “all documentation the [CRS] utilized,” and that Claimant receive “all emails, correspondence, and other material regarding [Claimant’s] filing, as well as the administrative file for the [Investigation] at issue.”

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn5] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn6] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

As an initial matter, the record shows that Claimant’s information did not cause the staff to open the Investigation. Claimant’s tip was forwarded to staff assigned to a separate and unrelated matter, not to staff assigned to the Investigation. Enforcement staff confirmed, in a sworn supplemental declaration, which we credit, that the Investigation began based upon a news article, not upon information provided by Claimant.[fn7] While Claimant argues that he/she provided information to the Commission more than one year before the Investigation began, and thus Claimant’s information may have been used by the staff, we do not find evidence in the record to support that conclusion. Accordingly, Claimant’s information did not cause the staff to open the Investigation.[fn8]

The record also does not show that Claimant’s information caused the staff to inquire into different conduct or significantly contributed to the ongoing Investigation. While one attendee at the [Redacted] meeting (the “Attendee”) was the [Redacted] *** that opened the Investigation, staff assigned to the Investigation confirmed that they did not receive, review, or use information from the Attendee that caused or contributed to the opening of the Investigation. The supplemental staff declaration confirms that the staff did not receive or review information from Claimant relating to the subject matter of the Investigation. The staff also confirmed that, aside from the Attendee, no one assigned to the Investigation attended either of the meetings with Claimant in [Redacted] or [Redacted] and the staff does not recall receiving, using, or reviewing any information from other Commission staff from the *** [Redacted] or [Redacted] offices, including staff from the Division of Enforcement or the Division of Examinations (formerly the Office of Compliance Inspections and Examinations), related to the subject matter of the Investigation. Accordingly, Claimant’s argument that the staff may have received and relied upon information originating from Claimant through other Commission staff is not persuasive. As we have stated, “the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s information actually had on the investigation.” 9 Here, while the Claimant provided information to the Commission prior to the opening of the Investigation, the record shows that Claimant’s information did not assist the staff during the Investigation or contribute to the Covered Action.

Lastly, Claimant’s argument that the record is incomplete is not meritorious. The record is based upon the sworn declarations of one of the primary staff attorneys assigned to the Investigation, as well as the submissions made by Claimant. To the extent that Claimant seeks declarations from staff members he/she spoke with, such information is unnecessary: the record already shows that staff assigned to the Investigation did not attend those meetings. Further, Claimant is not entitled to depose Commission staff assigned to the Covered Action, nor is Claimant entitled to “all emails, correspondence, and other material regarding [Claimant’s] filing” or the Commission’s investigative file. Exchange Act Rule 21F-12(a) lists the materials that form the basis for the Preliminary Determination and that Claimant may request from the Commission.[fn10] “These rules do not entitle [Claimant] to obtain from the Commission any materials . . . other than those listed in paragraph (a) of this section.”[fn11] Claimant requested and received the materials to which he/she was entitled under Rule 21F-12(a) and is entitled to no more.
For these reasons, Claimant does not qualify for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[2] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[3] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[4] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[5] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[6] Exchange Act Rel. No. 85412 at 8-9.
[7] Claimant does not argue on reconsideration that he/she is the source of the information in the news article that caused the staff to open the Investigation.
[8] Claimant’s Response provided information from the [Redacted] that Claimant contends indicates that the Company was not under examination by the Commission as of [Redacted] more than one year after Claimant’s initial submission to the Commission. Claimant argues that this information shows that only after Claimant’s two meetings with Commission personnel did the Investigation begin, and that Claimant’s information likely contributed to the Investigation. However, this information does not show that Claimant’s information assisted the staff or otherwise contributed to the Investigation, only that the Investigation began later in time. And, as confirmed by Staff assigned to the Investigation, staff opened the Investigation based upon a news article, not based upon information from Claimant.
[9] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 92542 at 4 (Aug. 2, 2021) (quoting Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90872 at 4 (Jan. 7, 2021)) (internal quotation marks omitted).
[10] See Exchange Act Rule 21F-10(e)(1).
[11] Exchange Act Rule 21F-12(b).

SEC

96658

01/13/2023

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed a complaint in federal district court (“District Court”) against [Redacted], alleging various violations of the federal securities laws in connection with [Redacted]. The complaint also named, as relief defendants, [Redacted]. The District Court issued final judgments against [Redacted] on [Redacted], and default judgments against relief defendants [Redacted] on [Redacted]. In total, the District Court ordered defendants and relief defendants to pay [Redacted] in disgorgement, [Redacted] in prejudgment interest, and [Redacted] in civil penalties.

B. The Preliminary Determination.

Claimant’s award application asserted that Claimant had submitted two tips to the Commission via the Commission’s Tips, Complaints, and Referrals system (“TCR System”).[fn1] The record reflects that the Commission received one of the purported tips, assigned TCR submission number [Redacted], on [Redacted] (“[Redacted] Tip”). Claimant’s award application noted that another purported tip was submitted earlier, on [Redacted] (“Purported Initial Tip”), after Claimant received a voicemail message from [Redacted] employee [Redacted] Employee *** about potential employment with the company. The award application, however, did not include a TCR submission number for the Purported Initial Tip. The Preliminary Determination was supported by a declaration (“Initial Declaration”)[fn2] of one of the primary Division of Enforcement (“Enforcement”) attorneys assigned to the Investigation. The Initial Declaration, which we credit, confirmed that the [Redacted] Tip was “designated for NFA”[fn3] and the TCR System did not reflect that the [Redacted] Tip was forwarded to Enforcement staff responsible for the Investigation. In addition, the Initial Declaration stated that Enforcement staff responsible for the Investigation were not aware of the [Redacted] Tip prior to their receipt of Claimant’s award application. As to the Purported Initial Tip, the Initial Declaration stated that the TCR System does not identify any TCRs submitted by Claimant on [Redacted], any TCRs submitted by an anonymous user on [Redacted] that have [Redacted] Employee or [Redacted] in the subject line, or any other TCRs submitted by Claimant that have [Redacted] Employee or [Redacted] in the subject line except for the [Redacted] Tip. Further, according to the Initial Declaration, none of the members of the Enforcement team responsible for the Investigation recalled receiving any information provided by Claimant or communicating with Claimant, before or during the Investigation.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn4] Claimant principally argues that, although the staff was unable to locate it at the time of the Preliminary Determination, information from the Purported Initial Tip may have been passed on to staff assigned to the Covered Action. Claimant posits that the staff was unable to locate the Purported Initial Tip because Claimant may have submitted it anonymously and the staff may have used the wrong search terms in attempting to locate it in the TCR System. Claimant asserts that Claimant’s telephone number at the time would have been included in the Purported Initial Tip and suggested a number of additional search terms that the staff could use in order to locate that tip in the TCR System. Claimant contends that a Commission attorney or investigator placed a telephone call to Claimant on [Redacted] and states that Claimant is “99% certain” that the interaction between Claimant and Commission staff was initiated as the result of the Purported Initial Tip submitted by Claimant. To support this assertion, Claimant provided billing records for the telephone number that itemize incoming and outgoing calls from [Redacted] through [Redacted]. These records reflect outgoing calls to the telephone number 202-551-4790[fn5] at [Redacted] on [Redacted] ***, as well as an incoming call at [Redacted] on [Redacted] that Claimant believes was from an attorney or investigator with the Commission. Claimant also included with the Response several screenshots that Claimant asserts corroborate the timeline as recalled by Claimant.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn6] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2),[fn7] respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either (1) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn8] or (2) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn9]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn10] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn11]

Claimant does not qualify for an award under either of the above-described provisions. First, the record demonstrates that staff opened the Investigation in [Redacted] as the result of a tip from someone other than Claimant, more than fifteen months prior to the date Claimant contends the Purported Initial Tip was submitted to the Commission. Accordingly, Claimant’s information did not cause the staff to open the Investigation. Second, as discussed below, Claimant’s information did not cause the staff to inquire concerning different conduct in the Investigation or significantly contribute to the success of the Covered Action because no information from Claimant was received or reviewed by Enforcement staff responsible for the Investigation.

Consistent with the award application, the Response contends that Claimant submitted tips twice via the TCR System – the Purported Initial Tip and the [Redacted] Tip. As to the Purported Initial Tip, the record does not support Claimant’s assertion that any such tip was submitted via the TCR System on [Redacted]. As stated above, the Initial Declaration noted the absence in the TCR System of any tips submitted by Claimant on [Redacted], any tips submitted anonymously on [Redacted] that have [Redacted] Employee or [Redacted] in the subject line, or any other tips submitted by Claimant that have [Redacted] Employee or [Redacted] in the subject line except for Claimant’s [Redacted] Tip. Furthermore, in an additional sworn declaration (“OWB Declaration”), OWB staff have confirmed that they conducted additional searches of the TCR System using the search terms suggested by Claimant and were unable to locate any relevant records of tips submitted anonymously between [Redacted] and [Redacted] that include any of the suggested search terms. The OWB Declaration also states that staff was unable to locate any tips in the TCR System that include Claimant’s telephone number. In the Response, Claimant asserts this telephone number would have been included in the Purported Initial Tip.

Claimant’s assertion that Commission staff contacted Claimant by telephone on [Redacted] *** is supported by the record; however, the record reflects that this telephone call was from OWB staff – not from Enforcement staff responsible for the Investigation – and was placed in response to a voicemail that Claimant left on OWB’s whistleblower hotline on the morning of [Redacted]. According to the OWB Declaration, OWB records reflect that, when staff returned the call, they searched for, but could find no record of, the Purported Initial Tip. Further, according to the OWB Declaration, OWB records reflect that Claimant left three additional voicemails on the whistleblower hotline on [Redacted] that indicated that Claimant intended to resubmit the information that Claimant had previously attempted to submit.

Based on the record, it appears that the “interaction” Claimant recalls having with Commission staff on [Redacted] was the telephone call between Claimant and OWB staff. While the record indicates Claimant may have tried submitting a tip via the TCR System around [Redacted], there is no evidence that Claimant was successful in doing so, nor any evidence that any information Claimant provided OWB was ever conveyed to Enforcement staff responsible for the Investigation. We note that the screenshots provided by Claimant with the Response do not provide any evidence that Claimant was ever in contact with, or that any of Claimant’s information was ever forwarded to, Enforcement staff responsible for the Investigation.
We therefore conclude that Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. As a result, Claimant is ineligible for an award with respect to the Covered Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.
By the Commission.

[1] The TCR System is the Commission’s electronic database which records and stores information received from whistleblowers and others about potential securities law violations and records staff action taken with regard to tips, complaints, and referrals (“TCRs”) entered into the system.
[2] The whistleblower rules contemplate that the record upon which an award determination is made shall consist of, as relevant here, a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).
[3] An “NFA” or “No Further Action” disposition indicates that the staff will not take any additional steps with respect to a TCR unless subsequent information leads staff to reopen or reexamine that TCR.
[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[5] This is the telephone number for the whistleblower hotline monitored by OWB.
[6] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[7] We construe the Response as applicable only to subsections 1 and 2 of Rule 21F-4(c). Consequently, the analysis that follows addresses only those two subsections of the provision.
[8] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[9] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).
[10] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[11] Exchange Act Rel. No. 85412 at 8-9.

SEC

96657

01/13/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the Redacted denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed a complaint in federal district court (“District Court”) against [Redacted] alleging [Redacted]. In a separate action filed with the District Court on [Redacted], the Commission also alleged that [Redacted] engaged in [Redacted]. The Commission charged each of the defendants in these actions with [Redacted]. These two actions were consolidated as [Redacted]

The District Court issued final consent judgments against [Redacted]. The District Court ordered defendants to pay a total of [Redacted] in disgorgement, prejudgment interest, and civil penalties.

On [Redacted] the Office of the Whistleblower (“OWB”) posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn4] As an initial matter, Claimant does not assert in the Response that the information Claimant provided led to the opening of the Investigation or significantly contributed to the success of the Covered Action. Rather, Claimant principally argues that there was an unreasonable delay in forwarding Claimant’s tips to investigative staff and Claimant’s information “could have played a role in the enforcement actions” had the tips been reviewed and forwarded in what the Claimant considers a timely fashion. Claimant also questions the exact timeline between receipt of his/her tips and the start of the Investigation. Additionally, Claimant asserts that he/she could be considered “the original source” of the information or analysis that led to the enforcement actions. Claimant contends that the Commission should not make a final determination on the award claim without establishing the exact timeline and examining whether “this type of a situation” affects eligibility.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn5] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2),[fn6] respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either (1) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn7] or (2) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn8]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn9] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn10]

Claimant does not qualify for an award under either of the above-described provisions. First, although Claimant provided two tips via the Commission’s Tips, Complaints, and Referrals system (“TCR System”) on the same date the staff opened the Investigation,[fn11] the record clearly demonstrates that Claimant’s tips were not the impetus for opening the Investigation. Rather, as noted in the Declaration, which we credit, Enforcement investigative staff opened the Investigation on [Redacted] as the result of [Redacted] review activity conducted by the Office of Market Intelligence (“OMI”) during which OMI [Redacted].[fn12] The Investigation was already underway when Claimant’s tips were first received by investigative staff assigned to the Investigation. The Declaration acknowledged that investigative staff received Claimant’s tips on or around [Redacted], and that, by that time, investigative staff was already familiar with the [Redacted] that were the subject of Claimant’s tips, and had already identified to recommend charging and against whom to seek [Redacted] based on information received from other sources.

Claimant contends in the response that there was an unreasonable delay in reviewing and directing Claimant’s tips to Enforcement and that the information Claimant provided “could have played a role in the enforcement actions” had the tips been reviewed and forwarded more quickly. Claimant also asserts that it is not possible to establish the exact timeline of “morning TCR receipt vs. the OMI investigation start time,” and that it “is very likely that the Commission was in possession of relevant voluntary original information and analysis (my TCR) and, later, decided to look at the [Redacted] on its own.” Claimant further states that “[t]his would be a situation where my Claim is deemed ineligible simply due to the lack of expeditious processing by the WBO and not through a fault of my own, or any TCR deficiencies.” Without further explanation, Claimant also asserts that Claimant “could be considered ‘the original source’ of the information/analysis that led to the enforcement actions.”

As a threshold matter, whether or not Claimant’s information could have led to a successful enforcement action had it been routed to investigative staff more expeditiously is not relevant to Claimant’s eligibility to receive an award. The standard for award eligibility is not what the staff would have or could have done in hypothetical circumstances but, rather, what impact the claimant’s information actually had on the Investigation.[fn13] In this case, the record does not support a finding that Claimant’s information actually led to the opening of the Investigation.[fn14] Moreover, Claimant has provided no information in the Response to dispute the declaration of the Enforcement staff assigned to the Investigation, which stated, under penalty of perjury, that the Investigation was opened based on OMI’s [Redacted] review activity. Accordingly, we conclude that Claimant’s information did not cause the staff to open the Investigation.

We also see no basis for Claimant’s assertion that Claimant could be considered “the original source” of the information that led to the Investigation or Covered Action. Under Whistleblower Program rules, in order for a claimant to be considered the “original source” of information the Commission obtains from another source, the information must satisfy the definition of original information and the other source must have obtained the information from the claimant or the claimant’s representative.[fn15] Even assuming the information Claimant provided could be considered “original information,” Claimant has not alleged or provided any information in the Response to suggest that any of the information relied upon by the Commission in opening the Investigation or bringing the successful enforcement action was initially supplied by Claimant to another source and then provided by that other source to the Commission. Therefore, to the extent Claimant contends that Claimant is the original source of any information received by the Commission from another source that led to the successful enforcement of the Covered Action, we find that argument without merit.

Second, because Claimant’s information did not cause the staff to open the Investigation, Claimant would be eligible for an award only if Claimant’s tips (1) caused the staff to inquire concerning different conduct as part of the ongoing Investigation and the Covered Action was based in whole or in part on that conduct, or (2) significantly contributed to the success of the action. We find that neither of these criteria is satisfied in this case. The record demonstrates that because Claimant admitted in his/her tips that Claimant lacked knowledge of [Redacted] investigative staff did not interview Claimant or otherwise follow up on Claimant’s information. The Declaration also stated that none of the information provided by Claimant helped advance the Investigation or had any impact on the charges brought by the Commission in the Covered Action. Claimant’s Response does not dispute the absence of contact between investigative staff and Claimant following submission of the two tips.

We therefore conclude that Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. As a result, Claimant is ineligible for an award with respect to the Covered Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.
By the Commission.

[1] Upon the stipulated request of the Commission and defendant [Redacted], the District Court dismissed all claims against *** with prejudice pursuant to Fed. R. Civ. P. 41(a)(2) on [Redacted].
[2] A separate claim for award for the Covered Action was submitted by a second claimant, but withdrawn prior to the issuance of the Preliminary Determination.
[3] The record supporting the Preliminary Determination included the declaration (“Declaration”) of one of the primary Division of Enforcement (“Enforcement”) attorneys assigned to the Investigation. The whistleblower rules contemplate that the record upon which an award determination is made shall consist of, as relevant here, a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).
[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[6] We construe the Response as applicable only to subsections 1 and 2 of Rule 21F-4(c). Consequently, the analysis that follows addresses only those two subsections of the provision.
[7] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[8] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).
[9] Order Determining Whistleblower Award Claims, Release. No. 34-90922, at 4 (Jan. 14, 2021); see also Order Determining Whistleblower Award Claims, Release No. 34-85412 , at 9 (Mar. 26, 2019).
[10] See Release No. 34-85412 , supra note 9, at 8-9.
[11] The Commission received two tips from Claimant on [Redacted], assigned TCR submission numbers [Redacted].
[12] The OMI staff member who referred the matter to investigative staff following OMI’s [Redacted] review activity has confirmed, in an additional sworn declaration, which we credit, that he was unaware of Claimant’s tips at the time of the referral and that the decision to refer the matter was not influenced by any tip submitted by Claimant.
[13] See Order Determining Whistleblower Award Claim, Release No. 34-79294 (Nov. 14, 2016) (denying whistleblower award to claimant who argued that staff errors resulted in improper processing of submission, on grounds that the information submitted did not actually lead to successful enforcement of covered action), pet. rev. denied sub nom. Doe v. SEC, 729 F. App’x 1 (D.C. Cir. 2018); see also Order Determining Whistleblower Award Claim, Release No. 34-88667 (Apr. 16, 2020) (“We must look to whether the Claimant’s information actually contributed to the success of the Covered Action, not whether ‘it should have or could have,’ as Claimant urges us to do.”).
[14] We decline to provide further information on the exact timeline between the Commission’s receipt of Claimant’s tips and the start of the Investigation. The whistleblower rules entitle a claimant to receive only those materials that formed the basis of the Preliminary Determination with respect to the claimant’s award application. Claimant made a request for, and received, a copy of those materials. The whistleblower rules do not entitle claimants to seek discovery of the Commission’s law enforcement files concerning a covered action. See Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b).
[15] See Exchange Act Rule 21F-4(b)(5), 17 C.F.R. § 240.21F-4(b)(5).

SEC

96641

01/12/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award equal to [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the four above-referenced Covered Actions.[fn1] The CRS also recommended that Claimant receive a whistleblower award equal to [Redacted] percent ( ***%) of the monetary sanctions collected, or to be collected, in four separate, related actions (the “Other Agency Actions”) brought by another agency (the “Other Agency”).[fn2] Based upon current collections, the total whistleblower award to Claimant recommended by the CRS for the Covered Actions and the Other Agency Actions is approximately $900,000.[fn3] Claimant provided written notice of his/her decision not to contest the Preliminary Determinations.[fn4]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission, and that this information led to the successful enforcement of the Covered Actions and the Other Agency Actions.[fn5] Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances with regard to the [Redacted] Covered Action and the [Redacted] Covered Action, we find that an award of *** % for Claimant is appropriate.[fn6]

[Redacted]

In reaching these determinations for the four Covered Actions, we considered that Claimant provided Enforcement staff with documents and information relating to his/her allegations of misconduct. Claimant also provided continued assistance to the staff and gave on-the-record testimony. Claimant’s information allowed the Commission to bring the Covered Actions more quickly, potentially preventing further misappropriation by the defendants.

Additionally, in view of the same considerations described above in connection with the Covered Actions, the Commission finds it appropriate for Claimant to receive an award of ***% of the monetary sanctions collected in the Other Agency Actions.

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to [Redacted] percent ( ***%) of the monetary sanctions collected, or to be collected, in the four Covered Actions and in the Other Agency Actions.

By the Commission.

[1] Pursuant to Rule 21F-4(d)(1), we are treating the following individual enforcement actions (the “Individual Actions”) together with Covered Action [Redacted] because they arose out of the same underlying facts: [Redacted] The Individual Actions and the four Covered Actions are collectively referred to as the “Covered Actions.”

[2] The Commission may pay an award based on amounts collected in related actions that are based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $1 million. Here, the Commission finds that the [Redacted] actions [Redacted] constitute “related actions” within the meaning of Exchange Act Rules 21F-3(b) and 21F-4(d)(3).

[3] The CRS also preliminarily denied the award claims of one other claimant. That claimant did not seek reconsideration of the Preliminary Determinations, and therefore the denial of his/her claim was deemed to be the Final Order of the Commission under Exchange Act Rule 21F-10(f).

[4] Claimant requested that all funds collected by the receiver be considered “collections” for purposes of a whistleblower award. But this approach is contrary to the Commission’s rules. The Commission has determined to treat as collected monetary sanctions under Section 21F(b)(1) of the Exchange Act those amounts distributed to investors by the court-appointed receiver in the Covered Action. See Exchange Act Rule 21F-4(e): “Monetary sanctions means: (1) An order to pay money that results from a Commission action or related action and which is either: (i) Expressly designated as penalty, disgorgement, or interest; or (ii) Otherwise ordered as relief for the violations that are the subject of the covered action or related action . . . .” 17 C.F.R. § 240.21F-4(e).

[5] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F3(a).

[6] In assessing the appropriate award amount, Exchange Act 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. [Redacted]

SEC

96642

01/12/2023

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award equal to *** percent (** %), of the monetary sanctions collected or to be collected in the above-referenced Covered Action, and that [Redacted] (“Claimant 2,” and collectively with Claimant 1, “Claimants”) receive a whistleblower award equal to [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action. Claimant 1 filed a timely response contesting the Preliminary Determinations (the “Response”), and Claimant 2 did not contest the Preliminary Determinations.[fn1] After a review of Claimant 1’s Response, the CRS determined on reconsideration that *** percent (** %) award to Claimant 1 and a [Redacted] percent *** %) award to Claimant 2 is warranted. For the reasons discussed below, the CRS’s recommendation is adopted. Based upon current collections, the Commission anticipates the combined payment to Claimants will be approximately $ 300,000.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted cease and desist proceedings against [Redacted] (the “Company,” and together with [Redacted] the “Respondents”). The Commission alleged that the Company [Redacted]. The Commission alleged that the Company [Redacted]. The Commission charged the Company with violating [Redacted]. Respondents agreed to pay a civil penalty [Redacted].

On [Redacted] the Office of the Whistleblower (“OWB”) posted the above-referenced Notice of Covered Action on the Commission’s website, inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn3] recommending that: (1) Claimant 1 receive an award of *** % of the monetary sanctions collected in the Covered Action; and (2) Claimant 2 receive an award of *** % of the monetary sanctions collected in the Covered Action. The CRS preliminarily concluded that while Claimant 1’s information caused the staff to open the investigation that led to the Covered Action (the “Investigation”) and that Claimant 1 provided ongoing assistance, Claimant 1 was aware of misconduct for more than two years before Claimant 1 contacted the Commission. The CRS also considered that Claimant 1 offered to withhold Claimant 1’s information from the Commission in exchange for a settlement from the Company, contrary to the law enforcement interest of the Commission, the goals of the whistleblower program, and the interests of investors.

The CRS preliminarily determined that Claimant 2’s information caused the staff to expand an existing investigation to address conduct that was not under review by the staff. Claimant 2 was also interviewed by the staff and corroborated statements made by Claimant 1.

C. Claimant 1’s Response to the Preliminary Determinations.

Claimant 1 submitted a timely written response (the “Response”) contesting Claimant 1’s award of **% in the Preliminary Determinations.[fn4] Claimant 1 principally contends, among other things, that he/she did not delay in reporting because he/she had only been at the Company for several months when he/she first learned of potential concerns. Claimant 1 discussed his/her concerns with supervisors and made formal inquiries within the Company within months of learning of the potential misconduct. Claimant 1 also contends that he/she “spent time in the next two years to figure out what it really means and finally confirmed the fraud information in “[Redacted]” According to Claimant 1, he/she was also not aware of the whistleblower program until a few months later in [Redacted] Claimant 1’s tip was submitted to the Commission one month later.

Claimant 1 argues that consideration of his/her requested settlement with Company is inappropriate because his/her settlement amounted to an internal report. Claimant 1 also claims that he/she sent the settlement offer to Company in the hopes that the company would “correct the violation themselves timely and settle the case.” Further, Claimant 1 states that settlements are not contrary to the law enforcement interest of the Commission and do not trigger any of the negative factors under Rule 21F-6(b). Claimant 1 also argues that the “law enforcement interest of the Commission” factor must not be used to decrease his/her award since the Whistleblower Rules identify it is a factor considered solely for purposes of increasing awards.

Claimant 1 also claims that he/she provided valuable information to the Commission that caused the staff to open the investigation, and that he/she played a critical role in causing the other claimants to come forward to the Commission, which warrants an increase in the award under Rule 21F-6(a)(2)(iv). Claimant 1 also claimed that he/she suffered hardships while working at the Company and attempting to report information. Lastly, Claimant 1 argues that policy considerations warrant a larger award because his/her attempts to report and correct the misconduct served the interests of investors and the public.

II. Analysis.

[Redacted].

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 1 qualifies for a whistleblower award. “[C]onsider[ing] all relevant facts” and circumstances, as well as our review of Claimant 1’s Response, we find that an award of *** percent (*** %) to Claimant 1 is appropriate.

The arguments for a larger award raised in Claimant 1’s Response are not persuasive.[fn10] The record shows that Claimant 1, through counsel, attempted to trade his/her whistleblower tip for a cash settlement from the Company and as part of that exchange offered to withhold that tip from the Commission.[fn11] We find this behavior contrary to our law enforcement interest,[fn12] the goals of the whistleblower program, and the interests of investors. As we said when we adopted the whistleblower rules in 2011, “the Commission’s primary goal, consistent with the congressional intent behind Section 21F [of the Securities Exchange Act of 1934], is to encourage the submission of high-quality information to facilitate the effectiveness and efficiency of the Commission’s enforcement program.”[fn13] Our law enforcement interest looks to “(i) [t]he degree to which an award enhances the Commission’s ability to enforce the Federal securities laws and protect investors; and (ii) [t]he degree to which an award encourages the submission of high quality information from whistleblowers by appropriately rewarding whistleblowers’ submission of significant information and assistance . . . .”[fn14] Claimant 1’s behavior is contrary to this goal and the law enforcement interest, and encourages potential whistleblowers to use their information about violations of the securities laws as leverage for their own personal gain.[fn15]

Accordingly, we find that a **% award is warranted for Claimant 1.[fn16]

B. Claimant 2.

Claimant 2 did not contest the Preliminary Determinations. The record demonstrates that Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 2 qualifies for a whistleblower award. Based on the facts and circumstances here, we find that an award of [Redacted] percent (*** %) is appropriate. Claimant 2 provided new information that significantly contributed to the success of the Covered Action and caused the staff to expand its existing investigation to address different conduct not previously under review. Claimant 2 was also interviewed by the staff and the Commission’s charges in the Covered Action were based in part on the information provided by Claimant 2.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award equal to *** percent (*** %) of the monetary sanctions collected in the Covered Action, and that Clamant 2 receive an award equal to [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] The CRS also recommended the denial of the award applications from two other claimants, neither of whom contested the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to those award claims became the Final Orders of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[10] [Redacted] While the Preliminary Determinations noted that Claimant 1 was aware of the underlying misconduct for approximately two years, the CRS did not recommend concluding that Claimant 1 engaged in unreasonable reporting delay that warrants a decrease in the award based upon the facts and circumstances of this matter. In any event, the Commission does not base its conclusions in this Final Order upon any finding of unreasoning reporting delay.

[11] Claimant 1’s argument that his/her settlement letter amounts to an internal report is not on point. The whistleblower program encourages internal reporting so that companies might address such concerns, but not at the cost of a whistleblower’s agreement to remain silent.

[12] Contrary to Claimant 1’s argument, the CRS is not considering the “law enforcement interest of the Commission” as a negative factor; rather the Commission is exercising its discretion to determine the appropriate award by considering this and other positive factors laid out in Rule 21F-6 and weighing them relative to the positive factors attributable to the other meritorious claimant.

[13] Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34323 (June 13, 2011).

[14] Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34366 (June 13, 2011).

[15] Claimant 1 argues that settlements with an employer do not implicate the law enforcement interest. We do not agree with this categorical statement. As in the case of Claimant 1, if such a settlement implicates potential violations of the federal securities laws, and the employee offers to withhold information about such violations from the Commission, then the Commission’s law enforcement interest is directly affected.

[16] For the reasons already stated above, Claimant 1’s other argument are not persuasive. While Claimant 1 may have submitted information to the Commission before Claimant 2, endured some hardships, caused the staff to open the Investigation and potentially convinced other whistleblowers to report misconduct, Claimant 1 still attempted to use his/her tip as a bargaining chip for a settlement with the Company. Similarly, policy considerations here do not warrant a larger award for Claimant 1, but warrant emphasizing that the whistleblower program does not condone a claimant attempting to trade a whistleblower tip for a monetary payment from the company allegedly engaged in the misconduct.

SEC

96604

01/06/2023

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending Redacted granting a whistleblower award to [Redacted] (“Claimant”) in connection with the above-referenced Covered Action (the “Covered Action”). Claimant timely filed a request for reconsideration of the preliminary award. For the reasons discussed below, Claimant’s award *** application is granted, and Claimant shall receive an award of nearly $5 million, equal to ***% of the monetary sanctions collected in the Covered Action.

I. BACKGROUND.

A. The Covered Action.

On [Redacted], the Commission instituted a settled enforcement proceeding against [Redacted] (“the Company”). According to the Commission’s Order, the Company [Redacted] (hereinafter, “the Transaction”). [Redacted].

The Commission found that the Company willfully violated [Redacted]. The Commission issued a cease and desist order, censured the Company, and ordered the Company to pay disgorgement of $[Redacted], prejudgment interest of $[Redacted], and a civil monetary penalty of $[Redacted], totaling $[Redacted] in monetary sanctions. The Company paid the amounts in full to the Commission.

B. The Preliminary Determination.

The CRS preliminary determined to recommend that Claimant’s award claim be granted *** and that he/she receive an award of ***% of the monetary sanctions collected in the Covered Action. The preliminary recommendation acknowledged that Claimant’s information was important to the opening of the investigation that resulted in the Covered Action and that Claimant provided some additional assistance to the Enforcement staff. But the CRS also noted that before receiving Claimant’s tip, Enforcement staff already had some information related to the Company’s [Redacted]. The CRS also explained that Claimant appeared to have known about the underlying conduct as early as ***. In light of the fact that Claimant did not come forward for four years and only after Claimant was under investigation for Claimant’s own [Redacted] conduct, the CRS concluded that Claimant had unreasonably delayed in contacting *** the Commission with his/her information and should therefore only receive a ***% award.

The CRS also recommended that Claimant’s award be subject to an administrative offset for any disgorgement, prejudgment interest, and penalty amounts that remained unpaid by Claimant or [Redacted] to the Commission’s Order [Redacted] (the “Other Unrelated Matter”).

C. Claimant’s Response to the Preliminary Determination.

Claimant filed a timely request for reconsideration[fn1] arguing that Claimant should be awarded a greater percentage of the monetary sanctions received and that Claimant’s payment should not be subject to an administrative offset. First, Claimant asserts that he/she was not aware of the Company’s misconduct in *** and therefore did not unreasonably delay contacting the Commission. Second, Claimant argues that Enforcement staff likely would not have discovered the fraud absent Claimant’s information. Third, Claimant claims that Claimant’s tip and assistance were not motivated by Claimant’s receipt of an investigative subpoena from the Enforcement staff related to the Other Unrelated Matter. And fourth, Claimant argues that an Redacted offset of Claimant’s award based on [Redacted] in the Other Unrelated Matter is inappropriate.

II. ANALYSIS.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn2]
Consistent with the Preliminary Determination, we find that Claimant meets the definition of a whistleblower under Rule 21F-2(a) and satisfies the statutory criteria for a whistleblower award under Rule 21F-3(a). Claimant provided information about the Company’s fraud “in writing” in [Redacted].[fn3] Claimant’s submission was voluntary because Claimant provided information about the Transaction to the Commission on Claimant’s own initiative before the Commission or another regulatory agency requested it from Claimant.[fn4] Although Enforcement staff had issued an investigatory subpoena to Claimant before Claimant’s submission, that subpoena and the underlying investigation did not “relate[] to the subject matter of [Claimant’s] submission.”[fn5]

Claimant provided original information based on independent knowledge and analysis and not already known to the Commission from any other source.[fn6] Claimant learned the information submitted to the Commission through Claimant’s work as [Redacted] and through Claimant’s independent analysis of the Transaction. Commission staff was not previously aware of much of the information in Claimant’s tip, in particular how the Company harmed investors by [Redacted].

Finally, Claimant’s information led to the success of the Covered Action in that it was “sufficiently specific, credible, and timely to cause the staff to . . . open an investigation,” and the Covered Action was “based in whole or in part on conduct that was the subject” of Claimant’s submission.[fn7]

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the facts and circumstances here, we find that an award of ***% for Claimant in the Covered Action is appropriate.[fn8]
Claimant’s information was important in that it caused staff to promptly open its investigation, and Claimant’s allegations are closely aligned with the Commission’s charges against the Company. Claimant also provided some additional assistance in the course of an in-person meeting and two phone calls. On the other hand, by the time Claimant first contacted the Commission, Enforcement staff was investigating [Redacted] and already possessed evidence that the Company [Redacted] in connection with the Transaction, which it only disclosed when asked directly.

Claimant asserts that the staff was unlikely to uncover the Company’s fraud absent his/her tip. [Redacted] Claimant offered unique insight into the [Redacted]. But the charges against the Company equally arose from the [Redacted], and Enforcement staff could have determined that the Company [Redacted]. While we acknowledge that Claimant’s information helped Enforcement staff uncover the fraud more quickly, the significance of Claimant’s information is tempered by the fact that Redacted Enforcement staff had already gathered some information and context about the [Redacted] prior to Claimant’s information.

In addition, Claimant unreasonably delayed in contacting the Commission with his/her information. The record indicates that, contrary to Claimant’s request for reconsideration, Redacted Claimant understood the nature of the fraud in [Redacted] but did not report it until after Claimant had received an investigatory subpoena from Enforcement staff in connection with the Other Unrelated Matter.

Claimant claims that Claimant did not realize in [Redacted] that the Company was [Redacted], but the record does not support this argument. The record indicates that in [Redacted], Claimant was [Redacted] the Transaction on the ground that the [Redacted]. In the Transaction, [Redacted]. The record therefore indicates that Claimant understood the nature of the Company’s misconduct in [Redacted]. We do not credit Claimant’s argument to the contrary.

Claimant also argues that Claimant could not have known of the Company’s misconduct in [Redacted] because Claimant, [Redacted], would not have been privy to what the Company and [Redacted]. Again, we do not credit this argument. The record, which includes a supplemental declaration from the Enforcement staff which we credit, reflects that multiple individuals with whom Claimant communicated frequently at the time had learned from the Company that it was [Redacted]. Thus while the Company or *** may not have directly told Claimant that the Company was [Redacted] ***, that information was known to individuals outside those organizations, including individuals who were in communication with Claimant at the time. And even if Claimant learned more information about and understanding of the Transaction after analyzing it, the record reflects that in *** Claimant was aware of enough facts about the underlying conduct that he/she could have submitted a fulsome tip at that time.

Regarding Claimant’s motivation to report the Company’s misconduct, Claimant asserts that it was unrelated to Claimant’s receipt of a subpoena by Enforcement staff investigating his/her own conduct. Claimant claims that in ***, before receiving any investigatory subpoena, he/she began doing research into the [Redacted] to see if he/she could find wrongdoing to make a whistleblower submission in anticipation of the Dodd-Frank Act being enacted. Claimant also argues that Claimant had no reason to believe Claimant had done anything wrong and so was not concerned about the staff’s investigation in the Other Unrelated Matter. [Redacted]

First, we note that Claimant’s motivation is not an award criterion, so we need not make a specific finding on this issue. Second, Claimant’s assertion that Claimant had done nothing wrong is also not related to any award criterion, so we decline to make any findings on that issue.

Regardless of Claimant’s motivation for submitting the tip when he/she did, we find that Claimant substantially and unreasonably delayed in reporting Claimant’s information by waiting approximately four years to provide information to the Commission and doing so only after Claimant received a subpoena from the SEC related to Claimant’s own misconduct. We further find that a ***% award will adequately acknowledge Claimant’s involvement with, and contributions to, the Covered Action, while taking into account his/her substantial delay in reporting.

Finally, after careful consideration of Claimant’s argument regarding the above-mentioned offset, we have determined not to offset the award by the amount of [Redacted] in the Other Unrelated Matter. We therefore will not order that the award payment be offset against the outstanding [Redacted] amount.

III. CONCLUSION.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application is granted, and Claimant shall receive an award of ***% of monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[3] See Rules 21F-2 and 21F-9(d).
[4] See Rules 21F-3(a)(1) and 21F-4(a).
[5] See Rule 21F-4(a).
[6] See Rules 21F-3(a)(2) and 21F-4(b).
[7] See Rules 21F-3(a)(3) and 21F-4(c)(1).
[8] In assessing the appropriate award amount, Exchange Act 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.

SEC

12/31/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims for the above-referenced Covered Action and Criminal Actions[fn1] from the following claimants:

[Redacted] (“Claimant 9”) [Redacted].

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Prelimina1y Determinations for the award claimants as follows.

[Redacted].

[Redacted] Claimant 9, [Redacted].

The CRS has preliminarily determined to recommend that the Commission deny an award to [Redacted] Claimant 9 [Redacted]. No information submitted by [Redacted] Claimant 9, [Redacted] led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the info1mation that [Redacted] Claimant 9, [Redacted] submitted:

1. caused the Commission to (i) commence an examination (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn6]

[Redacted].

The CRS notes that the record demonstrates that Claimant 9’s responsibilities at [Redacted] focused on conducting internal investigations of employee misconduct and illegal activities. Accordingly, pursuant to 21F-4(b)(4)(iii)(B), Claimant 9’s information cannot be considered original information. In addition, Claimant 9’s information focused on [Redacted] in [Redacted] whereas the Covered Action focused on other misconduct in [Redacted], which Claimant 9 did not provide information on. Claimant 9’s information did not cause Enforcement staff to open the investigation or inquire concerning different conduct as part of a current Commission investigation; nor did it significantly contribute to the success of the Covered Action.

[Redacted].

By: Claims Review Staff.

[1] The Criminal Actions constitute “related actions” to the Covered Action within the meaning of § 21F(a)(5) of the Exchange Act, 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as judicial or administrative actions that were brought by the Attorney General of the United States and are based on the same original information that the whistleblowers voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.

[6] To the extent that Claimants [Redacted], 9, [Redacted] applied for a related action award in connection with the Criminal Actions, because they do not qualify for an award in the Covered Action, none are eligible for a related action award in connection with the Criminal Actions. A related action award may be made only if, among other things the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

SEC

96527

12/19/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination[fn1] recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $29 million, equal to [Redacted] percent (*** %) of monetary sanctions collected in the above-referenced Covered Action and an award of more than $8 million, equal to *** percent (*** %) of monetary sanctions collected in an action brought by *** [Redacted] (the “Other Agency”) (hereinafter, “Related Action”).[fn2] In recommending that Claimant be found eligible for an award, the CRS recommended that the Commission exercise its general exemptive authority to waive the timing element of the first requirement of Rule 21F-4(c)(3).

We have determined that it would be in the public interest and consistent with the protection of investors for the Commission to exercise our discretionary authority under Section 36(a) of the Exchange Act to waive the timing element of the first requirement of Rule 21F-4(c)(3) and find that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the referenced Covered Action pursuant to § 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder. To be eligible for an award, a whistleblower must provide original information that leads to a successful enforcement action. As relevant here, a claimant satisfies Rule 21F-4(c)(3) where he/she does the following: (1) reports original information through an entity’s internal whistleblower, legal or compliance procedures before or at the same time he or she reports to the Commission; (2) the entity provides the Commission with the whistleblower’s information or with the results of an investigation initiated in response to the whistleblower’s information; (3) the information provided by the entity to the Commission “led to” successful enforcement under the criteria of Rule 21F-4(c)(1)[fn4] or (2)[fn5] ; and (4) the whistleblower provides the same information to the Commission in compliance with Rule 21F-9 within 120 days of providing it to the entity.

Here, Claimant does not satisfy the first requirement under Rule 21F-4(c)(3) because Claimant did not submit the information to the entity before or at the same time Claimant reported to the Commission. Rather, Claimant submitted a tip that was received by the Commission approximately six months before Claimant sent an email directly to the company’s [Redacted] making substantially the same allegations. The company opened an internal investigation based on Claimant’s information and reported the allegations to the Commission, which prompted the opening of the Commission’s investigation. Claimant then submitted a tip to the Commission within 120 days that included the email that Claimant had sent to the company. While Claimant, an outsider to the company, did not first submit the information to the company, Claimant made persistent efforts to bring the conduct to the attention of the Commission as well as the company. Further, the principal objective of Rule 21F-4(c)(3) — to encourage internal reporting, thereby allowing a company the opportunity to address the conduct — was satisfied here. Quickly after Claimant submitted the email to the company, the company opened an internal investigation, hired outside counsel to conduct the investigation, and reported the allegations to the Commission. It would be in the public interest and consistent with the protection of investors to waive the first requirement of Rule 21F-4(c)(3) as to Claimant’s award application for both the Covered Action and the Related Action.

In applying the facts under Rules 21F-6(a) and (b), we find the recommended award percentages to be appropriate. Claimant’s initial anonymous tip to the company was the initial source of the company’s internal investigation, as well as both the Commission’s and Other Agency’s investigations. Claimant submitted multiple anonymous tips to both the company and the Commission throughout the course of the investigations. The resulting Covered and Related Actions, however, addressed misconduct broader than that reported in Claimant’s tips and a large percentage of the monetary sanctions ordered against the company related to conduct other than the violations alleged by Claimant. Further, Claimant’s level of contribution to the Covered Action was higher than to the Related Action, as Claimant’s specific allegations were not included as part of the charges in the action brought by the Other Agency.

Accordingly, it is ORDERED that Claimant shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action and an award of *** percent (*** %) of the monetary sanctions collected in the Related Action.
By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying an award to two claimants who did not submit requests for reconsideration. Accordingly, the preliminary denial of the second and third claimants’ award applications have become Final Orders of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] The action brought by the Other Agency, [Redacted], constitutes a “related action” to the Covered Action within the meaning of Section 21F(a)(5) of the Exchange Act, 15 U.S.C. § 78u-6(a)(5), and Rule 21F-4(d)(3) promulgated thereunder, 17 C.F.R. § 240.21F-4(d)(3), which provides that [Redacted] after July 21, 2010 is “deemed to be an administrative action and any money required to be paid thereunder will be deemed a monetary sanction.”
[3] See Exchange Act Section 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] Pursuant to Rule 21F-4(c)(1), the Commission will consider that a whistleblower provided original information that led to the successful enforcement of a judicial or administrative action if the whistleblower gave the Commission original information that was sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of the whistleblower’s original information.
[5] Rule 21F-4(c)(2) provides that the Commission will consider that a whistleblower provided original information that led to the successful enforcement of a judicial or administrative action if the whistleblower gave the Commission original information about conduct that was already under examination or investigation by the Commission, the Congress, any other authority of the federal government, a state Attorney General or securities regulatory authority, any self-regulatory organization, or the PCAOB (except in cases where the whistleblower was an original source of this information as defined in paragraph (b)(5) of this section), and the whistleblower’s submission significantly contributed to the success of the action.

SEC

12/14/2022

fu response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [Redacted] (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Claimant provided no information that was reviewed or otherwise used by staff handling the Covered Action or underlying investigation, and those staff members otherwise had no contact with Claimant. Therefore, Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action(s) within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant failed to comply with the requirements of Rules 21F-9(a) & (b) of the Exchange Act, as Claimant did not provide information on Form TCR or through the Commission’s online TCR portal or sign the required whistleblower declaration.[fn3]

Office of the Whistleblower.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, Claimant is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[3] Claimant’s Form WB-APP does not include a valid TCR number upon which he/she bases his/her claim. Nor does it provide any date on which any TCR was purpo1tedly submitted. Further, Enforcement staff was unable to locate any TCR in the Commission’s TCR system from Claimant relating to the Covered Action. Claimant also is not eligible for an automatic waiver of the Form TCR filing requirement under Rule 21F-9(e) because Claimant is not otherwise eligible for an award.

SEC

96474

12/12/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $20,000,000, which is equal to *** percent ( ***%) of the amount collected in the above-referenced Covered Action (“Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the referenced Covered Action.[fn1]

In determining the amount of award, the Commission considered the following factors set forth in Rule 21F-6 of the Exchange Act as they applied to the facts and circumstances of Claimant’s application: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the 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.

In reaching this conclusion, the Commission considered that prior to Claimant’s provision of information, Enforcement staff had previously received a detailed referral from the Division of Examinations and had been investigating the conduct for more than a year before receiving Claimant’s tip. As such, much of the information Claimant provided was already known to the Enforcement staff, and the new, helpful information Claimant provided was fairly limited. On the other hand, Claimant met with Enforcement staff multiple times and remained cooperative throughout the investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

SEC

12/11/2022

In response to the above-referenced Notices of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] and [Redacted] for the three above-referenced SEC enforcement actions (“Covered Actions”) and the above-referenced action brought by the [Redacted]. The Commission also received a whistleblower award claim from [Redacted] (“Claimant 3”) in the [Redacted]. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations as follows:

[Redacted].

[Redacted] (“Claimant 3”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 3 for the reasons described below.

Claimant 3 was a [Redacted] for [Redacted] (the “Company”). Claimant 3 submitted a Form WB-APP on [Redacted]. The deadline for filing award claims in the [Redacted] was [Redacted]. As such, Claimant 3 submitted an untimely award application because Claimant 3 failed to submit the claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act.

Claimant 3 also did not submit a Form TCR as required under the Commission ‘s rules. Under Rule 21F-2(b), to be eligible for a whistleblower award, claimants are required to submit their information in the form and manner required by Rule 21F-9. Claimant 3 did not submit information either on Form TCR or online through the Commission’s website, as required by Rule 21F-9(a), and did not sign the required whistleblower declaration, as required by Rule 21F-9(b). Claimant 3 has never submitted a Form TCR in connection with the [Redacted]. Claimant 3 also is not eligible for the automatic waiver under Rule 21F-9(e) because the record does not unambiguously reflect that Claimant 3 would otherwise be eligible for an award.

Finally, Claimant 3 did not provide information that led to the successful enforcement of the [Redacted] within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information Claimant 3 provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn9]

By: Claims Review Staff.

[9] In the Form WB-APP, Claimant 3 asserts a claim for award from the “US Trustee.” While it is unclear what “US Trustee” refers to, Claimant 3 is not eligible for an award in connection with a related action because Claimant 3 is not eligible for an award in a Commission Covered Action.

SEC

12/10/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received three whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of the three below claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations as follows.

[Redacted].

[Redacted] (“Claimant 3”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 3. The basis for this determination is that Claimant 3 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 3 submitted a tip more than a year after the Covered Action investigation was opened, and the tip concerned an entity unrelated to the subject matter of the investigation. Investigative staff for the Covered Action investigation do not recall receiving or reviewing Claimant 3’s information, nor communicating with Claimant 3. None of Claimant 3’s information allowed Enforcement staff to conserve time and resources in the Covered Action investigation; nor did Claimant 3’s information allow staff to bring additional charges or charges against additional defendants. None of Claimant 3 ‘s information significantly contributed to the success of the Covered Action.

By: Claims Review Staff.

SEC

12/10/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [Redacted] for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimant was never provided to or used by staff handling the Covered Action or underlying investigation, and those staff members otherwise had no contact with Claimant. Therefore, Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action(s) within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

N. Creola Kelly.

Chief, Office of the Whistleblower.

SEC

96439

12/02/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of nearly $ 2,500,000, which represents *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). The CRS further preliminarily determined to recommend the denial of the award application submitted by [Redacted] (“Claimant 2”). Claimant 1 did not submit a response contesting the Preliminary Determinations, but Claimant 2 submitted a timely notice contesting the preliminary denial of his/her award claim. For the reasons discussed below, the CRS’s recommendations are adopted with respect to Claimant 1 and Claimant 2.

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed a settled civil action in federal district court. The complaint alleged that [Redacted]. According to the complaint, [Redacted]. The complaint alleged that [Redacted]. The complaint further alleged that [Redacted]. The complaint charged [Redacted]. In settlement, [Redacted] agreed to pay monetary sanctions totaling [Redacted], which has been collected.

On [Redacted], the Office of the Whistleblower posted the above-referenced Notice Redacted of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn1] Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determinations.

The CRS[fn2] preliminarily determined to recommend to the Commission that it find that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the referenced Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, and that Claimant 1 receive an award *** of % of the monetary sanctions collected or to be collected in the Covered Action.

The Claims Review Staff also preliminarily determined to deny Claimant 2’s award claim because Claimant 2 is not a “whistleblower,” having never individually provided the Commission with information about a possible violation of the securities laws.[fn3] The information that is the basis for Claimant 2’s award claim was submitted to the Commission by an entity that is owned by Claimant 2, not by Claimant 2 in Claimant 2’s individual capacity.[fn4] Additionally, Claimant 2 failed to submit a Form TCR to the Commission within 30 days of the submission of information upon which Claimant 2’s award claim is based despite having constructive notice of the filing requirement.[fn5] As a result, the CRS determined that Claimant 2 does not qualify for a waiver of Claimant 2’s noncompliance with this requirement, and the record does not unambiguously demonstrate that Claimant 2 would otherwise qualify for an award because he/she did not individually provide information to the Commission.[fn6]

C. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 submitted a timely written response contesting the Preliminary Determinations.[fn7] Claimant 2 first asserts that that all of the information provided to the SEC was submitted in his/her individual capacity. Claimant 2 states that he/she researched and evaluated the information and decided to report his/her conclusions to the SEC. Claimant 2 further states that the entity’s general counsel was acting on his/her behalf and at his/her direction when presenting information to the SEC. Claimant 2 therefore asserts that the entirety of the information submitted to the SEC was provided at his/her direction, including information presented by the entity’s representatives, and should be attributed to Claimant 2 in his/her individual capacity, not to the entity. Claimant 2 further argues that individual whistleblowers routinely employ attorneys throughout the whistleblower process when interfacing with SEC staff and there is no requirement that all of the information come directly from the mouth or email of the individual. In support of Claimant 2’s response, Claimant 2 submits a declaration of the entity’s general counsel which states that he/she personally assisted Claimant 2 in reporting information to the SEC and acted entirely at the direction of Claimant 2. According to the general counsel, Claimant 2, through his/her own contacts, set up a meeting at the entity’s offices with the SEC and other government agencies in [Redacted]. At that meeting, Claimant 2 states that he/she and an entity analyst led the discussion. The general counsel also stated that it was Claimant 2, in his/her personal capacity, who determined to report his/her findings to the SEC and other governmental authorities. Claimant 2 alternatively argues that if he/she and the entity provided information jointly (as stated in Claimant 2’s late-filed TCR submission), Claimant 2 should be awarded whistleblower status while the entity should not.

Claimant 2 also contends that to the extent he/she failed to submit a timely Form TCR, he/she should be granted a waiver pursuant to Section 36(a) of the Exchange Act. While Claimant 2 appears to concede that he/she is not entitled to a waiver pursuant to Rule 21F-9(e), Claimant 2 contends that the 30-day timing requirement pursuant to Rule 21F-9(e) became effective on December 7, 2020, well after Claimant 2 provided information to the SEC. To the extent this rule applies to a previously filed TCR,[fn8] Claimant 2 argues that a waiver of the TCR filing requirements pursuant to Section 36(a) is in the public interest and consistent with the protection of investors.

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that caused Enforcement staff to open an investigation that led to the successful enforcement of the Covered Action.

The CRS preliminarily determined that Claimant 1 [Redacted]. In making this recommendation, we considered: (1) Claimant 1’s information was significant in that it revealed fraudulent conduct and prompted the opening of the investigation; (2) Claimant 1’s assistance during the investigation, which included several interviews and production of documents, assisted the staff in identifying witnesses and drafting subpoenas; and (3) the charges in the Covered Action were based on Claimant 1’s information. [Redacted].

B. Claimant 2.

Contrary to the assertions in Claimant 2’s response, the claim that Claimant 2 provided information in his/her individual capacity is unsupported by the record. While the entity’s general counsel states that Claimant 2 determined to report the information in his/her personal capacity, there is no evidence that the general counsel or other entity representatives actually represented Claimant 2 in his/her individual capacity rather than the entity on the numerous occasions when they presented information to the SEC, including the initial submission of information by the general counsel to SEC staff in [Redacted]. Because Claimant 2 is the owner and founder of the entity, the fact that all entity employees are under the direction and control of Claimant 2 is not determinative here. Because an entity can only act through its associated individuals, Claimant 2 would need to demonstrate that these individuals were acting at his/her direction on his/her personal behalf rather than on behalf of the entity. Notably, the entity’s general counsel does not state in his/her declaration that he/she ever represented Claimant 2 in Claimant 2’s individual capacity. In response to OWB’s request for additional information to clarify whether the general counsel’s representation of Claimant 2 was in Claimant 2’s individual capacity, the general counsel only reiterated that he/she worked at Claimant 2’s sole direction on behalf of Claimant 2 and the entity when speaking with the SEC. The record, therefore, does not demonstrate that the entity’s general counsel or employees ever represented anyone other than the entity when providing information to the SEC. Further, although Claimant 2 takes issue with the SEC staff’s declaration stating that Claimant 2 “attended” the [Redacted] meeting, even if we credit Claimant 2 with scheduling and leading that discussion as he/she contends, there is no evidence in the record supporting his/her assertion that the information was presented in his/her personal capacity rather than on behalf of the entity.

Claimant 2’s request for a waiver pursuant to Exchange Act Section 36(a) is also unsupported by the record. Section 36(a)(1) provides that “the Commission, by rule, regulation, or order, may conditionally or unconditionally exempt any person… from any provision or provisions of [the Exchange Act] or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.”[fn12] The “public interest” requirement supports the use of exemptive authority when “particular facts would make strict compliance” inappropriate in a specific case.[fn13] In whistleblower matters, the Commission has found that the public interest warranted an exemption from a rule requirement in a limited number of cases where the unique circumstances of the particular matter raised considerations substantially different from those which had been considered at the time the rules were adopted, and a strict application of the rules would result in undue hardship, unfairness, or inequity.[fn14]

Claimant 2, however, has failed to demonstrate any circumstances that warrant an exemption from the TCR filing requirements. The requirement that an individual submit a Form TCR has existed since the whistleblower rules went into effect in August 2011.[fn15] Further, when proposing the subsequently adopted “clarification” to Rule 21F-9 in June 2018, the Commission stated:

[T]he first time an individual provides information to the Commission that the individual will rely upon as a basis for claiming an award, the individual must provide that information in accordance with the procedures specified in Rules 21F-9(a) and (b)… To date, this has been the approach that the Commission has followed in making award determinations.[fn16]

Prior to the proposed amendments, the only exceptions to this were in the limited instances where we “allowed individuals to perfect a defective submission provided that the individual did so promptly and before any significant investigative steps had occurred with respect to the submission”[fn17] and where the individual submits his or her information in accordance with the procedures specified in Rules 21F-9(a) and (b) shortly after the individual had provided the information to the Commission in a manner that was not in accordance with these procedures. Thus, even before the adoption of Rule 21F-9(e), Claimant 2 would not have qualified for an exception to the filing requirements because he/she waited eighteen months to submit a TCR and did so well after significant investigative steps had occurred.

Claimant 2 further contends that he/she is particularly suited for a waiver because he/she suffered from ineffective assistance of counsel throughout his/her whistleblower application.[fn18] According to Claimant 2, his/her attorney failed to communicate with the SEC, failed to open messages from SEC staff, and failed to familiarize himself with the basic requirements of a whistleblower application, which caused Claimant 2 to file his/her Form TCR after the required deadline. Claimant 2 further claims that his/her attorney was unaware that submitting the Form TCR late and jointly with the entity might impact Claimant 2’s whistleblower eligibility. In support of Claimant 2’s argument for a waiver, Claimant 2 references two whistleblower matters where waivers were granted. The first matter involved counsel who used information from the claimant to submit an application as a whistleblower on behalf of themselves.[fn19] The second matter involved, among other circumstances, counsel who misunderstood communications from the staff about whether the claimant met the procedural requirements for participating in the whistleblower program, but who made clear at the outset that the claimant intended to be a whistleblower.[fn20] Neither of these matters are instructive here. Claimant 2 does not allege that his/her counsel misappropriated Claimant 2’s information and sought to pass it off as their own. Nor does Claimant 2 allege a misunderstanding of communications from the staff or demonstrate the existence of the unique combination of other facts and circumstances the Commission pointed to in that matter as justifying an exemption under Section 36(a). Claimant 2 provides no explanation as to why the TCR was submitted eighteen months after the general counsel’s original contact with SEC staff. As a result, Claimant 2 has not demonstrated a sufficient reason for not timely filing a TCR that reflects the type of limited circumstance supporting the Commission’s exercise of general exemptive authority under Exchange Act Section 36(a) or how a waiver would be necessary or appropriate in the public interest in this matter. Accordingly, Claimant 2 does not qualify for a waiver pursuant to Section 36(a) and his/her claim should be denied.[fn21]

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award equal to *** percent (*** %) of the monetary sanctions collected in the Covered Action.

It is further ORDERED that Claimant 2’s whistleblower award application in the Covered Action be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a); 17 C.F.R. § 240.21F-10(a).

[2] Rule 21F-10(d) under the Exchange Act provides that the CRS will “evaluate all timely whistleblower award claims submitted on Form WB-APP in accordance with the criteria set forth in the rules.” 17 C.F.R. § 240.21F-10(d); see also Rule 21F-11(d).

[3] See Exchange Act Section 21F(a)(6) (defining whistleblower as “any individual”); Rule 21F-2(a)(1); 17 C.F.R. § 240.21F-2(a)(1) (“[y]ou are a whistleblower… as of the time that, alone or jointly with others, you provided the Commission with information in writing that relates to a possible violation of the federal securities laws…). See also Rule 21F-2(a)(2); 17 C.F.R. § 240.21F-2(a)(2) (“[a] whistleblower must be an individual. A company or other entity is not eligible to be a whistleblower.”).

[4] See Order Determining Whistleblower Award Claim, Rel. No. 34-85793 (May 7, 2019).

[5] See Rule 21F-9(e); 17 C.F.R. § 240.21F-9(e). Even if Claimant 2 could be credited with the information submitted by the entity, Claimant 2’s TCR was submitted approximately eighteen months after the entity, through its general counsel, provided information to the Commission.

[6] See Rule 21F-9(e)(2); 17 C.F.R. § 240.21F-9(e)(2).

[7] See Rule 21F-10(e); 17 C.F.R. § 240.21F-10(e).

[8] Rule 21F-9(e) applies to award applications pending as of the effective date of the amended rules and therefore applies to Claimant 2’s application for award.

[9] [Redacted].

[10] [Redacted].

[11] ***.

[12] 15 U.S.C. § 78mm(a)(1).

[13] AT&T Wireless Services, Inc. v. FCC, 270 F.3d 959, 965 (D.C. Cir. 2001); see P&R Temmer v. FCC, 743 F.2d 918, 929 (D.C. Cir. 1984).

[14] See, e.g. , Order Determining Whistleblower Award Claim, Rel. No. 34-86010 (June 3, 2019) (“voluntary” requirement of Rule 21F-4(a) waived where, among other factors, claimants were not notified of request from *** that preceded their whistleblower submission); Order Determining Whistleblower Award Claims, Rel. No. 34-84046 (Sept. 6, 2018) (“voluntary” requirement waived where, among other factors, claimant learned the information he/she reported after he/she was interviewed by other agency); Order Determining Whistleblower Award Claims, Rel. No. 34-90721 (Dec. 18, 2020) (claimant’s counsel used information from the claimant to submit an application as a whistleblower on behalf of themselves); Order Determining Whistleblower Award Claims, Rel. No. 34-90580 (Dec. 7, 2020) (counsel misunderstood communications from the staff about whether the claimant met the procedural requirements for participating in the whistleblower program).

[15] See Exchange Act Rule 21F-8(a); 17 C.F.R. § 240.2F-8(a) (providing that “[t]o be eligible for a whistleblower award, you must give the Commission information in the form and manner that the Commission requires” and specifying that the procedures for submitting information are described in Rule 21F-9). Exchange Act Rule 21F-9(a) and (b), as in effect at the time the whistleblower rules went into effect in August 2011, required that in order “[t]o be considered a whistleblower under Section 21F of the Exchange Act… you must submit your information about a possible securities law violation by either of these methods: (1) Online, through the Commission’s website located at www.sec.gov; or (2) By mailing or faxing a Form TCR… to the SEC Office of the Whistleblower” and that further, the submitter “must declare under penalty of perjury at the time you submit your information pursuant to paragraph (a)(1) or (2) of this section that your information is true and correct to the best of your knowledge and belief.”

[16] Proposed Amendments to the Whistleblower Rules, Exchange Act Rel. No. 83577 (June 28, 2018) at 82.

[17] See id. , note 196; see also Adopting Release for the Whistleblower Rule Amendments, Exchange Act Rel. No. 34-9963 at 99 (Sept. 23, 2020) (“[t]hat said, we have not applied these procedural requirements rigidly and have through our practice permitted whistleblowers to ‘perfect’ their submissions of original information by complying with the requirements of Rule 21F-9(a) and (b) for a brief period of time from the date they first provide information to the Commission.” (emphasis added).

[18] The general counsel of the entity did not submit Claimant 2’s late-filed Form TCR. Rather, separate whistleblower counsel submitted the Form TCR and Claimant 2’s Form WB-APP.

[19] Order Determining Whistleblower Award Claims, Rel. No. 34-90721 (Dec. 18, 2020).

[20] Order Determining Whistleblower Award Claims, Rel. No. 34-90580 (Dec. 7, 2020).

[21] Even were we to waive non-compliance with the Form TCR requirement, Claimant 2 still does not qualify for an award because Claimant 2 did not submit information to the Commission in his/her individual capacity.

SEC

96399

11/29/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that: (1) [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action; (2) [Redacted] (“Claimant 2”) receive a whistleblower award in the amount of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; (3) [Redacted] (“Claimant 3”) receive a whistleblower award in the amount of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; and (4) [Redacted] (“Claimant 4”) be denied a whistleblower award in the Covered Action.[fn1]

Claimant 1, Claimant 2, and Claimant 3 provided written notice of their decisions not to contest the Preliminary Determination.[fn2] Claimant 4 filed a timely response contesting the Preliminary Determination. For the reasons discussed below, the CRS ‘s recommendations are adopted.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed the Covered Action in the [Redacted] (“Court”). The Commission charged [Redacted] (“Individual 1”), [Redacted] (“Individual 2”), [Redacted] (“Company 1”), and [Redacted] (“Company 2”) (collectively, “Defendants”) with [Redacted]. On [Redacted] the Court [Redacted]. On [Redacted] the Court issued an order requiring that: (1) [Redacted] pay monetary sanctions totaling [Redacted] and (2) [Redacted] pay monetary sanctions totaling [Redacted]. The litigation involving [Redacted].

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimants filed timely whistleblower award claims.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that the Commission: (1) grant Claimant 1 an award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; (2) grant Claimant 2 an award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; (3) grant Claimant 3 an award equal to *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; and (4) deny Claimant 4 an award in the Covered Action.

The Preliminary Determination recommended that the Commission deny Claimant 4’s claim because no information submitted by Claimant 4 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily concluded that Claimant 4’s information did not either (1) cause the Commission to commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action pursuant to Rule 21F-4(c)(2). The CRS preliminarily determined that Enforcement staff responsible for the Investigation (“Staff”) did not open the Investigation based on Claimant 4’s information. Additionally, the CRS preliminarily concluded that none of Claimant 4’s information significantly contributed to the success of the Covered Action because such information was already known to Staff and did not meaningfully advance the Investigation or the Covered Action. Finally, the CRS noted that none of Claimant 4’s information was used in, or had any impact on, the charges brought in the Covered Action.

C. Claimant 4’s Response to the Preliminary Determination.

Claimant 4 submitted a timely, written response contesting the Preliminary Determination. 3 Claimant 4 argues that he/she provided the Commission with important and extensive information and supporting documentation only two months after the Investigation was opened. Claimant 4 also asserts that he/she supplemented his/her tip with further information relevant to the Investigation and provided hundreds of additional documents from [Redacted]. Further, Claimant 4 states that in [Redacted] he/she participated in a six-hour in-person interview with the Commission, during which time Claimant 4 provided specific context and clarity related to the documents he/she had previously produced. Claimant 4 asserts that given his/her assistance to the Commission, Claimant 4 likely saved the Commission substantial time, energy, and resources in the course of the Investigation.

II. Analysis.

A. Claimant 1, Claimant 2, and Claimant 3.

The record demonstrates that Claimant 1, Claimant 2, and Claimant 3 voluntarily provided original information to the Commission, and their original information led to the successful enforcement of the Covered Action.[fn4] Further, the record reflects that: (1) Claimant 1’s information was significant, as it contributed to the decision by Staff to initiate the Investigation into misconduct related to Defendants; (2) Claimant 1 submitted information and documents to Staff and spoke with Staff at least once; (3) Claimant 1’s information helped guide the early stages of the Investigation; and (4) Claimant 1 raised his/her concerns regarding Company 1 and Company 2 internally. Additionally, the record reflects that: (1) Claimant 2’s information was significant, as it contributed to the decision by Staff to initiate the Investigation; (2) Claimant 2 submitted information and documents to Staff, spoke with Staff at least once, and [Redacted] in connection with the Covered Action; and (3) Claimant 2’s information was helpful in that it included details about how Defendants [Redacted]. Finally, the record reflects that: (1) Claimant 3’s information significantly contributed to the Covered Action; (2) Claimant 3 submitted information and documents to Staff, spoke with Staff, and [Redacted] in connection with the Covered Action; and (3) Claimant 3’s information—which focused on Claimant 3’s [Redacted] communications with certain of the Defendants—was more limited as compared to the information and assistance provided by Claimant 1 and Claimant 2, whose information opened the Investigation.[fn5]

In light of these considerations and the relevant factors specified in Rule 21F-6,[fn6] it is appropriate that Claimant 1 receive an award of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; Claimant 2 receive an award of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; and Claimant 3 receive an award of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

B. Claimant 4.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn7] As relevant here, under Rule 21F-4(c)(1) and Rule 21F-4(c)(2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn8] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn9]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn10] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn11]

Claimant 4 does not qualify for an award under either of the above-described provisions. We credit Staffs declaration (“Declaration”), provided under penalty of perjury, which confirms that Staff opened the Investigation, in part, because of tips that the Commission received from certain individuals (other than Claimant 4), including Claimant 1 and Claimant 2.[fn12]

Additionally, while Staff communicated with and received information from Claimant 4, Claimant 4 did not provide information that significantly contributed to the success of the Covered Action. Beyond Claimant 4’s tip, Claimant 4 spoke to Staff via telephone with his/her counsel in March 2017, subsequently provided a thumb drive of additional internal corporate documents, and sat for testimony before the Commission in [Redacted] . Claimant 4 argues that in light of the volume of the documents he/she provided in his/her initial tip and then again following Claimant 4’s discussion with Staff, it is difficult to believe that none of the documents were documents that the Commission did not already have or did not use in the Investigation. Claimant 4 also argues that the documents he/she provided were from a Company 1 hard drive and were subject to a non-disclosure agreement that contained materials that were not widely circulated or publicly available. Claimant 4 alleges that it is doubtful that the Commission received duplicative information and files from other Company 1 [Redacted] Claimant 4 believes that the Commission brought the Covered Action based, in part, on at least some of Claimant 4’s information; Claimant 4 therefore alleges that he/she deserves to receive at least a portion of any award issued for the Covered Action.

Despite Claimant 4’s contentions, Staff was already aware of Claimant 4’s information through its own investigative efforts, as confirmed by the Declaration. The Declaration also confirms that Staff obtained the documentation that Claimant 4 provided from other sources. The Declaration explains in detail why Claimant 4’s information and documentation did not substantially advance or impact the Investigation and why none of Claimant 4’s information was used in, or had any impact on, the charges brought by the Commission in the Covered Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that: (1) Claimant 1 shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; (2) Claimant 2 shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; (3) Claimant 3 shall receive an award of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; and (4) the whistleblower application of Claimant 4 in connection with the Covered Action be, and hereby is, denied.

By the Commission.

[1] The CRS also preliminarily determined to recommend that the award application of one other claimant be denied. That claimant did not submit a request for reconsideration and, as such, the Preliminary Determination with respect to this claimant became the Final Order of the Commission, pursuant 10 Rule 21F-10(f).

[2] Claimant 2 and Claimant 3 also submitted claims for award for a separate Commission enforcement action. However, the CRS concluded that, because the Covered Action and the separate enforcement action did not arise out of the same nucleus of operative facts, there was no basis to treat the separate action as part of the Covered Action and these award claims should be denied. As noted, Claimant 2 and Claimant 3 provided written notice that they would not contest the Preliminary Determination, and, as such, the Preliminary Determination with respect to their award claims for the separate enforcement action became the Final Order of the Commission, pursuant to Rule 21F-10(f).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] See Exchange Act Section 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).

[5] In Claimant 3’s Form TCR, Claimant 3 argued that the documents and information being provided to the Commission were supplements to Claimant 2’s prior tip. In Claimant 3’s award application, Claimant 3 requested that the Commission review Claimant 2’s initial tip, along with all supporting documents and emails that Claimant 2 previously provided to Staff related to Claimant 2’s tip. However, although Claimant 2 and Claimant 3 were represented by the same counsel, they are not joint whistleblowers, and Claimant 3 only approached the Commission well after Claimant 2 came forward to the Commission. Further, there was no connection between Claimant 2’s information and Claimant 3’s information. Therefore, we are only considering Claimant 3’s own information and assistance that he/she supplied directly to the Commission.

[6] In determining the amount of the award to Claimant 1, Claimant 2, and Claimant 3, we considered the following factors set forth in Rule 21F-6 as they apply to the facts and circumstances of their application: (1) the significance of information provided: (2) the assistance provided, (3) the 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.

[7] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[8] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[9] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[10] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.

[11] Exchange Act Rel. No. 85412 at 8-9.

[12] Claimant 4 alleges in his/her reconsideration request that before the Investigation was opened, he/she spoke to a Commission analyst in [Redacted] for approximately 15 minutes. According to Claimant 4, during this conversation, Claimant 4 provided the Commission analyst with an overview of Company 1’s and Company 2’s business practices. However, according to the statements in Claimant 4’s own TCR, he/she did not disclose the names of Company 1 or Company 2 during this conversation. Since Claimant 4 did not disclose any company names during this August 2016 conversation, there is insufficient evidence for the Commission to conclude that this conversation caused the opening of the Investigation.

SEC

96381

11/28/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of $20 million, which represents *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). The CRS further preliminarily determined to recommend the denial of the award applications of [Redacted] (“Claimant 2”) and [Redacted] (“Claimant 5”). Claimant 1 did not submit a response contesting the Preliminary Determinations, but Claimant 2 and Claimant 5 each submitted a timely notice contesting the preliminary denial of his/her award claim.[fn1] For the reasons discussed below, the CRS’s recommendations are adopted.

I. The Covered Action.

On [Redacted], the Commission instituted the settled Covered Action in which it found that [Redacted] (the “Company”) violated [Redacted]. The Company was ordered, among other things, to pay [Redacted], which the Company has fully paid.

The Covered Action concerned the Company’s [Redacted].

II. Claimant 1’s Award.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn2] In determining the amount of award, we considered the factors set forth in Rule 21F-6 of the Exchange Act as they apply to the facts and circumstances of Claimant 1’s application.[fn3]

Claimant 1 provided significant information and continuing helpful assistance that enabled Commission staff to more quickly and efficiently investigate complex [Redacted] discussed in the Covered Action. Claimant 1, however, provided no information with respect to [Redacted] discussed in the Covered Action, was involved for a short period and at the direction of his/her supervisor in the conduct underlying part of the Covered Action, and delayed reporting for over two years after being involved in such conduct. Given all of these considerations, a *** percent (*** %) award appropriately recognizes Claimant 1’s contribution to the Covered Action while also accounting for both his/her level of culpability and unreasonable reporting delay.

III. Claimant 2’s Award Claim Is Denied.

A. Preliminary Denial.

The CRS preliminarily determined to recommend that Claimant 2’s award claim be denied because Claimant 2 did not provide information that led to the success of the Covered Action within the meaning of Section 21F(b)(l) of the Exchange Act 4 and Rules 21F-3(a)(3) and 21F-4(c) thereunder.[fn5]

Claimant 2 submitted two TCRs. In the first TCR, Claimant 2 alleged that the Company’s [Redacted] impeded his/her ability to communicate directly with the Commission’s Office of the Whistleblower in violation of Exchange Act Rule 21F-17(a). Claimant 2 asserted that several months after his/her TCR submission, the Company [Redacted].

According to a staff declaration, the Covered Action investigation staff never reviewed Claimant 2’s first TCR or had any communication with him/her about his/her information. Claimant 2’s first TCR provided no information that was used in the Covered Action investigation or contributed to the Covered Action. 6

Claimant 2 submitted the second TCR just hours before the Covered Action was instituted. Claimant 2 alleged that [Redacted]. According to a staff declaration, this TCR was referred to Covered Action investigation staff on the day that the Covered Action was instituted. In addition, the staff declaration stated that the TCR provided no information that was used in the Covered Action investigation or contributed to the Covered Action.

B. Response.

In his/her reconsideration request, Claimant 2 asserts that the information in his/her second tip provided the Company with additional motivation to agree to the Covered Action settlement. Claimant 2 states that as part of his/her effort to find whistleblower counsel, a month and a half before institution of the Covered Action, he/she provided the information that would be in his/her later tip to a lawyer and that lawyer later advised him/her that he could not represent him/her because he had a conflict of interest. Claimant 2 speculates that that lawyer may have been representing the Company in the Covered Action investigation and that his/her information may have provided the Company with extra motivation to settle the Covered Action in order to avoid Enforcement staff from expanding the investigation to include the misconduct alleged by him/her.

C. Analysis.

Claimant 2’s information did not cause Enforcement staff to open the Covered Action investigation or to inquire into different conduct as part of the Covered Action investigation and did not significantly contribute to the success of the Covered Action. Enforcement staff responsible for the Covered Action investigation did not review Claimant 2’s first tip. Enforcement staff received Claimant 2’s second tip on the same day the Covered Action was filed, and the tip related to [Redacted] which was not part of the Commission’s charges. Furthermore, Enforcement staff provided a supplemental declaration, which we credit, confirming that the law firm to which Claimant 2 provided his/her second tip did not represent the Company in the underlying investigation, and as such, there is no evidence supporting Claimant 2’s supposition that the second tip motivated the Company to settle the charges.

Accordingly, as the record does not show that Claimant 2’s information led to the success of the Covered Action, Claimant 2’s award application is denied.

IV. Claimant 5’s Award Claim Is Denied.

A. Preliminary Determination.

The CRS preliminarily determined to recommend that Claimant 5’s award claim be denied because Claimant 5 did not provide information that led to the success of the Covered Action within the meaning of Section 21F(b)(l) of the Exchange Act[fn10] and Rules 21F-3(a)(3) and 21F-4(c) thereunder.[fn11]

Claimant 5 submitted four tips regarding the Company: (1) [Redacted] complaint alleging that *** was [Redacted]; (2) [Redacted] whistleblower tip submitted through the Commission’s on-line TCR portal alleging that the Company was [Redacted]; (3) [Redacted] whistleblower tip submitted through the Commission’s on-line portal alleging that the Company had [Redacted] and (4) [Redacted] whistleblower tip submitted through the Commission’s on-line portal expressing his/her fear that the Company would [Redacted]. These tips were not related to the charges in the Covered Action. In addition, according to a staff declaration, none of these tips provided information that was used in the Covered Action investigation or contributed to the Covered Action.

B. Response.

In his/her reconsideration request, Claimant 5 states that he/she is entitled to an award because: (1) his/her tips and the Covered Action both focused on the Company’s [Redacted] and his/her tips said that the Company’s [Redacted]; and (2) he/she provided substantial information to Enforcement’s Office of Market Intelligence (“OMI”) and believes that OMI would have passed along his/her information to the Covered Action investigation staff.

C. Analysis.

Claimant 5’s information did not cause Enforcement staff to open the Covered Action investigation or to inquire into different conduct as part of the Covered Action investigation and did not significantly contribute to the success of the Covered Action.

Enforcement staff opened the Covered Action investigation based on a source unrelated to Claimant 5. Enforcement staff responsible for the Covered Action investigation clarified in a supplemental declaration, which we credit, that on [Redacted], OMI sent an email to an Enforcement accountant (“Accountant”), summarizing information that had been provided by Claimant 5 in his/her [Redacted] complaint and proposing that a disposition of no further action appeared warranted given the lack of substantiating evidence supporting Claimant 5’s allegations. That same day, the Accountant agreed with the proposed disposition. On [Redacted] , almost nine months after the [Redacted] email communication discussed above, Enforcement staff opened the Covered Action investigation based on information provided by an individual other than Claimant 5. While the Accountant became the lead accountant on the Covered Action investigation, the information in Claimant 5’s [Redacted] complaint was not used in the Covered Action investigation and did not contribute to the Covered Action.

Enforcement staff responsible for the Covered Action investigation also clarified in a supplemental declaration, which we credit, that none of the information in Claimant 5’s last three whistleblower complaints was reviewed by Enforcement staff responsible for the Covered Action investigation, was used in the Covered Action investigation, or contributed to the Covered Action.

Accordingly, as the record does not show that Claimant 5’s information led to the success of the Covered Action, Claimant 5’s award application is denied.

V. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award equal to *** percent (*** %) of the monetary sanctions collected in the Covered Action.

It is further ORDERED that Claimant 2’s and Claimant 5’s whistleblower award applications in the Covered Action be, and hereby are, denied.

By the Commission.

[1] The CRS’s Preliminary Determination also recommended denying an award to a set of joint claimants, who did not request reconsideration. As such, the preliminary denial of their award claim is now deemed to be the Final Order of the Commission through operation of law. Exchange Act Rule 21F-10(f), 17 C.F.R § 240.21F-10(f).

[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(b)(l), 15 U.S.C. § 78u-6(b)(l); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

[3] Rule 21F-6(a) and (b) factors include the following: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the 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.

[4] 15 U.S.C. § 78u-6(b)(1).

[5] 17 C.F.R. §§ 240.21F-3(a)(3) and 4(c).

[6] Nor did any witness in the Covered Action investigation mention [Redacted] to Enforcement staff during the investigation.

[7] See Exchange Act Section 21F(b)(l), 15 U.S.C. § 78u-6(b)(l).

[8] Rules 21F-4(c)(1)&(2).

[9] See Order Determining Whistleblower Award Claims, Release No. 34-85412 (March 26, 2019); Order Determining Whistleblower Award Claims, Release No. 34-82897 (March 19, 2018); see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).

[10] 15 U.S.C. § 78u-6(b)(1).

[11] 17 C.F.R. §§ 240.21F-3(a)(3) and 4(c).

SEC

96366

11/21/2022

The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition[fn1] recommending the denial of the joint whistleblower award claim submitted by [Redacted] (collectively, “Joint Claimants”) in connection with the above-referenced covered action (the “Covered Action”). Joint Claimants filed a timely response contesting the preliminary denial. For the reasons discussed below, Joint Claimants’ award claim is denied.[fn2]

I. Background.

A. The Covered Action.

On the Commission instituted settled administrative and cease-and-desist proceedings in the Covered Action, [Redacted] (collectively, “Respondents”) with [Redacted]. Specifically, the Commission alleged that Respondents [Redacted]. Pursuant to the settlement, Respondents agreed to pay [Redacted] in disgorgement and prejudgment interest to resolve the charges.

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Joint Claimants filed a timely whistleblower award claim.

B. The Preliminary Summary Disposition.

On [Redacted] OWB issued a Preliminary Summary Disposition recommending that Joint Claimants’ claim be denied because Enforcement staff assigned to the investigation that led to the Covered Action (the “Investigation”) never received any information from Joint Claimants or had any communication with Joint Claimants. Therefore, Joint Claimants’ information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. OWB determined that with respect to the Covered Action, Joint Claimants’ information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

C. Joint Claimants’ Response to the Preliminary Summary Disposition.

Joint Claimants submitted a timely written response contesting the Preliminary Summary Disposition (the “Response”).[fn3] Joint Claimants principally argue that Joint Claimants are entitled to an award because Joint Claimants provided significant and relevant information to the Commission “well in advance of the enforcement action and before [Respondents] [Redacted] and because [Joint Claimants] provided extensive and ongoing assistance to the Commission in the form of disclosures and interviews.” In support of their argument, Joint Claimants provided approximately fifty pages of email correspondence between Joint Claimants’ counsel and Commission staff who were not assigned to the Investigation from the period [Redacted] through [Redacted] Joint Claimants also stated that they were interviewed by a law firm conducting an investigation of the Respondents.

II. Analysis.

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the Covered Action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8] For the reasons discussed below, Joint Claimants’ information does not merit a whistleblower award in the Covered Action.

The record shows that Joint Claimants’ information did not cause the staff to open the Investigation. Enforcement staff assigned to the Investigation (the “Investigation Staff”) confirmed that the Investigation was opened based upon [Redacted] from the Respondents following [Redacted] Joint Claimants’ information did not cause the Investigation Staff to open the Investigation.

The record also demonstrates that Joint Claimants did not cause the Commission to inquire into different conduct as part of the Investigation and did not significantly contribute to the success of the Covered Action. Investigation Staff did not recall communicating with Joint Claimants or receiving any information from Joint Claimants. Further, the email correspondence which Joint Claimants attached to the Response does not bolster their case: Investigation Staff confirmed, in a supplemental declaration, which we credit, that the Commission staff involved in that email correspondence were not assigned to the Investigation and did not contribute to it. Investigation Staff also confirmed that Investigation Staff did not receive or review any information from the Commission staff involved in the email correspondence about the subject matter of the Investigation, nor did Investigation Staff discuss the Investigation with the staff involved in the email correspondence. Accordingly, Joint Claimants’ information did not cause the Investigation Staff to inquire into different conduct or significantly contribute to the success of the Covered Action.[fn9]

For these reasons, we deny Joint Claimants’ whistleblower award claim.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Joint Claimants in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-18, 17 C.F.R. § 240.21F-18.
[2] OWB also preliminarily denied the award claim of two other claimants. These claimants did not seek reconsideration of the Preliminary Summary Dispositions, and therefore the denials of their claims were deemed to be the Final Orders of the Commission under Exchange Act Rule 21F-18(b)(4).
[3] See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3).
[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[8] Exchange Act Rel. No. 85412 at 8-9.
[9] Joint Claimants also support their claim for an award by stating that they were interviewed in [Redacted] by a law firm retained to perform an audit and investigation of the Respondents. Investigation Staff confirmed, in the supplemental declaration, that they never received or reviewed any information from the law firm. Accordingly, whatever information Joint Claimants provided to the law firm did not lead to the success of the Covered Action.

SEC

11/18/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received six whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations as follows.

[Redacted].

[Redacted] (Claimant 3).

The CRS has preliminarily determined to recommend that the Commission deny the award claim of Claimant 3. Claimant 3 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information he/she provided to the Commission:

(1) under Rule 21F-4(c)(1) of the Exchange Act did not cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s information;

(2) did not significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act; and

(3) if the whistleblower first reported the information internally to an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law, was not submitted to the Commission in accordance with the procedures set forth in § 240.21F-9 within 120 days of having provided it to the entity, as required by Rule 21F-4(c)(3) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by Claimant 3. In addition, none of the information provided by Claimant 3 caused the staff to inquire concerning different conduct as part of the ongoing investigation or significantly contributed to the success of the action, as the information did not further the staffs understanding of the misconduct at issue in the Covered Action.[fn4] Finally, while Claimant 3 reported original information through his/her employer’s internal compliance procedures, Claimant 3 did not submit the same information to the Commission within 120 days of providing it to his/her employer, as required under Rule 21F-4(c)(3) of the Exchange Act.

[Redacted] (Claimant 4).

The CRS has preliminarily determined to recommend that the Commission deny the award claim of Claimant 4. Claimant 4 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information he/she provided did not:

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[Redacted] (Claimant 5).

The CRS has preliminarily determined to recommend that the Commission deny the award claim of Claimant 5. Claimant 5 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information he/she provided did not:

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[Redacted] (Claimant 6).

The CRS has preliminarily determined to recommend that the Commission deny the award claim of Claimant 6. Claimant 6 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information he/she provided did not:

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by Claimant 6. Moreover, staff responsible for the investigation and Covered Action did not review Claimant 6’s information; therefore, Claimant 6’s information had no impact on the staffs investigation or the Covered Action.

By: Claims Review Staff.

[4] Due to attorney-client privilege concerns, the staff did not review a memo submitted by Claimant 3 that contained Claimant 3’s analysis of wrongdoing committed by the respondent in the Covered Action and the staff had just one conversation with Claimant 3’s counsel.

SEC

11/18/2022

[Redacted] (“Claimant 11”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

[Redacted] Claimant 11.

The CRS has preliminarily determined to recommend that the Commission deny an award to [Redacted] Claimant 11. No information submitted by [Redacted] Claimant 11 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that [Redacted] Claimant 11 submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn6]

[Redacted].

The CRS notes that the record demonstrates that Claimant 11’s information was submitted the same day the Covered Action was filed and that the staff did not review Claimant 11’s information prior to the filing of the Covered Action. Claimant 11’s information did not cause the staff to open the investigation that led to the Covered Action or inquire concerning different conduct as part of a current Commission investigation, or significantly contribute to the success of the Covered Action.

By: Claims Review Staff.

[6] To the extent that Claimants [Redacted] 11 applied for a related action award in connection with the Criminal Actions, because they do not qualify for an award in the Covered Action, none are eligible for a related action award in connection with the Criminal Actions. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

SEC

96324

11/16/2022

The Commission previously jointly awarded [Redacted] and [Redacted] (collectively “Claimant”) *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action (“Covered Action”). Claimant now requests that a separate, subsequently-filed enforcement proceeding, [Redacted] (the “Second Action”), be deemed to have arisen from the same nucleus of operative facts as the Covered Action under Rule 21F-4(d) of the Securities Exchange Act of 1934 (“Exchange Act”), and that Claimant receive a payment equal to *** percent (***%) of amounts collected in the Second Action.[fn1]

Under Rule 21F-4(d)(2), for purposes of determining payment on an award, the Commission “will deem as part of the Commission action upon which the award was based any subsequent Commission proceeding that, individually, results in a monetary sanction of $1,000,000 or less, and that arises out of the same nucleus of operative facts.” In determining whether separate proceedings arise out of the same nucleus of operative facts, the Commission will consider a number of factors, including whether the separate proceedings involve the same or similar: (1) parties (whether named as defendants/respondents or simply named within the complaint or order); (2) factual allegations; (3) alleged violations of the federal securities laws; or (4) transactions or occurrences.[fn2]

The Commission finds that the Second Action did not arise out of the same nucleus of operative facts as the Covered Action. The record demonstrates that the Covered Action and the Second Action involved different and unrelated parties and transactions, which Claimant concedes. The Second Action also was brought more than two years after the Covered Action. That the two enforcement proceedings allege similar violations of law does not mean that they arose from the same nucleus of operative facts.

Accordingly, it is hereby ORDERED that the Second Action did not arise from the same nucleus of operative facts as the Covered Action, and Claimant’s request for payment in connection with the Second Action is DENIED.
By the Commission.

[1] The Second Action did not result in monetary sanctions totaling more than $ 1,000,000, and as such, was not posted as a Notice of Covered Action on the Office of the Whistleblower’s website. See Exchange Act Rule 21F-10(a).
[2] Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34,300, 34,327 (June 13, 2011).

SEC

11/14/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] Enforcement staff had opened the investigation almost a year before Claimant’s tip was submitted. By the time Claimant’s tip was received, Enforcement staff had significant documents and information regarding the conduct underlying the Covered Action. The documents and information provided by the Claimant were duplicative of information and documents Enforcement staff already had and did not provide any new theories of liability. Although Enforcement staff interviewed the Claimant, he/she did not provide Enforcement staff with any new information which helped Enforcement staff save time and resources or which led Enforcement staff to investigate new claims or parties. Claimant’s information did not advance Enforcement staff’s investigation or assist the staff in bringing the charges in the Covered Action.

SEC

11/11/2022

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] Although Claimant’s information prompted the opening of an investigation, after several months of investigating, Enforcement staff could not substantiate Claimant’s allegations. Enforcement staff opened a new line of investigation based on public information reported by [Redacted], which became the focus of the investigation and the basis for the Commission’s charges in the Covered Action. The Commission’s charges in the Covered Action were not based on the conduct alleged by Claimant. None of the information provided by Claimant was used in the Covered Action or otherwise helped Enforcement staff save time and resources or allowed staff to recommend additional charges or charges against additional respondents.

SEC

96231

11/04/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (Claimant 1), [Redacted] (Claimant 2), and [Redacted] (Claimant 3) receive a joint whistleblower award of nearly $1,600,000, which represents [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”) and that [Redacted] (Claimant 4) receive a whistleblower award of nearly $1,600,000, which represents [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action. Claimants 1, 2, and 3 provided written notice of their decision not to contest the Preliminary Determinations. Claimant 4 filed a timely response contesting the Prelimina1y Detenninations. For the reasons discussed below, the CRS’s recommendation is adopted with respect to Claimant 1, Claimant 2, Claimant 3, and Claimant 4.

I. Background.

A. The Covered Action.

The Commission filed the settled Covered Action on [Redacted]. The Commission’s complaint alleged that [Redacted]. The complaint further alleged that [Redacted]. As alleged in the complaint, [Redacted]. The complaint *** [Redacted].

The Commission charged the Company and [Redacted]. As part of the settled action, the Company and [Redacted].

The court approved the settlement and entered a final judgment. The Company and [Redacted] paid their total monetary sanctions as required under the court’s final judgment, including any prejudgment and post-judgment interest.

B. The Preliminary Determinations.

The Claims Review Staff preliminarily determined to recommend to the Commission that it find that Claimant 1, Claimant 2, and Claimant 3 jointly[fn1] voluntarily provided original information[fn2] to the Commission that led to the successful enforcement of the referenced Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, and that Claimant 1, Claimant 2, and Claimant 3 receive a joint award of *** % of the monetary sanctions collected in the Covered Action.

The Claims Review Staff also preliminarily determined to recommend to the Commission that it find that Claimant 4 voluntarily provided original information[fn3] to the Commission that led to the successful enforcement of the referenced Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, and that Claimant 4 receive an award of ***% of the monetary sanctions collected in the Covered Action.

C. Claimant 4’s Response to the Preliminary Determinations.

Claimant 4 requested reconsideration of the Preliminary Determinations asserting that (1) the information submitted by Claimants 1, 2, and 3 was not original information because it was based on information Claimant 4 submitted to [Redacted] (“Research Publication”), and (2) that the CRS overlooked several contributions made by Claimant 4 to the staff’s investigation, as well as hardships Claimant 4 suffered, when determining the award percentage.

First, Claimant 4 contends that Claimants 1, 2, and 3 did not provide the Commission with original information concerning [Redacted].[fn4] Claimant 4 contends without support that he/she provided information concerning [Redacted] to the Research Publication, which then published Claimant 4’s information on [Redacted]. Claimant 4 claims that Claimants 1, 2, and 3 used this information for their tip to the Commission. Claimant 4 acknowledges that the [Redacted] report only focused on [Redacted], but contends that it also provided evidence [Redacted]. Claimant 4 claims that the Research Publication’s [Redacted] report [Redacted] using the same sources of information that Claimant 4 ultimately provided to the Commission. Claimant 4 asserts that Claimants 1, 2, and 3 [Redacted] and that Claimant 4 was the original source of the information published therein.[fn5]

Second, Claimant 4 asserts that the CRS overlooked numerous contributions he/she made to the staff’s investigation, including: (1) [Redacted]; (2) [Redacted]; (3) [Redacted]; (4) [Redacted]; (5) [Redacted], and (6) [Redacted].

Finally, Claimant 4 asserts that the CRS did not consider unique hardships he/she endured due to his/her whistleblowing, including being subjected to numerous threats of litigation from the Company and other harassment.[fn6]

II. Analysis

A. Claimants 1, 2, and 3.

The record demonstrates that Claimants 1, 2, and 3 voluntarily provided original information to the Commission that caused Enforcement staff to inquire into new conduct as part of an existing investigation and led to the success of the Covered Action. [Redacted]

The CRS preliminarily determined that Claimants 1, 2, and 3 [Redacted]. Claimant 1, Claimant 2, and Claimant 3 provided new information that caused the staff to inquire into new conduct as part of its existing investigation and provided substantial assistance during the course of the investigation, including providing additional information and participating in interviews with the staff. [Redacted].[fn10] Furthermore, Claimant 1, 2, and 3’s contributions to the success of the Covered Action were equal in significance to the contributions made by Claimant 4, justifying an equal allocation of the recommended award percentage.

B. Claimant 4.

The record demonstrates that Claimant 4 voluntarily provided original information to the Commission that significantly contributed to the success of the Covered Action.[fn11] As discussed above, [Redacted].

Contrary to Claimant 4’s assertions in his/her reconsideration request, Claimants 1, 2, and 3 submitted original information in their Form TCR, which included information about [Redacted], Claimants 1, 2, and 3’s tip was submitted to the Commission before the [Redacted] Research Publication report and therefore, could not have been based on information contained in that report. While the [Redacted] Research Publication report contained information concerning [Redacted].[fn12] As a result, the report states [Redacted].[fn13] Claimants 1, 2 and 3’s tip, however, included non-public information that included [Redacted]. This internal information showed [Redacted]. Because the TCR submitted by Claimants 1, 2, and 3 included information not included in the Research Publication report published prior to their submission, as well as other information indicative of fraud by the Company and [Redacted] which they learned of as early as [Redacted], the information they submitted is original and they are eligible for an award.

Furthermore, the additional contributions and hardships discussed in Claimant 4’s request for reconsideration do not warrant a change in the award allocation. Most of the contributions cited by Claimant 4 concerned allegations that were not charged by the Commission. Enforcement staff confirmed that Claimant 4’s information [Redacted] did not further the staff’s investigation. With respect to this part of the Covered Action, the staff was already aware of the [Redacted] was primarily focused on determining [Redacted] based on the Company’s internal documents and witnesses, as well as the documents of witnesses of relevant third parties. Claimant 4’s information and analyses were based upon publicly available information only. Claimant 4 also contends that [Redacted]. However, the record does not establish that Claimant 4 was in fact the cause of these events. Finally, while Claimant 4 contends that he/she provided the staff with detailed information concerning [Redacted], this information did not assist or further the Covered Action investigation because this information was already known to the staff from the Company’s internal documents prior to Claimant 4 submitting his/her information. Additionally, while Claimant 4 claims that he/she faced threats of litigation and other harassment, Claimant 4 has not substantiated hardships that warrant an increase in award percentage in light of all the facts and circumstances in this matter.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1, Claimant 2, and Claimant 3 shall receive a joint award equal to [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action and that Claimant 4 receive an award equal to [Redacted] percent ( %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1]The CRS preliminarily determined to treat Claimant 1, Claimant 2, and Claimant 3 jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their tip. See Exchange Act Section 21F(a)(6) (defining “whistleblower” to mean “2 or more individuals acting jointly who provide[] information relating to a violation of the securities laws to the Commission”). Proceeding in this way has not impacted the net total award percentage to Claimant 1, Claimant 2, and Claimant 3. Unless Claimants 1, 2, and 3, 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 33.33% of their joint award.

[2] Claimants 1, 2, and 3 provided original information based on both independent knowledge and independent analysis. To be credited with providing independent analysis, the whistleblower’s examination and evaluation should contribute significant 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) (“Adopting Release”) at 112-13. Here, Claimants 1, 2 and 3 (the “joint claimants”) used their specialized knowledge to evaluate and analyze complex accounting data in public filings. According to Commission staff, their expertise assessed the staff in understanding complex accounting principles and transactions that furthered the investigation. Additionally, the joint claimants are not excluded from award eligibility by virtue of Exchange Act 21F-8(c)(4), which precludes award eligibility if a claimant “obtained the original information … through an audit of a company’s financial statements, and making a whistleblower submission would be contrary to requirements of Section 10A of the Exchange Act (15 U.S.C. 78j-a).” While Claimant 3 was [Redacted], the record reflects that Claimant 3 [Redacted]. As such, the joint claimants’ whistleblower TCR, filed approximately six months after Claimant 3’s [Redacted].

[3] The CRS preliminarily determined that Claimant 4 satisfied the original information requirement by providing independent analysis. Here, Claimant 4 used specialized knowledge to evaluate and analyze complex accounting data in public filings. According to Commission staff, this expertise assisted the staff in understanding complex accounting principles and transactions that furthered the investigation.

[4] In his/her award application, Claimant 4 also stated he/she was the original source of information underlying a report published by the Research Publication on [Redacted], which raised concerns about the Company’s [Redacted]. In addition, Claimant 4 states that he/she raised these same issues in a [Redacted]. However, we do not need to resolve this issue because neither Claimant 4, nor the joint claimants, are receiving credit for their analysis of [Redacted] because that information did not become part of the charges in the Covered Action.

[5] Claimant 4 also claims that Claimant 2 acknowledged in [Redacted] that Claimants 1, 2, and 3 [Redacted]. However, Claimant 4 provides no corroborating evidence of this alleged statement.

[6] Claimant 4 also requested that the record be amended to include all of his/her Forms TCR, including attachments and other related materials he/she provided to the Commission. However, no amendment to the record is necessary here because the initial staff declaration acknowledges Claimant 4’s numerous TCR submissions, including those specifically cited in Claimant 4’s response, and the supplemental staff declaration further explains the contributions, if any, that the information those submissions had to the investigation.

[7] [Redacted].

[8] [Redacted].

[9] [Redacted].

[10] [Redacted].

[11] While Claimant 4 did not satisfy the Exchange Act Rule 21F-9 TCR filing requirements when Claimant 4 submitted information in [Redacted], Claimant 4 subsequently satisfied the TCR filing requirements when Claimant 4 submitted new information in [Redacted] and again in [Redacted] on Form TCR that significantly contributed to the success of the Covered Action. See Exchange Act Rule 21F-9(e) (requiring claimants to submit information on Form TCR within 30 days of submitting the original information upon which the award claim is based).

[12] [Redacted] Research Publication report ***.

[13] Id. ***.

SEC

96232

11/04/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claims submitted by [[Redacted]] (“Claimant 1”) for the seven above-referenced covered actions (“Covered Actions”). The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition recommending the denial of the whistleblower award claim submitted by [[Redacted]] (“Claimant 2”) for the [[Redacted]] Action. Claimant 1 and Claimant 2 filed timely responses contesting the preliminary denials. For the reasons discussed below, Claimant 1’s and Claimant 2’s award claims are denied.

I. Background.

A. The Covered Actions.

The Covered Actions emanated from an investigation (“Investigation”) conducted by Division of Enforcement staff (“Staff’) into [Redacted]. As a result of the investigation, the Commission brought the Covered Actions against [Redacted]. The Commission charged the [Redacted] for willfully violating the Securities Exchange Act (“Exchange Act”) and relevant rules thereunder by [Redacted]. The Commission ordered that the [Redacted]. OWB posted notices of covered action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days for: [Redacted] Action [Redacted].[fn2] Claimant 1 and Claimant 2 filed timely whistleblower award claims for the Covered Actions and the [Redacted] Action, respectively.

B. The Preliminary Determination as to Claimant 1.

On December 20, 2021, the CRS issued a Preliminary Determination[fn3] recommending that Claimant 1’s claims be denied on three grounds.[fn4] First, the CRS determined that as to (1) the [[Redacted]] Action, (2) the [Redacted] Action, and (3) the *** Action, Claimant 1 did not provide information that led to the successful enforcement of the three actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that with respect to these three actions, Claimant 1’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 1’s information pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action pursuant to 21F-4(c)(2). The CRS determined that the Investigation that led to these actions was based on Staff’s efforts and not Claimant 1’s information.

Second, the CRS determined that as to (1) the [Redacted] Action, (2) the *** Action. (3) the *** Action, (4) the [Redacted] Action, and (5) the [Redacted] Action, the Commission could not Consider Claimant 1’s information to be derived from Claimant 1’s independent knowledge or independent analysis, as required to be “original information,” because Claimant 1 obtained the information as a result of his/her association with a firm retained to perform compliance or internal audit functions, as specified by Rule 21F-4(b)(4)(iii)(B). The CRS further concluded that Claimant 1 did not satisfy any of the expectations set forth in Rule 21F-4(b)(4)(v).

Finally, the CRS determined that because Claimant 1 was not eligible for an award for any of the Covered Actions, he/she was not eligible for any related action award for [Redacted] (“Other Agency”) [Redacted].
C. Claimant 1’s Response to the Preliminary Determination.
Claimant 1 submitted a timely written response contesting the Preliminary Determination.[fn5] Claimant 1 alleges that the Preliminary Determination wrongly concluded that his/her information did not advance the Investigation or the Covered Actions and emphasizes the value of his/her information to the Staff. Claimant 1 also argues that he/she is not subject to Rule 21F-4(b)(4)(iii)(B) because he/she was not an employee whose principal duties involved compliance responsibilities, nor was Claimant 1 employed by or otherwise associated with a firm retained to perform compliance functions. Claimant 1 asserts that even if he/she is subject to Rule 21F-4(b)(4)(iii)(B), he/she nevertheless satisfies two of the exceptions set forth in Rule 21F-4(b)(4)(v)—the substantial injury exception and the impeding an investigation exception— which would make him/her eligible for awards.

D. The Preliminary Summary Disposition as to Claimant 2.

On September 29, 2021, OWB issued a Preliminary Summary Disposition[fn6] recommending that Claimant 2’s claim for the [Redacted] Action be denied.[fn7] OWB determined that Claimant 2 did not provide information that led to the successful enforcement of the [Redacted] Action because Staff responsible for the action never received any information from Claimant 2 or had any communications with Claimant 2.[fn8]

E. Claimant 2’s Response to the Preliminary Summary Disposition.

Claimant 2 submitted a timely written response.[fn9] Claimant 2 argues that he/she submitted information to the Other Agency [Redacted] concerning [Redacted]. Claimant 2 also suggests that he/she informed Commission staff “firsthand” about these concerns. Claimant 2 believes that his/her information led to the Investigation and the [Redacted] Action. In support of his/her contentions, Claimant 2 points to purported correspondence Claimant 2 had with the Other Agency.

II. Analysis.

A. Claimant 1.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn10] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn11] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn12]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn13] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn14]

Claimant 1 does not qualify for an award in the [Redacted] Action, the [Redacted] Action, and the *** Action under either of the above-described provisions. We credit the Claimant 1 Staff Declarations, provided under penalty of perjury, which confirm that (1) the Investigation leading to the [Redacted] Action, the [Redacted] Action, and the *** Action was opened based on Staff’s independent investigative efforts and not based on information provided by Claimant 1; and (2) while Staff communicated with and received information from Claimant 1, he/she did not provide information that significantly contributed to the success of these three actions. The Preliminary Determination thus correctly concluded that as to the [Redacted] Action, the [Redacted] Action, and the *** Action, Claimant 1 did not provide information that led to the successful enforcement of any of those covered actions.

Further, to qualify as “original information”, a submission must be, inter alia, (1) derived from the submitter’s “independent knowledge” or “independent analysis”; and (2) not already known to the Commission from other sources. In addition, Rule 21F4(b)(4)(iii)(B) provides that information will not be treated as “independent knowledge” or “independent analysis” if it is obtained by an individual “because” he or she was “employed by or otherwise associated with a firm retained to perform compliance or internal audit functions for an entity.”

The record demonstrates that Claimant 1 obtained information about [Redacted] (collectively, the [Redacted]) as a result of his/her association with [Redacted] (“Company”), which was retained to perform compliance functions for the [Redacted]. Since the exclusion pertains to anyone “associated” with a firm retained to perform compliance functions and Claimant 1 does not contend that he/she was not associated with the Company, Claimant 1’s arguments that his/her “principal duties did not involve compliance or internal audit responsibilities” and that Claimant 1 obtained the relevant information in his/her capacity as an “independent contractor” rather than “employee,” are unavailing.

Claimant 1 argues that the Company— [Redacted] — was never retained to, or represented that it would, perform compliance functions and that it did not supplant the compliance officer or department at the [Redacted] who retained all regulatory responsibilities despite outsourcing some of the functions to the Company. However, the record demonstrates that, even though the Company did not supplant the compliance departments at the [Redacted] engaged the Company to perform compliance functions [Redacted] Company’s [Redacted] —as described by Claimant 1 and by the Company during the time that the Company and Claimant 1 interacted with the [Redacted] —was used by the Company to perform compliance functions for entities.

Additionally, Claimant 1 contends that certain of the [Redacted] had not formally engaged the Company at the times that Claimant 1 learned his/her information. Claimant 1 alleges that he/she only learned the information during pre-engagement activities, [Redacted]. However, even if Claimant 1 learned his/her information this way, we consider such activities to be part of the process by which the Company was retained by the [Redacted] to perform compliance functions.

Finally, Claimant 1 alleges that some of his/her information was developed through Claimant 1’s experiences working in the [Redacted]. For example, Claimant 1 argues that through independent analysis he/she uncovered and reported to the Commission “a dangerous pattern of non-compliant conduct.” However, the information that was helpful to Staff was the specific information that Claimant 1 provided about [Redacted] and which Claimant 1 learned while working for the Company.[fn15]

Because Claimant 1 obtained his/her information as a result of his/her association with the Company—which was retained to perform compliance functions—Claimant 1 must therefore satisfy at least one of Rule 21F-4(b)(4)(v)’s exceptions to receive an award. Claimant 1, however, has not done this.

First, Claimant 1 does not satisfy Rule 21F-4(b)(4)(v)(C), the 120-day exception.[fn16] Claimant 1 did not wait at least 120 days to report his/her information to the Commission since Claimant 1 provided his/her information to the [Redacted] audit committees, chief legal officers, or chief compliance officers (or their equivalents), or, since receiving Claimant 1’s information under circumstances indicating that the [Redacted] audit committees, chief legal officers, or chief compliance officers (or their equivalents) were already aware of the information. Claimant 1’s argument that the provision is inapplicable to his/her circumstances because the relevant Broker Dealers were aware of the misconduct “for months and/or years,” is not supported by evidence in the record. We therefore find that there is insufficient evidence to support the 120-day exception. Claimant 1’s argument that the provision is inapplicable because Claimant 1 was not acting in an “in-house role” and was not “involved in any audit of financial statements” is similarly unavailing because, as explained above, Claimant 1 obtained his/her information as a result of his/her association with the Company, which was retained to perform compliance functions.

Second, Claimant 1 does not satisfy Rule 21F-4(b)(4)(v)(A), the substantial injury exception.[fn17] Claimant 1 argues that failures by [Redacted] materially and negatively impacted the Commission’s prior and ongoing investigations, which ultimately caused substantial harm to investors. However, Claimant 1 has not identified a specific, substantial injury to the [Redacted] or to investors that he/she believed was likely to result from the [Redacted] conduct if Claimant 1 did not report his/her information.

Third, Claimant 1 does not satisfy Rule 21F-4(b)(4)(v)(B), the impeding an investigation exception.[fn18] Claimant 1 alleges that each of the [Redacted] engaged in conduct to cover up their misconduct, declined to self-report known violations, and did not fully implement compliance policies to redress past misconduct and to ensure future compliance. Moreover, Claimant 1 has alleged that in [Redacted] Claimant 1 believed that if he/she did not submit his/her information to the Commission, the Commission would never have learned of the [Redacted]. Claimant 1 has argued that without his/her information, the Commission would not be able to comprehend the magnitude and severity of the [Redacted] and supervisory failures spanning numerous [Redacted].

However, in the Commission’s 2011 adopting release for the whistleblower program rules (“2011 Adopting Release”), we explained that this exception may apply if a whistleblower had a reasonable basis to believe, for example, that “the entity is destroying documents, improperly influencing witnesses, or engaging in other improper conduct that may hinder our investigation.”[fn19] Here, Claimant 1 did not allege that he/she believed that misconduct of this nature was taking place. Instead, Claimant 1 has only expressed concerns that the [Redacted]: (1) were delaying in investigating and/or reporting their [Redacted] issues to the Commission; (2) desired to refrain from investigating, self-reporting, or correcting their *** issues; or (3) were seeking to prevent the creation of paper trails regarding when [Redacted] issues were discovered. Such concerns, however, are not comparable to those specifically identified in the 2011 Adopting Release—”destroying documents, improperly influencing witnesses, or engaging in other improper conduct that may hinder a Commission investigation.”

Finally, as to the [Redacted] Action, the [Redacted] Action, and the *** Action, prior to receiving Claimant 1’s information, Staff was already investigating [Redacted] as well as issues related to their [Redacted].[fn20] As such, Claimant 1’s information was not used in, nor had any impact on, the success of these Actions.

B. Claimant 2.

We deny an award to Claimant 2. The Claimant 2 Staff Declaration, which we credit, confirmed under penalty of perjury that Staff did not receive any information from Claimant 2 or communicate with Claimant 2. Instead, the Investigation that led to the [Redacted] Action was opened as a result of Staff’s own efforts. Although the Other Agency brought its own action—the [Redacted] Action—against [Redacted] for the same conduct that the Commission charged, the Commission was not involved in the bringing of the [Redacted] Action. The Commission and the Other Agency each conducted separate investigations into the conduct that was charged in the [Redacted] Action and the [Redacted] Action.

We therefore conclude that Claimant 2 did not provide information that caused Staff to commence an examination, open or reopen an investigation, inquire concerning different conduct as part of a current examination or investigation that then resulted in the Commission bringing the [Redacted] Action, or significantly contribute to the success of the [Redacted] Action. Therefore, Claimant 2 is not eligible to receive a whistleblower award for the [Redacted] Action or the [Redacted] Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that: (1) the whistleblower award applications of Claimant 1 in connection with the Covered Actions be, and hereby are, denied; and (2) the whistleblower award application of Claimant 2 in connection with the [Redacted] Action be, and hereby is, denied. By the Commission.

[1] [Redacted].
[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[4] The record supporting the Preliminary Determination included the declarations of two Staff attorneys who were assigned to the Investigation (“Claimant 1 Staff Declarations”).
[5] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[6] See Exchange Act Rule 21F-18(b), 17 C.F.R. § 240.21F-18(b).
[7] The record supporting the Preliminary Summary Disposition included the declaration of one of the Staff attorneys who was assigned to the Investigation (“Claimant 2 Staff Declaration”).
[8] OWB also determined that because Claimant 2 was not eligible for an award in the [Redacted] Action,
Claimant 2 was not eligible for an award in connection with any related action.
[9] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[10] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[11] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[12] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[13] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[14] Exchange Act Rel. No. 85412 at 8–9.
[15] Claimant 1 also takes issue with a sentence in a footnote from the Preliminary Determination, which states, in relevant part, that “. . . [the Company] represented Claimant [1] to clients and potential clients as [the Company’s] Compliance Director.” Claimant 1’s title is ultimately not dispositive since, as noted above, the record indicates that, regardless of his/her title, Claimant 1 obtained the relevant information as a result of his/her association with a firm retained to perform compliance or internal audit functions.
[16] This exception applies if “[a]t least 120 days have elapsed since [the claimant] provided the information to the relevant entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or [the claimant’s] supervisor,” or, since receiving the information, if the claimant “received it under circumstances indicating that the entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or [the claimant’s] supervisor was already aware of the information.”
[17] This exception applies if a claimant has a “reasonable basis to believe that disclosure of the information to the Commission is necessary to prevent the relevant entity from engaging in conduct that is likely to cause substantial injury to the financial interest or property of the entity or investors”.
[18] This exception applies if a claimant has a “reasonable basis to believe that the relevant entity is engaging in conduct that will impede an investigation of the misconduct”.
[19] Securities Whistleblower Incentives and Protections, 76 FR 34299, 34319 (June 13, 2011).
[20] As discussed above, under Rule 21F-4(b)(4)(iii)(B), Claimant 1’s information regarding [Redacted] will not be treated as “independent knowledge” or “independent analysis.” In light of the application of this rule, Claimant 1’s argument on reconsideration that the staff did not sufficiently acknowledge the usefulness of Claimant 1’s information is unavailing with respect to the *** Action, the *** Action, the [Redacted] Action, and the [Redacted] Action.

SEC

96230

11/04/2022

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed an emergency action against [Redacted] (the “Defendants”). The Commission’s complaint alleged, among other things, that the Defendants [Redacted]. The Commission’s complaint also alleged that Defendants [Redacted]. The Commission also charged [Redacted] (“Individual 1”) and [Redacted] (“Individual 2”) [Redacted].

On [Redacted] the court entered judgment against the Defendants, ordering them to pay over [Redacted] in disgorgement, as well as permanently enjoining them from future violations of the federal securities laws. That same day the court also entered judgment against Individual 2, ordering him/her to pay [Redacted] in disgorgement and prejudgment interest. On [Redacted] the court ordered Individual 1 to pay [Redacted] in disgorgement, prejudgment interest, and a civil penalty.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS preliminarily determined that Claimant first provided information to the Commission approximately one month after the Commission filed the Covered Action. In addition, the CRS preliminarily determined that the information provided by Claimant was either already known to the staff assigned to the investigation that led to the Covered Action (the “Investigation”) or was not relevant to the Covered Action. The CRS also noted that because Claimant did not qualify for an award in connection with the Covered Action, Claimant did not qualify for any related action award.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn1] Claimant did not provide any new information or facts to the Commission as part of Claimant’s Response. Instead, Claimant principally argues that the Covered Action was “deeply intertwined” with actions brought by [Redacted] (the “Other Agency”). Claimant stated that Other Agency staff and Commission staff spoke with Claimant on at least one occasion, and that the timing of developments in the Investigation affected the Other Agency’s investigation, and vice-versa. Claimant contends that “[g]iven the overlapping investigations, actions, and judgments, the SEC and [Other Agency] actions cannot be viewed in isolation, and [Claimant’s] contributions to one cannot be properly judged without consideration of [Claimant’s] contributions to the other.” Claimant asserts that Other Agency staff should have been consulted “in assessing the significance of [Claimant’s] contributions to the enforcement actions.”

II. Analysis.

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn5] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn6] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

As an initial matter, Claimant does not contend that Claimant’s information caused the staff to open the Investigation. Claimant’s TCR was submitted to the Commission approximately ten months after the staff opened the Investigation. Accordingly, Claimant’s information did not cause the staff to open the Investigation.

The record also does not show that Claimant’s information caused the staff to inquire into different conduct or significantly contributed to the ongoing Investigation. The staff declaration confirms that information in Claimant’s TCR was already known to the staff, and Claimant’s later conversations with the staff regarding Claimant’s TCR, where Claimant provided additional documents, also did not yield any information not already known to the staff through its own investigation. Claimant also reported on the substance of a meeting Claimant had with an individual connected to the Defendants; however, Claimant’s information about that meeting did not advance the Investigation or contribute to the success of the Covered Action as the staff was either already aware of the information or it was not relevant to the Investigation.

Claimant’s argument that Other Agency staff should be contacted because the Covered Action and the Other Agency actions are “deeply intertwined” is misplaced. As stated above, the initial question we examine is whether Claimant provided original information to the Commission that led to a successful Commission enforcement action.[fn7] Commission staff are best-placed to determine Claimant’s contributions to the Investigation and the Covered Action, and Claimant offers no plausible basis for why we should think otherwise. Based on the record, including the sworn declaration from Enforcement staff, which we credit, Claimant’s information did not lead to the success of the Covered Action. We decline Claimant’s invitation to gather additional information from Other Agency staff on the basis of Claimant’s speculation that Other Agency staff may have more information about Claimant’s contributions to the Commission Investigation and the Covered Action than Commission staff themselves.

For these reasons, Claimant does not qualify for a whistleblower award.[fn8]

III. Conclusion

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[2] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[3] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[4] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[5] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[6] Exchange Act Rel. No. 85412 at 8-9.
[7] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[8] Claimant’s Response refers to guidance on OWB’s website (the “Guidance”) stating that OWB may seek information from other government agencies when processing award claims. However, as noted in the Guidance, and quoted in Claimant’s Response, seeking information from another government agency “is particularly common with claims involving a related action, in which OWB is dependent on another agency to provide information unavailable to SEC.” Had Claimant qualified for a whistleblower award in connection with the Covered Action, which Claimant did not, discussions with Other Agency staff might have been warranted to determine if Claimant was eligible for a related action award. However, a related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable Commission covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims Release No. 34-84503 (Oct. 30, 2018). Because Claimant is not qualified for an award in connection with the Covered Action, Claimant is ineligible for a related action award.

SEC

96229

11/04/2022

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed a complaint against [Redacted] (the “Defendant”), [Redacted] (the “Company”), alleging that Defendant [Redacted]. Among other things, the complaint alleged that [Redacted]. The complaint charged that [Redacted]. On [Redacted] the court entered final judgment, permanently enjoining Defendant from future violations of the securities laws and ordering Defendant to pay a civil monetary penalty of [Redacted].

B. The Preliminary Determination.

The CRS also concluded that Claimant failed to submit Claimant’s claim for award within 90 days of the date of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act. Claimant determined that Claimant’s WB-APP was signed and dated approximately seven months after the deadline to file an application for an award.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a response (the “Response”) which OWB viewed as contesting the Preliminary Determination.[fn1] Claimant requested “a definitive preliminary determination and a schedule of the next steps in resolving the Whistleblower Award Application.” Among other things, Claimant argued that he/she contacted the Commission in [Redacted] and was subsequently “attacked and harassed” by [Redacted] (“Other Entity”). Claimant alleged that the Commission did not “adequately protect [Claimant] from retaliation and harassment” and “demands to be compensated for [Claimant’s] cooperation in the . . . SEC investigation into [Other Entity].” Claimant also claimed that Claimant “provided material information regarding [Claimant’s] claims against [the Company] and [Defendant] to the [Company] Board, and Federal Court, [Redacted] in advance of the SEC decision to fine [Defendant] and [Company]. [Claimant] also provided information directly to the SEC at help@sec.gov and [email address for a former Commissioner] and completed the TCR Form once [Claimant] was notified it was required.”[fn2]

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a claimant must, among other things, submit a claim for award within 90 days of the posting of a Notice of Covered Action.[fn3] The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that the Commission can make timely awards to meritorious whistleblowers.[fn4]

A claimant must also voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn5] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn6] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn7]

Claimant does not qualify for a whistleblower award on two independent grounds. First, Claimant did not submit Claimant’s whistleblower application within the required ninety-day deadline. The requirement that claimants file whistleblower award claims within ninety days of the posting of a Notice of Covered Action (“NoCA”), set forth in Exchange Act Rule 21F-10, serves important programmatic functions. Here, Claimant’s application was approximately seven months late. This ground alone renders Claimant ineligible for an award. Further, Claimant did not contest the CRS’s recommended denial on this ground and accordingly forfeits Claimant’s opportunity to contest on this ground.[fn10]

Claimant also does not qualify for an award on the ground that Claimant’s information did not lead to the successful enforcement of the Covered Action. Enforcement staff confirms that the investigation that led to the Covered Action (the “Investigation”) was opened based upon the staff’s own investigative steps and not based on any information from Claimant. The staff also confirms that the staff did not receive any information provided by Claimant prior to opening the Investigation. Accordingly, Claimant’s information did not cause the staff to open the Investigation.

In addition, the staff states that they did not receive any information from Claimant, nor do they recall communicating or having any contact with Claimant, either before or during the Investigation. Enforcement staff also state that Claimant’s information did not contribute to the Investigation or the Covered Action in any way. A supplemental declaration provided by OWB staff also confirms that Claimant’s TCR submissions were all provided to the Commission after the Commission filed the Covered Action and all Claimant’s TCRs were designated as “no further action.” Accordingly, Claimant’s information did not cause the staff to inquire into different conduct nor did it significantly contribute to the success of the Covered Action.

For these reasons, Claimant is not entitled to an award.[fn11]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[2] Upon receipt of the preliminary denial, Claimant requested to review the materials that formed the basis of the Preliminary Determination pursuant to Exchange Act Rule 21F-10(e)(1)(i). However, Claimant declined to execute OWB’s standard confidentiality agreement, as discussed in Exchange Act Rule 21F-12(b), without “a financial settlement in the amount of 2% of the [Company’s] market capitalization [Redacted] and a cash settlement in an amount more than 500,000,000.00 USD to retain counsel, security, and relocate to a safe location of [Claimant’s] choosing.”
[3] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).
[4] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 64545 Release No. 88464 at 3 (Mar. 24, 2020).
[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[6] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[7] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[8] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021); see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[9] Exchange Act Rel. No. 85412 at 8-9.
[10] Cf. Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f) (“Your failure to submit a timely response contesting a Preliminary Determination will constitute a failure to exhaust administrative remedies, and you will be prohibited from pursuing an appeal pursuant to § 240.21F-13 of this chapter.”).
[11] Claimant’s Response argues that Claimant submitted material to the Commission by email beginning in 2017, before the Covered Action was filed. However, the record demonstrates that Enforcement staff opened the Investigation based upon its own investigative steps, not based upon information from Claimant.

SEC

96228

11/04/2022

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed a complaint against [Redacted] (collectively, the “Defendants”) alleging that the Defendants [Redacted]. Instead, the Commission alleged that Defendants [Redacted]. On [Redacted], the court entered final judgment against the [Redacted] ordering [Redacted] liable for disgorgement of [Redacted] plus prejudgment interest of [Redacted]. Defendant was separately ordered to pay a civil penalty in the amount of [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, or no later than [Redacted]. Claimant filed a whistleblower award claim on [Redacted].

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant failed to submit his/her claim for award to OWB within ninety days of the date of the Notice of Covered Action, as required under Rule 21F-10 of the Exchange Act.[fn1] The CRS noted that Claimant submitted his/her application weeks after the ninety day deadline had expired.[fn2] In addition, the CRS recommended that Claimant’s claim be denied on the independent ground that Claimant’s submission was not made voluntarily as required by Rules 21F-3 and 21F-4(a)(1). The CRS noted that investigative staff contacted and interviewed Claimant regarding the subject matter covered by Claimant’s subsequent tip before Claimant submitted his/her information to the Commission. The CRS also noted that Claimant submitted his/her tip approximately one year after the Commission filed the Covered Action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn3] Claimant argues, among other things, that while Claimant’s whistleblower application may have been submitted more than ninety days after the Notice of the Covered Action for this matter, the Commission should exercise its discretionary authority pursuant to Rule 21F-8(a) to waive that timing requirement, or alternatively use the Commission’s general authority under Exchange Act Section 36(a) to exempt Claimant from the same requirement.[fn4] Claimant states that Claimant inadvertently subscribed to the email notifications of a different agency and did not realize this mistake until after the deadline had passed, and further cited to hardships Claimant had endured due to the Defendant’s misconduct. In addition, Claimant contends that his/her information was indeed voluntary because, even though the staff interviewed Claimant about his/her experience as an investor in [Redacted] prior to the submission of Claimant’s TCR, Claimant had not understood “what the investigator was inquiring about, and ultimately what the Commission’s investigation really entailed,” until after the Commission filed the Covered Action. Once Claimant became aware of the filing of the Covered Action, Claimant argues that Claimant then reached out to the Commission and began to provide valuable information. Claimant argues that Claimant “provid[ed] extensive tips and information the likes of which either could not have existed, or did not exist at the time of the original investigative interview in question.”

II. Analysis.

A. Timeliness of Whistleblower Application.

Here, Claimant’s whistleblower application was submitted more than three months after the ninety-day filing period had closed. Claimant argues that the Commission should use its authority under Exchange Act Rule 21F-8(a) to waive the ninety-day filing requirement. Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive any of these procedures upon a showing of extraordinary circumstances.”[fn6] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn7] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn8]

Applying this demanding standard here, we find that Claimant has failed to show that extraordinary circumstances beyond Claimant’s control were responsible for the delayed filing of his/her whistleblower application. To the contrary, and as admitted by Claimant in his/her submissions, Claimant was aware of the final judgment entered against the Defendants in [Redacted] *** . While his/her submissions argue Claimant inadvertently failed to subscribe to the Commission’s email notification system announcing the posting of notices of covered actions, such an action was directly under Claimant’s control. “A potential Claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim.”[fn9] Based on these facts, we do not find any “extraordinary circumstances” that might trigger our discretion to excuse the fact that Claimant submitted his/her award application more than three months late.[fn10]

Accordingly, we find that Claimant is not eligible for an award because Claimant’s application was not submitted within ninety days of the date the NoCA was posted.[fn11]

B. Voluntary Submission.

Claimant also contests the CRS’s conclusion that his/her information was not provided voluntarily to the Commission. Among other things, Section 21F(b)(1) of the Exchange Act requires that a whistleblower submit original information “voluntarily” in order to be considered for an award.[fn12] The purpose of this requirement is to “create a strong incentive for whistleblowers to come forward early with information about possible violations of the federal securities laws, rather than wait to be approached by investigators.”[fn13] Rule 21F-4(a)(1) establishes a “simple and straightforward test for when we will treat a whistleblower as having submitted information voluntarily; as relevant here, the whistleblower must provide his or her tip to the Commission before investigators direct a ‘request, inquiry, or demand’ to the whistleblower that relates to the subject matter of the tip.”[fn14]

Here, the record shows that Enforcement staff contacted Claimant because Claimant was an investor in the Defendants’ scheme. The Enforcement staff interviewed Claimant by phone in [Redacted] about his/her experience as an investor, approximately twenty-one months before Claimant submitted his/her TCR to the Commission. Indeed, in response to a question on the Form TCR asking whether the complainant had “received a request, inquiry or demand that relates to the subject matter of [the complainant’s] submission,” Claimant checked “Yes.” Claimant further acknowledged in his/her *** TCR that Claimant had been briefly interviewed by phone by an “SEC investigator” on [Redacted]. Claimant’s Response argues that after learning of the Covered Action, Claimant provided additional valuable information to the staff about his/her dealings with the Defendants, and that this information was not available at the time of the interview.[fn15] However, a submission of information is not voluntary “even if the submission provides more information than was specifically requested [by the staff], if it only describes additional instances of the same or similar conduct, provides additional details, or describes other conduct that is closely related as part of a single scheme,” as is the case here.[fn16] Accordingly, we find that Claimant’s submission of information was not voluntary.[fn17]

For these reasons, Claimant is not entitled to an award.[fn18]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).
[2] The Preliminary Determination misstated the date of the deadline to file a whistleblower application as [Redacted]. A supplemental staff declaration confirmed that the deadline to file the application for this Covered Action was [Redacted]. As the deadline was correctly stated on the Commission’s public website, and Claimant filed his/her whistleblower application well after both of these dates, this error does not affect the analysis herein.
[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[4] See Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).
[5] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 64545. 76 Fed. Reg. 34300, 34343 (June 13, 2011) (hereinafter, the “Adopting Release”); Order Determining Whistleblower Award Claim, Release No. 88464 at 3 (Mar. 24, 2020).
[6] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).
[7] Order Determining Whistleblower Award Claim, Release No. 77368 at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S.Ct. 2005 (2018).
[8] See Order Determining Whistleblower Award Claim, Release No. 77368 at 3; see also Order Determining Whistleblower Award Claim, Release No. 82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 72178 (May 16, 2014).
[9] Order Determining Whistleblower Award Claim, Release No. 91805 at 3 (May 10, 2021) (internal quotation omitted). We also note that when a NoCA is posted on the Commission’s website, a corresponding “Claim Due Date,” which reflects the deadline for filing an award claim, is simultaneously posted.
[10] Claimant mentions Section 36(a) of the Exchange Act in his/her Response, which we construe as a request for a Section 36(a) waiver. However, we do not find evidence that would support the Commission exercising its authority under Section 36(a) to exempt Claimant from his/her obligation to have timely filed the application.
[11] Claimant suggests in his/her Response, based upon statements in a 2013 SEC Office of Inspector General Report and OWB’s 2020 Annual Report to Congress, that OWB bears some responsibility to contact potential claimants to notify them to submit award applications. We reject this argument. As we have previously stated, the whistleblower rules “provide for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim. The NoCA[] for the Covered Action[] w[as] clearly posted on the Commission’s website, along with the requisite deadline[]. Under our rules, that is all the notice that Claimant was due.” Order Determining Whistleblower Award Claim, Release No. 91805 at 3 (May 10, 2021) (internal quotation omitted).
[12] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[13] Adopting Release, 76 Fed. Reg. at 34306.
[14] Order Determining Whistleblower Award Claim, Exchange Act Release No. 84046 at 8 (Sept. 6, 2018).
[15] Although not a basis for the CRS’s preliminary denial, we note that the staff declaration confirmed that none of the information Claimant provided to the Commission was relied upon by the staff when recommending the Covered Action or when filing the charges brought by the Commission in the Covered Action.
[16] Adopting Release, 76 Fed. Reg. at 34308.
[17] Claimant’s Response at times construes Claimant’s untimely filing of the whistleblower application and lack of a voluntary submission to the Commission as having “to do exclusively with what the Commission has apparently deemed to be unreasonable delay(s) . . . Unreasonable delays, moreover, are only one reason among the seven (7) listed in the Commission’s summary of criteria ostensibly considered via all Award Orders . . . .” Claimant’s Response argues that such “delays” should “favor an Award or a negligible reduction in the amount, if any . . . .” Claimant’s Response confuses eligibility criteria for an award, such as the voluntary submission of information pursuant to Rule 21F-4(a) and a timely submission of a whistleblower award application pursuant to Rule 21F-10(b), with the criteria the Commission evaluates to determine the amount of an award pursuant to Rule 21F-6 once a whistleblower is determined to be eligible for an award. Because Claimant did not submit a timely whistleblower application or voluntarily submit information to the Commission, as discussed above, Claimant is ineligible for an award and thus no evaluation of the Rule 21F-6 factors is required. To the extent that Claimant asks the Commission to waive application of these eligibility requirements pursuant to Section 36(a) on the grounds that Claimant is an “unsophisticated investor,” we decline to do so. We do not find that Claimant has met his/her burden to demonstrate the considerations that would support the Commission exercising its authority under Section 36(a) to exempt Claimant from these obligations.
[18] Claimant’s Response also argues that the Commission failed to protect Claimant from retaliation by one of the Defendants in the Covered Action. Such concerns, if true, are beyond the scope of this whistleblower award proceeding, which addresses whether Claimant voluntarily provided original information that led in fact to the success of the Covered Action. See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

SEC

96227

11/04/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the [Redacted] denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed an emergency action charging [Redacted] (collectively, the “Defendants”) [Redacted]. The Commission alleged that the [Redacted]. The Commission’s complaint also named [Redacted].

The court entered [Redacted] judgment [Redacted] ordering *** to pay more than [Redacted] in disgorgement and prejudgment interest. On [Redacted] the court entered judgment against defendants [Redacted] ordering [Redacted] to pay more than [Redacted] in disgorgement and prejudgment interest, and ordering [Redacted] to pay more than [Redacted] in disgorgement and prejudgment interest. On [Redacted] the court ordered defendant [Redacted] to pay more than [Redacted] in disgorgement and prejudgment interest. On [Redacted] the court ordered [Redacted] to pay approximately [Redacted] in disgorgement and prejudgment interest. The court also permanently enjoined [Redacted] from future violations of the securities laws.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS preliminarily determined that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS preliminarily determined that Claimant’s information was first submitted after the Commission filed the complaint in the Covered Action, and that Claimant’s information was either already known to the staff or was not used in the Covered Action. The CRS also denied Claimant’s request for any related action awards on the grounds that because Claimant was not eligible for an award in the Covered Action, he/she is not eligible for an award in connection with any related action.[fn1]

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn2] Claimant principally argues that the staff declaration supporting the CRS’s preliminary determination was not prepared by the purported “lead staff attorney” who communicated with the Claimant and whom Claimant contends was the “principal staff attorney responsible for the Covered Action.” Claimant argues that the staff declarant may have lacked full knowledge of the facts surrounding Claimant’s information. Claimant also argues that the information Claimant provided the staff in a [Redacted] telephone call and later in Claimant’s [Redacted] TCR submission was new and assisted the staff in a separate Commission administrative proceeding (the “Other Proceeding”) as well as in certain criminal proceedings. Claimant argues that the Other Proceeding should be treated as part of the Covered Action pursuant to Exchange Act Rule 21F-4(d)(2). Claimant further contends that the information Claimant provided, which supposedly led to the Other Proceeding and to a criminal plea and agreement to testify with an individual (the “Individual”) not charged in the Covered Action, “contributed leverage to the Commission . . . and helped ‘lead to’ the successful conclusion of the Covered Action and the related actions.”

Claimant further argues that his/her information caused the Commission to inquire into different conduct and bring an action based on conduct that was a subject of Claimant’s information and/or significantly contributed to the success of the Commission’s action. In support of this argument, Claimant contends that the staff declaration relied on by the CRS failed to state the exact timing of the staff’s awareness of the Individual’s involvement in the misconduct or a description of how the staff first learned of the information that Claimant argues the staff learned from him/her. Claimant further argues that even if the staff learned of the information from another source, Claimant should be credited as the original source of the information.

Lastly, Claimant argues that Claimant assisted the court-appointed receiver in the Covered Action (the “Receiver”) by providing information on real estate holdings and other assets, among other things, and that Claimant’s assistance to the Receiver should be credited for award purposes.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] Among other things, to be considered original information the submission must be provided to the Commission for the first time after July 21, 2010.[fn4] Additionally, and as relevant here, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

As an initial matter, Claimant first provided information to the staff in [Redacted] over four months after the staff opened the investigation that led to the Covered Action (the “Investigation”) and more than one month after the Commission filed its complaint. Accordingly, Claimant cannot be credited with causing the staff to open an investigation.

Second, the record does not demonstrate that Claimant significantly contributed to the success of the Covered Action or caused the staff to inquire into different conduct that was later the subject of a successful Commission enforcement action. Enforcement staff have confirmed, in a sworn supplemental declaration, which we credit, that Claimant’s information did not advance the Investigation: Claimant’s information related to the Individual who was not charged in the Covered Action. And the staff confirmed that it first became aware of the Individual in approximately [Redacted] about four months before Claimant provided information, and the staff was aware of the Individual’s involvement with [Redacted] (the “Firm”) the following month, approximately three months before Claimant submitted his information.[fn9] The staff confirmed that Claimant’s information was not a motivating factor in the decision to interview the Individual and that Claimant’s information was either already known to the staff or did not advance the Investigation or contribute to the charges in the Covered Action.[fn10] The staff also confirmed that Claimant’s information did not assist the staff during settlement discussions with any of the Defendants.[fn11]

Claimant’s argument that the Other Proceeding should be treated as part of the Covered Action pursuant to Exchange Act Rule 21F-4(d)(2) is also misplaced. Rule 21F-4(d)(2) allows the Commission, “[f]or purposes of determining the payment on an award . . . ., [to] deem as part of the Commission action upon which the award was based any subsequent Commission proceeding that . . . results in a monetary sanction of $1,000,000 or less, and that arises out of the same nucleus of operative facts.”[fn12] Application of this rule, however, is predicated upon the Claimant qualifying for an award for the Covered Action, which as discussed above, Claimant does not. Further, Rule 21F-4(d)(2) applies to proceedings which result in a monetary sanction; the Other Proceeding did not order any monetary sanction. Accordingly, the Other Proceeding cannot be considered part of the Covered Action.

Claimant’s argument that Claimant contributed to the Covered Action through providing assistance to the Receiver also lacks merit.[fn13] While Claimant describes hardships experienced while assisting the Receiver and argues that the Commission staff oversimplified the Receiver’s actions and diminished the amount of Claimant’s assistance to the Receiver, Claimant does not qualify for an award on these grounds. Claimant’s argument rests on the provision of information to the Receiver, not to the Commission. As noted above, Section 21F of the Exchange Act allows the Commission to award claimants if, among other things, the claimants provide useful information to the Commission that leads to a successful enforcement action by the Commission.[fn14] But a receiver does not work for the Commission or represent the interests of the Commission. As we stated in another context:

Although the Commission may seek the appointment of a receiver in an enforcement action filed in federal court, a receiver does not work for the Commission, represent the interests of the Commission, or even represent the interests of investors. Rather, a receiver is an officer of the court, appointed by the court to take custody of assets over which the court asserts jurisdiction (the receivership estate), for the benefit of all persons whom the court may later adjudge to have rights in the property.[fn15]

Because the Receiver does not work for the Commission or represent the interests of the Commission, any information Claimant provided to the Receiver does not qualify Claimant for a whistleblower award. Pursuant to Rules 21F-3(a) and 21F-4(c)(2), to warrant an award, Claimant’s information must lead to the successful enforcement of an action “by the Commission” rather than a receiver as an officer of the Court.[fn16]

For these reasons, Claimant is not entitled to a whistleblower award in connection with the Covered Action.[fn17]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.[fn18]
By the Commission.

[1] See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] See Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).
[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[6] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) a 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[8] Exchange Act Rel. No. 85412 at 8-9.
[9] To the extent Claimant argues that he/she deserves credit as the “original source” of any information received by the staff from another source regarding the Individual or the Firm, Claimant does not meet the requirements of Rule 21F-4(b)(5), which states that a claimant will be considered an original source “of the same information that we obtain from another source” if, among other things, “the other source obtained the information from [the claimant] or [the claimant’s] representative.” Claimant has not provided information demonstrating another source obtained the information from Claimant or his/her representative. Accordingly, Claimant cannot be considered an “original source” under Rule 21F-4(b)(5).
[10] Claimant’s argument that the staff declaration fails to state the exact timing of the staff’s awareness of the Individual’s involvement in the misconduct or a description of how the staff first learned of the information that Claimant argues the staff learned from him/her is unavailing. As noted above, the supplemental staff declaration confirms that the staff was aware of the Individual and knew of the Individual’s involvement with the Firm prior to the receipt of the Claimant’s tip. Regardless, Claimant is not entitled to all aspects of the Commission’s investigative file in these whistleblower award proceedings. See Exchange Act Rule 21F-10(e)(1)(i), 17 C.F.R. § 240.21F-10(e)(1)(i); Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b) (noting that the whistleblower rules “do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section”).
[11] Claimant’s Response also criticizes the CRS’s preliminary determination because the CRS relied upon a staff declaration prepared by someone other than the Enforcement staff attorney to whom Claimant spoke, and whom Claimant believes was the “principal staff attorney” assigned to the Investigation. We also find no merit in this argument. The CRS relied upon a declaration from one of the primary staff attorneys responsible for the Covered Action. Further, the staff confirmed in a supplemental declaration that he regularly consulted and exchanged information with the staff attorney who spoke with Claimant, and the declarant learned of the information Claimant provided shortly after [Redacted].
[12] Exchange Act Rule 21F-4(d)(2), 17 C.F.R. § 240.21F-4(d)(2).
[13] While not an independent ground for denial, we also note that the information Claimant argues he/she provided to the Receiver appears to consist of publicly-available information, such as real estate and personal property holdings, among other things. Such publicly-available information, without any further analysis, would likely not qualify as independent knowledge or independent analysis and thus would not constitute original information. See Exchange Act Rule 21F-4(b), 17 C.F.R. § 240.21F-4(b).
[14] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[15] Whistleblower Program Rules, 85 Fed. Reg. 70898, 70905 (Nov. 5, 2020).
[16] Claimant also contends that the CRS or OWB never spoke with individuals assigned to the criminal proceedings related to the Covered Action. However, no such contact is necessary here. While OWB may speak with representatives of other agencies to determine if a claimant qualifies for a related action award, Claimant does not merit a related action award here. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable Commission covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018). because Claimant is not qualified for an award in connection with the Covered Action, Claimant is ineligible for a related action award.
[17] Claimant also makes a conclusory request that the Commission exercise our discretionary authority pursuant to Section 36(a) of the Exchange Act to grant Claimant an award because of the various policy considerations, such as, among others, the Commission’s policy interest in encouraging whistleblowers to provide information and assistance to receivers. We decline to do so. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person … from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” However, “the broad objective of the whistleblower program is to enhance the Commission’s law enforcement operations . . . [by incentivizing whistleblowers] to provide the Commission with timely, useful information that the Commission might not otherwise have received.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34326 (June 13, 2011). Granting an exemption under circumstances where a whistleblower did not provide information that was in fact “useful” and the information did not lead to the success of a covered action is contrary to the purpose of the whistleblower program, the public interest, and the protection of investors. As a result, we find that Claimant has not met his/her burden to demonstrate any considerations that would satisfy the requirements for us to exercise our Section 36(a) authority.
[18] Claimant also argues that because Claimant submitted his/her tip prior to the adoption of the 2020 Whistleblower Rules amendments and interpretive guidance addressing “independent analysis,” the amendments do not apply to Claimant. Claimant contends that any application of the amendment to his/her claim would be a violation of his/her due process rights, among other things. However, as discussed herein, Claimant is not entitled to an award because Claimant did not provide information that led to the success of the Covered Action. Accordingly, Claimant’s argument is moot.

SEC

96178

10/31/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that claimant [Redacted] (“Claimant”) receive a whistleblower award of more than $10 million, equal to *** percent (***%) of the monetary sanctions percent collected, or to be collected, in the above-referenced Covered Action. Claimant provided written notice that he/she does not contest the Preliminary Determination.

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission, and that this information led to the successful enforcement of the Covered Action. Claimant’s information significantly contributed to the successful enforcement of the Covered Action.[fn1]

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] Securities and Exchange Act (“Exchange Act”) Rule 21F-4(c)(2); 17 C.F.R. § 240.21F-4(c)(2).
[2] In assessing the appropriate award amount, Exchange Act 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.

SEC

10/31/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[1] Claimant did not provide information that led to the successful enforcement of the Covered Action. Claimant’s TCR submission was closed with a designation of “no further action,” indicating that no further action was planned for that tip unless subsequent information leads Commission staff to reopen or reexamine the tip. The Covered Action investigation was opened based upon information provided by another source. Enforcement staff assigned to the Covered Action did not recall reviewing Claimant’s TCR and did not receive any information from Claimant, nor did the staff have any contact or communication with Claimant. Accordingly, Claimant’s information did not advance the investigation that led to the Covered Action or contribute to the charges in the Covered Action.

CFTC

10/26/2022

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1 and Claimant 2 (collectively, “Claimants”) in response to the above-referenced Notice of Covered Action regarding [Redacted] (“Order” or “Covered Action”). The Claims Review Staff has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules, 17 C.F.R. pt. 165 (2021), promulgated pursuant to Section 23 of the Commodity Exchange Act, 7 U.S.C. § 26 (2018). The Claims Review Staff sets forth its Preliminary Determination for Claimants as follows:

1. The Claims Review Staff has determined to recommend that the Commission deny both applications because Claimants did not provide information that led to the successful enforcement outcome in the Covered Action. See 17 C.F.R. § 165.2(i). Division of Enforcement (“Division”) staff responsible for the investigation did not contact Claimants or use any information provided by Claimants to bring, investigate, or settle the Covered Action.

2. Throughout the investigation leading to the Order, Division staff relied instead on documents and information provided by [Redacted] and other financial institutions, as well as statements made by their employees and former employees. Division staff also relied on data analysis conducted by Division economists and outside experts.

CFTC

10/26/2022

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1 and Claimant 2 (collectively, “Claimants”) on the above-listed Forms WB-APP in response to the above-referenced Notice of Covered Action regarding [Redacted] (collectively, the “Covered Action”). The Claims Review Staff (“CRS”) has evaluated the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165, promulgated pursuant to Section 23 of the Commodity Exchange Act (“Act”), 7 U.S.C. § 26. The CRS sets forth its Preliminary Determination for Claimant 1 and Claimant 2 as follows:

1. The CRS has determined to recommend that the Commission deny Claimant 1 and Claimant 2’s applications on the Covered Action because each application fails to meet the requirements of Section 23 of the Act and the Rules. Specifically, each of the Claimants’ information did not lead to the successful enforcement of the Covered Action.

2. Neither Claimant 1 nor Claimant 2 provided any information to the Division of Enforcement (“Division”) that led to the opening of the investigation that would later result in the Covered Action. [Redacted]

The Division opened its investigation based on information from sources that were not Claimants. Accordingly, the Commission did not commence its investigation as a direct or indirect result of any of Claimant 1’s or Claimant 2’s information. See 17 C.F.R. § 165.2(i)(1).

3. Neither Claimant 1 nor Claimant 2 provided any information that contributed in any way to the Division’s investigative findings that are the basis of the Covered Action. Accordingly, neither Claimant 1’s nor Claimant 2’s information significantly contributed to the Covered Action. See 17 C.F.R. § 165.2(i)(2).

CFTC

10/26/2022

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1 and Claimant 2 on the above-listed Forms WB-APP in response to the above-referenced Notice of Covered Action regarding [Redacted] (“Covered Action”). The Claims Review Staff (“CRS”) has evaluated the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165, promulgated pursuant to Section 23 of the Commodity Exchange Act (“Act”), 7 U.S.C. § 26. The CRS sets forth its Preliminary Determination for Claimant 1 and Claimant 2 as follows:

1. The CRS recommends that the Commission deny the award applications of Claimant 1 and Claimant 2 because they do not meet the requirements of Section 23 of the Act and the Rules.

2. Neither Claimant 1 nor Claimant 2 provided original information to the Commission that led to the successful enforcement of the Covered Action. See 17 C.F.R. § 165.2(i). Neither Claimant 1’s nor Claimant 2’s information caused the Commission to commence the investigation underlying the Covered Action or contributed in any way to the Covered Action or the underlying investigation. Division staff assigned to the investigation did not communicate with Claimant 1 or Claimant 2 in regard to this investigation.

SEC

96129

10/24/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $400,000, which is equal to *** percent (***%) of the amount collected or to be collected in the above-referenced Covered Action (“Covered Action”). In recommending that Claimant be found eligible for an award, the CRS recommended that the Commission exercise its general exemptive authority to waive the TCR filing requirements of Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-9.

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn1]

Moreover, we have determined that it would be in the public interest and consistent with the protection of investors for the Commission to exercise our discretionary authority under Section 36(a) of the Exchange Act to waive the TCR filing requirements of Rule 21F-9 as to the Claimant in light of the specific facts and circumstances present here.[fn2] Claimant anonymously filed an online TCR him/herself and included his/her counsel’s information and signed the counsel certification on behalf of his/her counsel. As such, Claimant does not technically satisfy Rule 21F-9(b), which requires whistleblowers to sign their Form TCRs under penalty of perjury, or Rule 21F-9(c), which requires anonymous whistleblowers to submit their information through counsel and for their counsel to sign the counsel certification. However, a Section 36(a) waiver is appropriate under the unique facts and circumstances here, which include the following: (1) Claimant’s information was submitted through an on-line Form TCR, thus satisfying Rule 21F-9(a); (2) while Claimant did not sign the whistleblower declaration he/she did sign the counsel certification; (3) Claimant completed the TCR under his/her counsel’s name and notified his/her counsel after the fact; (4) counsel did not contest the validity of the TCR and has represented the Claimant throughout his/her interactions with the Commission and confirmed that he/she was aware of the Form TCR filing under his/her name; and (5) Claimant would be otherwise meritorious, as he/she expeditiously reported information about an ongoing offering fraud to the Commission, prompting the opening of the investigation and thereafter provided additional assistance to the Commission staff.
[Redacted].

In coming to this conclusion, the Commission considered that Claimant, a prospective investor, expeditiously alerted Commission staff to an ongoing fraud, prompting the opening of the investigation. Rather than stay silent, Claimant immediately reported suspected wrongdoing to the Commission when presented with what he/she believed was false investor information and materials. Claimant also provided continuing assistance by supplying critical documents, participating in an interview with Commission staff, and giving testimony that advanced the investigation.

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.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.
[2] Section 36(a) of the Exchange Act provides the Commission with broad authority to exempt any person from any provision of the Exchange Act or any rule or regulation thereunder to the extent that such exemption is (i) “necessary or appropriate in the public interest” and (ii) “is consistent with the protection of investors.”
[3] [Redacted].
[4] [Redacted].
[5] [Redacted].

SEC

96128

10/24/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of [Redacted] percent (***%) of the monetary sanctions collected in the above-referenced Covered Action, which would yield an award of more than $1,000,000, and [Redacted] (“Claimant 2”) receive a whistleblower award of *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action, which would yield an award of more than $500,000. Both Claimants provided written notice of their decisions not to contest the Preliminary Determination. For the reasons discussed below, the CRS’s recommendations are adopted.

Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled cease and desist proceedings (the “Order”) settling charges with [Redacted] (“the Company”) for [Redacted]. In the Order, the Commission found that, from approximately [Redacted]. The Commission further found that [Redacted]. The Commission established that [Redacted]. The Commission concluded that [Redacted]. Among other relief, the Commission ordered the Company to pay [Redacted]. This amount has been paid in full by the Company.

On [Redacted] the Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that Claimants 1 and 2 receive whistleblower awards of *** % and *** %, respectively, of the monetary sanctions collected in the Covered Action. In recommending that Claimant 1 receive a larger award than Claimant 2, the CRS considered that, while Claimant 2 provided significant information, Claimant 2’s information was less significant than Claimant 1’s information. In particular, Claimant 1 brought the operation of the scheme to the Commission staff’s attention and assisted in the staff’s understanding of the scheme as a whole. The CRS also made its recommendation based on Claimant 2’s unreasonable reporting delay to the Commission for over 30 months.

II. Analysis.

The recommendations of the CRS are adopted. The record demonstrates that Claimant 1 and Claimant 2 each voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

Based on the specific facts and circumstances here, we find that an award of [Redacted] percent (***%) to Claimant 1 and *** percent (***%) to Claimant 2 is appropriate. In particular, Claimant 1’s information caused the opening of the investigation that led to the Covered Action and formed the basis for the some of the findings in the Covered Action. Further, Claimant 1 provided additional information and assistance to the Enforcement staff through interviews in person and via telephone, along with internal Company documents. Accordingly, the CRS believes that a ***% award reflects Claimant 1’s contributions to the success of the Covered Action. In contrast, Claimant 2 provided evidence of false statements by the Company’s [Redacted] and provided significant information about the Company’s internal processes. Claimant 2’s information formed the basis for the some of the findings in the Covered Action. However, while Claimant 2 provided significant information, Claimant 2’s information was indeed less significant vis-à-vis Claimant 1’s information. This is because, as noted, Claimant 1 brought the operation of the scheme to the Commission staff’s attention and assisted in the staff’s understanding of the scheme as a whole. The award percentage also recognizes that Claimant 2 unreasonably delayed reporting to the Commission for over 30 months. Accordingly, we believe that a ***% award strikes the appropriate balance between Claimant 2’s assistance to the success of the Covered Action and Claimant 2’s unreasonable reporting delay.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action and Claimant 2 shall receive an award of *** percent (***%) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] See Exchange Act Section 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).
[2] [Redacted].
[3] [Redacted].
[4] [Redacted].
[5] [Redacted].

SEC

96119

10/21/2022

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn1]
[Redacted].
In reaching this determination, the Commission considered that (1) Claimant provided important, new information, including in the form of documents and analysis, that assisted the Commission’s investigation; (2) Claimant participated in multiple voluntary interviews with Commission staff; and (3) some of the underlying findings in the Covered Action were based on Claimant’s information.

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to *** percent (***%) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] [Redacted].
[3] [Redacted].

SEC

10/16/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted], and [Redacted], and collectively “Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The bases for this determination is marked below as follows:

The information provided by Claimants was never provided to or used by staff handling the Covered Action or underlying investigation, and those staff members otherwise had no contact with Claimants. Therefore, Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Action(s) within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

[Redacted] failed to comply with the requirements of Rule 21F-9 of the Exchange Act when submitting the tip upon which the award claim is based, and [Redacted] is not eligible for a waiver under either Rule 21F-9(e) or the Commission’s other waiver authorities.[fn3]

[Redacted] failed to specify in the award application the submission pursuant to Rule 21F-9(a) on which the [Redacted] claim for an award is based.

Chief, Office of the Whistleblower.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See IS U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[3] [Redacted] failed to identify a TCR number on [Redacted] award application and investigative staff was unable to identify a Form TCR submitted by [Redacted] related to the Covered Action.

SEC

10/14/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received three whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations as follows.

[Redacted].

[Redacted] (Claimant 3).

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

10/14/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 2”) for the above-referenced Commission enforcement action (“Covered Action”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated this claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 2.

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the CRS notes that the record demonstrates that the staff assigned to the investigation that led to the Covered Action did not recall seeing Claimant 2’s TCR or ever communicating with Claimant 2. Further, the TCR System indicates that Claimant 2’s information was not forwarded to staff assigned to the investigation that led to the Covered Action, but was sent to Enforcement staff assigned to a different investigation.[fn3] The CRS recommended denial of Claimant 2’s claims for award in connection with that investigation in September 2020, and that preliminary denials became the final orders of the Commission by operation of law in November 2020.

By: Claims Review Staff.

[3] To the extent that Claimant 2 applied for any related action award, because Claimant 2 does not qualify for an award in the Covered Action, Claimant 2 is not eligible for a related action award. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

SEC

96076

10/14/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of more than $500,000, which represents [Redacted] percent (***%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”), and that [Redacted] (“Claimant 2”) receive a whistleblower award in the amount of more than $500,000, which represents [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action. In recommending that each Claimant be found eligible for an award, the CRS recommended that the Commission exercise its general exemptive authority to waive the TCR-submission requirements under Securities Exchange Act of 1934 (“Exchange Act”) Rules 21F-9(a) and (b) for both Claimants. Both Claimants declined to contest the Preliminary Determinations.

The recommendations of the CRS are adopted. The record demonstrates that Claimants 1 and 2 each voluntarily[fn1] provided original information to the Commission, and that this information led to the successful enforcement of the Covered Action by causing Enforcement staff to open the investigation that led to the Covered Action.[fn2]

Neither Claimant timely submitted a Form TCR to the Commission, and neither Claimant has established eligibility for a waiver under Exchange Act Rule 21F-9(e) of his/her initial noncompliance with the TCR-submission requirement. However, we have determined that it would be in the public interest and consistent with the protection of investors for the Commission to exercise our discretionary authority under Section 36(a) of the Exchange Act to waive the TCR-submission requirements of Rules 21F-9(a) and (b)[fn3] as to each Claimant in light of the specific facts and circumstances present here. Both Claimants provided [Redacted] that were crucial to Enforcement staff’s efforts [Redacted]. Claimant 1 and counsel who represented Claimant 1 [Redacted] had miscommunications that led Claimant 1 to erroneously believe that no further steps were necessary for Claimant 1 to establish eligibility for a whistleblower claim. And even though Claimant 2 did not timely submit a TCR with his/her information, the Commission’s Office of Market Intelligence generated a TCR based on the information Claimant 2 provided in his/her submission. Claimants 1 and 2 were both instrumental in alerting the Commission to the ongoing fraud.

[Redacted].

In determining how to allocate the award between Claimants 1 and 2, we considered the following: (1) Claimant 1 provided directly to the Commission accounting records relating to the Entities, and Claimant 2 provided directly to the Commission information about the representations made to Claimant 2 as a potential investor; (2) Claimant 1 provided other important information about the Entities’ finances to Claimant 2 and authorized Claimant 2 to provide that information to the Commission; (3) Claimant 2 saved Enforcement staff time and resources by organizing and synthesizing information from both Claimants for the Commission; (4) [Redacted] (5) Claimants 1 and 2 each provided continuing assistance to the Commission by meeting with Enforcement staff; and (6) Claimants 1 and 2 each provided [Redacted].

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action and Claimant 2 shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] Under Exchange Act Rule 21F-4(a)(1), a claimant satisfies the voluntariness requirement “if [they] provide [their] submission before a request, inquiry, or demand that relates to the subject matter of [their] submission is directed to” them by the Commission. Although Claimant 1 did not directly submit information to the Commission before the Commission reached out to him/her for assistance, the Commission finds that Claimant 1 satisfied the voluntariness requirement in the unusual circumstances of this case. Claimant 1 and Claimant 2 met before Claimant 2 first submitted information about a fraud involving various entities (the “Entities”) to the Commission. Claimant 1 believed that Claimant 2 was acting on his/her behalf in submitting Claimant 1’s information about the Entities to the Commission. Claimant 1’s belief was not unreasonable when considered in the context of (1) Claimant 1’s view that he/she authorized Claimant 2 to submit Claimant 1’s information to the Commission; (2) Claimant 1’s understanding that Claimant 2 already had contacted the Commission, and Claimant 1’s belief that it would be more efficient for his/her information to be combined and organized with Claimant 2’s information for another submission to the Commission; (3) Claimant 1’s belief that Claimant 2 would have more credibility with the Commission [Redacted] and (4) Claimant 2’s express acknowledgment that Claimant 1 was the source of some of the information in Claimant 2’s submissions to the Commission.
[2] See Rule 21F-4(c)(1).
[3] As pertinent here, Rule 21F-9(a) provides that to be eligible for an award, a putative whistleblower must, among other things, submit their information “[o]nline, through the Commission’s website located at www.sec.gov, using the Commission’s electronic TCR portal (Tip, Complaint, or Referral); [or by m]ailing or faxing a Form TCR to the SEC Office of the Whistleblower…” Rule 21F-9(b) provides that “to be eligible for an award, you must declare under penalty of perjury at the time you submit your information . . . that your information is true and correct to the best of your knowledge and belief.”
[4] [Redacted].

SEC

96075

10/14/2022

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed a complaint against [Redacted] (the “Company”) in federal district court alleging that the Company [Redacted]. The complaint further alleged that [Redacted]. The complaint also alleged that the Company [Redacted]. The Company agreed to settle the [Redacted] charges by consenting to [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS determined that the investigation which led to the Covered Action (the “Investigation”) was opened based upon a source other than Claimant and that Enforcement staff did not receive any information from Claimant before or during the Investigation. The CRS also determined that while Claimant provided information to the staff over the telephone after the Commission filed the Covered Action, none of the information provided by Claimant during the telephone call was used in or contributed to the success of the Covered Action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn1] Claimant principally argues that the information Claimant provided to the Commission appears to be the same information that was also used in the Commission’s complaint. Claimant contends that information Claimant provided might have been used by the staff after coming from another source, specifically, the Company. Claimant also states that the Company provided documents to Claimant [Redacted] in [Redacted] the staff’s investigation began in [Redacted] and Claimant’s tip was submitted in [Redacted] noting that “[t]he data provided to me quite clearly became the basis for the SEC investigation. The data was PRECISEY [sic] the same. So, the only plausible explanation is that the very same [Redacted] was provided to the SEC.”[fn2]

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn4] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn5]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7]

Claimant does not qualify for an award. First, the record demonstrates that the Investigation was opened in [Redacted] approximately six months before Claimant submitted his/her initial tip to the Commission, in response to findings of an examination of the Company by Commission staff. Accordingly, Claimant’s information did not cause the staff to open the Investigation.

Second, the record shows that Claimant’s information did not significantly contribute to the success of the Covered Action or cause the staff to inquire into different conduct as part of a current investigation. Claimant submitted three TCRs to the Commission. Claimant’s first tip, submitted in [Redacted] was not forwarded to Commission staff assigned to the Investigation, but was forwarded to the Commission’s Office of Investor Education and Advocacy (“OIEA”). Enforcement staff assigned to the Investigation confirmed, in a supplemental declaration, which we credit, that they do not recall receiving or reviewing any information from OIEA relating to Claimant or the subject matter of the Investigation. Claimant’s second tip, submitted in [Redacted] was neither received nor reviewed by the staff assigned to the Investigation. Claimant’s third tip, submitted in [Redacted] and approximately three months after the Covered Action was filed, was likewise neither received nor reviewed by the staff assigned to the Investigation. And although Claimant spoke with Enforcement staff in [Redacted] approximately two months after the Covered Action was filed, the staff declaration confirms that Claimant’s information did not advance the Investigation.[fn8]

For these reasons, Claimant is not entitled to an award.[fn9]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[2] Claimant also contends that the Company did not provide sufficient documents to the Commission during the investigation and the Company potentially committed perjury. [Redacted]. These allegations are beyond the scope of this whistleblower award proceeding. [Redacted].
[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[5] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[6] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[7] Exchange Act Rel. No. 85412 at 8-9.
[8] To the extent Claimant is arguing that Claimant may be the original source of information the Commission obtained from another source, Claimant’s argument fails. Among other things, in order to consider the claimant to be an original source of information that the Commission receives from another source, the claimant needs to show that “the other source obtained the information from you or your representative.” Exchange Act Rule 21F-4(b)(5). The record does not show, and Claimant’s Response does not contend, that Claimant or his representative provided original information to another source; instead, Claimant appears to argue that the Company “prepared” the information for Claimant [Redacted] and that the Company subsequently provided the information to the Commission. Even assuming Claimant’s allegations to be true, Claimant’s allegations do not establish Claimant as the original source because Claimant did not provide the information to any other source that subsequently submitted the information to the Commission as required by Rule 21F-4(b)(5).
[9] Claimant’s Response also questions why the Commission did not investigate or charge what Claimant views as additional misconduct by the Company in his/her submissions. Such concerns about other hypothetical charges, however, are beyond the scope of this whistleblower award proceeding, which addresses whether Claimant voluntarily provided original information that led in fact to the success of the Covered Action. See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

SEC

96012

10/11/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with the above-referenced Covered Action (the “Covered Action”) recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] percent (***%) of the monetary sanctions collected for a payout of approximately $825,000. 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 led to the successful enforcement of the Covered Action.[fn1]
[Redacted]. Claimant, [Redacted] expeditiously provided detailed information that prompted the opening of the investigation and thereafter met with Commission staff in person and provided additional information after submitting the initial TCR. [Redacted].
Accordingly, it is ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 CF.R. § 240.21F-3(a).
[2] [Redacted].
[3] [Redacted].

SEC

10/10/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a joint whistleblower award claim from [Redacted] (“Joint Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above joint claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your joint award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above joint award claim.[fn1] The basis for this determination is marked below as follows:

The information provided by the Joint Claimants was never provided to or used by staff handling the Covered Action or underlying investigation, and those staff members otherwise had no contact with the Joint Claimants. Therefore, Joint Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Office of the Whistleblower.

[1] To the extent Joint Claimants have applied for an award in a related action, because the Joint Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] The investigation that resulted in the Covered Action was opened several months before the Joint Claimants submitted their first tip. Furthermore, investigative staff responsible for the Covered Action never reviewed or received any information from the Joint Claimants or had any communications with the Joint Claimants. As such, the Joint Claimants did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

09/26/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received two whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of the two below claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Detenninations as follows.

[Redacted].

[Redacted] (“Claimant 2”).

The Claims Review Staff has preliminarily dete1mined to recommend that the Commission deny an award to Claimant 2. The basis for this determination is that Claimant 2 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 2’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 2 submitted a tip more than a year after the Covered Action investigation was opened. Enforcement staff had already unde1iaken significant investigative steps prior to receiving Claimant 2’s information, including having identified the key aspects and mechanics of the misconduct. Claimant 2’s information did not meaningfully advance the investigation. None of Claimant 2 ‘s information allowed Enforcement staff to conserve time and resources; nor did Claimant 2’s info1mation allow staff to bring additional charges or charges against additional defendants. None of Claimant 2’s information significantly contributed to the success of the Covered Action.

By: Claims Review Staff.

SEC

09/23/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] and [Redacted] (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants [Redacted] and 2 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any info1mation provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant [Redacted] and 2 did not provide “original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information provided by Claimants [Redacted] and 2 was already known to the Commission.[fn3]

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Enforcement staff opened the investigation based on a news article, and not because of any information provided by Claimants [Redacted] or 2. [Redacted] was investigating and that ultimately formed the charges in the Covered Action. Enforcement staff responsible for the Covered Action did not have any communications with [Redacted] before or during the investigation. While Enforcement staff responsible for the Covered Action did receive information from Claimant 2 and communicated with Claimant 2 during the course of the investigation, Claimant 2 provided no new information that was used in the investigation. Claimant 2 ‘s information was already known to Enforcement staff, consisted largely of publicly-available information, or otherwise did not assist Enforcement staff during the investigation or resulting Covered Action.

[3] Much of Claimant [Redacted] and Claimant 2’s information was based on publicly-available information, without any further independent examination or analysis. Much of their information also was already known to the Enforcement staff on the Covered Action.

SEC

09/21/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received whistleblower award claims from three individuals for the SEC Covered Action as well as the above-referenced [Redacted] brought by the Department of Justice (“Criminal Action”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows:

[Redacted].

[Redacted] (“Claimant 2”) and [Redacted] (“Claimant 3”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2 and Claimant 3. No information provided by Claimant 2 or Claimant 3 led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that these claimants submitted:

1. caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and thereafter bring a successful enforcement action based in whole or in part on conduct that was the subject of the claimants’ information, under Rule 21F-4(c)(1) of the Exchange Act; or

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

In reaching this preliminary determination, we note that the record reflects that the investigation was opened based on information received from a source other than Claimant 2 and Claimant 3. By the time Enforcement staff responsible for the Covered Action received information from Claimant 2 and Claimant 3, the investigation had been ongoing for more than two years.[fn3] The information provided by Claimant 2 and Claimant 3 related to alleged misconduct in [Redacted], respectively, and none of the charges brought by the Commission in the Covered Action related to misconduct occurring in either country. None of the information provided by Claimant 2 or Claimant 3 was used in, or had any impact on, the charges brought by the Commission in the Covered Action. The information provided by Claimant 2 and Claimant 3 did not save Commission time or resources nor did it lead to any additional charges against the company or help advance settlement discussions with the company.[fn4]

By: Claims Review Staff.

[2] In addition, Claimant 2 and Claimant 3 also applied for a related action award in connection with the Criminal Action. Because Claimant 2 and Claimant 3 do not qualify for an award in the Covered Action, their request for a related action award is denied. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-90247 (Oct. 22, 2020); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

[3] The record reflects that Claimant 2 also anonymously reported the alleged [Redacted] violations in [Redacted] to the company in [Redacted] and Claimant 3 anonymously reported the alleged [Redacted] violations in [Redacted] to the company in [Redacted], both of which were after the company self-reported to the Commission, which caused Enforcement staff to open the investigation that resulted in the Covered Action.

[4] The record further reflects that the investigation into possible misconduct in [Redacted] was not based on information provided by Claimant 2. The record further reflects that the investigation into possible misconduct in the [Redacted] was not based on information provided by Claimant 3.

SEC

95834

09/20/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that claimant [Redacted] (“Claimant”) receive a whistleblower award equal to *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action.[fn1] The CRS also recommended that Claimant receive a whistleblower award equal to *** percent (*** %) of the monetary sanctions collected, or to be collected, in a separate, related action (the “Other Agency Action”) brought by another agency (the “Other Agency”).[fn2] The total current whistleblower award to Claimant recommended by the CRS for the Covered Action and the Other Agency Action is $1.5 million. Claimant did not contest the Preliminary Determinations.

[Redacted] the information Claimant provided to the Commission was valuable, on point, and conserved Commission resources. And Claimant did provide ongoing assistance to the Other Agency. [Redacted].

Additionally, in view of the same considerations described above in connection with the Covered Action, the Commission finds it appropriate for Claimant to receive an award of *** % of the monetary sanctions collected in the Other Agency Action.
Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action and in the Other Agency Action.[fn7]
By the Commission.

[1] The investigation that gave rise to the Covered Action also gave rise to two pending enforcement actions against [Redacted] (the “Company”) [Redacted] (collectively, the “Other Actions”), both of which arise from the same nucleus of operative facts as the Covered Action. The Commission directs that, in the event that $1 million or less of monetary sanctions are ordered in either of the Other Actions, the action be considered part of the Covered Action for the purpose of making an award here.
[2] The Commission may pay an award based on amounts collected in a related action that is based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $1 million. [Redacted] entered into after July 21, 2010, are deemed to be administrative actions that may be “related actions” that are eligible for a whistleblower award. Here, the Commission finds that [Redacted] constitute a “related action” within the meaning of Exchange Act Rules 21F-3(b) and 21F-4(d)(3).
[3] See Exchange Act Section 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). The Commission provided Claimant’s information to the Other Agency, which caused the Other Agency to open its own investigation.
[4] [Redacted].
[5] [Redacted].
[6] The Commission finds that further collections in the Covered Action or the Other Agency Action are unlikely, [Redacted].
[7] The Court in the Covered Action deemed the monetary sanctions it ordered against the Company satisfied by the [Redacted] in the Other Agency Action. Thus, any monetary sanctions collected by the Other Agency in the Other Agency Action up to the amount of monetary sanctions ordered in the Covered Action shall not be double counted for purposes of paying an award—that is, collections by the Other Agency in the Other Agency Action will not form the basis for payment of another award based on the Other Agency Action unless and until collections exceed the amount of monetary sanctions ordered in the Covered Action. Cf. Order Determining Claim for Award, Rel. No. 34-88015 (Jan. 22, 2020).

SEC

95840

09/20/2022

The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition (“PSD”) in connection with the above-referenced Covered Action (the “Covered Action”) recommending that the whistleblower award application submitted by [Redacted] (“Claimant”) be denied.[fn1] Claimant filed a timely response contesting the PSD. For the reasons discussed below, OWB’s recommendation is adopted.

I. BACKGROUND.

A. The Covered Action.

In or around [Redacted], Enforcement staff opened the Covered Action investigation based on a tip from a source other than Claimant to investigate whether [Redacted].

On [Redacted], the Commission instituted settled public administrative and cease-and-desist proceedings against [Redacted] (“Firm”). The Commission’s Order charged the Firm and two of its members (collectively, the “Respondents”) with *** [Redacted].

On [Redacted], OWB posted the Notice for the Covered Action on the Redacted Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn1*]

B. The Preliminary Summary Disposition.

OWB issued a PSD recommending that Claimant’s claim for award in the Covered Action be denied because Claimant’s information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Enforcement staff assigned to the investigation that resulted in the Covered Action (the “Investigation”) provided a declaration, which we credit, confirming that Claimant’s tips did not relate to the subject matter of the Covered Action. After review of the Commission’s Tips, Complaints, and Referrals (“TCR”) system, Enforcement staff confirmed that all of Claimant’s tips were closed with a disposition of “No Further Action” and that none of the tips were forwarded to Enforcement staff responsible for the Investigation. Enforcement staff also confirmed that they did not receive any information from, or have communications with, Claimant.

In addition, the PSD noted that Claimant’s award application was frivolous because it lacked a colorable connection between the tips and the Covered Action within the meaning of Rule 21F-8(e) of the Exchange Act. Claimant also failed to submit his/her claim for award within ninety days of the date of the Notice for the Covered Action, as required under Rule 21F-10(b).[fn2]

C. Claimant’s Response to the Preliminary Summary Disposition.

Claimant submitted a timely written response (the “Response”) contesting the PSD.[fn3] In the Response, Claimant argues that he/she submitted a notebook to the Commission on [Redacted], which should be considered as additional information to his/her other tips. Claimant also argues that there is a colorable connection between his/her claim and the Covered Action because “everything connects,” listing various purported connections to foreign drug cartels, money laundering, and organized crime, among other things. Claimant further concedes that he/she “never provided information to investigative staff” and “never communicated with anyone investigating [the Firm] or [the Company].” Finally, Claimant contends that the award application was submitted late because his/her computer was hacked.

II. ANALYSIS.

Claimant’s information does not satisfy Exchange Act Rule 21F-4(c)(1) because his/her information did not cause the staff to open the Investigation or inquire into different conduct as part of the investigation. Nor did Claimant provide information that significantly contributed to the success of the Covered Action under Exchange Act Rule 21F-4(c)(2). As noted, Claimant’s information was not forwarded to Enforcement staff responsible for the Investigation. Nor did the staff receive any information from, or have any communications with, Claimant. Further, none of Claimant’s tips related to the subject matter of the Covered Action. The notebook that Claimant references in the Response does not show that he/she submitted information that significantly contributed to the success of the Covered Action. Claimant provided the notebook to the Commission approximately one month after the filing of the Covered Action. Accordingly, that notebook could not have contributed to the success of the Covered Action.[fn8] Further, the additional information Claimant provided in the Response lacks any nexus to the subject matter of the Investigation or the Covered Action.

Further, the subject matter, allegations asserted, and the entities named in Claimant’s tips do not relate to the Investigation or the Covered Action. Therefore, the Commission finds that the Claimant’s award application was frivolous, and there is no colorable connection between the tips submitted by Claimant and the Commission action for which Claimant has sought an award within the meaning of Rule 21F-8(e) of the Exchange Act.

For these reasons, Claimant is not entitled to an award.

III. CONCLUSION.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-18.
[1*] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[2] Claimant’s application was submitted on [Redacted], one day past the application period for the Covered Action, which closed on [Redacted].
[3] See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3).
[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[5] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[6] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).
[7] See Order Determining Whistleblower Award, Whistleblower File No. 2019-4, at 9, 2019 SEC LEXIS 615 at *16 (Mar. 26, 2019); see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).
[8] Because the record shows that Claimant did not provide information that led to the success of the Covered Action, we do not need to determine whether Claimant’s application should also be denied on the separate ground that his/her award application was untimely.

SEC

95802

09/16/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that joint claimants [Redacted] (“Joint Claimants”)[fn1] receive a whistleblower award of almost $280,000, which is equal to *** percent (***) of the amounts collected in the above-referenced Covered Action (“Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that the Joint Claimants voluntarily provided original information[fn2] to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn3]

[Redacted].

In coming to this conclusion, the Commission considered that the Joint Claimants provided significant information alerting Commission staff to the underlying conduct, which, in part, caused staff to open the Covered Action investigation, and also participated in multiple communications with Commission staff.

Accordingly, it is hereby ORDERED that the Joint Claimants shall receive an award of *** percent (***%) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] We have determined to treat the Joint Claimants jointly as a “whistleblower” for purposes of the award determination given that their information and Forms WB-APP were submitted together via the same counsel. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining a “whistleblower” to include two or more individuals acting jointly who provide information relating to a violation of the securities laws to the Commission). Unless the Joint Claimants, within ten (10) calendar days of the issuance of this Order, makes a joint request, in writing, for a different allocation of the award between the four of them, the Office of the Whistleblower is directed to pay each of them individually 25% of their joint award.
[2] The Joint Claimants’ information was based, in part, on their “independent analysis.” Exchange Act Rule 21F-4(b)(3). By reviewing multiple public sources, and applying their own experience and knowledge, they were able to identify a pattern of suspicious conduct. As such, they were able to provide an evaluation, assessment, or insight beyond what would be reasonably apparent to the Commission from the publicly available information. See Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34312 (June 13, 2011).
[3] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.
[4] [Redacted].
[5] [Redacted].
[6] [Redacted].

SEC

09/16/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received four whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations as follows.

[Redacted].

[Redacted] (Claimant 3) [Redacted] (Claimant 4).

The CRS has preliminarily determined to recommend that the Commission deny the award claims of Claimant 3 and Claimant 4. Neither Claimant 3 nor Claimant 4 provided information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information they provided did not:

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by either Claimant 3 or Claimant 4. In addition, none of the information provided by Claimant 3 or Claimant 4 caused the staff to inquire concerning different conduct as part of the ongoing investigation or significantly contributed to the success of the action, as the staff, having opened the investigation [Redacted] before it received Claimant 3’s tip and [Redacted] before it received Claimant 4’s tip, was already aware of most of the information or the information did not contribute to the staff’s understanding of the misconduct at issue in the Covered Action.

By: Claims Review Staff.

SEC

09/16/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (the “Commission”) received whistleblower award claims from [Redacted] (“Claimant 4”) for the above-referenced Commission enforcement action (the “Covered Action”) against [Redacted]. Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), the Claims Review Staff has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 of the Exchange Act.

[Redacted].

Claimant 4.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 4. No information submitted by Claimant 4 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) promulgated thereunder. None of the information that Claimant 4 submitted: (1) caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the Claims Review Staff notes that the record demonstrates that Enforcement staff responsible for the Covered Action never received any information from Claimant 4 or had any communications with Claimant 4. The tip submitted by Claimant 4 to the Commission did not allege a violation of U.S. securities laws, but generally alleged breaches of the Company’s code of business ethics, which were unrelated to any of the issues involved in the Covered Action. Claimant 4 did not provide any information that was used in, or otherwise had any impact on, the investigation or the resulting Covered Action.

By: Claims Review Staff.

SEC

09/16/2022

In response to the above-referenced Notice of Covered Action, the Securities and
Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 2”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 2.

The CRS has preliminarily determined to recommend that the Commission deny an award to Claimant 2. No information submitted by Claimant 2 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c). None of the information that Claimant 2 submitted: (1) caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the CRS notes that the record demonstrates that Commission staff responsible for the Covered Action did not rely upon the information provided by Claimant 2 when opening the examination or investigation, nor did Commission staff use Claimant 2’s information during the course of the examination or investigation. Claimant 2 provided information that was already known to Enforcement staff.

By: Claims Review Staff.

SEC

95748

09/13/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that joint claimants [Redacted] (together, “Claimant”) receive a whistleblower award in the amount of *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (“Covered Action”). This will result in an award of approximately $ 500,000 to Claimant.[fn1]

[Redacted].

In reaching this determination, we note that: (i) Claimant’s information was significant, as it resulted in Commission staff initiating an investigation into misconduct that [Redacted] (“Company”) engaged in, and it ultimately led in part to the Covered Action; (ii) Claimant submitted information and documents to Commission staff, participated in interviews with Commission staff, and helped Commission staff identify key individuals and entities involved in the investigation; (iii) Claimant’s information and assistance helped Commission staff focus its investigation into the Company and helped the Commission conserve significant time and resources; and (iv) Claimant raised Claimant’s concerns internally at the Company in efforts to remedy the relevant misconduct.

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.

[1] Five other claimants (“Other Claimants”) did not contest the Preliminary Determination denying the Other Claimants’ award claims. Accordingly, the Preliminary Determination with respect to the Other Claimants’ award claims became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. §240.21F-10(f).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
[3] [Redacted].
[4] [Redacted].
[5] [Redacted].

SEC

95753

09/13/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the award application submitted by [Redacted] (“Claimant”) in connection with the above-referenced Covered Action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted settled cease-and-desist proceedings against [Redacted] (“the Company”), in which the Company agreed to pay [Redacted]. According to the Commission’s Order, the Company made nearly [Redacted].

On [Redacted], the Office of the Whistleblower posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)[fn3] and Rules 21F-3(a)(3) and 21F-4(c) thereunder.[fn4] In reaching this recommendation, the CRS considered that the Enforcement staff responsible for the Covered Action investigation did not receive any information from Claimant, nor did staff communicate with Claimant; therefore, Claimant provided no information that helped advance the investigation or the resulting enforcement action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn5] Claimant principally argues that Claimant submitted information in the form of a letter dated [Redacted] Letter”), a copy of which Claimant provided with his/her request for reconsideration, and that this letter prompted the opening of the Covered Action investigation. Claimant also complains that the CRS issued the Preliminary Determination the same day that the Enforcement attorney responsible for the Covered Action signed the declaration, and as such, the CRS could not have had enough time to review all the relevant aspects of the record. Finally, Claimant asserts that Claimant did not receive a copy of the dozens of tips that Claimant sent to the Commission over the years in connection with his/her request for the record.

II. Analysis.

We find that the information Claimant provided did not lead to the successful enforcement of the Covered Action. According to the declaration provided by the Enforcement staff responsible for the Covered Action, which we credit, Enforcement staff opened a Matter Under Inquiry (“MUI”) on [Redacted] concerning possible violations of [Redacted]. The MUI was opened in response to a self-report about the possible violations made by outside counsel for the Company. The MUI was later converted to an investigation on [Redacted].

Claimant contends that his/her [Redacted] Letter prompted the opening of the investigation.[fn8] However, the record reflects that the MUI, which marked the beginning of the Enforcement staff’s inquiry into the Company, had been opened almost three months before Claimant purportedly submitted his/her [Redacted] Letter. Further, the MUI was opened in response to the Company’s self-report, and not because of Claimant’s information. As such, Claimant cannot satisfy Rule 21F-4(c)(1).

Nor does Claimant satisfy Rule 21F-4(c)(2). Enforcement staff responsible for the Covered Action affirmed that the investigative team never received any information provided by Claimant; nor did responsible Enforcement staff have any communication with Claimant before or during the investigation. Further, with respect to the [Redacted] tips that Claimant submitted to the Commission, all but one was closed with a disposition of “No Further Action” or “NFA”[fn9] and not forwarded to Enforcement staff in connection with any matter. The single tip that was not designated for No Further Action was provided to other Enforcement staff in connection with a matter unrelated to the Covered Action.

Claimant’s contention that the CRS could not have had enough time to review the record before issuing the Preliminary Determination is without merit. That the Enforcement attorney signed the declaration the same day that the Preliminary Determination was issued does not mean that the CRS did not adequately consider the underlying record, nor does it mean that the CRS did not have opportunity to review the declaration prior to the issuance of the Preliminary Determination. To the contrary, the staff declaration succinctly and conclusively shows that Claimant could not have provided information that led to the success of the Covered Action because Enforcement staff responsible for the investigation received no information from, and had no communication with, Claimant.

Finally, contrary to Claimant’s contention, the record reflects that Claimant received the record materials underlying the CRS’s Preliminary Determination recommending that Claimant’s award claim be denied. Claimant asked for the record and also, at around the same time, submitted a request to the Commission’s Freedom of Information Act Office (“FOIA request”) for a copy of the tips Claimant submitted to the Commission. Through intra-agency coordination, Claimant was provided not only with the Enforcement staff declaration but also copies of the voluminous TCRs and attachments that Claimant had submitted to the Commission over the years.[fn10]

IV. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.
By the Commission.

[1] [Redacted].
[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[3] 15 U.S.C. § 78u-6(b)(1).
[4] 17 C.F.R. §§ 240.21F-3(a)(3) and 4(c).
[5] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[6] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[7] See Exchange Act Rule 21F-4(c)(1)-(2), 17 C.F.R § 240. 21F-4(c)(1)-(2).
[8] Staff in the Office of the Whistleblower (“OWB”) provided a declaration confirming that the [Redacted] Letter was not in the Commission’s TCR system, an intra-agency database that contains information provided to the Commission regarding potential securities law violations. OWB staff conducted additional research with respect to other Commission databases, and could not locate any evidence that the [Redacted] Letter was received by the Commission in or around [Redacted]. Further, the copy of the [Redacted] Letter that Claimant provided with his/her request for reconsideration was not accompanied by a Form TCR. As such, even assuming the Commission received the [Redacted] Letter, Claimant did not satisfy Exchange Act Rules 21F-9(a) and (b), which require claimants to provide their information on Form TCR or through the Commission’s on-line TCR portal, and sign the requisite whistleblower declaration. Lastly, contrary to Claimant’s assertions, the Commission’s TCR portal was established prior to [Redacted] and was able to accept submissions from outside the U.S. in [Redacted], and the rules requiring submission of a Form TCR were established as part of the Commission’s whistleblower rules adopted in 2011.
[9] An NFA disposition indicates that the staff will not take any additional steps with respect to a TCR unless subsequent information leads staff to reopen or reexamine that TCR.
[10] In providing the record materials to Claimant, OWB included an exhibit list that incorrectly indicated a “Tip submitted on [Redacted]” was part of the record. As reflected in a declaration provided by OWB, there is no evidence that the Commission received the [Redacted] Letter in or around [Redacted], much less that it was submitted on Form TCR.

SEC

95714

09/09/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”).[fn1] Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted cease-and-desist proceedings against [Redacted] (the “Company”) and [Redacted] (the “Individual”) in the Covered Action, charging the respondents with [Redacted]. Pursuant to the settlement, the Company agreed to pay total monetary sanctions of more than [Redacted] while the Individual consented to pay a civil penalty of [Redacted]. Both respondents agreed to cease and desist from future violations of the federal securities laws.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS determined that Claimant’s information did not significantly contribute to the investigation that resulted in the Covered Action (the “Investigation”) because Claimant’s information concerned [Redacted] violations in *** (the “Other Country”), which Enforcement staff could not substantiate, whereas the Covered Action focused on conduct in [Redacted] (the “Country”).

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2] Claimant principally argues that the record does not demonstrate that Claimant’s information “could not have, in any way, been a bargaining chip in the SEC’s settlement negotiations with [the Company].” Claimant argues that the settlement in the Covered Action could have been “a package deal” addressing the charges related to Country as well as the charges related to Claimant’s information regarding Other Country. In support of this position, Claimant, among other things, points to [Redacted] stating that the Company resolved investigations “regarding [Country] and [Other Country].”

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2),[fn4] respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8]

Second, even assuming that Claimant’s information caused the Commission to inquire into conduct in Other Country, the Commission did not bring a successful action in whole or in part based on conduct that was the subject of Claimant’s information, nor did Claimant’s information significantly contribute to the Investigation. It is undisputed that the information Claimant provided to the Commission did not address conduct in Country, but instead related to conduct in Other Country. And while the record shows that Enforcement staff investigated conduct in Other Country, the violations charged in the Covered Action only pertain to conduct in Country. Enforcement staff confirmed that Claimant’s information was not used in nor had any impact on the charges brought in the Covered Action.

Further, Claimant’s information did not assist with settlement discussions or otherwise help resolve the Covered Action. Enforcement staff assigned to the Investigation have confirmed, in a supplemental declaration, which we credit, that Enforcement staff had already determined, prior to the beginning of settlement discussions, that there was not sufficient evidence for the Commission to bring charges based upon conduct in Other Country. Accordingly, when the staff opened settlement discussions, no mention was made of conduct in Other Country, nor were the settlement discussions based upon or aided by any information provided by Claimant. Staff did not raise any Other Country conduct during subsequent settlement discussions, nor did the respondents’ offers of settlement, which the Commission accepted, address conduct in Other Country. Accordingly, we conclude that Claimant’s information did not cause the Commission to inquire into different conduct and then bring an action based upon conduct that was the subject of that information, nor did Claimant significantly contribute to the success of the Covered Action.[fn9]

For these reasons, Claimant is not entitled to an award.[fn10]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] The CRS also preliminarily denied the award claims of two other claimants. Those claimants did not seek reconsideration of the Preliminary Determinations, and therefore the denials of their claims were deemed to be the Final Orders of the Commission under Exchange Act Rule 21F-10(f).
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] We construe the Response as applicable only to subsections 1 and 2 of Rule 21F-4(c). Consequently, the analysis that follows addresses only those two subsections of the provision.
[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).
[8] Exchange Act Rel. No. 85412 at 8-9.
[9] Claimant relies on a [Redacted] referring to Other Country. But as noted above, the Covered Action makes no mention of conduct in Other Country, and Enforcement staff determined prior to commencement of settlement discussions that the staff had not developed sufficient evidence to warrant charges based upon conduct in Other Country.
[10] Claimant’s Response also requests that certain materials subject to an alleged Freedom of Information Act (“FOIA”) request made “over three years ago” be included in the record. Claimant, who is represented by counsel, notes that he/she “never received the requested documents[, nor] did the SEC ever respond to our FOIA request.” Claimant concludes that he/she has thus made “good faith efforts” to attach materials to his/her whistleblower application pursuant to Exchange Act Rule 21F-12(a)(3). Yet Claimant’s FOIA “request” appears to rest upon a single footnote in Claimant’s whistleblower application submission to OWB. FOIA requests must be submitted to the Commission’s Office of FOIA Services (“OFS”), the centralized unit that handles all FOIA request for the Commission and whose website provides procedures on submitting a request directly to OFS.

SEC

95713

09/09/2022

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed suit against [Redacted] (the [Redacted] “Company”), [Redacted] alleging, among other things, [Redacted]. To settle the Commission’s charges, the Company consented to entry of a final judgment ordering the Company liable for disgorgement of [Redacted]. The Company also consented to a permanent injunction prohibiting it from future violations [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS determined that Claimant’s information was submitted to the Commission approximately six weeks after the Commission filed the complaint in the Covered Action. As a result, the CRS determined that Claimant’s information was not the source of or the impetus for the investigation that led to the Covered Action, nor did Claimant’s information contribute to the investigation or the resolution of the Covered Action. The CRS also denied Claimant’s claim for a related action award on the ground that because Claimant is not eligible for an award in connection with a Commission action, Claimant is not eligible for an award in connection with any related action.[fn1]

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2] Claimant principally argues that beginning in [Redacted] Claimant had discussions with an investigator for a law firm (the “Law Firm”) concerning the Company and [Redacted] an affiliate (the “Affiliate”) of the Company. Claimant argues that he/she provided information to the Law Firm in [Redacted] regarding [Redacted] by Company and Affiliate. Claimant contends that in the investigator for the Law Firm said that Law Firm had “filed the information with the SEC that [Claimant] provided . . . and [the investigator] had been told the firm had contacted [Claimant].” Claimant states that he/she was never contacted by Law Firm and that Claimant believes Law Firm provided Claimant’s information to the Commission without his/her consent.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn4] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn5] In addition, the Commission will consider an individual to be the “original source” of the same information the Commission obtains from another source if the information satisfies the definition of original information and the other source obtained the information from the individual or the individual’s representative.[fn6]

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8]

Claimant does not qualify for an award under either of the above-described provisions. First, the record demonstrates that the Commission’s investigation which led to the Covered Action (the “Investigation”) was opened in [Redacted] more than eighteen months before Claimant submitted his/her tip to the Commission, and more than one year before Claimant contends Claimant spoke with the investigator associated with the Law Firm. Accordingly, Claimant’s information did not cause the staff to open the Investigation.

Second, the record shows that Claimant’s tip to the Commission did not cause the staff to inquire into different conduct or significantly contribute to the Investigation. To the extent that Claimant argues he/she is the original source of any information provided to the Commission by the Law Firm, Enforcement staff provided a supplemental declaration, which we credit, stating that the staff did not recall receiving any communications or tips from the Law Firm or the investigator with regard to the Company or the Investigation. The staff also reviewed email records associated with the Investigation and did not identify any email or tip from the Law Firm or the investigator. For these reasons, the record does not support the contention that Claimant was the original source of any information used by the Commission prior to the filing of the Covered Action. Lastly, as stated by the CRS, Claimant’s own submission to the Commission occurred approximately six weeks after the Covered Action was filed and therefore did not contribute to the Investigation or to the charges in or resolution of the Covered Action.

In sum, Claimant’s information did not affect the opening of the Investigation, it was not used by the staff during the Investigation, nor did it significantly contribute to the Investigation or Covered Action.
For these reasons, Claimant is not entitled to an award.[fn9]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

SEC

95712

09/09/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial.[fn1] For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings in the Covered Action, charging [Redacted] (the “Company”) with violations of [Redacted]. The Commission order stated that [Redacted]. The Company agreed to settle the charges and to pay [Redacted] in disgorgement, [Redacted] in prejudgment interest, and a civil money penalty of [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS concluded that Claimant’s information was initially forwarded to Enforcement staff investigating the [Redacted] however, because Claimant’s information focused on [Redacted] the staff investigating the [Redacted] forwarded Claimant’s information to other Enforcement staff in the Commission’s New York Regional Office (“NYRO”) assigned to a separate investigation. The investigation that led to the Covered Action began in [Redacted] and was based on information developed in another investigation. The CRS determined that none of Claimant’s information contributed to or had any impact on the charges brought in the Covered Action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2] Claimant principally argues that in [Redacted] he/she provided “detailed information on the [Redacted] to Enforcement staff and states that this information “directly benefited” the staff’s work on the Covered Action. Claimant attached several emails to his/her Response as examples of the information Claimant shared, and also implied that the origin of the staff’s knowledge of the [Redacted] at issue in the Covered Action was derived from Claimant’s information. Claimant also argues that he/she provided specific and detailed information to NYRO staff, and that the NYRO staff may have shared this information with others at the Commission thereby assisting with the Covered Action. Finally, Claimant appears to also contend that his/her information regarding [Redacted] helped the Investigation in some way.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] As relevant here, under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn4] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn5]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7]

Claimant does not qualify for an award under either of the above-described provisions. First, the record demonstrates that the Commission’s investigation which led to the Covered Action (the “Investigation”) was opened based upon information developed during a separate investigation into the Company. Claimant’s information did not cause the staff to open the Investigation.

Second, the record shows that Claimant’s information did not cause the staff to inquire into different conduct or significantly contribute to the Investigation. Enforcement staff assigned to the Investigation confirmed that Claimant’s information, which concerned the issue of [Redacted] did not relate to the matters at issue in the Investigation or the charges in the Covered Action. Further, staff confirmed that the [Redacted] Claimant raised in the Response were already known to the staff before Claimant submitted his/her information. Staff assigned to the Investigation also confirmed that the Commission’s NYRO staff did not share any additional information received from Claimant. The emails Claimant attached to the Response also do not bolster his/her argument: the staff had already confirmed that Claimant’s information from [Redacted] did not relate to the Investigation or the charges in the Covered Action. Based upon these facts, Claimant’s information did not cause the staff to inquire into different conduct or significantly contribute to the Investigation.[fn8]

For these reasons, Claimant is not entitled to an award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] The CRS also preliminarily denied the award claims of one other claimant. That claimant did not seek reconsideration of the Preliminary Determinations, and therefore the denial of that claim was deemed to be the Final Order of the Commission under Exchange Act Rule 21F-10(f).
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[5] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[6] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[7] Exchange Act Rel. No. 85412 at 8-9.
[8] Claimant also asks that the Commission determine if the Company was [Redacted] There is no evidence in the record on this point, and even if such information were available, we do not see its relevance. The staff has confirmed that Claimant’s information did not cause the opening of the Investigation or assist it in any way.

SEC

95711

09/09/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of whistleblower award claims submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered actions (the “Covered Actions”).[fn1] Claimant filed a timely response contesting the preliminary denials. For the reasons discussed below, Claimant’s award claims are denied.

I. Background.

A. The Covered Actions.

The Office of the Whistleblower (“OWB”) received one Form WB-APP on or about *** [Redacted] from Claimant applying for awards in connection with the Covered Actions.

On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] The 90-day deadline for this posting was [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted approximately six months after the deadline.

On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. The 90-day deadline for this posting was [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted approximately three months after the deadline.

B. The Preliminary Determinations.

On [Redacted] the CRS issued Preliminary Determinations recommending that Claimant’s award claims for the Covered Actions be denied because Claimant failed to submit the claims for award to OWB within ninety days of the dates of the Notices of Covered Action, as required under Rule 21F-10 of the Exchange Act.[fn3]

C. Claimant’s Response to the Preliminary Determinations.

Claimant submitted a timely written request contesting the Preliminary Determinations.[fn4] In the reconsideration request, Claimant contends that the Commission never alerted Claimant to the necessity of filing for a whistleblower award in the Covered Actions and that the Commission should use its authority under Exchange Act Rule 21F-8(a) to waive the award application deadlines in the above-captioned Covered Actions.

II. Analysis.

The requirement that claimants file whistleblower award claims within ninety days of the posting of a Notice of Covered Action (“NoCA”), set forth in Exchange Act Rule 21F-10, serves important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that the Commission can make timely awards to meritorious whistleblowers.[fn5]

Claimant argues that the Commission should use its authority under Exchange Act Rule 21F-8(a) to waive the ninety-day filing requirement in the two Covered Actions discussed herein. Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive any of these procedures upon a showing of extraordinary circumstances.”[fn6] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn7] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn8]

Claimant provided the same explanation for Claimant’s tardiness in filing award applications in the Covered Actions as Claimant provided in five previous late-filed award applications, namely that the Commission failed to alert Claimant to the necessity of filing for a whistleblower award. As we explained in our previous orders, Claimant has failed to satisfy the “demanding showing” required by Rule 21F-8(a):

Applying that demanding standard here, we find that Claimant has failed to show that extraordinary circumstances beyond Claimant’s control were responsible for the years of delay between the application deadline for the Covered Actions and Claimant’s untimely whistleblower application in [Redacted]. Contrary to Claimant’s contentions, the Commission is not obligated to notify a claimant of the posting of a NoCA or the deadline for submitting an award application. As we have explained, our whistleblower rules provide “for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim.” The NoCAs for the Covered Actions were clearly posted on the Commission’s website, along with the requisite deadlines. Under our rules, that is all the notice that Claimant was due.

Despite Claimant’s asserted unawareness of this notice, “a lack of awareness about the [whistleblower award] program does not . . . rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.” “A potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim.” Claimant’s failure to regularly monitor the Commission’s web page for NoCA postings is not an “extraordinary circumstance” that might trigger our discretion to excuse the fact that Claimant submitted the award application more than two years late.[fn9]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimant in connection with the Covered Actions be, and it hereby are, denied.
By the Commission.

[1] Claimant’s award application also sought awards in connection with five other covered actions. On March 26, 2019, we denied Claimant’s award claim in Covered Action [Redacted] because it had been submitted after the deadline for submitting award claims for that covered action. See Order Determining Whistleblower Award Claim, Release No. 85412 (Mar. 26, 2019). On March 24, 2020, we denied Claimant’s award claims in Covered Actions [Redacted] and [Redacted] because each had been submitted after the deadline for submitting award claims for those covered actions. See Order Determining Whistleblower Award Claim, Release No. 88464 (Mar. 24, 2020). Then on May 10, 2021, we denied Claimant’s award claim in Covered Action [Redacted] because it too had been submitted after the deadline for submitting award claims in that covered action. See Order Determining Whistleblower Award Claim, Release No. 91805 (May 10, 2021).
[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[3] Exchange Act Rules 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred”) and 10(b)(1) (“All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award”). See also Order Determining Whistleblower Award Claim, Release No. 77368 , at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018).
[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[5] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 64545 , 76 Fed. Reg. 34300, 34300; Order Determining Whistleblower Award Claim, Release No. 88464 at 3 (Mar. 24, 2020).
[6] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).
[7] Order Determining Whistleblower Award Claim, Release No. 34-77368 at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S.Ct. 2005 (2018).
[8] See Order Determining Whistleblower Award Claim, Release No. 77368 at 3; see also Order Determining Whistleblower Award Claim, Release No. 82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 72178 (May 16, 2014).
[9] Order Determining Whistleblower Award Claim, Release No. 88464 at 3-4 (March 24, 2020) (internal citations omitted).

SEC

95672

09/06/2022

The Office of the Whistleblower (“OWB”) issued a Preliminary Summary Disposition recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.[fn2]

I. Background.

A. The Covered Action.

On [Redacted] the Commission charged [Redacted]. The Commission’s complaint alleged that the defendants [Redacted] (the “Company”) and [Redacted]. The Commission alleged that the Company [Redacted]. The court entered final judgment against the Company and the individual defendants, permanently enjoining them from future violations of the securities laws and ordering more than [Redacted] in monetary sanctions.

B. The Preliminary Summary Disposition.

On [Redacted], OWB issued a Preliminary Summary Disposition recommending that
Claimant’s claim be denied because Claimant’s information was not provided to Enforcement staff assigned to the investigation that led to the Covered Action (the “Investigation”) and therefore did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. OWB determined that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. OWB stated that Enforcement staff responsible for the Investigation had opened the Investigation based upon a source other than Claimant and had never received any information from or had any communication with Claimant.

C. Claimant’s Response to the Preliminary Summary Disposition

Claimant submitted a timely written response contesting the Preliminary Summary Disposition (the “Response”).[fn3] Claimant principally argues that Claimant provided specific, credible, and timely information to the Commission and is therefore entitled to an award, and that Exchange Act Rule 21F-4(c)(1) “establishes an objective test; what the SEC did or did not do is irrelevant to the question of whether the character of the information provided was such that it was sufficiently specific, credible, and timely to cause the staff to act.” Claimant notes that the Commission received Claimant’s tip before the staff opened the Investigation and therefore had the necessary information to begin the Investigation. Claimant also argues, among other things, that the record does not sufficiently demonstrate that Enforcement staff did not use Claimant’s information. The Claimant also argues that the staff declaration provided to Claimant pursuant to Claimant’s request for the record materials upon which OWB relied when making its recommendation 4 was based on hearsay evidence and does not provide a complete recitation of the facts because the declaration is partially redacted.

II. Analysis.

In determining whether information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn8] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn9] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

First, Claimant misinterprets the eligibility criteria under Rule 21F-4(c)(1): contrary to Claimant’s arguments in the Response, our rules do not provide for awards based upon the potential or theoretical use of a claimant’s information. Instead, awards are based upon the actual use of a claimant’s information by Commission staff. As we have stated, “the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s information actually had on the investigation.”[fn10] The Commission will not speculate on the supposed value of Claimant’s information in the absence of its actual use during the Investigation.

Accordingly, while Claimant may have submitted information to the Commission prior to the opening of the Investigation, the record here demonstrates that Claimant’s information did not cause Enforcement staff responsible for the Investigation to open the Investigation or cause the staff to inquire into different conduct. A staff declaration, which we credit, confirms that the staff responsible for the Investigation opened the based upon a referral from the [Redacted] (“Other Agency 1”). A supplemental declaration from OWB staff, which we also credit, confirms that, after review of Claimant’s information, other Enforcement staff referred Claimant’s information to the [Redacted] (“Other Agency 2”) and the [Redacted] (“Other Agency 3”) and then closed Claimant’s submission with a disposition of “no further action.” Contrary to Claimant’s contentions, there is no evidence in the record that Other Agency 2 or Other Agency 3 had any role in the referral to the Commission from Other Agency 1, and the record demonstrates that Other Agency 1 has no record of receiving any information from Claimant or that Claimant was the source of Other Agency 1’s referral to the Commission. And while other Enforcement staff reviewed Claimant’s tip and forwarded it to Other Agency 2 and Other Agency 3, there is no evidence in the record that Claimant’s information was forwarded to staff assigned to the Investigation.

The record demonstrates that Claimant did not cause the Commission to inquire into different conduct and did not significantly contribute to the success of the action: Claimant’s information was not used by staff assigned to the Investigation, nor did Claimant ever communicate with staff assigned to the Investigation.[fn11]

For these reasons, we deny Claimant’s whistleblower award claim.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-18, 17 C.F.R. § 240.21F-18.
[2] OWB also preliminarily denied the award claim of one other claimant. This claimant did not seek reconsideration of the Preliminary Summary Disposition, and therefore the denial of his/her claim was deemed to be the Final Order of the Commission under Exchange Act Rule 21F-18(b)(4).
[3] See Exchange Act Rule 21F-18(b)(3), 17 C.F.R. § 240.21F-18(b)(3).
[4] See Exchange Act Rule 21F-11(e)(1)(i), 17 C.F.R. § 240.21F-11(e)(1)(i).
[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[6] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[7] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[8] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[9] Exchange Act Rel. No. 85412 at 8-9.
[10] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 92542 at 4 (Aug. 2, 2021) (quoting Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90872 (Jan. 7, 2021)) (internal quotation marks omitted).
[11] Claimant’s other arguments regarding the contents of the record are not persuasive. The Commission may rely upon hearsay evidence in its administrative proceedings. See, e.g., In the Matter of Guy P. Riordan, Securities Act Release No. 9085 at 25 (Dec. 11, 2009). Further, Claimant offers no reason for us to doubt the reliability or trustworthiness of the declaration provided by Enforcement staff. Claimant also received the record materials to which he/she was entitled. Claimants are only entitled to record material relevant to their own claim for award. OWB may also “make redactions as necessary to comply with any statutory restrictions,” such as whistleblower confidentiality requirements. Exchange Act Rule 21F-12(b). Redactions to the staff declaration at issue here were done properly pursuant to those requirements.

SEC

95537

08/18/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that the Commission grant an award of over $1,500,000, equal to [Redacted] percent (***%) to joint whistleblowers [Redacted] (together, “Claimant 1”)[fn1] and an award of almost $800,000 to [Redacted] (“Claimant 2”), equal to percent (***%) of the monetary sanctions collected in [Redacted] (together “the Covered Actions”). Claimant 1 and Claimant 2 provided written notice of their decisions not to contest the Preliminary Determinations.

[Redacted].

We find the award allocation is appropriate. While both Claimant 1 and Claimant 2 provided information that, in part, caused the opening of the investigation, Claimant 1 provided more ongoing helpful information and assistance to the Enforcement staff as compared to Claimant 2.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent (*** %) and Claimant 2 shall receive an award of *** percent (***%) of the monetary sanctions collected or to be collected in the Covered Actions.

By the Commission.

[1] We have determined to treat Claimant 1 jointly as a “whistleblower” for purposes of the award determination given that their tip was submitted on behalf of both of them and they submitted their Forms WB-APP together via the same counsel. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining a “whistleblower” to include two 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 total award percentage to Claimant 1. Unless Claimant 1, within ten (10) calendar days of the issuance of this Order, makes a joint request, in writing, for a different allocation of the award between the two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

[2] [Redacted].

SEC

95484

08/12/2022

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed a complaint against [Redacted] (the “Defendants”) alleging that the Defendants [Redacted]. On [Redacted] the court entered final judgment against [Redacted] the Defendants, permanently enjoining them from future violations of [Redacted]. The court entered judgment against [Redacted] Defendants on [Redacted] and [Redacted] ordering additional monetary sanctions of more than [Redacted] in disgorgement, prejudgment interest, and civil penalties. The court also permanently enjoined these other Defendants from future violations of [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that [Redacted] Claimant’s claim be denied on the grounds that Claimant did not provide information to the Commission that led to the successful enforcement of the Covered Action. The CRS concluded that none of the information submitted by Claimant either (1) caused the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS concluded that Enforcement staff assigned to the investigation which led to the Covered Action (the “Investigation”) did not receive any information from Claimant and did not have any communications with Claimant. The record also showed that the Investigation was opened on or about [Redacted] based upon three referrals from [Redacted] (the “Other Agency”) concerning [Redacted] issuers (the “Issuers”).

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn2] Claimant principally argues that Claimant was the original source of the information in the referrals that the Commission received from the Other Agency. Claimant argues that “[Claimant] also provided SEC and [Other Agency] original information on the . . . companies referenced in the SEC’s Complaint . . . and the scheme that led to the SEC’s award against [defendant].” Claimant also contends that his/her independent analysis of misconduct [Redacted] (the “Other Company”) “was key to the Commission’s successful enforcement action.” In support of his/her contention, and as “secondary confirmation” that he/she provided information to the Other Agency, Claimant attached a “collection of [Claimant’s] tips to [Other Agency] and/or SEC regarding [the Other Company] and securities manipulated by the same. Each security referred to [Other Agency]/SEC by [Claimant] was subject of a . . . scheme identical to that of [the Issuers].”[fn3]

II. Analysis.

For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

First, Claimant argues for the first time in his/her Response that Claimant was the original source of information provided to the Other Agency which must have caused the Other Agency to make referrals to the Commission. However, Other Agency staff confirmed with OWB staff that Other Agency records do not indicate that the referrals were opened based upon information from Claimant or any other whistleblower. The Other Agency typically tracks if referrals originated from a tip or complaint from a member of the public. Here, Other Agency records demonstrate that the referrals originated with (1) Other Agency’s own review of the price and volume activity of *** Issuer’s security, and (2) Other Agency’s review of [Redacted] Issuers promotional material. In addition, Enforcement staff assigned to the Investigation confirmed in a supplemental declaration, which we credit, that the [Redacted] Other Agency referrals did not mention that the Other Agency received any information from Claimant or any other whistleblower or informant. Staff assigned to the Investigation further confirmed that the staff has no recollection of an Other Agency representative identifying or mentioning Claimant as a source of information for the referrals at issue. Therefore, the record does not show that Claimant was the original source for the referrals from the Other Agency and thus does not show that Claimant’s information caused the staff to open the Investigation.

Second, because the evidence does not establish that Claimant’s information caused the staff to open the Investigation, Claimant’s information can only be deemed to have led to the success of the Covered Action if it caused the staff to inquire concerning different conduct as part of a current investigation[fn10] or “significantly contributed to the success of the action.”[fn11] While Claimant included a document in the Response indicating that Claimant was in communication with a Commission staff member, according to the staff’s supplemental declaration, the staff assigned to the Investigation never received or reviewed Claimant’s information from that staff member. Further, the staff supplemental declaration confirmed that staff assigned to the Investigation never reviewed or received information from Claimant or had communications with Claimant. Accordingly, we find that Claimant’s information did not cause the staff to look into different conduct as part of its ongoing investigation, nor did Claimant’s information significantly contribute to the success of the action.[fn12]

Therefore, Claimant’s information does not qualify Claimant for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection the Covered Action be, and it hereby is, denied.

By the Commission.

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Claimant also contends that he/she is entitled to copies of the Other Agency referrals to the Commission.

[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[5] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).

[6] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[7] Exchange Act Rule 21F-4(b)(5); 17 C.F.R § 240.21F-4(b)(5).

[9] Exchange Act Rel. No. 85412 at 8-9.

[10] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[11] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[12] In addition, Claimant is not entitled to copies of the referrals from the Other Agency. Exchange Act Rule 21F-12(a) lists the materials that form the basis for the Preliminary Determination and that Claimant may request from the Commission. See Exchange Act Rule 21F-10(e)(1). “These rules do not entitle [Claimant] to obtain from the Commission any materials . . . other than those listed in paragraph (a) of this section.” Exchange Act Rule 21F-12(b). Referrals and other Commission investigative files are not included in the materials listed in Rule 21F-12(a) and thus not available to Claimant.

SEC

95483

08/12/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the [Redacted] denial of the whistleblower award claim submitted by (“Claimant”) in connection with the above-referenced covered action (“Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action and Other Commission Actions.

On [Redacted], the Commission brought several actions related to misconduct involving [Redacted]. First, in the Covered Action, the Commission charged [Redacted] with violating [Redacted] for their involvement in [Redacted]. The Commission subsequently obtained judgments in the Covered Action ordering the defendants and relief defendant to pay disgorgement, prejudgment interest, and/or civil penalties totaling more than [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted the Notice of [Redacted] Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn1] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination[fn2] recommending that [Redacted] Claimant’s claim be denied on the grounds that Claimant did not provide “original information” that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information was not provided to the Commission for the first time after July 21, 2010, the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).[fn3]

The record supporting the Preliminary Determination included the declaration (“Declaration”) of one of the Division of Enforcement (“Enforcement”) attorneys who was assigned to the investigation that led to the Covered Action, [Redacted] (“Investigation”).[fn4] The Declaration stated, under penalty of perjury, that Enforcement staff opened a Matter Under Inquiry (“MUI”) on [Redacted], which was subsequently converted to the Investigation. Enforcement staff opened the MUI after receiving a referral from [Redacted] Referral”) [Redacted] Referral included information that Claimant had provided to [Redacted]. [Redacted] Referral indicated that Claimant submitted information and documents to [Redacted].

Claimant also communicated with Commission staff orally and in writing as early as [Redacted]. From [Redacted], Claimant sent documents and information concerning his/her allegations and complaints to not only the Commission, but also to [Redacted]. The documents and information that Claimant provided during this time largely centered on Claimant’s contention that [Redacted]. From [Redacted], Claimant continued to furnish Commission staff [Redacted] with information concerning [Redacted]. On [Redacted], Commission staff interviewed Claimant to discuss Claimant’s information about ***, other individuals, and their involvement in [Redacted].

According to Enforcement staff, although the information that Claimant provided to the Commission was helpful, Claimant did not provide any information for the first time to the Commission after July 21, 2010 that helped advance the Investigation or was used in, or had any impact on, the charges brought by the Commission in the Covered Action or the other actions initiated by the Commission.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn5] Claimant argued that he/she did provide original information that was relevant to the Covered Action after July 21, 2010. Claimant stated that he/she submitted information to the Commission and had several calls with Commission personnel to discuss the same. Claimant also stated that he/she was “asked to have a face to face meeting with [Redacted] to review all of the original material I had submitted[,] [Redacted] to meet with me in [Redacted]. At this meeting in [Redacted] Claimant purportedly “was informed that my information flow contributed to their learning of information about the principals named [Redacted] [in the Covered Action] of which they [were] unaware. [Redacted]. Finally, Claimant argued that the original information that he/she provided after July 21, 2010 was evidenced by numerous documents and other information Claimant sent via FedEx, certified mail, and email. Claimant attached a letter, dated [Redacted], which Claimant purported showed that he/she provided significant information after July 21, 2010.

II. Analysis.

We deny an award to Claimant in connection with the Covered Action. To qualify for an award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn6] Among other things, to be considered original information, the submission must be provided to the Commission for the first time after July 21, 2010.[fn7] Claimant did not provide such information to the Commission.

In Claimant’s request for reconsideration, Claimant indicated that certain individuals— [Redacted] to meet with Claimant in *** [Redacted]. In prior submissions to the Commission, Claimant stated that [Redacted] were employees with [Redacted]. Regardless of when this purported meeting with [Redacted] transpired, the meeting had no relevance to the Commission’s Investigation, the Covered Action, or the other Commission actions, all of which were filed on [Redacted]. Thus, Claimant’s reference to [Redacted] meeting in Claimant’s reconsideration request provides no evidence indicating that Claimant provided any new information for the first time to the Commission after July 21, 2010 that led to the success of the Covered Action.

Additionally, the letter that Claimant attached to his/her reconsideration request provides no evidence that Claimant is eligible for an award. That letter—which was dated *** ***—was purportedly written by Claimant two weeks after the Commission filed the Covered Action and the other Commission actions on [Redacted]. Claimant’s letter contains nothing indicating that Claimant provided any new information for the first time to the Commission after July 21, 2010 that led to the success of the Covered Action.

Instead, the Declaration, which we credit, confirmed under penalty of perjury that although Claimant provided information to the Commission that was helpful, Claimant did not provide any information for the first time after July 21, 2010 that helped advance the Investigation, or had any impact on, the charges brought by the Commission in the Covered Action.

Based on the Declaration and the other facts in the record–including but not limited to Claimant’s prior submissions to the Commission—we find that Claimant did not provide any new information for the first time to the Commission after July 21, 2010 that led to the success of the Covered Action. Because Claimant did not provide original information to the Commission that led to the success of the Covered Action, Claimant is not eligible to receive a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] See Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[4] The whistleblower rules contemplate that the record upon which an award determination is made shall consist of, as relevant here, a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a).

[5] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[6] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[7] See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).

SEC

08/12/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 3”), and [Redacted] (“Claimant 4”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 3.

The CRS has preliminarily determined to recommend that the Commission deny an award to Claimant 3. No information submitted by Claimant 3 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that the Claimant 3 submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the CRS notes that the record demonstrates that Claimant 3’s information was submitted after the investigation that led to the Covered Action was opened and that Claimant 3’s information was generally duplicative of information the staff had already received in the investigation. Claimant 3’s information did not advance the staff’s investigation or have any impact on the charges brought in the Covered Action.

Claimant 4.

The CRS has preliminarily determined to recommend that the Commission deny an award to Claimant 4. No information submitted by Claimant 4 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that the Claimant 4 submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the CRS notes that the record demonstrates that Claimant 4’s information was submitted after the investigation that led to the Covered Action was opened and that Claimant 4’s information was generally duplicative of information the staff had already received in the investigation. Claimant 4’s information did not advance the staff’s investigation or have any impact on the charges brought in the Covered Action.

By: Claims Review Staff.

SEC

08/12/2022

In response to the above-referenced Notice of Covered Action, the Securities and
Exchange Commission (the “Commission”) received five whistleblower award claims. Pursuant
to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10
promulgated thereunder, the Claims Review Staff has evaluated each of these claims in
accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff
sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

The CRS has preliminarily determined to recommend that the Commission treat [Redacted] (“[Redacted] Action”) [Redacted] as part of the Covered Action.[fn1]

[Redacted].

[Redacted] (Claimant 3), [Redacted] (Claimant 4) and [Redacted] (Claimant 5).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claims of Claimant 3, Claimant 4 and Claimant 5. Neither Claimant 3, Claimant 4 nor Claimant 5 provided information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information they provided did not:

(1) under Rule 21F-4(c)(1) of the Exchange Act cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s, Claimant 4’s, or Claimant 5’s information; or

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by Claimant 3, Claimant 4 or Claimant 5. In addition, none of the information provided by Claimant 3 or Claimant 4 caused the staff to inquire concerning different conduct as part of the ongoing investigation or significantly contributed to the success of the action, as the staff, having opened the investigation before it received Claimant 3’s tip and [Redacted] before it received Claimant 4’s tip, was already aware of most of their information or the information did not contribute to the staff’s understanding of the misconduct at issue in the Covered Action. Finally, with regard to Claimant 5, staff responsible for the investigation and Covered Action did not review Claimant 5’s information; therefore, Claimant 5’s information had no impact on the staffs investigation or the Covered Action.[fn4]

By: Claims Review Staff.

[1] Exchange Act Rule 21F-4(d)(1) provides that “the Commission will treat as a Commission action two or more administrative or judicial proceedings brought by the Commission if these proceedings arise out of the same nucleus of operative facts.” Because the [Redacted] Action arose from the same investigation and was brought against [Redacted], we have determined that both matters arose out of the same nucleus of operative facts.

[4] Claimant 5’s tip, which was submitted before the underlying investigation was opened, alleged that [Redacted]. Even if the staff had reviewed Claimant 5’s information, it could not have caused the staff to open the investigation or significantly contributed to it given the absence of any connection between Claimant 5’s allegations and the facts that were central to the investigation and the Covered Action [Redacted].

SEC

95489

08/12/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of more than $2.1 million, and that [Redacted] (“Claimant 2”) receive a whistleblower award of more than $1 million, equal to [Redacted] percent (***) and *** percent (***), respectively, of the amounts collected, or to be collected, in the above-referenced Covered Actions (“Covered Actions”). The CRS also preliminarily recommended that the award claim of [Redacted] (“Claimant 3”) should be denied. Claimant 1 and Claimant 3 filed timely responses contesting the Preliminary Determinations, and Claimant 2 provided written notice of Claimant 2’s decision not to contest the Preliminary Determinations.[fn1] For the reasons discussed below, the CRS’s recommendations are adopted with respect to Claimant 1, Claimant 2, and Claimant 3.

I. Background.

A. The Covered Actions.

1. [Redacted] Enforcement Action.

On [Redacted], the Commission filed an action in federal district court captioned [Redacted]. The Commission charged [Redacted].
The Commission’s complaint charged [Redacted]. The complaint also alleged that [Redacted]. The Court granted the Commission’s [Redacted].
On [Redacted] consented to the entry of a Final Judgment ordering [Redacted]. No collections have been made from [Redacted].
The Court-Appointed Receiver has distributed [Redacted] to harmed investors. Amounts distributed to harmed investors by court-appointed receivers as relief for the securities violations, like here, may be treated as collected monetary sanctions for purposes of making an award payment.[fn2]
On [Redacted] the Office of the Whistleblower posted the relevant Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn3] Claimants 1, 2 and 3 each separately filed a timely whistleblower award claim.

2. [Redacted] Enforcement Action.

On [Redacted] the Commission filed an action in federal district court captioned [Redacted]. The Commission charged [Redacted]. According to the complaint, [Redacted]. The Commission’s complaint charged [Redacted].
On [Redacted] consented to the entry of [Redacted] *** a court order prohibiting [Redacted] and agreed to pay [Redacted]. On [Redacted] also consented to [Redacted]. To date, [Redacted] has paid [Redacted].
On [Redacted] consented to the entry of a Final Judgment ordering *** [Redacted]. To date, [Redacted] has paid [Redacted].

On [Redacted] the Office of the Whistleblower posted the relevant Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn4] Claimants 1, 2 and 3 each separately filed a timely whistleblower award claim.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn5] recommending that Claimant 1 and Claimant 2 receive a whistleblower award equal to [Redacted] percent (***) and *** percent (***), respectively, of the amounts collected in the above-referenced Covered Actions and that Claimant 3’s award be denied because Claimant 3 did not provide original information that “led to” the success of the Covered Actions as required under Exchange Act Rule 21F-4(c).

C. Claimants’ Responses to the Preliminary Determination.

Claimant 1 submitted a timely written response contesting the Preliminary Determination. 6 Specifically, Claimant 1 argues in response to the Preliminary Determination that Claimant 1 should receive a higher award given that Claimant 1 assisted throughout the entire investigation. Claimant 1 further states that the Commission should use its discretion to award Claimant 1 a *** award and Claimant 2 a *** award in the Covered Actions.
Claimant 3 submitted a timely written response contesting the Preliminary Determination. 7 Specifically, Claimant 3 explains that he/she submitted a TCR in ***, not on the date stated in the staff declaration, but does not show how Claimant 3’s information was used in the Covered Actions or the underlying investigation.

III. Analysis.

A. Claimant 1 and Claimant 2.

The recommendation of the CRS is adopted. The record demonstrates that Claimants 1 and 2 both voluntarily provided original information to the Commission, and that this information led to the successful enforcement of the Covered Actions.[fn8] Specifically, Claimant 1 and Claimant 2 provided tips that collectively caused Commission staff to open an investigation, and both Covered Actions are based, in part, on conduct alleged by Claimants 1 and 2. [Redacted].
We agree with the CRS’s recommendation that [Redacted].
We further agree with the CRS’s recommendation that Claimant 1 should receive a *** award while Claimant 2 should receive a *** award. While Claimant 1 argues that he/she should receive an even higher award percentage vis-a-vis Claimant 2, we disagree. Claimant 2 actually reported first to the Commission, and it was both Claimant 1’s and Claimant 2’s information that caused Commission staff to open the underlying investigation. And while Claimant 1 provided significant assistance during the investigation, Claimant 2 also provided additional assistance by communicating with Enforcement staff on at least two occasions. Finally, the [Redacted] award allocation already recognizes the fact that Claimant 1’s information and assistance played a more significant role in the success of the Covered Actions than Claimant 2’s.

B. Claimant 3.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 and Claimant 2 receive whistleblower awards of [Redacted] percent (***) and *** percent (***), respectively, of the amounts collected or to be collected in the Covered Actions and that Claimant 3’s award application is denied.
By the Commission.

[1] The CRS also preliminarily determined to recommend denying an award to two other claimants, who did not file a written response. Accordingly, the two other claimants have failed to exhaust administrative remedies and the preliminary denial of those award claims have become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Rule 21F-4(e): “Monetary sanctions means: (1) An order to pay money that results from a Commission action or related action and which is either: (i) Expressly designated as penalty, disgorgement, or interest; or (ii) Otherwise ordered as relief for the violations that are the subject of the covered action or related action . . . .” 17 C.F.R. § 240.21F-4(e).
[3] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[4] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[5] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[7] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[8] See Exchange Act Section 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).
[9] [Redacted]
[10] [Redacted]
[11] [Redacted]
[12] [Redacted]
[13] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[14] Rule 21F-4(c)(1).
[15] Rule 21F-4(c)(2).
[16] Under standard practice, whenever members of the public provide the Commission with information about possible violations of the securities laws pursuant to the procedures set forth at 17 C.F.R. § 240.21F-9(a), or otherwise, that information is uploaded and preserved in the Commission’s Tips, Complaints, and Referrals (“TCR”) System, where it is retrievable by the submitter’s name or TCR submission number. In addition, the TCR System records staff action taken with regard to tips, complaints, and referrals entered into the system.
[17] A disposition of NFA generally means that no further action is planned with respect to that TCR unless subsequent information leads Commission staff to reopen, or reexamine that TCR.

SEC

95490

08/12/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award application submitted by [Redacted] (“Claimant”) in connection with the above-referenced Covered Action (the “Covered Action”). Claimant timely filed a response contesting the preliminary denial. For the reasons discussed below, Claimant’s award application is granted, and Claimant shall receive an award of approximately $70,000, equal to *** percent (***) of the monetary sanctions collected in the Covered Action.

I. BACKGROUND.

A. The Covered Action.

On [Redacted], the Commission filed an enforcement action in federal district court charging [Redacted]. The Commisison(sic) alleged that from [Redacted]. The Commission’s complaint alleged that [Redacted].

On [Redacted] the district court entered final judgments in favor of the Commission ordering [Redacted] and others to pay a total of approximately [Redacted]. To date, the Commission has collected approximately [Redacted] against these judgments.

On [Redacted] the Office of the Whistleblower posted Notice of Covered Action [Redacted] on the Commission’s public website, inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that the Commission deny Claimant’s award application because the information Claimant provided did not lead to the successful enforcement of the Covered Action. The CRS based the Preliminary Determination principally on the facts that the Enforcement staff’s investigation was well underway by the time Claimant contacted the Commission and that Claimant’s information was largely limited to [Redacted]. At the time Claimant contacted the Commission, the Enforcement staff was already aware of [Redacted] had subpoenaed documents, and had identified potential defendants and investors. The Enforcement staff was also already aware of [Redacted].

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn1] Claimant argues in response to the Preliminary Determination that the information he/she provided, either in calls and meetings with the staff or in documents he/she shared, established the basis for various allegations in the SEC’s complaint. First, Claimant points to four paragraphs of the complaint that specifically [Redacted]. Second, Claimant argues that the information he/she provided “informed” additional, more general allegations in the complaint that broadly describe [Redacted].

II. ANALYSIS.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn2] As relevant here, information leads to the success of a covered action if it: (1) causes the Commission staff to (i) open or reopen an investigation, or (ii) inquire into different conduct as part of a current Commission investigation, and the Commission thereafter brings an action based in whole or in part on conduct that was the subject of the information[fn3] ; or (2) significantly contributes to the success of a Commission judicial or administrative enforcement action.[fn4]

On reconsideration, we find that Claimant meets the definition of a whistleblower under Rule 21F-2(a) and satisfies the statutory criteria for a whistleblower award under Rule 21F-3(a). Claimant provided information about [Redacted] “in writing” in [Redacted].[fn5] Claimant’s submission was voluntary because Claimant provided information about the [Redacted] to the Commission on Claimant’s own initiative before the Commission or another regulatory agency requested it from Claimant.[fn6] Claimant provided original information based on independent knowledge and not already known to the Commission from any other source.[fn7] As described in the supplemental staff declaration, which we credit, Enforcement records reflect that Claimant informed the Enforcement staff of [Redacted] and that Enforcement staff was not previously aware of those [Redacted]. Finally, Claimant’s information made a substantial and important contribution to the success of the Covered Action, as demonstrated by the fact that [Redacted].[fn8]

Rule 21F-5(b) provides that if all of the conditions are met for a whistleblower award, the Commission will decide the percentage amount of the award, which must be between 10% and 30% of the monetary sanctions collected. Rule 21F-6(c) creates a presumption for a maximum award where a maximum award would be less than $ 5 million, the claimant has no negative factors— i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system, and Rule 21F-16 regarding culpable whistleblowers does not apply. The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn9] Here, the 30% presumption applies because a 30% award would yield less than $5 million,[fn10] Claimant has no negative factors, does not trigger Rule 21F-16, and provided more than limited assistance. Specifically, Claimant met with the Enforcement staff on multiple occasions, and Enforcement records reflect that Claimant provided new information about [Redacted]. Claimant’s information was sufficiently valuable that it was [Redacted].

III. CONCLUSION.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application is granted, and Claimant shall receive an award of *** percent (***) of monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[3] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[4] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2). In determining whether information significantly contributed to an enforcement action, we consider “whether the information allowed us to bring: (1) Our successful action in significantly less time or with significantly fewer resources; (2) additional successful claims; or (3) successful claims against additional individuals or entities.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011). In other words, “[t]he individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.” Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 , 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).
[5] See Rules 21F-2 and 21F-9(d).
[6] See Rules 21F-3(a)(1) and 21F-4(a).
[7] See Rules 21F-3(a)(2) and 21F-4(b).
[8] See Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019).
[9] Rule 21F-6(c)(1)(iv).
[10] In accordance with Rule 21F-6(c)(1)(i), we determine that we do not reasonably anticipate that future collections would cause the statutory maximum award to be paid to exceed $ 5 million. The final judgments in this matter were entered in ***, and to date the Commission has only collected approximately [Redacted].

SEC

95486

08/12/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (“Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed the Covered Action against [Redacted] alleging violations of [Redacted]. The Commission alleged that over the course of [Redacted].

Simultaneously with the filing of the Commission’s complaint, (1) the defendants consented to the entry of a final judgment [Redacted] consented to pay disgorgement and prejudgment interest totaling [Redacted] consented to pay a civil penalty of [Redacted] the court entered a final judgment ordering the same and also found [Redacted] liable for disgorgement and prejudgment interest, [Redacted].

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination[fn2] recommending that [Redacted] Claimant’s claim be denied on two grounds.[fn3]

First, Claimant knowingly and willfully made materially false statements in Claimant’s dealings with the Commission within the meaning of Section 21F(i) of the Exchange Act and Rule 21F-8(c)(7) thereunder, and therefore was ineligible for an award. Specifically, Claimant knowingly and willfully made a number of materially false statements and representations to the Commission during the course of the Investigation. Moreover, Claimant knowingly and willfully made a number of materially false statements and representations to the Commission with respect to the Commission’s consideration and evaluation of Claimant’s whistleblower award application, dated [Redacted] (“[Redacted] Award Application”).

In particular, Claimant made several materially false statements in the [Redacted] Award Application regarding the alleged information and assistance Claimant provided to the Commission during the Investigation. Further, on [Redacted], when Claimant provided sworn testimony to Enforcement staff during the Investigation (“[Redacted] Testimony”), Claimant made several statements that were contrary to other evidence that Enforcement staff developed during the Investigation. Additionally, in the [Redacted] Testimony, Claimant made several statements that were inconsistent with (1) information that Claimant had previously provided to the Commission in a written submission, dated [Redacted] (“[Redacted] *** Tip”), and (2) a Form TCR, dated [Redacted] (“[Redacted] Form TCR”), that Claimant submitted to the Commission after the [Redacted] Testimony.

The Enforcement Declaration extensively detailed, under penalty of perjury, the specific facts that support our determination that Claimant knowingly and willfully made a number of materially false statements in his/her dealings with the Commission. The Enforcement Declaration provided comprehensive and explicit citations to the record—including the [Redacted] Tip, the [Redacted] Testimony, the [Redacted] Form TCR, and the [Redacted] Award Application—demonstrating how Claimant made materially false statements and representations. Such statements and representations included the following:

(1) One reason for Enforcement staff to take Claimant’s testimony in *** *** was to determine whether [Redacted].

In response, Claimant stated: [Redacted]. Claimant also stated that he/she did not know whether [Redacted]. Then, in the [Redacted] Form TCR, Claimant contradicted the [Redacted] Testimony by stating that [Redacted]. Enforcement staff ultimately discovered that [Redacted].

(2) Further, Claimant testified that in [Redacted]. However, this was not actually the case, as [Redacted]. Additionally, Claimant contradicted himself/herself in the [Redacted] Form TCR, this time stating that [Redacted].

(3) In the [Redacted] Award Application, Claimant stated that he/she had provided the Commission with “key intel” that [Redacted]. Claimant also represented that he/she informed the Commission that [Redacted]. However, during the [Redacted] Testimony, Claimant stated that he/she did not know [Redacted]. And, in the [Redacted] Tip, while Clamant stated that [Redacted] Claimant did not provide any information about [Redacted]. Instead, [Redacted] Enforcement staff separately obtained the evidence that [Redacted].

(4) In the [Redacted] Award Application, Claimant stated that he/she had provided key testimony before the Commission in [Redacted] that *** [Redacted]. However, during Claimant’s [Redacted] Testimony, Claimant stated that he/she did not know whether [Redacted]. In fact, Claimant never mentioned [Redacted] at all during the [Redacted] Testimony or in the [Redacted] Tip or the [Redacted] Form TCR.

(5) In the [Redacted] Award Application, Claimant stated that he/she had previously sent the Commission a [Redacted] and that the Commission used this as evidence *** [Redacted]. However, during the [Redacted] Testimony, Claimant stated that: (1) Claimant did not remember previously seeing *** [Redacted]; (2) Claimant had not seen [Redacted] until the day of the [Redacted] Testimony; and (3) Claimant did not see any [Redacted] *** after ***, when Claimant [Redacted]. Moreover, the Commission had actually received the [Redacted] the Commission never received [Redacted] from Claimant.

(6) In the [Redacted] Award Application, Claimant stated that he/she previously provided the Commission with *** in support of Claimant’s allegations. In fact, however, Claimant never provided [Redacted] to the Commission.

According to the Enforcement Declaration, Claimant’s untruthful testimony and statements concerned conduct that was at the heart of the Investigation and the conduct charged in the Covered Action. Additionally, the Enforcement Declaration stated that Claimant’s conduct in his/her dealings with the Commission impeded the Investigation.

The second ground for denial in the Preliminary Determination was that Claimant did not submit his/her information on Form TCR or sign the requisite whistleblower declaration in accordance with Rules 21F-9(a), (b), and (e). Claimant was not entitled to the automatic waiver under Rule 21F-9(e) because: (1) Claimant obtained actual notice of the Form TCR requirement in [Redacted], but Claimant did not cure the deficiency within 30 days; and (2) Claimant would not otherwise qualify for an award.

Specifically, when Claimant submitted the [Redacted] Tip to the Commission, Claimant did not include a Form TCR with the submission. Consequently, in [Redacted], OWB informed Claimant that pursuant to the whistleblower program rules, Claimant was required to submit a signed Form TCR in order to be considered for a whistleblower award. Claimant, however, did not submit a Form TCR to the Commission until several years later in [Redacted] ***, when Claimant submitted the [Redacted] Form TCR.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn4] In the response, Claimant disagreed with the statement that he/she made materially false statements and representations in his/her dealings with the Commission. Claimant argued that during the [Redacted] Testimony, the way Enforcement staff asked Claimant questions made him/her feel uneasy about how to respond. Claimant alleged that the questions demanded absolute, 100 percent certainty. Claimant stated that he/she answered the questions in the manner in which Claimant did because “[h]ad [Claimant] answered a question that was not 100% accurate, [Claimant] would have availed [himself/herself] to perjury charges—this is why [Claimant] answered [his/her] questions that conflicted with [his/her] original tip.” According to Claimant, although he/she was almost certain there was wrongdoing that violated the securities laws, he/she was not absolutely certain—purportedly, only the actual perpetrators of the fraudulent activity could have known for certain whether violations of the securities laws and certain other conduct transpired. According to Claimant, this is why Claimant responded to the Commission’s questions in the manner in which he/she did.

Claimant also argued that because several years had elapsed between the time Claimant submitted the [Redacted] Tip and Claimant’s [Redacted] Testimony, one would expect the accuracy of the information to suffer “some form of deterioration.” Additionally, Claimant stated that he/she submitted [Redacted] to the Commission in [Redacted] and that Claimant sent the Commission emails that supported his/her allegations via U.S. mail as well as via email.

Finally, Claimant argued that due to circumstances beyond his/her control, the Commission should exercise its exemptive authority under Section 36(a) of the Exchange Act and grant Claimant an award because this would purportedly create a strong incentive for whistleblowers to come forward to the Commission in the future with information about possible violations of the federal securities laws.

II. Analysis.

We deny an award to Claimant in connection with the Covered Action. To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn5] Although Claimant submitted information that caused Enforcement staff to open the Investigation, Claimant violated Section 21F(i) of the Exchange Act and Rule 21F-8(c)(7) thereunder[fn6] because Claimant knowingly and willfully made materially false statements in Claimant’s dealings with the Commission.

All of Claimant’s arguments in the request for reconsideration are unavailing, and nothing in the record supports Claimant’s assertions. Claimant, who was represented by counsel at the [Redacted] Testimony, points to nothing in the [Redacted] Testimony transcript or any other evidence in the record to support Claimant’s contention that the way the questions were posed by Enforcement staff made him/her feel uneasy about answering truthfully and accurately while under oath. Indeed, Claimant had, and took, opportunities to confer with counsel during the [Redacted] Testimony. Counsel and Claimant also were provided an opportunity to ask clarifying questions or make a statement before the testimony record was closed, and elected not to do so. And, we are unable to detect any evidence of improper questioning in the transcript of the [Redacted] Testimony.

Further, Claimant’s assertion that he/she testified in the manner in which Claimant did during the [Redacted] Testimony because Claimant was fearful of committing perjury is unjustified. As detailed extensively in the Enforcement Declaration, Claimant made a multitude of materially false statements and representations in his/her dealings with the Commission that were contrary to Claimant’s own statements elsewhere and contrary to the evidence Enforcement staff discovered. A fear of perjury does not adequately explain these contradictions in the record. Moreover, a supposed fear of perjury during the [Redacted] Testimony would not explain Claimant’s materially false statements in the [Redacted] Award Application.

Claimant’s contention that he/she did not fully appreciate the illegality of [Redacted] is also unavailing. During the [Redacted] Testimony, Enforcement staff asked Claimant about specific facts and specific events and did not require Claimant to opine on the legality of what he/she witnessed. Similarly, the submission of a tip or a whistleblower award application to the Commission does not require any knowledge of the securities laws. Therefore, a lack of knowledge about the law would not explain the contradictions between the [Redacted] Testimony and the [Redacted] Tip and would not explain the materially false statements in the [Redacted] Award Application.

Moreover, nothing in the record supports Claimant’s suggestion that the accuracy of the information provided to the Commission suffered due to the passage of time rather than because, as Claimant acknowledges elsewhere in the response, Claimant deliberately chose to answer the questions as he/she did. To the contrary, the transcript of Claimant’s [Redacted] Testimony shows that Claimant remembered the contents of the [Redacted] Tip; however, some of his testimony contradicted the [Redacted] Tip anyway. There is also no evidence in the record supporting Claimant’s assertion that Claimant did, in fact, provide the [Redacted] and emails supporting his/her allegations to the Commission.

Overall, the Enforcement Declaration, which we credit, confirmed under penalty of perjury the numerous instances in which Claimant unambiguously made materially false statements and representations in his/her dealings with the Commission, including in the [Redacted] Tip, the [Redacted] Testimony, the [Redacted] Form TCR, and the [Redacted] Award Application.

Additionally, the OWB Declaration, which we credit, confirmed under penalty of perjury that when Claimant submitted the [Redacted] Tip to the Commission, Claimant did not include a Form TCR with the submission. Consequently, in [Redacted], OWB informed Claimant by letter that pursuant to the whistleblower program rules, Claimant was required to submit a signed Form TCR in order to be considered for a whistleblower award. Claimant, however, did not submit a Form TCR to the Commission until several years later in [Redacted]. In fact, Claimant’s [Redacted] Form TCR was dated [Redacted], which was one day after the Commission filed the Covered Action on [Redacted].

Based on the Enforcement Declaration, the OWB Declaration, and the other facts in the record—including but not limited to Claimant’s prior submissions to the Commission—we find that: (1) Claimant knowingly and willfully made materially false statements in Claimant’s dealings with the Commission within the meaning of Section 21F(i) of the Exchange Act and Rule 21F-8(c)(7) thereunder, and therefore is ineligible for an award;[fn7] and (2) Claimant did not submit his/her information on Form TCR or sign the requisite whistleblower declaration in accordance with Rules 21F-9(a), (b), and (e).

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and hereby is, denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[3] The record supporting the Preliminary Determination included the declaration (“Enforcement Declaration”) of one of the Division of Enforcement (“Enforcement”) attorneys who was assigned to the investigation that led to the Covered Action (“Investigation”) as well as the declaration of an attorney from OWB (“OWB Declaration”). The whistleblower rules contemplate that the record upon which an award determination is made shall consist of, as relevant here, sworn declarations provided by relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a), 17 C.F.R. § 240.21F-12(a).
[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[6] Rule 21F-8(c)(7) specifies that a claimant seeking a whistleblower award is not eligible to be considered for an award if “[t]he Commission . . . finds that, in [claimant’s] whistleblower submission, [or claimant’s] other dealings with the Commission (including [claimant’s] dealings beyond the whistleblower program and covered action) . . . [claimant] knowingly and willfully made any materially false, fictitious, or fraudulent statement or representation.” This rule does “not apply if the Commission, in its discretion, finds it consistent with the public interest, the promotion of investor protection, and the objectives of the whistleblower program” to award claimant a whistleblower award.
[7] Claimant has requested a waiver of the application of Rule 21F-8(c)(7). In light of the factual record in this matter, there is no reason to waive the application of Rule 21F-8(c)(7) in our discretion or to invoke our Section 36(a) exemptive authority. The Commission expects that individuals interacting with Enforcement staff and the whistleblower award program be transparent and honest in their dealings with the Commission. In this case, Claimant was neither transparent nor honest in his/her dealings with the Commission.

SEC

95485

08/12/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial.[fn1] For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission charged [Redacted] (the “Defendant”) with [Redacted]. According to the Commission’s complaint, Defendant [Redacted]. The Commission charged Defendant with violating [Redacted] the Securities Act of 1933 (“Securities Act”), and [Redacted] the Securities Exchange Act of 1934 (“Exchange Act”) and Rules [Redacted] thereunder. Defendant consented to entry of final judgment imposing permanent injunctions and ordering Defendant to pay disgorgement of [Redacted] prejudgment interest of [Redacted] and a civil penalty of [Redacted].

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS stated that Enforcement staff had already opened the investigation that led to the Covered Action (“the Investigation”) before receiving Claimant’s information and that Claimant’s information was not otherwise used in the Investigation or the successful enforcement action.

The CRS also stated that some of Claimant’s information did not qualify for an award because it was provided in part before July 21, 2010, the date of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and thus did not constitute original information within the meaning of Section 21F(b)(l) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b)(1)(iv) thereunder.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn2] Claimant principally argues that while he/she provided some information to the Commission before July 21, 2010, Claimant provided much of Claimant’s information after July 21, 2010, and that Claimant’s information contributed to the success of the action against Defendant. Claimant further argues that he/she had interactions with the Defendant and shared that times” with Enforcement Staff in the [Redacted] (“Regional Office”) and also with information with the Commission. Claimant also states that he/she “communicated numerous the Enforcement staff member who drafted a declaration relied upon by the CRS. Claimant argues that the Regional Office staff might have communicated his/her information to staff assigned to the investigation and thus contributed to the investigation.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] Among other things, to be considered original information the submission must be provided to the Commission for the first time after July 21, 2010.[fn4] Additionally, and as relevant here, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

As an initial matter, any information that Claimant provided to the Commission for the first time prior to July 21, 2010 is not considered original information pursuant to the Dodd-Frank Act.[fn9] Therefore, Claimant’s submissions prior to July 21, 2010 are not original information and cannot serve as the basis for a whistleblower award.

With regard to the information Claimant provided to the Commission after enactment of the Dodd-Frank Act on July 21, 2010, the record also demonstrates that such information did not lead to a successful enforcement action. First, the staff assigned to the Covered Action did not receive Claimant’s information until after the Investigation was opened, so Claimant cannot be credited with causing the staff to open an investigation. Second, as relevant here, the record shows that Claimant’s information did not cause the staff to look into different conduct as part of an ongoing investigation or significantly contribute to an ongoing investigation. The staff confirms that Claimant’s information was already known to the staff at the time it was received, and Claimant’s information did not strengthen the Commission’s case against the Defendant, nor did it lead to additional charges against the Defendant. Further, in a supplemental declaration, staff assigned to the Investigation confirmed that while staff received information from Regional Office Enforcement staff, that information was limited to testimony transcripts and documents provided by Defendant and separately by a regulated entity. These transcripts and documents were obtained during the course of a different investigation. None of the transcripts were of Claimant’s testimony and none of the documents had been provided by Claimant. We find that Claimant’s information did not cause the staff to look into different conduct as part of its ongoing investigation, nor did Claimant’s information significantly contribute to the investigation. Accordingly, Claimant’s information does not qualify for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.
By the Commission.

[1] The CRS also preliminarily denied the award claim of one other claimant. That claimant did not seek reconsideration of the Preliminary Determinations, and therefore the denial of his/her claim was deemed to be the Final Order of the Commission under Exchange Act Rule 21F-10(f).
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).
[5] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).
[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).
[7] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9.
[8] Exchange Act Rel. No. 85412 at 8-9.
[9] See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).

SEC

95443

08/09/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of about $13 million, which represents [Redacted] percent (***) of the monetary sanctions collected in the above-referenced Covered Action. The CRS further recommended that [Redacted] (“Claimant 2”) receive a whistleblower award of about $3.3 million, which represents *** percent (***) of the monetary sanctions collected in the Covered Action.[fn1] Both Claimants provided written notice of their decisions not to contest the Preliminary Determination. For the reasons discussed below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action.

On the [Redacted] Commission instituted a settled public administrative and cease-and-desist proceeding against [Redacted] (the “Firm”), that, among other things, [Redacted] finding that the Firm violated [Redacted]. In its enforcement [Redacted]. Among other relief, the Firm was ordered to pay disgorgement of [Redacted] prejudgment interest of [Redacted] and a civil money penalty of [Redacted] all of which has been fully collected.

On [Redacted] the Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that Claimants 1 and 2 receive whistleblower awards of [Redacted] and [Redacted] respectively, of the monetary sanctions collected in the Covered Action. In recommending that Claimant 1 receive a larger award than Claimant 2, the CRS considered the fact that Claimant 1’s information was received by the Commission several years before Claimant 2’s information. The CRS also made its recommendation based on Claimant 2’s unreasonable reporting delay.

II. Analysis.

We find that Claimant 1 contributed substantially more to the success of the Covered Action than Claimant 2. Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amounts are appropriate.[fn3] In reaching our award determinations, we positively assessed the following facts in determining Claimant 1’s award percentage: (1) Claimant 1’s tip was the initial source of the underlying investigation; (2) Claimant 1’s tip exposed abuses in [Redacted] including at the Firm, that would have been difficult to detect without Claimant 1’s information; (3) Claimant 1 provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses, including [Redacted] and helping staff understand complex fact patterns and issues related to the matters under investigation; (4) the Commission used information Claimant 1 provided to devise an investigative plan and to craft its initial document requests from the Firm and [Redacted] (5) Claimant 1 made persistent efforts to remedy the issues, while suffering hardships; and (6) Claimant 1 was the main source of information for the investigation and an important source of information for the Covered Action.

With regard to Claimant 2, we positively assessed the following factors: (1) Claimant 2 was a valuable first-hand witness who also provided helpful information relevant to the practices engaged in by the Firm, albeit several years after the Commission had received Claimant 1’s information; (2) Claimant 2 provided information and documents, participated in staff interviews, and provided clear explanations to the staff regarding the issues that Claimant 2 brought to the staff’s attention; (3) Claimant 2’s information gave the staff a more complete picture of how events from an earlier period impacted the Firm’s practices and put the Firm on notice that [Redacted] which the staff was able to use in settlement discussions with the Firm’s counsel.

Finally, we note that, in contrast to Claimant 1, who persistently alerted the Commission to the ongoing abusive practices for a number of years before the investigation was opened, Claimant 2 delayed reporting to the Commission for several years after becoming aware of the wrongdoing. Accordingly, we find that Claimant 2 unreasonably delayed reporting to the Commission and that Claimant 2’s award should be set at [Redacted] in light of all the facts and circumstances.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent ([Redacted]) of the monetary sanctions collected or to be collected in the Covered Action and Claimant 2 shall receive an award of [Redacted] percent ([Redacted]) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[2] See Exchange Act Section 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).

[3] In assessing the appropriate award amount, Exchange Act 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.

SEC

95408

08/02/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively, “Claimants”) each receive whistleblower awards in the amount of [Redacted] percent (***%) of the monetary sanctions collected and to be collected in [Redacted] (collectively, the “Covered Action”),[fn1] which will presently result in an aggregate award of approximately $500,000.[fn2] Claimant 1’s estate and Claimant 2 provided written notice of their decisions not to contest the Preliminary Determinations.

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 and Claimant 2 each voluntarily provided original information to the Commission and that each Claimant’s original information led to the successful enforcement of the Covered Action.[fn3]

[Redacted].

In reaching that determination, we considered that Claimant 1 provided information that served as important evidence of a fraud and supported the Commission’s findings in the Covered Action. Claimant 1 and/or his/her counsel met with Enforcement staff on multiple occasions. With regard to Claimant 2, we considered that Claimant 2 provided information that identified a fraudulent transaction and provided unique documentation that served as the basis for some of the Commission’s findings in the Covered Action.

Accordingly, it is hereby ORDERED that Claimant 1 and Claimant 2 shall each receive an award of [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action, as well as any monetary sanctions collected in the Covered Action after the date of this Order.

By the Commission.

[2] The CRS also recommended that Claimant 1’s and Claimant 2’s award claims for a related action be denied. Because Claimant 1’s estate and Claimant 2 did not contest the preliminary denials, the CRS’s preliminary determinations as to the denials became the final order of the Commission pursuant to Exchange Act Rules 21F-10(f) & 11(f); 17 C.F.R. §§ 240.21F-10(f) & 11(f).

[3] See Exchange Act Section 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). [Redacted]

SEC

95384

07/28/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of whistleblower award claims submitted by [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), and [Redacted] (“Claimant 3”) (collectively, “Claimants”) in connection with the above-referenced Covered Action (the “Covered Action”). Claimants filed timely responses contesting the preliminary denial. Subsequent to issuing the Preliminary Determination, the Commission adopted Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-9(e), which provides for an automatic waiver of the Form TCR filing requirements under Rules 21F-9(a) and (b) where the claimant submits a Form TCR within 30 days of learning of the TCR filing requirement and the record unambiguously shows that the claimant would otherwise qualify for a whistleblower award. As such, the CRS now recommends that Claimant 1 receive an award of [Redacted] percent [Redacted] which will equal a payment of more than $5 million. The CRS continues to recommend that the award claims of Claimants 2 and 3 be denied.[fn1] For the reasons stated below, we agree with the CRS’s recommendations.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted a settled enforcement action, [Redacted]. The [Redacted] Commission found that [Redacted] (“Respondents”) violated the federal securities laws through [Redacted]. The Respondents agreed to pay disgorgement of [Redacted] prejudgment interest of [Redacted] and a civil money penalty in the amount of [Redacted] which has been fully collected.
On [Redacted] the Office of the Whistleblower posted Notice of Covered Action [Redacted] for the Covered Action. The Claimants each submitted a timely award application for the Covered Action.

II. Claimant 1’s Award Claim.

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]

Exchange Act Rule 21F-9(e) sets forth certain procedural requirements that claimants must comply with including, among other things, filing a tip on a Form TCR within 30 days of supplying the information to the Commission, in order to be eligible for a whistleblower award. Exchange Act Rule 21F-9(e) provides for a waiver of this procedural requirement in certain circumstances where: (1) a claimant can demonstrate to the satisfaction of the Commission that he or she complied with the Form TCR requirements within 30 days of first obtaining actual or constructive notice about these requirements (or 30 days from the date a claimant retains counsel to represent him or her in connection with the submission of original information to the Commission, whichever occurs first); and (2) the Commission can readily develop an administrative record that unambiguously demonstrates that claimant would otherwise qualify for an award. Here, although Claimant 1 did not file a Form TCR within 30 days of first contacting the Commission, Claimant 1 satisfies Exchange Act Rule 21F-9(e) and is entitled to a waiver of this procedural requirement because the record reflects that Claimant 1 submitted a Form TCR within 30 days of learning of the TCR filing requirement and Claimant 1 otherwise unambiguously qualifies for an award.

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed amount is appropriate.[fn3] In reaching that determination, we considered that Claimant 1 alerted Commission staff to the conduct and provided additional assistance by meeting with staff in-person and identifying potential witnesses. Claimant 1 also waited approximately two and a half years after learning of the conduct to report it to the Commission. On balance, we find that a [Redacted] percent (***) award appropriately recognizes Claimant 1’s level of contribution to the Covered Action while also considering Claimant 1’s unreasonable reporting delay.

III. Claimant 2’s Award Claim Is Denied.

A. CRS’s Preliminary Denial.

The CRS preliminarily determined to deny Claimant 2’s award claim because Claimant 2 failed to provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F- 4(c) thereunder. Claimant 2’s information did not: cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn4]

Claimant 2’s information did not cause Enforcement staff to open the investigation. Staff had already opened the investigation a year prior to receiving Claimant 2’s information.

Claimant 2’s information also did not significantly contribute to the success of the action. Enforcement staff conducted significant investigative steps between when the investigation was opened and when Claimant 2 submitted the information. While Enforcement staff received Claimant 2’s information and met with Claimant 2, Enforcement staff were already aware of the allegations raised by Claimant 2, and none of the information provided by Claimant 2 (or by the employee identified by Claimant 2) was used to advance the investigation. Furthermore, certain of Claimant 2’s allegations were investigated further by staff but could not be substantiated and did not become part of the Covered Action.

B. Claimant 2’s Response and Analysis.

In Claimant 2’s Response, Claimant 2 primarily argues that Claimant 2 provided relevant information that Enforcement staff used in the Covered Action, including the following information: [Redacted] statements and that [Redacted] (b) regarding the circumstances of [Redacted] creation (including the identification of [Redacted] (c) regarding *** [Redacted] and (d) concerning [Redacted]. Claimant 2 also argues that the witness Claimant 2 identified to staff, and whom the staff interviewed twice, provided valuable information concerning [Redacted] and identified key witnesses who were involved [Redacted][fn5]

Based on the record, including an initial declaration (“Initial Declaration”) and supplemental declaration (“Supplemental Declaration”) from the Enforcement staff, we conclude that Claimant 2’s information did not lead to the success of the Covered Action.

The timeline of investigative developments and events—which Claimant 2 does not dispute—is highly relevant to our consideration of Claimant 2’s award claim. The investigation that resulted in the Covered Action was opened in [Redacted]. In the ensuing year before Claimant 2 submitted Claimant 2’s TCR (in [Redacted]) the staff engaged in significant investigative activities, including reviewing a voluminous number of documents and taking investigative testimony of numerous individuals. Against this backdrop, the Supplemental Declaration makes clear that Enforcement staff, prior to Claimant 2’s provision of information, already had a thorough understanding of the [Redacted] and were aware of which employees were responsible for [Redacted]. As such, Claimant 2’s information was duplicative of information Enforcement staff had already obtained from Claimant 1 and through their own investigative efforts and did not help advance the investigation.

Furthermore, the Supplemental Declaration demonstrates that the witness identified by Claimant 2 did not supply any new information that contributed to the matter. When Enforcement staff spoke to this witness, the investigation had been ongoing for approximately 18 months. Moreover, the Enforcement staff were already aware of the individuals identified by the witness prior to speaking with the witness. Staff took testimony from the individuals involved in the [Redacted] including one of the individuals later identified by the witness. All of this occurred before the witness was interviewed in [Redacted].
In sum, Claimant 2’s information did not lead to the success of the Covered Action because it was duplicative of information that staff had already learned prior to Claimant 2’s submissions. None of the information provided by Claimant 2 helped the Enforcement staff (1) save time and resources, (2) recommend bringing additional charges, or (3) recommend bringing charges against any additional parties.

IV. Claimant 3’s Award Claim Is Denied.

A. CRS’s Preliminary Denial.

The CRS recommended that Claimant 3’s award claim be denied on two grounds. First, Claimant 3 did not submit information that led to the success of the Covered Action. Enforcement staff responsible for the investigation had no communications with Claimant 3 and received no information from Claimant 3. Claimant 3’s tip was closed by staff in the Commission’s Office of Market Intelligence with a disposition of “no further action” and not forwarded to Enforcement staff in connection with any matter. For the same reason, additional submissions from Claimant 3 were also not forwarded to the Enforcement staff. Second, Claimant 3 failed to submit the information on Form TCR or through the Commission’s on-line portal and did not sign the whistleblower declaration, as required by Rules 21F-9(a) and (b).

B. Claimant 3’s Response and Analysis.

In Claimant 3’s Response, Claimant 3 argues that Claimant 3 “submitted credible & original evidence to the SEC Whistleblower Office.” Claimant 3 also contends Claimant 3 sent evidence of fraud to the Federal Reserve, which in turn reported the information to the Financial Industry Regulatory Authority (“FINRA”), which then relayed the information to the Commission.

With respect to information that Claimant 3 submitted directly to the Commission, the record is clear that Claimant 3’s information did not lead to the success of the Covered Action, as none of Claimant 3’s information was ever forwarded to the Enforcement staff responsible for the investigation that resulted in the Covered Action. Enforcement staff responsible for the investigation confirmed in the Supplemental Declaration, which we credit, that they did not review any information from Claimant 3. We interpret Claimant 3’s assertion that information Claimant 3 provided to the Federal Reserve was subsequently referred to the Commission (through FINRA) as a request that we apply Rule 21F-4(b)(7) to Claimant 3’s claim. Under Rule 21F- 4(b)(7), if an individual submits his or her tip to another federal agency, then in considering an award application from that individual, the Commission will treat the information as though it had been submitted to the Commission directly from the individual at the same time that it was submitted to the other agency, provided that the individual submitted that same information to the Commission pursuant to the procedures required under Rule 21F-9 no later than 120 days after the individual first went to the other government agency.[fn6] In this way, Rule 21F-4(b)(7) operates as a 120-day look-back provision, assuring an individual who voluntarily reports misconduct to another agency first that he or she will be deemed for award purposes to have reported directly to the Commission at the same time that the individual reported to the other federal agency. However, Claimant 3 has not established any of the pre-requisites for applying Rule 21F- 4(b)(7) to Claimant 3’s claim.

Claimant 3 has not shown what information (if any) Claimant 3 provided to the Federal Reserve, when Claimant 3 provided it, that it was the same information that Claimant 3 provided to the Commission and that Claimant 3 provided the information to the Commission within 120 days of providing it to the Federal Reserve.

Moreover, as noted, Claimant 3 did not comply with the procedural requirements of Rule 21F-9 in Claimant 3’submissions of information to the Commission. Claimant 3 does not qualify for an automatic waiver of the TCR filing requirements under Rule 21F-9(e) because the record does not unambiguously demonstrate that Claimant 3 otherwise qualifies for an award. For all of these reasons, Rule 21F-4(b)(7) is not applicable to Claimant 3’s award claim.[fn7]

Accordingly, it is ORDERED that Claimant 1 receive an award of [Redacted] percent (***) of amounts collected in connection with the Covered Action, and that the whistleblower award claims of Claimants 2 and 3 are denied.

By the Commission.

[1] The CRS also preliminarily denied the claim submitted by a fourth claimant, who did not seek reconsideration, which became final through operation of law.
[2] See Exchange Act Section 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).
[3] Exchange Act 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 in 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.
[4] In determining whether an individual’s information significantly contributed to an action, we may consider factors such as “whether the information allowed us to bring: the action in significantly less time or with significantly fewer resources; additional successful claims; or successful claims against additional individuals or entities. The individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.” Order Determining Whistleblower Award, Release No. 34-85412 (Mar. 26, 2019).
[5] Claimant 2 made other allegations, which Enforcement staff investigated but which did not become part of the Covered Action, which Claimant 2 does not dispute in the Response.
[6] See Order Determining Whistleblower Award Claim, Release No. 34-82996 (Apr. 5, 2018) at 1-2.
[7] Claimant 3 also contends in his/her request for reconsideration that Claimant 3 did not receive a Preliminary Determination in connection with another matter for which he/she applied. While this contention has no bearing on Claimant 3’s award claim for this Covered Action, we observe that Claimant 3 was provided with a Preliminary Determination as well as a Final Order in connection with that other matter.

SEC

95309

07/19/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award equal to *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action and in the related [Redacted] (the “Related Action”)[fn1] for a total award of approximately $17 million.

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission, which the Commission passed along to [Redacted], and that this original information led to the successful enforcement of both the Covered Action and the Related Action.[fn2]

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the facts and circumstances here, we find that an award of ***% for Claimant in the Covered Action is appropriate.[fn3] In reaching the recommended award percentage, the Commission considered that Claimant’s information caused the staff to open the investigation that led to the Covered Action. Claimant also provided Enforcement staff with detailed information and documents early in the investigation. Claimant offered ongoing assistance by, among other things, speaking with the Enforcement staff on several occasions. Finally, the resulting charges were based on conduct that was the subject of Claimant’s information and assistance.

Additionally, in view of the significance of the information provided by Claimant and the high law enforcement interest, the Commission finds it appropriate for Claimant to receive an award of ***% of the monetary sanctions collected in the Related Action.

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action and in the Related Action.
By the Commission.

SEC

95304

07/18/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive whistleblower awards in the amount of thirty percent (30%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Actions (the “Covered Actions”).[fn1] The awards would not result in a payment based on current collections.

The presumption applies here because the maximum awards would not exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to the award applications, and the award claims do not trigger Rule 21F-16. Further, Claimant provided more than limited assistance, as Claimant provided multiple interviews to Commission staff, and application of the presumption would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Actions.
By the Commission.

[1] The investigation that gave rise to the Covered Actions also produced another enforcement action relevant here—[Redacted] (the “Other Action”)—that was not posted as a covered action because the monetary sanctions in that matter did not exceed $1 million. The Commission will consider the Other Action part of Covered Action [Redacted] under Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(d)(1) for purposes of determining the award amount because the Other Action arose from the same nucleus of operative facts as Covered Action [Redacted].
[2] See Exchange Act Rule 2 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[3] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[4] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

SEC

95292

07/15/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $3 million, which represents [Redacted] percent (***%) of monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).[fn1] 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 led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a).[fn2]

[Redacted].

The record reflects that Claimant, an insider, raised concerns internally, and thereafter submitted a detailed tip that prompted the opening of the investigation, met with the Enforcement staff multiple times, identified key witnesses and documents, and provided supplemental information during the investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] We find that another enforcement action, [Redacted] arose out of the same nucleus of operative facts as the Covered Action, and should be treated as part of the Covered Action for award purposes under Exchange Act Rule 21F-4(d)(1).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[3] [Redacted].

SEC

95291

07/15/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $3,000,000, which is equal [Redacted] to percent (***%) of the amount collected in the above-referenced Covered Action (“Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

In coming to this conclusion, the Commission considered that Claimant, an outside professional, was solicited to invest in a product that Claimant believed was being misrepresented. Claimant expeditiously contacted Commission staff to alert them of the conduct. Claimant’s information prompted the opening of an investigation, and thereafter, Claimant communicated with Commission staff concerning Claimant’s allegations.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3. [Redacted]
[2] [Redacted].
[3] [Redacted].

SEC

95247

07/12/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial.[fn1]

For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled cease-and-desist proceedings in the Covered Action, charging [Redacted] (the “Company”) with violations of [Redacted]. The Commission alleged that [Redacted]. Pursuant to the settlement, the Company agreed to pay [Redacted].

On [Redacted] , the Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS concluded that Enforcement staff had already opened the investigation that led to the Covered Action approximately four years before Claimant submitted his/her information, and that Claimant’s information was otherwise vague, insubstantial, and did not warrant any further investigative efforts by the staff. The CRS also determined that the staff did not use any information from Claimant’s submission.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn2] Claimant principally argues that the CRS did not adequately review Claimant’s award application, arguing that Claimant based his/her award claim on a tip sent to Company management in [Redacted] alleging [Redacted]. Claimant argues that Claimant deserves credit for the results of any internal investigation conducted by the Company as a result of his/her tip that was provided to the Commission and that led to the success of the Covered Action. Claimant also argues that the CRS ignored certain documents cited in his/her whistleblower application.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] Additionally, and as relevant here, there are three ways in which original information can be deemed to lead to a successful enforcement action. Under Exchange Act Rules 21F-4(c)(1) and (2), respectively, the Commission will consider a claimant to have provided original information that led to the successful enforcement of a covered action if either : (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn4] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn5]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn6] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn7]

(3) the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of [Rule 21F-4]; and

(4) the whistleblower submitted the same information to the Commission in accordance with the procedures set forth in Rule 21F-9 within 120 days of providing it to the entity.[fn8]

Claimant does not qualify for an award under the above-described provisions. First, the record demonstrates that the Commission’s investigation which led to the Covered Action (the “Investigation”) was opened approximately four years before Claimant submitted his/her information to the Commission. Accordingly, Claimant’s information did not cause the staff to open the Investigation.

Second, the record shows that Claimant’s tip to the Commission did not cause the staff to inquire into different conduct or significantly contribute to the Investigation. Enforcement staff reviewed Claimant’s tip and determined that it included only vague allegations and did not provide any material beyond what the staff had already uncovered much earlier in the Investigation. Claimant’s information thus was not used by the staff during the Investigation, had no impact on the scope of the Investigation, and did not significantly contribute to the Investigation.

Lastly, Claimant is not entitled to an award under Rule 21F-4(c)(3). While the record shows that Claimant anonymously reported his/her information to the Company using its internal compliance procedures, and subsequently provided the same information to the Commission within 120 days, the record does not demonstrate that Claimant meets the other elements of Rule 21F-4(c)(3). According to a supplemental declaration prepared by Enforcement staff assigned to the Investigation, which we credit, the Company had begun its internal investigation regarding misconduct in [Redacted] by [Redacted] approximately four years before Claimant submitted his/her concerns to the Company. Between the beginning of the Investigation and the time of Claimant’s [Redacted] tip, the Company provided significant information and documents to the staff; further, Company counsel had provided several presentations to the staff regarding its findings. The staff confirms that the documents, information, and presentations provided to the staff prior to [Redacted] formed the basis for the charges in the Covered Action related to misconduct in [Redacted]. The staff also confirms that it did not recall receiving a copy of Claimant’s tip from the Company, and that any information the staff received from the Company after [Redacted] regarding misconduct in [Redacted] did not materially advance the Investigation or contribute to the charges in the Covered Action. We therefore conclude that Claimant cannot satisfy the elements of Rule 21F-4(c)(3).[fn9]

For these reasons, Claimant is not entitled to an award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).

[5] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[7] Exchange Act Rel. No. 85412 at 8-9.

[8] Exchange Act Rule 21F-4(c)(3), 17 C.F.R § 240.21F-4(c)(3).

[9] Claimant’s argument that the CRS ignored certain documents cited in his/her whistleblower application is without merit. Rule 21F-12(a)(3) states that the CRS and the Commission will consider, among other things, the “whistleblower’s Form WB-APP, including attachments, any supplemental materials submitted by the whistleblower before the deadline to file a claim for a whistleblower award for the relevant Notice of Covered Action, and any other materials timely submitted by the whistleblower in response. . . [t]o the Preliminary Determination . . . that was provided to the claimant.” Here, Claimant’s WB-APP demanded that the CRS review certain materials, including the Company’s offer of settlement, all communications between the Company and the staff regarding the Claimant’s information, and the “date (if one exists) on which the SEC closed the matter relating to the claimant’s TCRs.” However, Rule 21F-12 does not allow Claimant to access the Commission’s investigative files, nor does the act of demanding documents in the Claimant’s WB-APP or reconsideration request incorporate those documents into the record. Regardless, we find there is no evidence to support Claimant’s argument that the CRS ignored certain documents and the issue raised by Claimant is sufficiently addressed by the supplemental staff declaration discussed above.

SEC

95222

07/08/2022

I. Background.

A. The Covered Action.

On [Redacted] the Commission charged [Redacted] with [Redacted]. According to the Commission’s complaint, [Redacted]. The Commission charged the defendants with violating [Redacted]. On [Redacted] the court entered final judgment by consent as to [Redacted] enjoining *** from future violations of the securities laws and ordering *** to disgorge [Redacted]. On [Redacted] the court entered final judgment by consent as to [Redacted] enjoining *** from future violations of the federal securities laws and ordering *** to disgorge [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The CRS concluded that Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS determined that the investigation that led to the Covered Action was opened and pursued as a result of referrals from another regulatory agency (the “Other Agency”). The CRS also determined that Claimant’s information did not significantly contribute to the Covered Action and consisted primarily of publicly available information, information already known to the staff, or information that was otherwise vague and unsubstantiated.

The CRS also concluded that Claimant did not qualify for an award because Claimant’s information was provided before July 21, 2010, the date of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), and thus did not constitute original information within the meaning of Section 21F(b)(l) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b)(1)(iv) thereunder. The CRS determined that Claimant’s whistleblower application was based on emails sent to the Commission and other agencies beginning in [Redacted]. The record before the CRS demonstrated that Claimant’s information provided to the Commission after July 21, 2010 was already known to the staff, publicly available, or contained general or vague allegations of wrongdoing that were unsubstantiated and did not lead to the success of the Covered Action under Rule 21F-4(c)(2) of the Exchange Act.[fn1]

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn2] Claimant principally argues that he/she provided information to the Other Agency and the Commission beginning on [Redacted] and that such information later caused Commission staff to open the investigation that led to the Covered Action. Claimant also argues that he/she continued to provide information to the Commission and other law enforcement agencies after contacting the Commission in [Redacted] and that such information included public and nonpublic material that assisted the staff’s investigation. Claimant also states that if the Commission relied upon certain media stories as a basis for opening its investigation, Claimant was a source of information for those stories and acted in an attempt to educate the public about the [Redacted] schemes.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] Among other things, to be considered original information the submission must be provided to the Commission for the first time after July 21, 2010.[fn4] Additionally, and as relevant here, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

As an initial matter, any information that Claimant provided to the Commission or that Claimant provided to another agency, which then provided such information to the Commission, for the first time prior to July 21, 2010, is not considered original information.[fn9] Therefore, Claimant’s [Redacted] submissions to the Commission, any [Redacted] submissions Claimant made to the Other Agency, and any other submissions Claimant made to the Commission or to news media prior to July 21, 2010 are not original information and cannot serve as the basis for a whistleblower award. In addition, the record demonstrates that Commission staff opened the investigation that led to the Covered Action prior to July 21, 2010 based upon a referral from the Other Agency.

With regard to any information Claimant provided to the Commission after enactment of the Dodd-Frank Act on July 21, 2010, the record demonstrates that such information did not lead to a successful enforcement action. First, because the investigation that led to the Covered Action was opened before July 21, 2010, none of Claimant’s information submitted after that date could have caused the investigation to be opened. Second, after review of Claimant’s response to the Preliminary Determination, the staff assigned to the Covered Action confirmed in a supplemental declaration, which we credit, that Claimant’s information submitted after July 21, 2010 did not materially contribute to the staff’s investigation. The staff confirmed that Claimant’s information was either already known to the staff, based upon publicly available information, or consisted of vague or general allegations of misconduct that were unsubstantiated.[fn10] Therefore we find that Claimant’s information did not cause the staff to look into different conduct as part of its ongoing investigation, nor did Claimant’s information significantly contribute to the investigation. Claimant’s information therefore does not qualify for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and it hereby is, denied.

By the Commission.

[1] While not a basis for the denial, the CRS also concluded that Claimant’s information primarily consisted of publicly available information without any additional evaluation, and as such would likely not qualify as independent knowledge or independent analysis and thus would not constitute original information.

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).

[5] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).

[6] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[8] Exchange Act Rel. No. 85412 at 8-9.

[9] See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).

[10] To the extent that Claimant argues that he/she is the “original source” of information in news articles which allegedly assisted the staff’s investigation, Claimant’s argument is unpersuasive. Claimant has not provided sufficient information to confirm that he/she is the “original source.” See Rule 21F-4(b)(5). Further, the staff confirms that news articles that Claimant provided the staff did not materially advance the investigation: any such information was generally either already known to the staff and/or contained vague and general allegations of misconduct that were unsubstantiated.

SEC

95221

07/08/2022

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed an emergency action against [Redacted] (the “Defendants”) [Redacted]. The Commission alleged that the Defendants, [Redacted] engaged in a [Redacted] scheme [Redacted] of [Redacted] (the “Company”) [Redacted]. The Commission charged the Defendants with violating [Redacted]. [Redacted] on [Redacted] the court entered final judgment against the Defendants and enjoined them from future violations of the securities laws. The court also ordered the Defendants to pay disgorgement, prejudgment interest, and a civil penalty totaling [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that [Redacted] Claimant’s claim be denied on the grounds that, prior to [Redacted] Claimant was not a “whistleblower” pursuant to Exchange Act Rule 21F-2(a). To qualify as a whistleblower in connection with a particular submission of information to the Commission, an individual must provide that information to the Commission in accordance with the procedures set forth in Rule 21F-9(a).[fn1] Rule 21F-9(a) requires a whistleblower to submit information through the Commission’s online Tips, Complaint, or Referral (“TCR”) portal, or by mailing or faxing a Form TCR to the Commission’s Office of the Whistleblower. Claimant’s whistleblower application stated that Claimant submitted information to the Commission by email on or about [Redacted] but Claimant did not cite to any specific TCR submission. The CRS concluded that Claimant did not submit any information pursuant to these procedures until [Redacted].

The CRS also concluded that Claimant did not qualify for an award because Claimant did not provide information to the Commission that led to the successful enforcement of the Covered Action. The CRS concluded that none of the information submitted by Claimant either (1) caused the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The record demonstrated that Enforcement staff opened the investigation that led to the Covered Action (the “Investigation”) on [Redacted] based upon a source other than the Claimant, that Claimant submitted his/her Form TCR almost three years after the Investigation was opened, and that staff responsible for the Investigation confirmed that Claimant’s information was not used in the Investigation or the resulting litigated enforcement action in any way.[fn2]

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response (the “Response”) contesting the Preliminary Determination.[fn3] Claimant principally argues that Claimant submitted three TCRs to the Commission “with considerable detail on [the Company]” that Claimant believes pre-dated the beginning of the Investigation. Claimant also points to an [Redacted] email that Claimant sent to Commission staff with a link to a publicly-available news article with which Claimant claims to have assisted, asserting that if the Investigation began after that date and/or was opened in part based on the article, Claimant should receive a whistleblower award. Finally, Claimant submitted copies of certain emails he/she sent to SEC staff about the Defendants and/or the Company as evidence of his/her assistance to the Investigation. Claimant did not offer any response on the issue of his/her failure to follow Rule 21F-9.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, an individual must, among other things, submit information to the Commission through the Commission’s website using the TCR portal or submit information by mailing or faxing a Form TCR to the Office of the Whistleblower.[fn4] The individual must also declare under penalty of perjury that the information submitted is true and correct to the best of the individual’s knowledge.[fn5]

An individual seeking an award must also voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn6] Among other things, claimant’s original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn7] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn8]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn9] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn10]

For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

First, Claimant contends for the first time in the Response that he/she submitted information about the Company in three TCR submissions prior to the beginning of the Investigation, implicitly arguing that Claimant’s information in part caused Enforcement staff to open the Investigation. Those three submissions were made in [Redacted] and [Redacted].[fn11] However, staff assigned to the Investigation confirmed that the Investigation was opened on or about [Redacted] more than one year before the earliest of Claimant’s three submissions. Because these submissions were made after Enforcement staff began the Investigation, Claimant’s information could not have caused the opening of the Investigation. Claimant’s contention that his/her [Redacted] email to Enforcement staff played some part in opening the Investigation fails for the same reason: at that point, the Investigation had already been open for almost one month.[fn12] Claimant’s contention that the copies of emails to the staff constituted proof of Claimant’s contribution is also unavailing. Although the emails Claimant attached to the Response contained a few references to Defendants and/or the Company, all such emails were sent after [Redacted] when the Covered Action was filed.

Second, because the evidence does not establish that Claimant’s information caused the staff to open the Investigation, Claimant’s information can only be deemed to have led to the success of the Covered Action if it caused the staff to inquire concerning different conduct as part of a current investigation[fn13] or “significantly contributed to the success of the action.”[fn14] Claimant’s information meets neither criterion. Staff assigned to the Investigation confirmed that they never relied upon or used any information provided by Claimant and that Claimant’s information did not cause the staff to inquire into different conduct or otherwise contribute to the Investigation. In addition, Commission records demonstrate that Claimant’s three TCR submissions highlighted in Claimant’s Response were either (1) forwarded to Enforcement staff assigned to other investigations, not to staff responsible for the Investigation, or (2) closed with a disposition of “No Further Action” and not forwarded to Enforcement staff responsible for the Investigation. Moreover, the above-mentioned emails that were attached to Claimant’s Response were all sent to the staff after the Covered Action was already filed. We find that Claimant’s information did not cause the staff to look into different conduct as part of its ongoing investigation, nor did Claimant’s information significantly contribute to the investigation.[fn15]

Lastly, Claimant’s Response did not contest the CRS’s recommendation that Claimant’s claim be denied on the additional ground that Claimant did not follow the procedures set forth in Rule 21F-9. By failing to timely present any argument to the Commission during the reconsideration stage as to this ground for denial, Claimant has forfeited the opportunity to contest this ground for denial.[fn16]

Therefore, Claimant’s information does not qualify Claimant for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection the Covered Action be, and it hereby is, denied.

By the Commission.

[1] Exchange Act Rule 21F-9(a), 17 C.F.R. § 240.21F-9(a).

[2] While not a basis for its recommendation, the CRS also noted that the information provided by Claimant was in the form of links to publicly-available websites and would likely not, standing alone, constitute “original information” as required by Exchange Act Rule 21F-4(b).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] Exchange Act Rule 21F-9(a); 17 C.F.R. § 240.21F-9(a).

[5] Exchange Act Rule 21F-9(b); 17 C.F.R. § 240.21F-9(b).

[6] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[7] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).

[8] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[9] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4; see also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).

[10] Exchange Act Rel. No. 85412 at 8-9.

[11] Although Claimant did not specify the date or submission number of the three submissions in Claimant’s Response, based upon Claimant’s descriptions of their contents, OWB staff were able to locate the three corresponding submissions.

[12] In addition, Claimant’s [Redacted] email to Enforcement staff was not sent to the Commission pursuant to the procedures required by Rule 21F-9(a) and for this separate reason cannot form the basis for a whistleblower award. While Rule 21F-9(e) applies to pending claims such as the one at issue here, a waiver of these procedural requirements is not available under this rule because the Commission cannot “readily develop an administrative record that unambiguously demonstrates that [Claimant] would otherwise qualify for an award.” Rule 21F-9(e)(2).

[13] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[14] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[15] To the extent that Claimant argues his/her [Redacted] email and the news article therein contributed to the success of the investigation, this argument also fails. First, Enforcement staff stated that no information provided by Claimant was used by the staff. Second, there is no evidence in the record indicating that the staff relied upon that article independently of Claimant’s email, nor does Claimant provide satisfactory evidence that Claimant is the original source of any information in the article. See Rule 21F-4(b)(5).

[16] Cf. Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f) (“Your failure to submit a timely response contesting a Preliminary Determination will constitute a failure to exhaust administrative remedies, and you will be prohibited from pursuing an appeal pursuant to § 240.21F-13 of this chapter.”).

SEC

07/08/2022

[Redacted].

[Redacted] (Claimant 3).

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[Redacted] (Claimant 4)

The CRS has preliminarily determined to recommend that the Commission deny the award claim of Claimant 4. Claimant 4 did not provide info1mation that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information he provided did not:

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by Claimant 4. In addition, none of the information provided by Claimant 4 caused the staff to inquire concerning different conduct as part of the ongoing investigation or significantly contributed to the success of the action, as the staff, having opened the investigation more than two years before it received Claimant 4’s tip, was already aware of much of the info1mation at the time the staff received it and Claimant 4 did not provide the staff with any new information that otherwise contributed to the staffs understanding of the misconduct at issue in the Covered Action.

By: Claims Review Staff.

SEC

07/08/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (the “Commission”) received whistleblower award claims from [Redacted] (2) [Redacted] (“Claimant 2”), (3) [Redacted] (“Claimant 3”), (4) [Redacted] (“Claimant 4”), (5) [Redacted] (“Claimant 5”), and (6) [Redacted] (“Claimant 6”) for the above-referenced Commission enforcement action (the “Covered Action”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

[Redacted].

Claimant 2.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2.

The record reflects that Claimant 2 did not voluntarily provide original information to the Commission as defined by Rule 21F-4(a) of the Exchange Act. The record reflects that Enforcement staff requested that Claimant 2 participate in a voluntary interview shortly before Claimant 2 submitted information to the Commission.

Further, no information submitted by Claimant 2 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F 4(c). None of the information that Claimant 2 submitted: (1) caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the Claims Review Staff notes that the record demonstrates that Enforcement staff responsible for the Covered Action did not rely upon the information provided by Claimant 2 when opening the investigation, nor did Enforcement staff use Claimant 2’s information during the course of the investigation. Claimant 2 provided information that was already known to Enforcement staff and/or that was unrelated to the conduct that was the focus of Enforcement staff’s investigation and the Covered Action.

Claimant 3.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 3. No information submitted by Claimant 3 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c). None of the information that Claimant 3 submitted: (1) caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 4.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 4. No information submitted by Claimant 4 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c). None of the information that Claimant 4 submitted: (1) caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn6]

Claimant 5.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 5. No information submitted by Claimant 5 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c). None of the information that Claimant 5 submitted: (1) caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the Claims Review Staff notes that the record demonstrates that Enforcement staff responsible for the Covered Action did not rely upon the information provided by Claimant 5 when opening the investigation, nor did Enforcement staff use Claimant 5’s information during the course of the investigation. Claimant 5 provided information that was unrelated to the conduct that was the focus of Enforcement staff’s investigation and the Covered Action.

Claimant 6.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 6. No information submitted by Claimant 6 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c). None of the information that Claimant 6 submitted: (1) caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the Claims Review Staff notes that the record demonstrates that Enforcement staff responsible for the Covered Action did not rely upon the information provided by Claimant 6 when opening the investigation, nor did Enforcement staff use Claimant 6’s information during the course of the investigation. Claimant 6 provided information that was already known to Enforcement staff. Claimant 6 also provided information that was not substantiated, and such information was unrelated to the conduct that was the focus of Enforcement staff’s investigation and the Covered Action.

By: Claims Review Staff.

[6] Because Claimant 4 is not eligible for an award in the Covered Action, Claimant 4 is not eligible for any related action award. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See Exchange Act Section 21F-6(b); Exchange Act Rule 21F-3(b), (b)(1); Exchange Act Rule 21F-4(f) and (g); Exchange Act Rule 21F-11(a).

SEC

95198

07/05/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced covered action. Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed an enforcement action in federal district court (the “Covered Action”) charging [Redacted] (collectively, the “Defendants”) with perpetrating a securities fraud on investors in connection with their management [Redacted] (“Company”).[fn1] The fraud began in *** when the Company [Redacted].

In [Redacted], the district court entered final judgments in favor of the Commission that ordered Defendants to pay a total of [Redacted] in disgorgement, prejudgment interest and civil monetary penalties. On [Redacted], the Office of the Whistleblower posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination[fn3] recommending that Claimant’s claim be denied. The CRS based its denial recommendation on two grounds. First, it concluded that Claimant’s submission of information to the Commission was not “voluntary,” as required by Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3 and 21F-4(a)(1) thereunder, because Claimant provided information in *** after Enforcement staff had already subpoenaed Claimant and taken Claimant’s testimony in the *** Investigation on a subject matter related to his/her information. Second, the CRS determined that, under Rule 21F-8(c)(7), Claimant was ineligible for an award because Claimant had knowingly and willfully made false statements to Commission staff during Claimant’s *** testimony.

II. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn4] Claimant asserts that he/she is entitled to a whistleblower award because “the information that [Claimant] provided to the Commission was the catalyst for reopening and creating a new direction of inquiry for a case that had been closed in [Redacted]” and that it was “information that [Claimant] did not have available to [him/her] until after [the *** Testimony] that formed the basis for [Claimant] contacting . . . the SEC [in ***].” With regard to the first ground for the denial, Claimant contends that, when he/she reported to the Commission in [Redacted], Claimant voluntarily provided the staff with new, original information unrelated to the information that was available to Claimant when he/she testified in ***.[fn5] With regard to the second ground for the denial, Claimant argues that, while he/she agrees there were discrepancies between the *** and *** testimonies, Claimant did not knowingly make false statements to the staff during the *** Testimony.

III. Analysis.

Section 21F(b)(1) of the Exchange Act authorizes the Commission to pay monetary awards — subject to certain limitations, exclusions, and conditions — to individuals who “voluntarily” provide the Commission with original information about a violation of the securities laws that leads to a successful Commission judicial or administrative action in which the monetary sanctions exceed $1,000,000. Exchange Act Rule 21F-4(a)(1) defines a voluntary submission as one that is provided “before a request, inquiry, or demand that relates to the subject matter of [the] submission” is directed to the whistleblower or his or her personal representative “[b]y the Commission.” The purpose of the rule is to “creat[e] a strong incentive for whistleblowers to come forward early with information about possible violations of the securities laws rather than wait until Government or other official investigators ‘come knocking on the door.’”[fn6]

According to the Adopting Release for the whistleblower rules, the “determination of whether a prior inquiry ‘relates to the subject matter’ of a whistleblower’s submission will depend on the nature and scope of the inquiry and on the facts and circumstances of each case.”[fn7] The Adopting Release adds that this test will “be met–and therefore the whistleblower’s submission [will not] be ‘voluntary’–even if the submission provides more information than was specifically requested, if it only describes additional instances of the same or similar conduct, provides additional details, or describes other conduct that is closely related as part of a single scheme.”[fn8] As an example, the Commission noted that if the Enforcement staff “sends an individual an investigative request relating to a possible fraudulent accounting practice, we would ordinarily not expect to treat as ”voluntary” for purposes of Rule 21F-4(a) a subsequent whistleblower submission from the same individual that describes additional instances of the same practice, or a different but related practice as part of an overall earnings manipulation scheme.”[fn9]

The subject matter of Claimant’s *** submission was his/her allegation that [Redacted]. The *** Investigation was opened in response to reports that the Company had [Redacted], and the staff subpoenaed testimony from Claimant to investigate this issue. Contrary to Claimant’s assertions in his/her reconsideration petition, the *** Investigation and the staff’s inquires during Claimant’s *** Testimony were closely related to the subject matter of Claimant’s later submission in that both involved the [Redacted]. Moreover, during Claimant’s *** Testimony, the staff inquired specifically regarding [Redacted] [Redacted], and both of these topics were subjects of Claimant’s *** submission. We thus conclude that Claimant’s *** submission of information was not made voluntarily within the meaning of Exchange Act Rule 21F-4(a).

Having already determined that Claimant is ineligible for an award because the information he/she provided in *** was not submitted voluntarily, the Commission finds it unnecessary to reach the merits of the other ground for denial set forth in the Preliminary Determination.

IV. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant be, and it hereby is, denied.

By the Commission.

[1] [Redacted].

[2] [Redacted].

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] Claimant acknowledges that certain questions that were asked by the staff during the *** Testimony could be construed as being related to his/her *** submission. However, Claimant states, back in ***, the staff never made clear to him/her why these questions were being asked and that, in any event, Claimant answered the staff’s questions as truthfully as possible with the knowledge that Claimant possessed at that time. Specifically, Claimant maintains that Claimant’s was “knowledge of what was actually going on with [the Company] [Redacted] was mostly limited [Redacted] [and that] not [Redacted], did [Claimant] begin to receive information [Redacted], that led [Claimant] to conclude that [his/her] previous perception that [Redacted] [Redacted] was in fact wrong and that the [Redacted] [Redacted] had in fact conducted illegal activities in their operation of the [Company [Redacted].”

[6] 75 Fed. Reg. at 70,490; see also 76 Fed. Reg. at 34,307 (stating that a “whistleblower award should not be available to an individual who makes a submission after first being questioned about a matter (or otherwise requested to provide information) by the Commission staff acting pursuant to any of [its] investigative or regulatory authorities”).

[7] 76 Fed. Reg. at 34,308.

[8] Id.

[9] Id. at 34,308-34,309.

SEC

06/28/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received five whistleblower award claims, two of which were submitted jointly. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows:

[Redacted].

[Redacted] (“Claimant 3”) and [Redacted] (Claimant 4) (“Joint Claimants”).[fn1]

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to the Joint Claimants. Joint Claimants did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information the Joint Claimants provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary determination, we note that the Joint Claimants submitted a tip that did not relate to the party to the Covered Action or the factual and legal issues in the Covered Action or contain information that was used in or contributed to the Covered Action. Enforcement staff responsible for the Covered Action received no information from the Joint Claimants and had no communications with them.

[Redacted].

By: Claims Review Staff.

[1] We have preliminarily determined to treat Claimant 3 and Claimant 4 jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their tip and their award applications discuss them as having provided the information jointly. See Exchange Act Section 21F(a)(6) (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 preliminary determination.

SEC

06/10/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received six whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

[Redacted] (Claimant 3), [Redacted] (Claimant 4), [Redacted] (Claimant 5) and [Redacted] (Claimant 6).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claims of Claimant 3, Claimant 4, Claimant 5 and Claimant 6. Neither Claimant 3, Claimant 4, Claimant 5 nor Claimant 6 provided information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information they provided did not:

(1) under Rule 21F-4(c)(1) of the Exchange Act cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s, Claimant 4’s, Claimant 5’s or Claimant 6 ‘s information; or

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by Claimant 3, Claimant 4, Claimant 5 or Claimant 6. In addition, none of the information provided by Claimant 3 or Claimant 4 contributed to the success of the Covered Action, in that the staff was already aware of the information at the time the staff received it or the information did not contribute to the staff’s understanding of the misconduct at issue in the Covered Action. Finally, with regard to Claimant 5 and Claimant 6, staff responsible for the investigation and Covered Action did not review either Claimant’s information, therefore, Claimant 5’s and Claimant 6’s information had no impact on the staff’s investigation or the Covered Action.

By: Claims Review Staff.

SEC

95038

06/03/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award applications submitted by [Redacted] (“Claimant”) in connection with the above-referenced Covered Actions (the “Covered Actions”). Claimant filed a timely response contesting the preliminary denials. For the reasons discussed below, Claimant’s award claims are denied.

I. Background.

A. The Covered Actions.

The Office of the Whistleblower (“OWB”) received one Form WB-APP on or about [Redacted] from Claimant applying for awards in connection with the following Covered Actions:

a. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted].[fn1] Claimant’s award application for Covered Action [Redacted] was submitted over 7 months after the deadline.

b. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 2 years and 11 months after the deadline.

c. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 3 years and 2 months after the deadline.

d. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 3 years and 10 months after the deadline.

e. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 3 years and 11 months after the deadline.

f. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 4 years after the deadline.

g. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 5 years and 9 months after the deadline.

h. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 6 years and 1 month after the deadline.

i. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 6 years and 1 month after the deadline.

j. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 6 years and 10 months after the deadline.

k. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 8 years and 1 month after the deadline.

l. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 8 years and 4 months after the deadline.

m. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 8 years and 4 months after the deadline.

n. On [Redacted] OWB posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted]. Claimant’s award application for Covered Action [Redacted] was submitted over 8 years and 4 months after the deadline.

B. The Preliminary Determinations.

On [Redacted], the CRS issued its Preliminary Determinations[fn2] recommending that Claimant’s claims in each of the Covered Actions be denied because Claimant failed to submit the claims for award to OWB within ninety (90) days of the dates of the Notices of Covered Actions, as required under Rule 21F-10 of the Exchange Act.[fn3]

C. Claimant’s Response to the Preliminary Determinations.

On [Redacted], Claimant submitted a timely written response contesting the Preliminary Determinations.[fn4] In the response, Claimant does not address the failure to submit the claims for award within the required ninety-day deadline other than to state that Claimant “filed timely WB-APPs” and “could not have responded sooner”, without further explanation. Claimant also states that after Claimant submitted tips Commission staff “made nothing known to me not even the NOCAS.” And finally, Claimant states that OWB did not provide Claimant with the materials on which the Preliminary Determinations were decided, harming Claimant’s due process to obtain awards on the Covered Actions. The remainder of Claimant’s response sets forth a number of assertions unrelated to the Preliminary Determinations.

II. Analysis.

The requirement that claimants file whistleblower award claims within ninety days of the posting of a Notice of Covered Action (“NoCA”), set forth in Exchange Act Rule 21F-10, serves important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that the Commission can make timely awards to meritorious whistleblowers.[fn5]

Notwithstanding these important programmatic functions, we recognize that there may be rare situations where an exception should be made. To allow for this, Exchange Act Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive” the ninety-day filing requirement “upon a showing of extraordinary circumstances.”[fn6] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn7] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn8]

Applying that standard here, we find that Claimant has failed to show that extraordinary circumstances beyond Claimant’s control were responsible for the delay, ranging from 7 months to over 8 years, between the application deadlines for the Covered Actions and Claimant’s untimely whistleblower application in [Redacted]. In fact, Claimant does not provide an explanation for failing to file timely award applications, asserting incorrectly that the applications were timely filed.

Claimant also states that Commission staff did not provide Claimant with information about the NoCAs. To the extent that Claimant argues that the Commission should exercise its discretion to waive the ninety-day filing requirement because the Commission failed to alert Claimant to the NoCAs, we note that the Commission is not obligated to notify a claimant of the posting of a NoCA or the deadline for submitting an award application. As we have explained, our whistleblower rules provide “for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim. The NoCAs for the Covered Actions were clearly posted on the Commission’s website, along with the requisite deadlines. Under our rules, that is all the notice that Claimant was due.”[fn9] Further, “a lack of awareness about the [whistleblower award] program does not . . . rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.”[fn10] “A potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings.”[fn11] Claimant’s failure to regularly monitor the Commission’s web page for NoCA postings is not an “extraordinary circumstance” that might trigger our discretion to excuse the fact that Claimant submitted the award applications months and years late.[fn12]

Finally, Claimant states that the Commission failed to provide the materials on which the Preliminary Determinations were decided, harming Claimant’s due process to obtain awards on the Covered Actions. Rule 21F-12 identifies the materials that may form the basis of an award determination and that may comprise the record on appeal, and the rule specifies that OWB may request an executed Confidentiality Agreement (“CA”) as a precondition to providing these materials to a claimant. On [Redacted], Claimant wrote to OWB, objecting to the request that Claimant execute the CA and informing OWB that Claimant would not execute the CA. OWB’s request that Claimant sign a CA is consistent with OWB’s practice. Moreover, Rule 21F-12(b), providing that OWB may require the execution of a CA, is reasonably designed to protect whistleblower confidentiality and the Commission’s law enforcement interests. Accordingly, OWB’s decision not to provide the materials to Claimant — because Claimant would not sign the CA — was warranted and consistent with Commission practice.

We conclude that Claimant failed to file Claimant’s award applications within the ninety-day application deadline and that Claimant has failed to show that extraordinary circumstances beyond Claimant’s control were responsible for the delay.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award applications be, and hereby are, denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[3] Exchange Act Rules 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred”) and 10(b)(1) (“All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award”). See also Order Determining Whistleblower Award Claim, Release No. 34-77368 , at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018).
[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[5] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545 , 76 Fed. Reg. 34300, 34300; Order Determining Whistleblower Award Claim, Release No. 34-88464 at 3 (Mar. 24, 2020).
[6] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).
[7] Order Determining Whistleblower Award Claim, Release No. 34-77368 at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S.Ct. 2005 (2018).
[8] See supra Order Determining Whistleblower Award Claim, Release No. 34-77368 at 3; Order Determining Whistleblower Award Claim, Release No. 34-82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 34-72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 34-72178 (May 16, 2014).
[9] Order Determining Whistleblower Award Claim, Release No. 34-88464 at 3-4 (Mar. 24, 2020) (internal citations omitted).
[10] Id. at 4.
[11] Id.
[12] Id.

SEC

95033

06/03/2022

For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the Commission charged multiple individuals with [Redacted]. The court enjoined the defendants from future violations of the federal securities laws, and ordered the defendants to pay disgorgement, penalties, and prejudgment interest totaling over [Redacted].

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn1] recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 21F-3(a)(3) and 21F-4(c) thereunder because Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2). The CRS reasoned that the investigation that led to the Covered Action was opened based on a referral from a foreign regulator, not because of information provided by Claimant. Claimant’s information also did not significantly contribute to the success of the Covered Action, as it was duplicative of information the staff had already obtained.

The CRS also explained that Claimant did not provide “original information” that led to the success of the Covered Action within the meaning of Exchange Act Section 21F(b)(1) and Rules 21F-3(a)(2) and 21F-4(b) as Claimant’s information was not derived from Claimant’s “independent knowledge,” as defined under Rule 21F-4(b)(2), because the information was derived entirely from publicly-available sources. The CRS also concluded that Claimant’s information was not derived from Claimant’s “independent analysis,” as defined under Rule 21F-4(b)(3), because the information, which included links to publicly available information, such as internet sites, did not include an examination or evaluation of information that “reveals information that is not generally known or available to the public.”[fn2] The CRS further concluded that Claimant’s information was not “original information” because the information Claimant provided was already known to the staff. Lastly, the CRS concluded that Claimant did not qualify for an award because certain of Claimant’s information was provided before July 21, 2010, the date of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), and thus did not constitute original information within the meaning of Section 21F(b)(l) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b)(1)(iv) thereunder.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination (the “Response”). Claimant principally contends that “foreign regulators did indeed provide most of the information given to the Commission but the information [the foreign regulators] got as early as 2010 was given to them by me.” Claimant cites to emails with a representative of a foreign regulator on [Redacted] to support Claimant’s argument that he/she provided information to the foreign regulator. Claimant also attached a [Redacted] newspaper article and a [Redacted] email with the staff in support of his/her Response. Claimant’s Response did not contest the CRS’s recommendation that his/her claim also be denied on the ground that it did not provide original information derived from his/her independent knowledge or independent analysis. Claimant’s Response also did not contest the CRS’s recommendation that his/her claim be denied on the ground that it was based in part on information submitted to the Commission prior to July 21, 2010.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn3] Among other things, to be considered original information the submission must be provided to the Commission for the first time after July 21, 2010.[fn4] Additionally, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn5] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn6]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn8] For the reasons discussed below, Claimant’s information does not merit a whistleblower award in the Covered Action.

First, Claimant’s Response did not provide the Commission with evidence in support of Claimant’s contentions that his/her information led to the successful enforcement of the Covered Action. Claimant argues that he/she provided information to a foreign regulator “as early as 2010,” and that foreign regulator gave the information to the Commission, which in turn began the investigation that led to the Covered Action. A staff declaration establishes that Enforcement staff opened the investigation that led to the Covered Action on [Redacted] based upon a referral from the same foreign regulator. However, Claimant offers no evidence showing what information, if any, he/she provided to the foreign regulator before that date.[fn9] Claimant’s email exchange with the foreign regulator on [Redacted] after the Commission’s investigation was already open, does not support his/her contention. Based upon the record before us, including the material provided in Claimant’s Response, we find that there is insufficient evidence to conclude that Claimant’s information caused the staff to open the investigation that led to the Covered Action.

Second, because the evidence does not establish Claimant’s information caused the staff to open the investigation, Claimant’s information can only be deemed to have led to the success of the Covered Action if it caused the staff to inquire concerning different conduct as part of a current investigation[fn10] or “significantly contributed to the success of the action.”[fn11] We find, based on evidence in the record, that although Claimant submitted multiple TCRs to the Commission from [Redacted] none of Claimant’s information caused the staff to inquire into different conduct or made a substantial and important contribution to the success of the Covered Action. According to the staff declaration considered by the CRS, which we credit, Claimant’s TCRs provided staff with very limited information relevant to the investigation. This information consisted of a [Redacted] Claimant received from a relevant entity. These [Redacted] were widely disseminated and publicly available. Claimant’s other submissions included [Redacted] about companies that later became defendants in the Covered Action, along with very limited information about some of the other defendants and their associates. The staff declaration reflects that Claimant’s information was not helpful because the staff was already familiar with the material facts based on detailed information the staff had previously obtained during the investigation. Claimant’s information was duplicative of information the staff had already received and did not advance the investigation that led to the Covered Action. Nothing in Claimant’s Response demonstrates otherwise. Accordingly, based upon the record before us, we find that Claimant did not provide information to the Commission that led to the success of the Covered Action and, therefore, Claimant is not eligible to receive a whistleblower award.

Lastly, Claimant’s Response did not contest the CRS’s recommendation that Claimant’s claim be denied on the additional ground of not providing original information derived from independent knowledge or independent analysis, nor did Claimant contest the CRS’s recommendation that Claimant’s application be denied on the separate ground that it was based in part on information submitted prior to July 21, 2010. By failing to timely present any argument to the Commission during the reconsideration stage as to these two other grounds for denial, Claimant has forfeited the opportunity to contest those two grounds.[fn12]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection the Covered Action be, and it hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[2] Exchange Act Rule 21F-4(b)(3).

[3] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).

[5] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).

[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[8] Exchange Act Rel. No. 85412 at 8-9.

[9] Specifically, Claimant has not demonstrated that he/she is the original source of any information the Commission received from the foreign regulator. Exchange Act Rule 21F-4(b)(5), 17 C.F.R. § 240.21F-4(b)(5).

[10] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[11] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[12] Cf. Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f) (“Your failure to submit a timely response contesting a Preliminary Determination will constitute a failure to exhaust administrative remedies, and you will be prohibited from pursuing an appeal pursuant to § 240.21F-13 of this chapter.”).”

SEC

95032

06/03/2022

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed suit in federal court charging [Redacted] (the “Defendant”) with [Redacted] (the “Company”). The Commission alleged that [Redacted]. The Commission charged Defendant with violations of [Redacted]. Following a jury verdict in favor of the Commission, on [Redacted] the court entered an amended final judgment ordering Defendant to pay [Redacted] in disgorgement and prejudgment interest.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination[fn1] recommending that Claimant’s claim be denied on the grounds that Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because Claimant’s information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2). The CRS found that the investigation which led to the Covered Action (the “Investigation”) was opened before Enforcement staff received Claimant’s information, and that by the time Claimant submitted his/her tip in [Redacted] Enforcement staff conducting the Investigation was already aware of the key facts underlying Claimant’s allegations.

The record supporting the Preliminary Determination included the declaration (the “First Declaration”) of one of the Enforcement attorneys who was assigned to the Investigation and the resulting Covered Action.[fn2] The First Declaration stated, under penalty of perjury, that Enforcement staff opened the Investigation on [Redacted] and that Claimant’s tip was submitted to the Commission in [Redacted]. The First Declaration stated that Enforcement staff in coordination with other Commission staff had been monitoring the Company since [Redacted] that Company’s [Redacted] and [Redacted]. Commission filings raised substantial concerns and questions about the Company; that none of the information provided by Claimant was used in or had any impact on the charges brought by the Commission in the Covered Action; and that Enforcement staff assigned to the Investigation did not have any communications with Claimant. The First Declaration also explained that Claimant’s tip was mostly duplicative of information Enforcement staff on the Investigation already were aware of from other Commission staff and from publicly available information.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn3] Claimant does not contest the determination that Claimant’s [Redacted] submission did not cause the opening of the Investigation, which the record shows was opened approximately one month before Claimant submitted his/her [Redacted] tip. Claimant argues instead that the First Declaration “is demonstrably false; so much so that it suggests a purposeful effort and intention to deceive.” Claimant provided a copy of an email that Claimant sent to OWB staff on [Redacted] which Claimant contends caused Enforcement staff to open the Investigation. Claimant’s [Redacted] email to OWB staff quoted from several of the Company’s [Redacted] public filings and alleged that the Company made [Redacted] and that the Company was [Redacted]. Claimant states that “[i]t should be obvious that the source of the information causing an investigation to be opened by the SEC on [the Company] on [Redacted] was solely and directly from [Claimant] . . . .”

In an attempt to offer proof for the argument that Claimant was the cause of the Investigation, Claimant’s attorney then pivots to discussing his/her own dialogues with Commission staff. Claimant’s attorney stated, “I can tell you with confidence that OCIE 4 was not investigating [Company’s] [Redacted]. They were, however, investigating the issues I brought to their attention. My concerns with respect to [the Company] and [other agency] were shared with OCIE well before [Redacted].” According to the attorney, he/she “had an ongoing dialogue” with a particular OCIE staff member about issues unrelated to the Company’s [Redacted]. Based on those interactions, the attorney concludes that the SEC was not examining Company’s [Redacted] until Claimant sent his/her [Redacted] email.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn5] Among other things, to be considered original information, the submission must be provided to the Commission for the first time after July 21, 2010.[fn6] Additionally, as relevant here, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused Commission staff to commence an examination, open or reopen an investigation, “or to inquire concerning different conduct as part of a current examination or investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn7] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn8]

In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn9] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn10]

We find, based on the evidence in the record, that Claimant did not provide information that caused Enforcement staff to open or reopen an investigation, commence an examination, or inquire concerning different conduct as part of a current examination or investigation. While Claimant’s information alleged misconduct by the Company, Enforcement staff was already aware of the key facts underlying those allegations. Therefore, Claimant’s information does not satisfy Rule 21F-4(c)(1).[fn11] Claimant does not contest that Claimant’s [Redacted] submission did not cause the opening of the Investigation; instead, Claimant points to the [Redacted] email Claimant sent to the Commission as the cause behind the opening of the Investigation. After review of Claimant’s response to the Preliminary Determination, Enforcement staff who wrote the First Declaration wrote a supplemental Declaration (the “Second Declaration”). The Second Declaration, which we credit, confirmed under penalty of perjury that Commission staff had already begun coordinating in examining and reviewing the Company’s [Redacted] and [Redacted] in [Redacted], more than six months before the Investigation was opened on [Redacted]. In addition, the Second Declaration indicated that Commission staff conducted examinations of the Company in [Redacted] and [Redacted]. The Second Declaration confirmed that the Company’s [Redacted] filings with the Commission [Redacted], [Redacted], raised concerns [Redacted]. The Second Declaration also confirmed that Enforcement staff did not recall receiving Claimant’s [Redacted] email. Based on the First Declaration and the Second Declaration and the other facts in the record, we find that it was for these principal reasons that Enforcement staff opened the Investigation on [Redacted], and not because of any information provided by Claimant.

Because Claimant’s information did not cause Enforcement staff to open the Investigation, Claimant’s information can only be deemed to have led to the success of the Covered Action if it caused the Commission staff to commence an examination, inquire concerning different conduct as part of a current investigation,[fn12] or “significantly contributed to the success of the action.”[fn13] We find, based on evidence in the record, that Claimant’s information did not cause the Commission staff to commence an examination, as Commission staff had already begun examinations of the Company prior to the submission of Claimant’s tip. Further, Claimant’s information did not cause Enforcement staff to inquire into different conduct and did not make a substantial and important contribution to the success of the Covered Action, including by allowing the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities. The Second Declaration confirms that Enforcement staff did not recall receiving Claimant’s [Redacted] email. The record also reflects that Claimant’s [Redacted] submission did not advance the Investigation.

Claimant’s attorney’s argument based on the attorney’s own pre-2010 conversations with one Commission staff member is unavailing and unhelpful to Claimant’s award application. Anecdotes about conversations with a single Commission staff member do not constitute persuasive evidence of what an entire government agency may or may not have been investigating.

Accordingly, Claimant did not provide information to the Commission that led to the success of the Covered Action and, therefore, Claimant is not eligible to receive a whistleblower award.[fn14]

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant in connection with the Covered Action be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[2] The whistleblower rules contemplate that the record upon which an award determination is made shall consist of, as relevant here, a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip, the claimant’s award application, and any other materials timely submitted by the claimant in response to the Preliminary Determination. See Exchange Act Rule 21F-12(a).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] The Commission’s Office of Compliance Inspections and Examinations (“OCIE”) is now known as the Division of Examinations.

[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[6] See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).

[7] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).

[8] See Exchange Act Rule 21-F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[10] Exchange Act Rel. No. 85412 at 8-9.

[11] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[12] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[13] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[14] To the extent that Claimant argues that any conversations with or information given to Commission staff pre-July 2010 supports a claim for a whistleblower award, an argument that would be made for the first time in Claimant’s response to the Preliminary Determination, Claimant’s argument fails. To be considered “original information,” a claimant must submit information to the Commission after July 21, 2010. See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv). Further, as noted above, the information in the record confirms that none of the information Claimant provided after July 2010 led to the success of the Covered Action.

SEC

94946

05/19/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $16,000, which is equal to percent Redacted of the amount collected in the above-referenced Covered Action (“Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

In coming to this conclusion, the Commission considered that Claimant. helped alert Commission staff to the ongoing fraud and his/her tip was a principal motivating factor in the decision to open the investigation. Claimant also provided continuing assistance by supplying critical documents and participating in at least one subsequent communication with Commission staff that advanced the investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R § 240.21F-3. While Claimant did not provide his/her information on Form TCR at the time it was first submitted to the Commission, Claimant satisfies Exchange Act Rule 21F-9(e) because Claimant, who was unrepresented, provided a Form TCR to the Commission within 30 days of learning of the TCR filing requirement.

SEC

05/18/2022

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Office of the Whistleblower.

[2] Except in connection of their review of Claimant’s award application, Investigative staff responsible for the Covered Action never received or reviewed any information from Claimant or had any communications with Claimant. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

94860

05/06/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that joint claimants (collectively, [Redacted] “Claimant 1”)[fn1] receive a whistleblower award of approximately $3.5 million, equal to [Redacted] percent (***%) of the monetary sanctions collected in the above-referenced Covered Action and in a separate action brought by the [Redacted] (the “Other Agency”). The CRS recommended the denial of the award application from [Redacted] (“Claimant 2”). Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determinations, and Claimant 2 submitted a timely notice contesting the preliminary denial of Claimant 2’s award claim.

After review of Claimant 2’s reconsideration request and the new evidence provided therein, the CRS found Claimant 2 eligible for an award for the Covered Action. After reviewing the Rule 21F-6 award factors,[fn2] the CRS determined on reconsideration that, regarding the Covered Action, a [Redacted] percent (***%) award to Claimant 1 and a [Redacted] percent (***%) award to Claimant 2 is appropriate. The CRS on reconsideration also maintained its [Redacted] percent (***%) related action award recommendation for Claimant 1 in the separate action brought by the Other Agency (the “Other Agency Action”)[fn3] and recommended denying Claimant 2’s application for award relating to the Other Agency Action.

For the reasons discussed below, we agree. We therefore award Claimant 1 [Redacted] percent of the monetary sanctions collected in the Covered Action and [Redacted] percent of the monetary sanctions collected in the Other Agency Action, equal in aggregate to more than $2.8 million. We award Claimant 2 [Redacted] percent of the monetary sanctions collected in the Covered Action, equal to more than $600,000, and we deny Claimant 2’s application for award in the Other Agency Action.[fn4]

I. Background.

A. The Covered Action.

The Commission opened the investigation into [Redacted] (the “Company”) that culminated in the Covered Action in [Redacted] (the “Commission Investigation”) following receipt of information provided by Claimant 1. On [Redacted], the Commission filed a complaint alleging that the Company violated [Redacted]. The court entered final judgment on [Redacted] ordering the Company to pay a penalty of [Redacted].

On [Redacted] the Office of the Whistleblower posted the above-referenced Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn5] Claimants 1 and 2 filed timely whistleblower award claims.

B. The Other Agency Action.

On [Redacted] the Other Agency brought an action against the Company based in part upon the same original information that Claimant 1 provided to the Commission and which caused the Commission to open the Commission Investigation. On [Redacted] the court entered judgment ordering the Company to pay [Redacted].

The Commission may pay an award based on amounts collected in a related action that is based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $1 million.[fn6] The Commission finds that the Other Agency Action constitutes a “related action” within the meaning of Exchange Act Rule 21F-3(b).

C. The Preliminary Determinations.

The CRS[fn7] issued Preliminary Determinations[fn8] recommending that: (1) Claimant 1 receive an award of ***% of the monetary sanctions collected in the Covered Action and the Other Agency Action, and (2) the award claim of Claimant 2 be denied with regard to the Covered Action and the Other Agency Action.

While the record showed that Enforcement staff issued a supplemental subpoena to the Company focusing [Redacted] among other things, based upon Claimant 2’s information, the CRS recommended that Claimant 2’s award claim be denied on the grounds that Claimant 2 did not provide original information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act. The record showed that Claimant 2’s information was either already known to the Commission or was not derived from (1) Claimant 2’s independent knowledge, as defined by Rule 21F-4(b)(2), because Claimant 2’s information was derived from publicly available sources, or (2) Claimant 2’s independent analysis, as defined by Rule 21F-4(b)(3), because the information did not include an examination and evaluation of information that reveals information that is not generally known or available to the public. To the extent Claimant 2 provided information related to the charges in the Covered Action, Claimant 2 provided publicly available information, quoting from public documents and referring to changes in the price of the Company’s stock.

D. Claimant 2’s Response to the Preliminary Determination.

Claimant 2 submitted a timely written response contesting the CRS’s Preliminary Determination that Claimant 2’s award claim be denied.[fn9] Among other things, Claimant 2 contends that the information provided regarding the [Redacted] constituted “independent analysis” and was the result of considerable time and effort. Claimant 2 argues that his/her information “indisputably” led to the success of the Covered Action. Claimant 2 also alleges that other information he/she provided in separate submissions regarding the Company’s [Redacted] among other things, may have significantly contributed to the success of the Covered Action.

Claimant 2 also provided additional evidence showing that Claimant spent more than seven weeks performing the analysis that led to Claimant 2’s submissions to the Commission. Claimant states that his/her analysis involved research and review of many documents, including the Company’s public filings, research reports, earnings call transcripts, and other material related to [Redacted] all of which Claimant 2 distilled into allegations that were submitted to the Commission.

II. Analysis.

[Redacted].

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action and the Other Agency Action. Accordingly, Claimant 1 qualifies for a whistleblower award. Based on the specific facts and circumstances here, we find that an award of [Redacted] percent (***%) is appropriate. In reaching that determination, we assessed the following facts: (1) there were no negative factors at issue in Claimant 1’s submission; (2) Claimant 1 supplied information that caused Enforcement staff to open the investigation that led to the Covered Action; (3) Claimant 1 [Redacted] before contacting the Commission; and (4) Claimant 1 alleged retaliation and other hardships as a result of Claimant 1’s reporting.

Claimant 1 also provided the same information to the Other Agency and caused the Other Agency to open the investigation that resulted in the Other Agency Action. For the reasons discussed herein, we find that an award to Claimant 1 of [Redacted] percent ( ***%) of the monetary sanctions collected or to be collected in the Other Agency Action is appropriate.

B. Claimant 2.

The record on reconsideration demonstrates that Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Claimant 2, an outsider unaffiliated with the Company, provided new evidence showing that his/her information constituted “original information” by showing that it was derived from “independent analysis.”[fn15] Claimant 2’s information was the result of unusual effort and intensive research over the course of many weeks, and developed through a detailed analysis of publicly-available information.[fn16] Claimant 2’s information revealed allegations that were not previously known to Commission staff. Accordingly, Claimant 2 qualifies for a whistleblower award.

Based on the specific facts and circumstances here, we find that an award of [Redacted] percent ( *** %) for the Covered Action is appropriate. In reaching that determination, we assessed the following facts: (1) there were no negative factors at issue in Claimant 2’s submission; (2) Claimant 2’s information focused Enforcement staff’s investigation on new allegations that led to the Covered Action; and (3) Claimant 2’s information was provided approximately fifteen months after the investigation was opened, based upon information provided by Claimant 1.

We deny a related action award to Claimant 2 for the Other Agency Action. The record shows that the investigation that resulted in the Other Agency Action was opened based upon information provided by Claimant 1. The record also shows that Claimant 2’s information did not significantly contribute to the Other Agency Action. Accordingly, Claimant 2 is not entitled to a related action award for the Other Agency Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that (1) Claimant 1[fn17] shall receive an award equal to [Redacted] percent ( ***%) of the monetary sanctions collected, or to be collected, in the Covered Action, (2) Claimant 1 shall also receive an award equal to [Redacted] percent ( ***%) of the monetary sanctions collected, or to be collected, in the Other Agency Action, (3) Claimant 2 shall receive an award equal [Redacted] percent ( *** to %) of the monetary sanctions collected, or to be collected, in the Covered Action; and (4) Claimant 2’s award applications for the Other Agency Action and the Other Actions are denied.

By the Commission.

[1] A joint award is appropriate as Claimant 1 jointly submitted their tip and Forms WB-APP. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining “whistleblower” to mean, as relevant here, “2 or more individuals acting jointly who provide[] information relating to a violation of the securities laws to the Commission…”).

[2] See Exchange Act Rule 21F-6, 17 C.F.R. § 240.21F-6.

[3] The Other Agency Action is [Redacted].

[4] We deny Claimant 2’s applications for awards arising from the following other actions: [Redacted].

[5] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[6] Exchange Act Rule 21F-3(b), 17 C.F.R. § 240.21F-3(b).

[7] Rule 21F-10(d) under the Exchange Act provides that the CRS will “evaluate all timely whistleblower award claims submitted on Form WB-APP in accordance with the criteria set forth in the rules.” 17 C.F.R. § 240.21F-10(d); see also Rule 21F-11(d).

[8] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d); Exchange Act Rule 21F-11(d), 17 C.F.R. § 240.21F-11(d).

[9] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[15] 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.

[16] As stated in our interpretive guidance, “the Commission may determine that a whistleblower’s examination and evaluation of publicly available information reveals information that is ‘not generally known or available to the public’–and therefore is ‘analysis’ within the meaning of Rule 21F-4(b)(3)–where: (1) The whistleblower’s conclusion of possible securities violations derives from multiple sources, including sources that, although publicly available, are not readily identified and accessed by a member of the public without specialized knowledge, unusual effort, or substantial cost; and (2) these sources collectively raise a strong inference of a potential securities law violation that is not reasonably inferable by the Commission from any of the sources individually.” Id. at 119; see also Order Determining Whistleblower Award Claim, Release No. 92780 (Aug. 27, 2021) (granting award to claimant whose information was the “product of unusual effort and expertise developed over many years”).

[17] Unless the members of Claimant 1 within ten (10) calendar days of the issuance of this Order make a joint request, in writing, for a different allocation of the award among them, the Office of the Whistleblower is directed to pay the joint award in equal shares to each member of Claimant 1.

SEC

94797

04/27/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of more than $500,000, which represents *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). In recommending that Claimant be found eligible for an award, the CRS recommended that the Commission exercise its general exemptive authority to waive the TCR filing requirements under Securities Exchange Act of 1934 (“Exchange Act”) Rules 21F-9(a) and (b).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily[fn1] provided original information to the Commission, and that this information led to the successful enforcement of the Covered Action.[fn2]

Moreover, we have determined that it would be in the public interest and consistent with the protection of investors for the Commission to exercise our discretionary authority under Section 36(a) of the Exchange Act to waive the TCR filing requirements of Rules 21F-9(a) and (b)[fn3] as to the Claimant in light of the specific facts and circumstances present here. Specifically (1) Claimant filed a [Redacted] complaint against, inter alia, the Company with the Other Federal Agency that suggested a potential securities-law violation; (2) the Other Federal Agency referred that complaint to the Commission and Claimant knew that the Commission had received Claimant’s information; (3) the Commission’s Office of Market Intelligence generated a TCR based on the referral; and (4) Claimant made substantially the same allegations in a federal lawsuit [Redacted]. We do not, however, suggest in any way that a putative whistleblower is relieved of the requirement to file a Form TCR merely because they first report to another federal agency, and that agency provides the same information to the Commission. [Redacted]. Claimant participated in three interviews with and provided documents to Commission staff, [Redacted].

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.

[1] Claimant satisfies the voluntariness requirement because Claimant filed a complaint with the United States [Redacted] (the “Other Federal Agency”) with allegations about [Redacted] (the “Company”) [Redacted] before Commission staff contacted Claimant about the same subject. See Exchange Act Rule 21F-4(a)(1)(ii) (a “submission of information to the Commission will be considered voluntary if [a claimant] voluntarily provided the same information to” inter alia, any authority of the federal government “prior to receiving a request, inquiry, or demand from the Commission”).
[2] See Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[3] Rule 21F-9(a) provides that “[t]o be considered a whistleblower . . . you must submit your information . . . online, through the Commission’s website . . . or by mailing or faxing a Form TCR.” 17 C.F.R. § 240.21F-9(a). Rule 21F-9(b) provides that “to be eligible for an award, you must declare under penalty of perjury at the time you submit your information . . . that your information is true and correct to the best of your knowledge and belief.” § 240.21F-9(b).
[4] [Redacted].

SEC

94789

04/25/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that joint claimants [Redacted] (“Claimant 1”) jointly receive a whistleblower award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action. The CRS also recommended that joint claimants [Redacted] (“Claimant 2,” and together with Claimant 1, “Claimants”) jointly receive a whistleblower award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action. The total whistleblower award to Claimants recommended by the CRS is approximately $6 million. Claimants did not contest the Preliminary Determinations.[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimants voluntarily provided original information to the Commission, and that this information led to the successful enforcement of the Covered Action.[fn2]

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of ***% for Claimant 1 and ***% for Claimant 2 is appropriate.[fn3] In reaching that determination, we considered that Claimant 1 provided staff with key documents that led the staff to seek additional documents from the respondent, which formed the core of the Commission’s case. Claimant 1 also provided ongoing assistance to the staff as the investigation progressed, providing documents and information to assist the staff’s understanding of the respondent’s business practices. With regard to Claimant 2, we considered that Claimant 2’s information provided valuable first-hand accounts of the respondent’s wrongdoing, and that Claimant 2 was familiar with the respondent’s systems and business processes. Claimant 2 was also interviewed by the staff and provided continuing assistance, including on-the-record testimony.

Accordingly, it is hereby ORDERED that (1) Claimant 1 shall receive an award equal to [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action, and (2) Claimant 2 shall receive an award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.[fn4]

By the Commission.

[2] See Exchange Act Section 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).

[3] In assessing the appropriate award amount for Claimants, Exchange Act 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.

[4] Unless Claimant 1 or Claimant 2, within ten (10) calendar days of the issuance of this Order, makes a joint request, in writing, for a different allocation of the award, the Office of the Whistleblower is directed to pay each member of Claimant 1 individually one-half of their joint award and to pay each member of Claimant 2 individually one-third of their joint award.

SEC

94767

04/21/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of *** percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (“Covered Action”),[fn1] which would result in a current award of more than $580,000. Claimant did not submit a request for reconsideration of the Preliminary Determination.[fn2]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed amount is appropriate.[fn4] In reaching that determination, we considered that while Claimant’s information and assistance were significant in that they helped the staff to more efficiently and quickly conduct the investigation, Claimant was involved in a transaction that gave rise to the [Redacted] violations described in the Covered Action, Claimant financially benefited from that transaction, and Claimant delayed in reporting for over two years after that transaction, while investors continued to be harmed.

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.

[1] The Commission also brought enforcement actions against certain individuals, [Redacted] ***. We find that these actions arise out of the same nucleus of operative facts as the Covered Action, and should be treated as part of the Covered Action for purposes of making a whistleblower award under Exchange Act Rule 21F-4(d).
[2] See Exchange Act Section 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).
[3] See Exchange Act Section 21(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] In assessing the appropriate award amount, Exchange Act 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 in 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.

SEC

94738

04/18/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] and [Redacted] (together, “Claimants”) jointly receive a whistleblower award in the amount of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in [Redacted] (“Covered Action”) and [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in a related [Redacted] action [Redacted] (“Related Action”)[fn1] for a total award of approximately $700,000.

The recommendation of the CRS is adopted. The record demonstrates that Claimants voluntarily provided original information to the Commission which the Commission passed along to [Redacted] (the “Other Agency”), and that this original information led to the successful enforcement of both the Covered Action and the Related Action.[fn2]

[Redacted].

In reaching this determination, the Commission considered that (i) Claimants’ information prompted Commission staff to begin an examination that led to the Covered Action, (ii) Claimants’ assistance helped focus the examination; (iii) some of the charges in the Commission’s Order were based, in part, on the information submitted by Claimants; and (iv) there was substantial law enforcement interest in the information provided, as it related to an ongoing fraud involving the misappropriation of investor funds.

The Commission shared Claimants’ information with the Other Agency, which commenced a Related Action concerning the same fraudulent conduct that formed the factual basis for the Covered Action. In view of the same considerations described above in connection with the Covered Action, the Commission has adopted the CRS’s recommendation of an award in the Related Action.

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, and [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Related Action.[fn6]
By the Commission.

SEC

94737

04/18/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action. Based on current collections, this would result in an award of approximately $45,000.

[Redacted].

In reaching this determination, the Commission considered that (1) Claimant provided new information that prompted Commission staff to open an investigation into the alleged misconduct; (2) Claimant participated in a voluntary interview with Commission staff; (3) the charges brought by the Commission were based in part on conduct that was the subject of the information provided by Claimant; and (4) Claimant suffered hardships as a result of the underlying misconduct.

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] [Redacted].
[3] [Redacted].

SEC

94736

04/18/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $450,000, which represents *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent ( ***%) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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). Although the CRS found that Claimant held a compliance role, Claimant is eligible for an award because Claimant satisfies the 120-day exception under Exchange Act Rule 21F-4(b). Claimant waited more than 120 days after reporting the potential securities violations internally before contacting the Commission.
[2] [Redacted].
[3] [Redacted].

SEC

94743

04/18/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claims submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) in connection with the above-referenced covered action (“Covered Action”). Claimants 1 and 2 filed timely responses contesting their preliminary denials.[fn1] For the reasons discussed below, both Claimants’ award claims are denied.

I. Background.

A. The Covered Action.

In [Redacted], staff from the Division of Enforcement opened an investigation (“Investigation”) based on a self-report by [Redacted] (the “Company”), indicating that [Redacted] *** subsidiaries of the Company had made improper payments to employees of its [Redacted] between at least [Redacted] in an effort to obtain or retain business in ***. On [Redacted], the Commission instituted a settled administrative cease-and-desist proceeding against the Company, charging it with violations of [Redacted]. The Commission ordered the Company to pay [Redacted], consisting of disgorgement and prejudgment interest.[fn2]

On [Redacted], the Office of the Whistleblower (“OWB”) posted the Notice for the Redacted Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimants 1 and 2 filed timely whistleblower award claims.[fn3]

B. The Preliminary Determinations.

On [Redacted], the CRS issued Preliminary Determinations[fn4] recommending that both Redacted Claimants’ claims be denied because the information they provided did not lead to the successful enforcement of the Covered Action.[fn5] In its Preliminary Determinations, the CRS found that the staff responsible for the Investigation did not receive any information from, or have any communications with, either Claimant.

C. Claimants’ Responses to the Preliminary Determinations.

Claimant 1 argues that he/she provided the Commission with original information related to certain suspected [Redacted] activities of the Company’s wholly-owned subsidiary in *** just a few months before the Investigation was opened and that his/her submission significantly contributed to the success of the Covered Action.[fn6] Claimant 1 also contends that he/she reported these facts [Redacted] to the Company’s senior management,[fn7] as well as to [Redacted] in connection with a contemporaneous related [Redacted] action (the “*** Action”) for which he/she asserts he/she qualifies for a related action award.

Claimant 2 makes two contentions. First, Claimant 2 asserts that the information Claimant 2 provided to the Commission formed at least part of the grounds for the subpoena that the staff issued to the Company and that this subpoena elicited information that assisted the Investigation and contributed to the success of the Covered Action. In addition, Claimant 2 argues that the CRS’s denial of his/her award claim was in retaliation for Claimant 2 having exposed a purported insider-trading ring in a separate and unrelated matter allegedly involving, among other parties, “OWB and the highest levels of SEC Enforcement.”[fn8]

II. Analysis.

To qualify for an award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn9] As relevant here, original information leads to a successful enforcement action if either: (i) the original information caused the staff to open an investigation or to inquire concerning different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.[fn10]

We find that none of the information that Claimant 1 or Claimant 2 submitted led to the successful enforcement of the Covered Action. The staff responsible for the Covered Action credibly declared, under penalty of perjury, that it neither received nor used any of the information provided by either Claimant during the Investigation or in the Covered Action, nor did it have any communications with the Claimants. Moreover, the information the Claimants provided did not relate to the matters considered in the Investigation.[fn11]

With regard to Claimant 1’s assertion that he/she reported his/her allegations to the Company’s senior management and that this caused the Company to commence its internal investigation that led to it self-reporting to the Commission, the staff credibly declared, under penalty of perjury, that the Company told the staff that its internal investigation was initiated by an anonymous complaint concerning a [Redacted].[fn12] In contrast, Claimant 1’s tip to the Company mentioned completely different individuals and entities involving, among other conduct, [Redacted]. Accordingly, we find that Claimant 1’s tip was not the cause of the Company’s internal investigation.

Finally, turning to Claimant 1’s contention that he/she qualifies for an award in connection with the *** Action, this argument also fails. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. As Claimant 1 does not qualify for an award in *** the Covered Action, Claimant 1’s claim for an award in connection with the *** Action cannot succeed.

Finally, Claimant 2 has provided no factual support for his/her allegations that the CRS’s denial recommendation was made in retaliation for Claimant 2 having exposed purported malfeasance by OWB or senior officials in the Division of Enforcement.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimants 1 and 2 be, and hereby are, denied.
By the Commission.

[1] The Preliminary Determinations also recommended denying awards to one other claimant. This claimant did not contest the Preliminary Determination and, accordingly, the claimant’s Preliminary Determination has become the Final Order of the Commission. Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] The Commission noted in its order that it did not impose a civil penalty based upon the Company’s [Redacted].
[3] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).
[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[5] See Exchange Act Rule 21F-4(c), 17 C.F.R. § 240.21F-4(c).
[6] Claimant 1 also alleges the CRS acted improperly by relying upon a staff declaration that was not signed until after the Preliminary Determination was issued. There is no merit to this contention. The unsigned and signed versions of the declaration are identical in every respect except for the signature such that the information relied upon by the CRS in its Preliminary Determination was not impacted by the signature being affixed immediately after the CRS met to approve the Preliminary Determination.
[7] Rule 21F-4(c)(3), 17 C.F.R. § 240.21F-4(c), provides that a whistleblower can be credited with having provided original information that led to the successful enforcement of a judicial or administrative action if, as relevant here, the whistleblower “reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time [the whistleblower] reported them to the Commission; the entity later provided [this] information to the Commission, or provided results of an audit or investigation initiated in whole or in part in response to information [the whistleblower] reported to the entity; and the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of this section.”
[8] Claimant 2 claims that based on information Claimant 2 provided “[Redacted] conducted an investigation that directly resulted in [certain individuals] being removed from their SEC positions due to their involvement in an insider-trading ring which had unfairly targeted [Redacted] to benefit short sellers” and that a former SEC Commissioner “made a lengthy series of highly unusual statements and media appearances as part of the conspiracy to single out and sink *** stock for the benefit of short sellers.”
[9] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[10] See Exchange Act Rule 21F-4(c)(1)-(2), 17 C.F.R § 240.21F-4(c)(1)-(2).
[11] The staff’s declaration states that the allegations raised in Claimant 1’s tip, which the declarant reviewed for the first time in preparing the declaration for Claimant 1’s award claim, did not relate to, or impact, the Investigation, noting that the evidence against the Company was “developed separately from any of the very limited information in [Claimant 1]’s unrelated complaint.” The declaration points out, for example, that a key entity identified in Claimant 1’s tip “was never a part of the . . . Investigation” and that “[t]he [Company] employees referenced by [Claimant 1] were not involved in the misconduct that led to the [Covered] Action.” Claimant 2’s complaint alleged that the Company had misappropriated software from another company and that this misappropriation “[gave] rise to an unfunded liability” which was not reflected in the Company’s financial statements. Claimant 2 also claimed to have been terminated “in retaliation for [Claimant 2’s] good faith reports.” None of Claimant 2’s information related to the *** issues in the Investigation or the Covered Action.
[12] According to the staff’s declaration, the Company explained that this anonymous tip led it to conduct an internal investigation in which it discovered that [Redacted].

SEC

94647

04/08/2022

I. Background.

A. The Covered Action.

In [Redacted], the Commission opened an investigation, based on a tip received from a source other than the Claimant, to look into allegations that [Redacted] (the “Company”) was [Redacted]. On [Redacted], the Commission filed a civil enforcement action in federal district court (“the Complaint”) charging the Company, its [Redacted] and [Redacted] (collectively with the Company and [Redacted] the “Defendants”) with (1) [Redacted]; and (2) [Redacted].[fn2]

In [Redacted] the Commission filed amendments to the Complaint to add [Redacted] as Defendants. The amendments were filed because, at the time the Complaint was filed, the staff did not have sufficient evidence to charge [Redacted] or the other Defendants. However, after filing the Complaint, the staff obtained additional evidence strongly supporting [Redacted] role in [Redacted]. This evidence was not obtained from Claimant but from other sources.

[Redacted] after the Commission filed the Complaint, but before the Commission filed its amendments to the Complaint, Claimant, in [Redacted], submitted a tip to the Commission. In his/her tip, Claimant alleged that [Redacted] was continuing [Redacted] after the Commission’s complaint was filed.[fn3] Following the submission of this tip, Claimant submitted additional information to the investigative staff, including, among other things, [Redacted].

On [Redacted] the district court entered final judgments in favor of the Commission that ordered Defendants to pay $[Redacted] in disgorgement plus $[Redacted] in civil penalties.[fn4]

The Office of the Whistleblower posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn5] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn6] recommending that Claimant’s claim be denied because Claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934[fn7] and Rules 21F-3(a)(3) and 21F-4(c) thereunder.[fn8] In reaching this determination, the CRS found that the information Claimant provided did not help advance the investigation or the resulting enforcement action, nor did it materially contribute to the progress of discovery in the action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn9] In his/her response, Claimant makes two arguments. First, Claimant asserts that he/she had provided more than 80 pages of evidence and information to the Commission, and made nearly 100 phone calls to the investigative staff[fn10] showing that [Redacted] continued [Redacted] even after the Commission’s enforcement action had been filed. Claimant contends that the information and evidence he/she provided contributed to the success of the Covered Action.

Second, Claimant requests “a formal investigation into all of [the staff’s] recorded phone calls between [Claimant] and [the staff] as well as all email correspondence. Pictures. Evidence and countless pieces of information which assisted [the Commission] in obtaining . . . judgement[s] against [the Defendants].”[fn11] Claimant argues that such an investigation would “provide ample evidence in validating [Claimant’s] claim for a whistleblower award” and expresses concern that the CRS may not have “thoroughly reviewed all the evidence and information [Claimant] provided which assisted the SEC in obtaining [its] judgment[s] [against the Defendants].”

As permitted by Exchange Act Rule 21F-10(e)(1), Claimant had requested the record that formed the basis of the Preliminary Determination (“Record Request”). In response to the Record Request, OWB sent Claimant a standard Confidentiality Agreement (“CA”) which, under Rules 21F-8(b)(4) and 21F-12(b), OWB may require claimants to sign before providing them the materials comprising the record. In its correspondence to Claimant enclosing the CA, OWB advised Claimant that if he/she did not sign and return the CA within two weeks, OWB would “deem [Claimant] to have abandoned and waived [his/her] request to receive the Preliminary Determination materials.” Claimant did not return the CA by the deadline or thereafter.

II. Analysis.

We find that the information Claimant provided did not lead to the successful enforcement of the Covered Action. Claimant submitted his/her tip to the Commission on [Redacted] nearly a year after the staff opened its investigation (and [Redacted] after the Commission filed its Complaint in the Covered Action), and thus Claimant’s information could not have caused the staff to open its investigation. The staff responsible for the Covered Action confirmed that Claimant’s information did not result in the opening of the investigation.

While Claimant submitted his/her tip before the Commission filed its amendments to the Complaint in [Redacted] the staff declared in its sworn declaration, under penalty of perjury, that Claimant’s information did not contribute to the investigation after it had been opened.[fn14] Specifically, the staff stated that the information Claimant provided “did not materially contribute to the progress of discovery in the action,” nor did it “help[] advance or contribute to the success of the . . . [i]nvestigation, or the [Covered Action], and none of [Claimant’s] information had any impact on the charges brought by the Commission.” The staff explained that, by the time it received Claimant’s information, “the investigation was so far along . . . documents had been subpoenaed, testimony was taken, and [the staff] was aware of all of the underlying charges.” We find the staff’s declaration to be credible and, accordingly, find that Claimant’s information did not cause the staff to inquire concerning different conduct as part of its investigation, nor did it significantly contribute to the success of the Covered Action. We thus conclude that Claimant’s information did not lead to the success of the Covered Action and that, as a result, Claimant is ineligible for an award with respect to the Covered Action.[fn15]

With regard to Claimant’s request to determine what information the staff received from the Claimant and whether it was all provided to the CRS, Exchange Act Rule 21F-12 identifies the materials that may form the basis of an award determination and that may comprise the record on appeal. This rule further specifies that OWB may request an executed CA as a precondition to providing these materials to a claimant. OWB’s request that Claimant sign a CA is consistent with OWB’s practice of asking all claimants who request the record to sign a standard CA.[fn16] Moreover, Rule 21F-12(b), which provides that OWB may require the execution of a CA, is reasonably designed to protect whistleblower confidentiality and the Commission’s law enforcement interests.[fn17] Claimant was advised by OWB that if he/she did not sign and return the CA within two weeks, OWB would deem Claimant to have abandoned and waived his/her request to receive the Preliminary Determination materials. Claimant did not return the CA by the deadline (or afterwards) and thus abandoned and waived his/her request to receive the materials.[fn18] Claimant is not now entitled to discovery of these materials.

We also reject Claimant’s request for “a formal investigation” into what the staff did with the information Claimant provided. The whistleblower rules permit an award claimant to request and to receive a copy of the materials that formed the basis of the Preliminary Determination, a right which Claimant waived as discussed above. But, as we have previously pointed out, “the whistleblower rules do not authorize a claimant to go on a fishing expedition to depose staff and to obtain copies of the SEC’s entire investigative file.”[fn19] Similarly, the rules do not permit a claimant to investigate, or cause the Commission to investigate, how the staff utilized the information it received from a claimant. Moreover, Claimant is incorrect that the CRS had an inadequate evidentiary basis for its determination that Claimant’s whistleblower award claim be denied. Exchange Act Rule 21F-12 identifies the materials that form the basis of an award determination.[fn20] The record presented for consideration by the CRS included all these required materials. Specifically, the record included Claimant’s Form TCR, attachments and other materials provided by Claimant to the staff, as well as a sworn declaration from the staff which assessed the value the staff found in the information provided by the Claimant.

III. Conclusion

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.

By the Commission.

[1] [Redacted].

[2] [Redacted] the Commission filed its enforcement action, the [Redacted] (“Other Agency”) filed [Redacted].

[3] Claimant further charged that the Company had [Redacted]

[4] The Defendants also paid $ [Redacted]

[5] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[6] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[7] 15 U.S.C. § 78u-6(b)(1).

[8] 17 C.F.R. §§ 240.21F-3(a)(3) and 4(c).

[9] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[10] In Claimant’s award application, Claimant notes that the evidence included, among other items, [Redacted]. The staff also notes in a sworn declaration under penalty of perjury that Claimant provided the staff with [Redacted] While Claimant asserts that he/she made nearly 100 phone calls to the staff, the staff stated that it believed there were significantly fewer calls than this.

[11] Claimant asserts that the hard drive on his/her computer crashed so that he/she only has copies of the “countless pieces of evidence and information sent to [the staff] on [his/her] iPhone.” Claimant incorrectly assumed in his/her response that the staff recorded its calls with Claimant.

[12] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[13] See Exchange Act Rule 21F-4(c)(1)-(2), 17 C.F.R § 240.21F-4(c)(1)-(2).

[14] While the staff believed when it received Claimant’s information that it would prove to be helpful and it was able to serve discovery requests to the Defendants based on Claimant’s information, the staff notes in its declaration that, as it turned out, it “did not obtain any useful information in discovery responses that related to anything [Claimant] provided, and [it was] unable to substantiate [Claimant]’s claims.” In this regard, the staff explained that “[a]t this point the investigation was so far along that this information was not helpful.”

[15] To the extent Claimant applied for a related action award in connection with the Other Agency Action, this claim fails. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See Exchange Act Section 21F-6(b), 15 U.S.C. § 78u-6(b), and Exchange Act Rules 21F-3(b)(1), 17 C.F.R § 240.21F-3(b)(1). Since Claimant does not qualify for an award in the Covered Action, Claimant’s claim for an award in connection with the Other Agency Action cannot succeed.

[16] See, e.g., Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 93604 (Nov. 18, 2021).

[17] Id.

[18] According to a sworn declaration from OWB staff, Claimant did not communicate with OWB after OWB sent Claimant the CA, nor did Claimant express a refusal to sign the CA.

[19] Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 88973 (May 29, 2020) at 5. See also Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b) (noting that the whistleblower rules “do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section”).

[20] Exchange Act Rule 21-F-12(a), 17 C.F.R § 240.21F-12(a), lists the items that constitute the materials that the Commission, the CRS and OWB may rely upon to make an award determination. As relevant here, these include among other items: (1) publicly available materials from the covered action, such as the complaint, any amendments thereto, and the final judgments; (2) the whistleblower’s Form TCR, attachments and other related materials provided by the whistleblower to assist the Commission with its investigation; (3) the whistleblower’s award application on Form WB-APP, and attachments and supplemental materials; and (4) sworn declarations from the Commission staff relevant to the award determination.

SEC

04/06/2022

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), and [Redacted] (“Claimant 3”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimants was never provided to or used by staff handling the Covered Actions or underlying investigation, and those staff members otherwise had no contact with Claimants. Therefore, Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Office of the Whistleblower.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a): see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Investigative staff responsible for the Covered Action never received any information from Claimants or had any communications with Claimants. As such, Claimants did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

94589

04/04/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of [Redacted] percent ( ***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (“Covered Action”), equal to a current payment of approximately $160,000, and that [Redacted] (“Claimant 2”) receive a whistleblower award of *** percent ( ***%) of the monetary sanctions collected, or to be collected, in the Covered Action, equal to a current payment of approximately $ 80,000. Neither claimant contested the award amounts.

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 and Claimant 2 both voluntarily provided original information to the Commission, and that their information led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

In recommending the award allocation, we note that the record reflects that Claimant 1’s information, together with Claimant 2’s information, caused the opening of the investigation and was an underlying source that formed the basis for the Covered Action. Further, Claimant 1 provided additional information and assistance to the Enforcement staff by submitting a detailed written narrative that provided a roadmap for the investigative staff early in the investigation that conserved significant Commission staff time and resources. While Claimant 2’s information also was important in that it helped Commission staff identify the wrongdoing, the helpfulness of Claimant 2’s information was more limited as compared to Claimant 1’s information and assistance.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award equal to [Redacted] percent ( *** %) and Claimant 2 shall receive an award equal to *** percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action.

By the Commission.

[1] See Exchange Act Section 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). Both Claimant 1 and Claimant 2 provided “independent analysis” to the Commission. Their examination and evaluation of publicly available information revealed information that was not already known or available to the public. See Exchange Act Rule 21F-4(b)(3).

[2] [Redacted].

[3] [Redacted].

[4] [Redacted].

[5] [Redacted].

CFTC

03/25/2022

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), [Redacted] (“Claimant 4”), [Redacted] (“Claimant 5”), [Redacted] (“Claimant 6”), [Redacted] (“Claimant 7”), [Redacted] (“Claimant 8”), and [Redacted] (“Claimant 9”) in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted] (“Covered Action”). The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). On [Redacted], the CRS issued a Preliminary Determination recommending a *** award, comprised of [Redacted] *** to claimant 4, and [Redacted] each to Claimant 2, Claimant 3, and Claimant 6, of the monetary sanctions collected by the Commission in the Covered Action. The Preliminary Determination also recommended that the award applications of Claimant 1, Claimant 5, Claimant 7, Claimant 8, and Claimant 9 be denied.[fn1] For the reasons set forth below, we agree with the CRS’s determination. Accordingly, Claimant 4’s claim is approved in the amount of ***, Claimant 2’s, Claimant 3’s and Claimant 6’s are approved in the amount of *** each, and Claimant 1’s, Claimant 5’s Claimant 7’s, and Claimant 8’s are denied.

I. BACKGROUND. A. The Award Program.

The Commission’s Whistleblower Program was created by Section 748 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Whistleblowers are eligible to receive between 10 percent and 30 percent of the monetary sanctions collected in certain enforcement actions for which they voluntarily provided original information that led to a successful enforcement. See 17 C.F.R. § 165.5(a).

B. Relevant Facts.

The matter related to the Covered Action required [Redacted] and [Redacted] (collectively, “Defendants”) to pay, jointly and severally, [Redacted] in civil monetary penalties, [Redacted]. In response to the Covered Action, the Commission received award applications from nine claimants.

II. DISCUSSION. A. Preliminary Determination.

The CRS determined to grant the award applications of Claimant 2, Claimant 3, Claimant 4, and Claimant 6 by awarding a total of ***, comprised of [Redacted] to Claimant 4, and [Redacted] to each of Claimant 2, Claimant 3, and Claimant 6, of the amount collected by the Commission in the Covered Action because it found these Claimants satisfied the requirements of the CEA and the Rules. Claimant 2, Claimant 3, Claimant 4, and Claimant 6, either jointly or individually, each provided the Commission with original information regarding [Redacted]. According to Division of Enforcement (“Division”) staff, these Claimants each provided ongoing cooperation and assistance to Division staff, which significantly contributed to the success of the Covered
Action. The CRS determined to award a higher share [Redacted] for Claimant 4
because *** provided the highest level of ongoing assistance and cooperation, which included,
among other things, providing a [Redacted] and [Redacted] in support of the
Commission’s action against the Defendants. Because the Commission has collected the total
sanctions ordered of [Redacted] in connection with the Covered Action, Claimant 2, Claimant 3,
and Claimant 6 would each receive award payments of [Redacted], and Claimant 4 would receive
an award payment of [Redacted], for a total award of [Redacted].

The CRS also determined to deny the award applications of Claimant 1. Claimant 5,
Claimant 7, Claimant 8, and Claimant 9 because each failed to meet the requirements of the CEA
and the Rules. In particular, the CRS found that Claimant 1’s information was not voluntary,
given that *** provided it after *** received a request or demand from Division staff. See 17
C.F.R. § 165.2(o)(1). After receipt of the Preliminary Determination, Claimant 1 requested the
records supporting the determination, and WBO staff provided the relevant materials shortly
thereafter. Claimant 1 then submitted a timely letter contesting the CRS’s Preliminary
Determination.

III. ANALYSIS. A. Claimant 1’s Request for Reconsideration.

In *** letter contesting the Preliminary Determination, Claimant 1 argues that (1) *** information was voluntary; (2) *** assistance was more than merely providing information; and (3) *** was “[p]romised a Whistleblower Award.” On the contrary, the record demonstrates that Claimant 1 did not voluntarily provide information. And, while Claimant 1 may have provided some assistance, all of this assistance came after *** received requests and/or subpoenas from Division staff in connection with its investigation. Finally, there is nothing in the record — and Claimant 1 offers no new evidence at this time — to support *** assertion that Division staff “promised *** that *** would be entitled to whistleblower compensation.” [Redacted].

1. Claimant 1’s information was not voluntary.

The Commission opened the investigation into [Redacted] based on the information provided by [Redacted]. According to [Redacted] informed Division staff that the suspicious activity had occurred [Redacted]. As discussed in more detail below, on [Redacted], less than a month after opening an investigation, Division staff sent a “Document Preservation Request” to [Redacted Claimant 1 [Redacted] in connection with its investigation of [Redacted]. On or about [Redacted], Division staff sent subpoenas for records and testimony to [Redacted] Claimant 1, [Redacted] connection with “[Redacted].” On or about [Redacted], Division staff issued a subpoena for the testimony of Claimant 1, [Redacted]. In [Redacted], pursuant to a subpoena, Claimant 1 provided sworn testimony to Division staff regarding [Redacted]. At that time, Claimant 1 testified *** believed that [Redacted] was not improper. In *** request for reconsideration, Claimant 1 does not dispute that *** received the Commission’s subpoena on [Redacted] (though *** fails to mention the [Redacted] subpoena for documents and testimony). Nor does *** deny providing testimony under subpoena to Division staff in [Redacted]. Clearly, by this time, Claimant 1 — [Redacted] — was well aware of the CFTC’s investigation of [Redacted] Claimant 1, instead, argues that: “Upon the realization that [Redacted] was, in fact, [Redacted] voluntarily contacted the CFTC to discuss [Redacted] not only in the [Redacted] the CFTC’s original subpoena covered, but also several other [Redacted].” According to Claimant 1, the [Redacted] “ultimately prompted *** to reach out to the CFTC and voluntarily provided this new information, as well as the necessary explanation and context for the CFTC to understand and ultimately utilized said information.” Information is voluntarily submitted if the whistleblower gave information to the
Commission before receiving a request, inquiry, or demand for information from the
Commission or another authority. See 17 C.F.R. § 165.2(o)(1). Here, it is undisputed that
Claimant 1 provided information to the Commission only after receiving requests from Division
staff in connection with the investigation. As noted above, Claimant 1 received [Redacted] requests
and/or subpoenas seeking information about potentially [Redacted]. Even accepting as true Claimant 1’s assertion that *** understand of [Redacted] may have changed [Redacted] that newfound understanding does not change the underlying facts (documents and information) regarding [Redacted] that the Commission had already requested from Claimant 1. In other words, *** opinion of the facts may have changed after reading the [Redacted], but the facts themselves were in *** possession throughout and did not change — and the requests required *** to produce documents and information related to the facts. Claimant 1 also suggest that *** can escape the voluntariness requirement because *** “voluntarily contacted the CFTC to discuss [Redacted] CFTC’s original subpoena covered, but also several [Redacted], including but not limited to, [Redacted].” Claimant 1’s view of the Commission’s investigation of [Redacted] is far too narrow. From the outset, Claimant 1 was on notice that the Commission’s [Redacted] document preservation request for the [Redacted] investigation demanded that Claimant 1 preserve, and safeguard against the destruction of documents, communications, and other information concerning and/or [Redacted] (emphasis added). In addition, Claimant 1 relies on a prior Commission order to support *** argument that
the Commission requests/subpoenas do not make *** information not voluntarily submitted.
That reliance is misplaced. Claimant 1 contends that “(i)t has been held that the Commission
intended the phrase ‘documents or information from the whistleblower’ to apply only to [Redacted].
“See Order Determining Whistleblower Award Claims No. 20-WB-07 (July 20, 2020).
That is true, but it does not help Claimant 1, [Redacted]. One way or the other, Claimant 1 “possess[ed]” the information the Commission requested, and it “necessar[ily)” had to come from *** in order
to respond to the subpoena.[fn2]

The CRS concluded that Claimant 1 was not eligible for an award given that *** did not voluntarily submit his information. Because it is undisputed that Claimant 1 received multiple requests for documents and information, [Redacted], the Commission agrees that the CRS correctly determined that Claimant 1’s information was not provided voluntarily.

2. Claimant 1’s assistance came after Commission requests and subpoenas.

In *** request for reconsideration, Claimant 1 argues that *** “involvement in the [Redacted] case transcended mere document production and testimony. *** actively participated in the “[Redacted].”

Claimant 1 adds that, “[w]ithout *** expert consultation, the CFTC’s [Redacted] would have been severely limited, if not outright impossible. As stated in the CRS’s preliminary determination, “Claimant 1 provided information to the Commission only after receiving requests from Division staff in connection with the investigation.” Even if Claimant 1’s assistance was indeed “transcendent,” as suggested above, *** indisputably received subpoenas for the information prior to providing *** assistance.

Because *** assistance was not voluntary, *** is not eligible for an award. See 17 C.F.R. § 165.5(a)(1): And because Claimant 1 is not eligible for an award, the Commission does not need to further evaluate the value of Claimant 1’s assistance at this time.

3. Claimant 1 provides nothing to support *** contention that *** was promised a whistleblower award.

Claimant 1 contends that *** was “Promised a Whistleblower Award” by Division staff. In *** request for reconsideration, Claimant 1 wrote, “[a]s enticement to have *** become actively involved in the [Redacted], [Division staff] promised *** that *** would be entitled to whistleblower compensation.”

There is nothing in the record to support a supposed “promise” of a whistleblower award.[fn3] Nor does Claimant 1 put forth any evidence to support this claim. Claimant 1 adds that “[o]n or about [Redacted], [Division staff] advised [Claimant 1] that if [Claimant 1] provided relevant information and cooperated with the CFTC’s investigation into [Redacted] would be treated as a whistleblower.” As stated in the Preliminary Determination: According to Claimant 1, on [Redacted], as a result of [Redacted] with [Redacted] expressing concern over [Redacted]. Then on [Redacted], [Redacted]. Claimant 1 contacted Division staff about cooperating with the Commission. Claimant 1 met with the Division staff again, in several sessions occurring in [Redacted], pursuant to subpoena, which Division staff issued at the request of Claimant 1’s legal counsel. Claimant 1 did not submit a Form TCR to the Commission until [Redacted].

As noted above, Claimant 1 does not provide any document or other evidence to support *** claim that Division staff “promised a whistleblower award.” Rather, it appears that Claimant 1 decided to “cooperate” with Division staff [Redacted]. And, while being a whistleblower may include an award for certain “eligible” individuals, it also can mean defined protections from retaliation. See 17 C.F.R. § 165.20.

Based on the context of Claimant 1 coming back to Division staff to *** “cooperate,” it appears that Division staff may have been attempting to direct Claimant 1 (and *** legal counsel) to the retaliation provisions under the Rules. Regardless, as discussed above, Claimant 1’s decision to “cooperate” occurred well after Division staff first issued document and/or testimony subpoenas to Claimant 1 [Redacted].

In *** request for reconsideration, Claimant 1 also describes some of the hardships *** endured, including retaliation. As reflected in both the Preliminary Determination and Claimant 1’s response, Claimant 1 had legal counsel at the time *** came forward to cooperate with Division staff. Claimant 1’s own legal counsel served to guide Claimant 1 with respect to *** cooperation in the investigation related to the Covered Action.

While [Redacted] treatment of Claimant 1 may have been [Redacted], based on the record, *** remains ineligible for an award given that the information was requested by subpoena on prior occasions by Division staff.

B. The Other Claimants. No other claimants requested reconsideration of the Preliminary Determination. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became final with respect to Claimant 2, Claimant 3, Claimant 4, Claimant 5, Claimant 6, Claimant 7, and Claimant 8. The failure to timely submit a response contesting the Preliminary Determination constitutes a failure to exhaust administrative remedies. Accordingly, these Claimants are prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13.

IV. CONCLUSION. Accordingly, it is hereby ORDERED that Claimant 2, Claimant 3, and Claimant 6 each shall receive an award of [Redacted] and Claimant 4 receive an award of [Redacted] *** of the monetary sanctions collected in the Covered Action; and it is further ORDERED that the claims of Claimant 1, Claimant 5, Claimant 7, and Claimant 8 are denied. By the Commission.

[1] Claimant 9 withdrew *** claim for award on [Redacted] after receiving the Preliminary Determination.

[2] Even if Claimant 1’s information had been submitted voluntarily, it is unclear whether *** information would satisfy the “independent knowledge” requirement, [Redacted]. See 17 C.F.R. § 165.2(g)(4).

[3] Even if such a promise or assurance had been made. that alone cannot override the requirements of the
Whistleblower Program set out by statute and rule. See 7 U.S.C. §26; 17 C.F.R. pt. 165.5. At best, Claimant 1
would have an argument sounding in equity or reliance. Although the rules do permit the Commission to “waive
any procedural requirements based upon a showing of extraordinary circumstances,” that waiver applies only to
procedural requirements (like filing deadlines) and can be exercised only by the Commission, not staff. 17 C.F.R.
§ 165.5(c). Through the statute and rules (published in August 2011. 76 Fed. Reg. 53172), Claimant 1, with
assistance of counsel. was on notice of what the Whistleblower Program permitted and required.

SEC

94519

03/25/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $1.25 million, equal to [Redacted] percent (***%) of collected monetary sanctions in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Exchange Act Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30% where (1) the maximum award would be $5 million or less; (2) none of the negative award factors under Rule 21F-6(b)—i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present; and (3) the award claim does not trigger Rule 21F-16.[fn2] The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn3]

The presumption, however, does not apply here because one negative factor under Rule 21F-6(b) is present with respect to the award application — unreasonable reporting delay. Based on the facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant waited about a year and a half after internally reporting and approximately three years after first having concerns, to submit information to the Commission. Moreover, the Commission has determined not to waive this criterion under Rule 21F-6(c)(1)(iii).[fn4]

Applying the award criteria in Rules 21F-6(a) and (b) to the facts and circumstances here, the Commission finds the award percentage determination to be appropriate.[fn5] In coming to this determination, the Commission considered that: (i) Claimant provided specific and credible information that prompted staff to open an investigation that resulted in the Covered Action, which was based largely on conduct that was the subject of Claimant’s whistleblower submission; (ii) Claimant provided continuing, extensive assistance, including helping Commission staff identify witnesses, understand critical documents and terminology, and focus the investigation on key issues, saving Commission time and resources; and (iii) although Claimant internally reported in an attempt to stop the misconduct, Claimant unreasonably delayed in submitting information to the Commission.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Exchange Act Section 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).
[2] Exchange Act Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[3] Exchange Act Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv).
[4] Exchange Act Rule 21F-6(c)(1)(iii) provides that the Commission, in its sole discretion, “may in certain limited circumstances determine to waive this criterion if the claimant can demonstrate that doing so based on the facts and circumstances of the matter is consistent with the public interest, the promotion of investor protection, and the objectives of the whistleblower program.” 17 C.F.R. § 240.21F-6(c)(1)(iii).
[5] In assessing the appropriate award amount, Exchange Act Rules 21F-6(a) and (b) provide 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(a) and (b).

SEC

94461

03/18/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $60,000, which represents *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this information led to the success of the Covered Action.[fn1]

[Redacted].

In reaching this determination, we considered that (1) Claimant provided important, new information in the form of documents and analysis that assisted the Commission’s investigation; (2) certain charges in the Covered Action were based on Claimant’s information; and (3) there was substantial law enforcement interest in the information provided, as it related to proving fraud that harmed investors.

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] [Redacted].

SEC

94460

03/18/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $400,000, which represents *** percent (***%) of monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). The recommendation of the CRS is adopted.

[Redacted]

The record reflects that Claimant internally reported his/her concerns, causing the company to cease the conduct, that Claimant submitted a detailed tip that prompted the opening of the investigation, that Claimant met with the Enforcement staff and provided supplemental information and continuing assistance throughout the investigation, and that the charges in the Covered Action bear a close nexus to the Claimant’s allegations.

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] [Redacted].

SEC

94459

03/18/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $1 million, equal to *** percent (***%) of collected monetary sanctions in the above-referenced Covered Action (the “Covered Action”). The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

In reaching this determination, we note that the record reflects that Claimant’s information prompted the opening of the investigation and saved Commission time and resources. Thereafter, Claimant, an insider who also reported internally, provided continuing assistance, including participating in multiples interviews with Commission staff.

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.

[1] See Exchange Act Section 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).
[2] [Redacted].
[3] [Redacted].

SEC

94458

03/18/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $1.5 million, which represents *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant provided information which prompted Commission staff to commence an examination and then open an investigation into potential securities laws violations and that the charges brought in the Covered Action were based in part upon Claimant’s information. Claimant also assisted the staff during the course of the investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent (***%) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
[2] [Redacted].
[3] [Redacted].

CFTC

03/17/2022

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application from Claimant 1 in response to Notice of Covered Action No. [Redacted]. The corresponding enforcement action is [Redacted]. The Claims Review Staff (“CRS”) has evaluated the award application in accordance with the Commission’s Whistleblower Regulations (“Regulations” or “Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”). 7 U.S.C. § 26 (2018). On [Redacted] the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of ***% of monetary sanctions collected in [Redacted]. For the reasons set forth below, the CRS’s determination is adopted.

I. BACKGROUND.

[Redacted] arose out of an investigation opened in response to information that Claimant 1 [Redacted] submitted to the Commission regarding [Redacted]. Claimant 1 subsequently submitted a whistleblower award application in response to [Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of ***% of sanctions collected in the [Redacted] because Claimant 1 voluntarily provided original information that led to the successful enforcement of a covered action. Claimant I did not contest the Preliminary Determination. Thus, under Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination.

III. LEGAL ANALYSIS.

Section 23(b)(1) of the CEA requires the Commission to pay an award to an individual who voluntarily provides the Commission with original information that leads to the successful enforcement of a covered or related action. 7 U.S.C. § 26(b)(1) (2018). The CRS determined that Claimant 1 voluntarily provided the Commission with original information that led to the successful enforcement of a covered action. Claimant 1 is a whistleblower because Claimant 1 submitted information on a Form TCR regarding potential violations of the CEA. Claimant 1 provided the information voluntarily, as Claimant 1 was not under any legal obligation to report to the Commission. In addition, Claimant 1’s information was original. The information was previously unknown to the Commission and derived from [Redacted]. Lastly, Claimant 1’s information led the Commission to open an investigation. The CRS recommended the award amount to be ***% of the amount of monetary sanctions collected in the covered action, which would result in a payment of [Redacted]. This recommendation is adopted. In arriving at this award amount, the CRS applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. Rule 165.9(b) provides a list of factors that may increase the award amount, and Rule 165.9(c) provides a list of factors that may decrease the award amount. However, the Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%. and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing documents containing direct evidence of violations could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present. As applied, Claimant 1 provided good background information, interesting color, and some context [Redacted] Claimant 1’s general information was useful at the earliest stages of the investigation. Claimant 1 explained [Redacted]. Because of Claimant 1’s allegations, Division staff drafted the earliest round of subpoenas [Redacted]. Further, Claimant 1 provided some insight [Redacted]. The Commission later found that [Redacted]. In addition, in Claimant 1’s supplemental letter [Redacted]. Claimant 1 attempted to answer questions previously raised by Division staff [Redacted]. Claimant 1, [Redacted], provided written details that included, among others, [Redacted]. Claimant 1 was also the first to inform Division staff about [Redacted]. Ultimately, however, the breakthrough in the investigations came not from Claimant 1 ‘s information but from [Redacted] . Claimant 1 in essence alleged that [Redacted]. Division staff did not find this to be true, but Claimant 1’s information pointed Division staff to [Redacted]. Accordingly, analysis of award factors justifies a ***% award to Claimant 1.

IV. CONCLUSION.

lt is hereby ORDERED that Claimant 1 shall receive ***% of monetary sanctions collected in [Redacted] By the Commission.

SEC

94442

03/17/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award equal to *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action and in [Redacted] (the “Related Action”).[fn1] Based upon current collections, the award to Claimant will be equal to approximately $1.5 million.[fn2] Claimant provided written notice of his/her decision not to contest the Preliminary Determinations.[fn3]

The recommendations of the CRS are adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission, and that this information led to the successful enforcement of the Covered Action and the Related Action.[fn4]

[Redacted].

In reaching this determination, the Commission considered that Claimant’s information in part caused the Enforcement staff to open the investigation that resulted in the Covered Action. Claimant provided information based on Claimant’s independent knowledge and independent analysis that alerted Enforcement staff to potential violations of the securities laws, and Claimant provided ongoing assistance during the litigation phase of the Covered Action.

Finally, we find that the contributions made by Claimant to the Related Action were similar to Claimant’s contributions to the success of the Covered Action, and, therefore, it is appropriate that the Claimant receive the same award percentage for the Related Action.

[1] The [Redacted] constitutes a “related action” to the Covered Action within the meaning of § 21F(a)(5) of the Exchange Act, 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as a judicial action that was brought by the Attorney General of the United States and was based on the same original information that the whistleblower voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $ 1,000,000. We have treated amounts distributed to injured investors by the court-appointed receiver, along with amounts collected by [Redacted] in the Related Action, as collected monetary sanctions upon which Claimant’s award can be based. These amounts shall not be double counted for purposes of paying an award. Further, any monetary sanctions collected in the manner described above shall be attributed, first, to the Commission’s Covered Action, with any remaining amounts attributed to the Related Action. See Order Determining Whistleblower Award Claim, Release No. 34-88015 , at n.3 (January 22, 2020) (providing for the payment of an award when monetary sanctions ordered in a Covered Action are deemed satisfied by payment of an amount in an action by another governmental authority).
[2] The Commission has determined at this time to treat as collected monetary sanctions under Section 21F(b)(1) of the Exchange Act those amounts distributed to investors by the court-appointed receiver in the Covered Action. See Exchange Act Rule 21F-4(e): “Monetary sanctions means: (1) An order to pay money that results from a Commission action or related action and which is either: (i) Expressly designated as penalty, disgorgement, or interest; or (ii) Otherwise ordered as relief for the violations that are the subject of the covered action or related action . . . .” 17 C.F.R. § 240.21F-4(e).
[3] The CRS also recommended the denial of the award application from a second claimant who did not contest the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to that claimant’s award claim became the Final Order of the Commission through operation of Exchange Act Rules 21F-10(f), 17 C.F.R. § 240.21F-10(f), and 21F-11(f), 17 C.F.R. § 240.21F-11(f).
[4] [Redacted].

SEC

94399

03/11/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with the above-captioned Covered Action (the “Covered Action”) recommending that [Redacted] (“Claimant 1”) receive an award of [Redacted] percent (*** %) of amounts collected in the Covered Action, and that the award claim submitted by [Redacted] (“Claimant 2”) be denied.[fn1] Claimant 1 did not submit a response contesting the Preliminary Determination, but Claimant 2 filed a timely response contesting the Preliminary Determination. [Redacted]

As such, the CRS now recommends that Claimant 1 receive an award of approximately $38,000, equal to ***% of amounts collected in the Covered Action and that Claimant 2’s award claim be denied. For the reasons discussed below, the CRS’s recommendation is adopted with respect to both Claimant 1 and Claimant 2.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed an enforcement action in federal district court charging multiple defendants with violations of [Redacted].

On [Redacted] the district court entered a Final Judgment in favor of the Commission that ordered [Redacted] the defendants to pay disgorgement, prejudgment interest and civil penalties. [Redacted] ***, the district court entered a Final Judgment as to the remaining defendants. The total disgorgement and civil penalties ordered in this matter amounted to [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination[fn3] recommending that Claimant 1 receive an award equal to [Redacted] percent (***%) of amounts collected in the Covered Action. The CRS also preliminarily determined to recommend that Claimant 2’s claim be denied because the information provided was not original pursuant to Rule 21F-4(b) of the Exchange Act. The CRS made this finding for two reasons. First, Commission staff had been pursuing an investigation of [Redacted] in this matter for nearly two years prior to receiving Claimant 2’s tip, and the information Claimant 2 provided was already known to the Commission from another source by the time it was received. Second, Claimant 2’s information was not based on Claimant 2’s independent knowledge or analysis because Claimant 2 was an employee whose principal duties involved compliance-related responsibilities as provided by Exchange Act Rule 21F-4(b)(4)(iii)(B). The Preliminary Determination also found that Claimant 2 did not fall within any of the exceptions to the compliance officer eligibility exclusion.

C. Claimant 2’s Response to the Preliminary Determination.

On or about [Redacted], Claimant 2 submitted a timely written response contesting the Preliminary Determination.[fn4] Claimant 2 contends that the information contained in Claimant 2’s [Redacted] tip, submitted via the Commission’s on-line TCR portal, was the basis upon which the Commission opened the investigation that led to the Covered Action. Claimant 2 also asserts that, in connection with Claimant 2’s employment as a compliance officer at [Redacted] Claimant 2 was the investigative staff’s primary point of contact at [Redacted] and that they provided hundreds of pages of information from [Redacted] to the Commission’s staff. Claimant 2’s response does not deny that they were an employee whose primary responsibilities were compliance-related; nor does Claimant 2 argue that any exceptions to the compliance officer exclusion apply.

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn5] Specifically, Claimant 1’s information significantly contributed to the success of the Covered Action because it played a key role in advancing the staff’s investigation and provided the basis for some of the allegations in the Commission’s complaint.
[Redacted].

Claimant 1 was not involved in the violations, but rather was a victim of the fraudulent conduct. Claimant 1 did not unreasonably delay in reporting the violations to the Commission. The record reflects that Claimant 1, whose company had [Redacted] became aware that [Redacted] would not honor its contractual obligation to [Redacted] and after some period of attempting to resolve the issue, became concerned about the possibility of fraud and made a detailed and credible report to the Commission. Claimant 1 also provided substantial assistance by providing new and helpful information and useful documents concerning fraudulent conduct and met with investigative staff, including the provision of investigative testimony.

B. Claimant 2.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn7] To qualify as “original information” under the whistleblower rules, a submission must be, inter alia, (1) derived from the submitter’s “independent knowledge” or “independent analysis;”[fn8] and (2) not already known to the Commission from any other source.[fn9]

Claimant 2 argues that they are eligible for an award under this standard because they provided information that directly led the Commission to open the investigation that ultimately resulted in the Covered Action. That assertion is contradicted by the administrative record. Claimant 2’s tip concerning possible fraud in connection with [Redacted] was submitted on [Redacted], which was almost two years after the Commission staff had opened the investigation. As a result, Claimant 2’s tip could not have led to the opening of the investigation. In addition, the record demonstrates that the Commission staff had learned of possible fraud in connection with the [Redacted] in [Redacted] from other sources, and as a result, Claimant 2’s tip fails to satisfy the requirement that the information be “original,” insofar as the information provided in Claimant 2’s tip was already known to the staff from another, earlier source.

Additionally, at the time Claimant 2 submitted the tip, their principal duties involved compliance at the [Redacted] where they were employed. Specifically, among their job duties was facilitating their employer’s compliance with a specific statutory obligation to file reports of certain [Redacted] information with the federal government in a timely fashion. Claimant 2 obtained all of the information and documents that they provided to the staff (both in the initial tip and subsequently) only through the performance of their duty to facilitate their employer’s compliance with those statutory reporting requirements. Because Claimant 2 obtained the information and documents for the purpose of ensuring their employer’s compliance with this statutory reporting requirement, they acquired the information in consequence of their performance of compliance-related job duties for the purposes of Rule 21F-4(b)(4)(iii)(B)’s exclusion.[fn10] Accordingly, Claimant 2’s information is excluded from their use in a whistleblower submission unless one of the exceptions set forth in Rule 21F-4(b)(4)(v) applies.[fn11] None of the exceptions apply to Claimant 2, nor does Claimant 2 argue that any apply here.

We therefore conclude that the information Claimant 2 provided was not original pursuant to Rule 21F-4(b) of the Exchange Act, and that, as a result, Claimant 2 is ineligible for an award with respect to the Covered Action.

III. Conclusion

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of *** percent (***%) of the monetary sanctions collected or to be collected in the Covered Action. It is further ORDERED that Claimant 2’s whistleblower award application be, and hereby is, denied.
By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying the award claim of a third claimant, who did not file a response. Thus, the Preliminary Determination with respect to the third claimant has become the Final Order of the Commission pursuant to Rule 21F-10(f) under the Securities Exchange Act of 1934 (“Exchange Act”), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[5] See Exchange Act Section 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).
[6] [Redacted].
[7] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[8] “Independent knowledge” is “factual information in [the submitter’s] possession that is not derived from publicly available sources” and which may have been gained from the submitter’s “experiences, communications and observations” in their “business or social interactions.” “Independent analysis” means one’s own “examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public.” Rule 21F-4(b)(2).
[9] Rule 21F-4(b)(1), 17 C.F.R. § 240.21F-4(b)(1).
[10] Rule 21F-4(b)(4)(iii)(B) provides that information will not be treated as “independent knowledge” or “independent analysis” if it is obtained by an individual “because” they were “[a]n employee whose principal duties involve compliance or internal audit responsibilities.” The Commission has stated that one of the purposes of this exclusion was to prevent employees from having an incentive to “‘front run[]’… processes that are important components of effective company compliance programs.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34316 (June 13, 2011).
[11] Pursuant to Rule 21F-4(b)(4)(v), a compliance officer may be eligible for an award if one of the following exceptions applies: (A) the individual has “a reasonable basis to believe that disclosure of the information to the Commission is necessary to prevent the relevant entity from engaging in conduct that is likely to cause substantial injury to the financial interest or property of the entity or investors;” (B) the individual has “a reasonable basis to believe that the relevant entity is engaging in conduct that will impede an investigation of the misconduct;” or (C) at least 120 days have elapsed since the individual reported the information internally to the company’s audit committee, chief legal officer, chief compliance officer, or to their supervisor, or since the individual received the information, if they received it under circumstances indicating that the audit committee, chief legal officer, chief compliance officer, or their supervisor was already aware of the information.

SEC

94398

03/11/2022

The Claims Review Staff (“CRS”) has recommended the denial of claims for a whistleblower award submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) in connection with the above-referenced Covered Action (the “Covered Action”).[fn1]

After considering the administrative record, we choose to depart from the CRS’s recommendation and award Claimant 1 an award of about $ 14 million, which is equal to [Redacted] *** percent (***) of the collected monetary sanctions in the Covered Action. We concur, however, with the CRS’s recommendation that Claimant 2’s award claim should be denied.

I. Background.

On [Redacted], the Commission filed a settled [Redacted] proceeding charging [Redacted] (the “Company”), and its [Redacted] (“CEO”), with negligently failing to [Redacted]. Without admitting or denying the findings against them, the Company and its CEO consented to the entry of the Commission’s order that, among other remedies, required the Company to pay [Redacted] and the CEO to pay [Redacted].

On [Redacted], the Commission’s Office of the Whistleblower (“OWB”) posted the Notice for the Covered Action. Claimant 1 and Claimant 2 filed timely whistleblower award applications.

Claimant 1 stated in his/her award application that he/she had published an online report exposing the fraud committed by the Company and the CEO in [Redacted], and that this report, along with the subsequent assistance he/she provided to the Commission’s investigative staff caused the Commission to discover the existence of the fraud and contributed to the success of the Covered Action. Claimant 1 contended that he/she satisfied the requirement of reporting this information to the Commission by “properly execut[ing] and fil[ing] [his/her] Form TCR on [Redacted],” which was more than four years after Claimant 1 had released the report about the Company and two months after OWB posted the Notice of Covered Action for this matter.[fn2]

Claimant 2, in contrast to Claimant 1, did not submit a tip to the Commission. Rather, Claimant 2 stated that he/she “was a principal author of [a] report . . . released publicly on [Redacted] . . . [containing] information and analysis [that] became the cornerstone of the Commission’s case” in the Covered Action. This is the same online report that Claimant 1 published, as discussed above.[fn3]

II. Preliminary Determination and Responses.

The CRS preliminarily determined to deny both Claimants’ award applications. The CRS cited three reasons for denying Claimant 1’s award claim: (1) Claimant 1 was not a whistleblower within the meaning of Rule 21F-2(a) under the Exchange Act prior to [Redacted] — the date on which Claimant 1 first submitted a Form TCR pursuant to Exchange Act Rule 21F-9(a);[fn4] (2) Claimant 1 did not provide original information to the Commission on a voluntary basis, as required by Rule 21F-4(a), because any information that Claimant 1 provided to the Commission was submitted after Claimant 1 received a request from Commission staff that related to the subject matter of Claimant 1’s submission;[fn5] and (3) Claimant 1’s information did not lead to the success of the Covered Action within the meaning of Exchange Act Section 21F(b)(1) and Rules 21F-3(a) and 21F-4(c) thereunder.[fn6]

The CRS cited two reasons for denying Claimant 2’s award claim: (1) Claimant 2 was not a “whistleblower” under Exchange Act Rule 21F-2(a) because Claimant 2 did not provide the Commission with information relating to a possible securities law violation pursuant to the procedures set forth in Exchange Act Rule 21F-9; and (2) Claimant 2’s information did not lead to the success of the Covered Action within the meaning of Exchange Act Section 21F(b)(1) and Rules 21F-3(a) and 21F-4(c) thereunder.

Both Claimants submitted timely written requests for reconsideration. Addressing the CRS’s first ground for denying Claimant 1’s award application, Claimant 1 argues that “[n]othing in the Commission’s Rules required [Claimant 1] to provide [his/her] original information first through a Form TCR”[fn7] and that “even if the Commission concludes that [Claimant 1] did not comply with certain technical requirements, it erred in refusing to waive them.” Claimant 1 notes that he/she did ultimately submit a Form TCR containing his/her allegations about the Company and that it is immaterial under the rules when he/she submitted the Form TCR.[fn8] Indeed, Claimant 1 contends the whistleblower rules expressly contemplate that a person could be eligible for an award even if the information in the person’s Form TCR was already known to the staff when the person submitted it to the Commission “as long as the person was ‘the original source of the information,’” which Claimant 1 was as the author of a [Redacted] online report the staff relied upon in opening its investigation. Claimant 1 further contends that the CRS erred in finding that he/she submitted his/her information to the Commission only after receiving a request from Commission staff that related to the subject matter of Claimant 1’s submission. Claimant 1 maintains that he/she, in fact, emailed an attorney in the Commission’s Division of Enforcement (the “First Enforcement Attorney”) with his/her allegations just three days after the online report was published and before the staff reached out to him/her to request the information.[fn9] Claimant 1 further notes that his/her attorney followed-up with the First Enforcement Attorney just a few weeks later, and that the First Enforcement Attorney asked that Claimant 1 send him data supporting the allegations. Before Claimant 1 was able to transmit his/her supporting information to the First Enforcement Attorney, he/she was contacted by a different Enforcement attorney, who had read the online report, on [Redacted], and subsequently sent the materials to that attorney. This second Enforcement attorney was, in fact, one of the attorneys assigned to the Enforcement team that was investigating the Company and later recommended the Commission bring the enforcement action (the “Enforcement Investigative Attorney”). Claimant 1 argues that his/her information did lead to the success of the Covered Action because the online report caused the opening of the investigation and he/she provided this information to the Commission on “multiple” occasions.[fn10] Finally, Claimant 1 contends that, even if he/she failed to comply with certain procedural requirements, the Commission should exercise its discretion under Rule 21F-8(a) to excuse Claimant 1 from these requirements because Claimant 1 “provided the type of extraordinary assistance that the [whistleblower] program was designed to reward.”

Claimant 2 asserts in his/her reconsideration request that the information and analysis in the online report was “the cornerstone” of the Commission’s case in the Covered Action. Claimant 2 does not dispute that he/she did not file a Form TCR as required by Rule 21F-9; rather Claimant 2 contends that the Commission was “directly notified” of his/her online report via “1) iContact email push notification, 2) tweets from [Claimant 2’s] account, [and] 3) significant media coverage of the [r]eport.” Claimant 2 further argues that the Commission should exercise its discretionary authority under Rule 21F-8(a) to excuse any procedural omissions Claimant 2 may have committed in this matter.

The CRS rejected both Claimants’ contentions and reaffirmed its initial recommendation that both Claimants’ award claims be denied.

III. Analysis.

A. Claimant 1.

Claimant 1 emailed a copy of his/her report to the First Enforcement Attorney, who, as noted, was not a member of the Covered Action investigative team, in [Redacted], just three days after the report was released online and a month before the Commission opened its investigation of the Company. Claimant 1 did not, however, submit a Form TCR until four years later, in [Redacted], which was [Redacted] months after the Covered Action had concluded. The requirement of submitting a tip in the prescribed manner on Form TCR or through the Commission’s TCR System[fn12] is not a mere formality but, rather, is critical to the trackability, management, and reliability of tips. The programmatic purposes of requiring whistleblowers to submit their information on Form TCR or through the online TCR portal include: allowing the Commission to promptly determine whether an individual who submits information is subject to heightened whistleblower confidentiality protections; helping the staff efficiently process the information and other documentation provided by the individual and assess its potential credibility; and assisting the Commission in eventually evaluating the individual’s potential entitlement to an award.[fn13] Also, by submitting a tip on Form TCR, the submitter declares under penalty of perjury that the information is true and correct to the best of the submitter’s knowledge and belief. A tip that bypasses the TCR System may not contain the sworn declaration under penalty of perjury as to the veracity of the information. The fact that Claimant 1 ultimately submitted a Form TCR years after the online report and Claimant 1’s email to the First Enforcement Attorney does not serve the programmatic goals of ensuring that information is properly tracked, reviewed and assessed.

In 2020, the Commission adopted a limited exception to the Rule 21F-9(a) and (b) TCR filing requirement.[fn14] New Rule 21F-9(e) clarifies that claimants must comply with the procedures for submitting information described in Rules 21F-9(a) and (b) within 30 days of providing the Commission with the original information to be relied upon as a basis for claiming an award. In addition, it provides for an automatic waiver of the TCR filing requirement where a claimant can show that he or she complied with the submission requirements of the rule within 30 days of “first obtaining actual or constructive notice about those requirements (or 30 days from the date you retain counsel to represent you in connection with your submission of original information, whichever occurs first);” and “[t]he Commission can readily develop an administrative record that unambiguously demonstrates that you would otherwise qualify for an award.”[fn15] Claimant 1 is not eligible for the automatic waiver under Rule 21F-9(e) because he/she was represented by counsel when he/she sent the email to the First Enforcement Attorney in [Redacted] and did not submit a Form TCR within 30 days thereafter.

Nevertheless, we have determined that it would be in the public interest and consistent with the protection of investors for the Commission to exercise our discretionary authority under Section 36(a) of the Exchange Act[fn16] to waive the TCR filing requirements of Rules 21F-9(a) and (b) in light of the unusual facts and circumstances present here. Specifically, Claimant 1: (1) emailed a copy of his/her online report to the First Enforcement Attorney just three days after posting it on the Internet and Claimant 1’s attorney followed-up with the First Enforcement Attorney a few weeks later; (2) the information in Claimant 1’s online report was credible and of high quality and caused Enforcement staff to open an investigation that ultimately resulted in the successful Covered Action and returned millions of dollars to harmed investors; (3) Claimant 1 submitted his/her tip just [Redacted] after the whistleblower rules went into effect, when the filing requirements were still unfamiliar to many individuals; and (4) the Enforcement Investigative Attorney provided warnings to Claimant 1 that there could be criminal penalties for providing false information to the Enforcement staff.[fn17]

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn18] Claimant 1 voluntarily provided the First Enforcement Attorney with a copy of the report three days after posting it on the Internet and before receiving any request from the Commission. While the investigation was opened as a result of the Enforcement Investigative Attorney discovering the report through his own Internet search, and not as a result of receiving Claimant 1’s submission to the First Enforcement Attorney, Claimant 1 was an original source of the report.[fn19] The investigation was opened based on the information in the report, which contained analysis derived from a large number of publicly-available and non-public sources,[fn20] and which alleged that [Redacted]. This allegation ended up being the basis of the charges that the Commission ultimately brought against the Company and its CEO. We thus conclude that Claimant 1 provided information that led to the successful enforcement of the Covered Action by providing the Commission with original information that was sufficiently specific, credible, and timely to cause the staff to open its investigation and that the Commission brought the Covered Action based on conduct that was the subject of Claimant 1’s information.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we have determined to grant Claimant 1 an award of *** of the monetary sanctions collected in the Covered Action.[fn21] In reaching this determination, we positively assessed the following facts: (i) Claimant 1, an outsider of the Company, was expeditious in reporting the information to the Commission; (ii) Claimant’s information was significant as it alerted the staff to the ongoing securities violations; (iii) Claimant’s prompt reporting to the Commission allowed the Commission to stop an ongoing fraud and ultimately to return millions of dollars to harmed investors; and (iv) the charges brought by the Commission bear a close nexus to the information provided by Claimant.

While the investigation was opened based in large part on Claimant 1’s research and analysis, as summarized in Claimant 1’s online report, investigative staff independently obtained key evidence on the [Redacted] and [Redacted] underpinning the violations from other sources.[fn22] Thus, although Claimant 1 was responsive to the staff’s requests for additional information, Claimant 1 was not in a position to provide continuing helpful information and assistance during the investigation.

B. Claimant 2.

Section 21F of the Exchange Act defines the term “whistleblower” to include “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.[fn23] It also directs that “[n]o award under subsection (b) shall be made . . . to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule, require.”[fn24] Exchange Act Rule 21F-2(a)(2), applicable at the time of the Claimants’ award applications, but since amended, stated, “To be eligible for an award, you must submit original information in accordance with the procedures and conditions described in §§ 240.21F-4, 240.21F-8, and 240.21F-9 of this chapter.”[fn25] As we previously observed, “[t]he plain language of Section 21F and of our whistleblower rules . . . requires that information be ‘provided’ and ‘submitted’ directly to the Commission in order to support an award–and makes no allowance for the online publication of information that, by happenstance, indirectly makes its way into the hands of Commission staff.”[fn26] Even if an individual was the original source of a report that the Commission staff discovered during an online search, in order to be eligible for an award, the individual would still need to demonstrate that he or she provided the report to the Commission in the form and manner required.[fn27]

For an individual to qualify for an award based on information that he or she provides, “our whistleblower rules require that the individual must provide his or her tip directly to the Commission and he or she must do so in accordance with the requirements of Exchange Act Rule 21F-9.”[fn28] Rule 21F-9 generally requires that tips provided to the Commission before the effective date of the whistleblower rules ( i.e., August 12, 2011) must be provided in writing; and for tips submitted on or after the effective date, the tip must be submitted through the Commission’s online portal or on Commission Form TCR.[fn29] Further, the whistleblower “must declare under penalty of perjury at the time [he or she] submits [the] information . . . that [the] information is true and correct to the best of [the whistleblower’s] knowledge and belief.”[fn30] Rule 21F-9(e) clarifies that if an individual fails to follow the submission procedures specified in this rule, then the individual “will be deemed ineligible for an award in connection with that information (even if [the individual] later resubmit[s] that information in accordance with [the provisions of the rule]).”[fn31] We have explained that “[i]f the Commission receives an individual’s information in another manner or through another source . . . , the individual will generally not be able to recover an award for that information [and that] failure to submit information to the Commission in accordance with the whistleblower rules discussed above means that the individual will generally not qualify as a ‘whistleblower’ (as defined in Exchange Act Rule 21F-2(a)) with respect to the information the Commission received and used.”[fn32]

Claimant 2 does not dispute that he/she failed to submit his/her information to the Commission in accordance with the procedures set out in Rule 21F-9. Rather, Claimant 2 asserts that the dissemination of the information in the online report through “iContact email push notification,” social media postings and “significant media coverage” was sufficient to constitute providing the information to the Commission. Regardless of whether these means could qualify as submissions to the Commission, Claimant 2 does not assert that he/she was the author or sender of these emails and postings and thus Claimant 2 has failed to show that he/she provided his/her information directly to the Commission. Accordingly, Claimant 2 does not qualify as a whistleblower under Exchange Act Section 21F(a)(6) and Rule 21F-2(a) and therefore is ineligible to receive an award.

Claimant 2 requests that we use our discretionary authority under Exchange Act Rule 21F-8(a) to excuse his/her failure to submit information directly to the Commission as required by Rule 21F-2 as well as his/her failure to do so on Form TCR or through the TCR System’s online portal as required by Rule 21F-9.[fn33] In support of this relief, Claimant 2 asserts that he/she provided invaluable assistance to the Commission in its investigation by the information contained in the report.

Under Rule 21F-8(a), “the Commission may, in its sole discretion, waive any of [the] procedures [for submitting information or making a claim for an award] based upon a showing of extraordinary circumstances.” In determining whether a claimant has demonstrated extraordinary circumstances for purposes of Rule 21F-8(a) to excuse untimely submissions, we have previously looked to our decision in In the Matter of the Application of PennMont Securities.[fn34] There, in determining whether extraordinary circumstances had been shown to permit an untimely filing under Commission Rule of Practice 420(b), 17 C.F.R. § 201.420(b), we explained that “the ‘extraordinary circumstances’ exception is to be narrowly construed and applied only in limited circumstances.”[fn35] An extraordinary circumstance is one “where the reason for the failure timely to file was beyond the control of the applicant that causes the delay.”[fn36] Further, “[e]ven when circumstances beyond the applicant’s control give rise to the delay, . . . an applicant must also demonstrate that he or she promptly arranged for the filing . . . as soon as reasonably practical thereafter.”[fn37] The critical question is whether the facts and circumstances that gave rise to the procedural deficiency were sufficiently beyond the control of the claimant to support an exercise of our discretionary authority under Rule 21F-8(a) to excuse the untimeliness.

We find that Claimant 2 has not established the existence of any “extraordinary circumstances” that prevented Claimant 2 from complying with Rules 21F-2 and 21F-9. Indeed, Claimant 2 has not proffered any reason for his/her failure to submit his/her information to the Commission. Accordingly, Claimant 2 has not demonstrated “extraordinary circumstances” so as to trigger our discretionary authority under Rule 21F-8(a) to waive Claimant 2’s noncompliance with Rules 21F-2 and 21F-9.

We further decline to exercise our discretionary exemptive authority under Exchange Act Section 36(a) to excuse Claimant 2’s failure to submit information directly to the Commission as required by Rule 21F-2 as well as his/her failure to do so on Form TCR or through the TCR System’s online portal as required by Rule 21F-9. In contrast to Claimant 1, Claimant 2 did not submit any information concerning the Company to the Commission at any point prior to the settled [Redacted] proceeding or even prior to Claimant 2’s award application on Form WB-APP. The definition of “whistleblower” enacted by Congress in Exchange Act Section 21F(a)(6) requires that an individual provide information “to the Commission” to qualify as a whistleblower, and the Supreme Court has described this definitional requirement as “clear and conclusive.”[fn38] We have never before granted an exemption from this requirement, and we decline Claimant 2’s invitation to do so now.[fn39]

In rejecting Claimant 2’s award claim, we do not intend to diminish Claimant 2’s role in investigating the Company and in publicly exposing the wrongdoing at the Company through writing and publishing the online report. Nor do we wish to discourage others from undertaking similar efforts. However, our whistleblower program is designed “to motivate those with inside or special knowledge to come forward and assist the Government to identify and prosecute persons who have violated securities laws and recover money for victims of financial fraud.”[fn40] To that end, Section 21F and our whistleblower rules unambiguously require individuals to provide their original information directly to the Commission and in the manner prescribed by the rules, if they wish to pursue a whistleblower award.

IV. Conclusion

It is hereby ORDERED that Claimant 1 receive an award of [Redacted] percent (***) of the monetary sanctions collected or to be collected in the Covered Action. It is further ordered that Claimant 2’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] The Preliminary Determination also recommended denying an award to two other claimants who had jointly filed award claims. Those determinations were not contested and, thus, the CRS’s preliminary determination to deny that award application became final pursuant to Rule 21F-10(f) under the Securities Exchange Act of 1934 (“Exchange Act”).
[2] Claimant 1 argued that, even if his/her TCR was late-filed, the Commission should waive the requirement because “extraordinary circumstances in [Claimant 1]’s case justify a waiver of any Form TCR filing deadline,” in this case in light of the fact that Claimant 1 “had a long history of detecting possible securities violations, independently investigating them, [Redacted], answering questions, producing documents and providing other assistance to the Staff” and because [Claimant 1’s] “public report contained virtually all of the information requested on a Form TCR.”
[3] The report was published under the name [Redacted] by an entity called [Redacted] ***. The report does not specify the name(s) of its author(s). Both Claimants, however, stated that they took part in preparing the report. The report lists Claimant 1 as the entity’s [Redacted]. There is no evidence contradicting either Claimant’s assertion of having participated in the writing of the report and we, therefore, credit both as having been authors of the report.
[4] See Exchange Act Rule 21F-2(a), 17 C.F.R. § 240.21F-2(a); Exchange Act Rule 21F-9(a), 17 C.F.R. § 240.21F-9(a).
[5] See Exchange Act Rule 21F-4(a), 17 C.F.R. § 240.21F-4(a).
[6] See Section 21F(b)(1) of the Exchange Act, 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
[7] Claimant 1 emphasizes that there was no requirement under the whistleblower rules at the time he/she submitted his/her Form TCR that required an individual to provide his or her original information first through a Form TCR and that this requirement was only proposed for the first time when the Commission issued its proposal to amend the whistleblower rules in 2018. Further, Claimant 1 notes that, in its release proposing the rule amendments, the Commission needed, in the Commission’s words, to “‘clarify” that “the first time an individual provides information to the Commission that the individual will rely upon as a basis for claiming an award, the individual must provide that information in accordance with the procedures specified in Rules 21F-9(a) and (b).”
[8] Claimant 1 does not argue that the [Redacted] Form TCR contained any new information that significantly contributed to the success of the Covered Action, as the Form TCR was submitted after the posting of the Notice for this Covered Action.
[9] The Enforcement Investigative Attorney stated in a supplemental declaration that he did not recall Claimant 1 mentioning any prior contacts he/she had had with Commission staff regarding the Company. Further, Claimant 1 did not mention this correspondence with the First Enforcement Attorney in either his/her [Redacted] Form TCR or in his/her award application.
[10] Claimant 1 states that he/she “gave” his/her report about the Company to the Commission “multiple times” — “when [he/she] emailed the report to [a Commission staff attorney] and to a listserve that [he/she] believed included SEC staffers, and when [he/she] released it online knowing it would reach the Commission . . . [and] when [he/she] submitted the report along with [his/her] Form TCR.”
[11] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[12] The TCR System (short for “Tips, Complaints, and Referrals System”) is the Commission’s electronic database which records and stores information received from whistleblowers and others about potential securities law violations and records staff action taken with regard to tips, complaints, and referrals (“TCRs”) entered into the system.
[13] As the Commission explained in its release adopting the rule amendments, “compliance with Rule 21F-9(a) is required in other contexts because it allows precise and reliable tracking of information for determining award eligibility as well as for helping clarify which submitters should receive heightened confidential treatment.” Whistleblower Program Rules, Exchange Act Rel. No. 89963 (Sept. 23, 2020) (“Adopting Amendments Release”) at 73. The Commission further observed that “the TCR requirement allows the Commission to manage and track the thousands of tips that it receives annually and to connect tips to each other so as to make better use of the information provided.” Id. at 99 (internal quotations omitted). See also Proposed Amendments to the Whistleblower Rules, Exchange Act Rel. No. 83577 (June 28, 2018) (“Proposed Amendments”) at 67 (“In our experience to date in the awards context, compliance with existing Rule 21F-9(a) has proven to be beneficial for enabling the Commission to determine, in a precise and reliable manner, which persons submitted which information on which dates.”) and at 83 (noting that the TCR submission requirement “advances many programmatic purposes . . . include[ing] allowing the Commission to promptly determine whether an individual who submits information is subject to heightened whistleblower confidentiality protections; helping the staff efficiently process the information and other documentation provided by the individual and assess its potential credibility; and assisting the Commission in eventually evaluating the individual’s potential entitlement to an award”).
[14] Adopting Amendments Release at 94-102.
[15] While claimants like Claimant 1, who have counsel are deemed to have constructive notice of the TCR filing requirements, and as such, are not entitled to the automatic waiver allowed by new Rule 21F-9(e), we noted that we will continue to review and assess the appropriateness of using our discretionary Section 36(a) exemptive authority where a claimant is represented by counsel but fails to meet the Form TCR filing requirements. For the reasons discussed herein, we find that the present facts and circumstances warrant the exercise of our Section 36(a) exemptive authority so as to find Claimant 1 eligible for an award.
[16] Section 36(a) of the Exchange Act provides the Commission with broad authority to exempt any person from any provision of the Exchange Act or any rule or regulation thereunder to the extent that such exemption is (i) “necessary or appropriate in the public interest” and (ii) “is consistent with the protection of investors.”
[17] We note, in this regard, that we have exercised our Section 36(a) exemptive authority in other cases where a whistleblower represented by counsel filed a Form TCR years after first providing information to the Commission. See, e.g., Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 90721 (Dec. 18, 2020) (claimant filed a Form TCR nearly two years after first providing information to the Commission); Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90580 (Dec. 7, 2020) (claimant’s counsel filed a Form TCR two and a half years after claimant had first provided information to the Commission, when the investigation was nearly complete).
[18] See Exchange Act Section 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).
[19] Exchange Act Rule 21F-4(b)(5), 17 C.F.R. § 240.21F-4(b)(5), provides that “[t]he Commission will consider you to be an original source of the same information that we obtain from another source if the information satisfies the definition of original information and the other source obtained the information from you or your representative.”
[20] According to the [Redacted] report, it was put together with the assistance of [Redacted] “[Redacted]” and involved “[Redacted]” as well as the “[Redacted] ***.”
[21] In assessing the appropriate award amount, Exchange Act 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.
[22] Specifically, the documents that were critical to investigating and building the case included the Company’s [Redacted]. In addition, [Redacted] obtained by the staff from [Redacted] established [Redacted]. None of these materials came from Claimant 1.
[23] Exchange Act Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6) (emphasis added).
[24] Exchange Act Section 21F(c)(2)(D), 15 U.S.C. § 78u-6(c)(2)(D) (emphasis added).
[25] Exchange Act Rule 21F-2(a)(2), 17 C.F.R. § 240.21F-2(a)(2) (emphasis added).
[26] Whistleblower Award Proceeding File No. 2018-7, Exchange Act Rel. No. 82955 (March 27, 2018) at 5; Whistleblower Award Proceeding File No. 2021-40, Exchange Act Rel No 91584 (April 16, 2021) at 4 ( same).
[27] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34,321 n.187 (original source of information “must still satisfy all of the other requirements of Section 21F and of [the whistleblower] rules, including that the information was submitted voluntarily, it led to a successful Commission enforcement action or related action, and [the claimant] is not ineligible for an award”). See also supra Exchange Act Rel. 82955 at 5 (“even an individual who qualifies as the original source of information that the Commission receives indirectly must also provide that same information directly to the Commission in order to qualify for an award [footnotes omitted].”).
[28] Whistleblower Award Proceeding File No. 2017-10, Exchange Act Rel. No. 80596 (May 4, 2017) at 6 n.9.
[29] Exchange Act Rule 21F-9(a), 17 C.F.R. § 240.21F-9(a).
[30] Exchange Act Rule 21F-9(b), 17 C.F.R. § 240.21F-9(b).
[31] Rule 21F-9(e) applies to award applications pending as of the effective date of the amended rules and therefore applies to these applications.
[32] Exchange Act Rel. No. 80596 at 6 n.9.
[33] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).
[34] Exchange Act Release No. 61967 (Apr. 23, 2010), aff’d PennMont Sec. v. SEC, 414 F. App’x 465 (3d Cir. 2011).
[35] Id. at 8-9.
[36] Id.; see also Whistleblower Award Proceeding File No. 2018-2, Exchange Act Rel. No. 82181 (Nov. 30, 2017) at 9 (rejecting claimants’ request that it use its discretionary authority to excuse their untimely TCR submission); Whistleblower Award Proceeding File No. 2019-3, Exchange Act Rel. No. 85273 (Mar. 8, 2019) (finding that claimants did not demonstrate the existence of “extraordinary circumstances” necessary to trigger the Commission’s discretion to waive their failure to file their whistleblower award claims by the deadline); Whistleblower Award Proceeding File No. 2020-20 Exchange Act Rel. No. 89002 (June 4, 2020) at 5 (same); Whistleblower Award Proceeding File No. 2020-39, Exchange Act Rel. No. 90059 (Sept. 30, 2020) at 8 (same).
[37] Id.
[38] Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 781-82 (2018).
[39] Since we find that Claimant 2 did not submit his/her information to the Commission and thus did not provide original information in the manner prescribed under the whistleblower rules, we do not address Claimant 2’s other objections to the Preliminary Determination.
[40] S. Rep. No. 111-176, at 110-12 (emphasis added).

SEC

94397

03/11/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant 1”), and denial of the joint whistleblower award claim submitted by [Redacted] and [Redacted] (“Claimant 2” and “Claimant 3”, or together, the “Joint Claimants”) in connection with the above-referenced covered action (the “Covered Action”). Claimant 1, Claimant 2, and Claimant 3 filed timely responses contesting the preliminary denials.[fn1] For the reasons discussed below, Claimant 1’s, Claimant 2’s, and Claimant 3’s award claims are denied.

I. Background.

A. The Covered Action.

On [Redacted] staff from the Division of Enforcement opened an investigation in response to news stories concerning [Redacted] (“Company”) (the “Investigation”).[fn2] Based on its review of [Redacted] the staff identified [Redacted]. On [Redacted], the Commission instituted a settled administrative and cease-and-desist proceeding against the Company, charging it with [Redacted]. The Commission ordered the Company to pay [Redacted], consisting of disgorgement, prejudgment interest and a civil penalty.

B. The Preliminary Determinations.

[Redacted] the CRS issued Preliminary Determinations[fn4] recommending that Claimants’ claims be denied because the information provided by Claimants did not lead to the successful enforcement of the Covered Action.[fn5] The record supporting the Preliminary Determinations included three declarations from Division of Enforcement staff.

Based on the staff’s declarations, the CRS found that the staff responsible for the Investigation did not receive any information from Claimant 1 before or during the Investigation, and that Claimant 1 did not assist or contribute in any way to the Investigation or the resulting Covered Action. The CRS also found, based on the staff declarations, that the staff was already investigating the specific conduct and the specific transaction described in one of the Joint Claimants’ tips when the tip was submitted, and that that tip did not provide any new information that advanced the Investigation. The CRS also noted that the staff did not expand the scope of the Investigation or the Covered Action to include the transactions that were the subject of the other tips submitted by the Joint Claimants, which were submitted after the opening of the Investigation, nor did those tips provide any new information that advanced the Investigation.

C. Claimants’ Responses to the Preliminary Determinations.

Claimant 1 submitted a timely written response contesting the Preliminary Determinations.[fn6] Specifically, Claimant 1 argued that Claimant 1 provided the Commission with an original, independent analysis of [Redacted] that caused the Commission to inquire into different conduct as part of the Investigation.[fn7] Claimant 1 claims that the Commission’s attorneys “had access” to his/her independent analysis and “should have” or “would have” reviewed it. Claimant 1 also contends that Claimant 1 qualifies for an award in connection with purported related actions — including a [Redacted] and the Company (the [Redacted])[fn8]

The Joint Claimants also submitted a timely written response, together with two expert reports and a detailed Company *** analysis, contesting the Preliminary Determinations. The Joint Claimants argue that their analysis “provid[ed] the SEC with a playbook to *** [Redacted] from multiple issuers, including [the Company],” and that the SEC could not have made the findings in the Covered Action absent the methodology provided in the Joint Claimants’ TCRs. The Joint Claimants state that, prior to the Covered Action, the SEC had never utilized a particular methodology “to uncover [Redacted],” and they conclude that the staff must have learned this methodology from the Joint Claimants’ TCRs. In particular, the Joint Claimants assert that the [Redacted] that were included in their TCR “[Redacted]” referenced in the Covered Action. The Joint Claimants further argue that the timing of one of their TCRs (approximately *** [Redacted] before the Company and the Commission reached a settlement in principle), creates a “plausible, if not probable, inference” that their analysis provided the staff with “the additional negotiation leverage it needed to bring [the Company] to a [Redacted] settlement.”[fn9]

II. Analysis.

To qualify for an award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn10] As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, or to inquire into different conduct as part of an ongoing investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the action.[fn11]

A. Claimant 1.

We find that none of the information that Claimant 1 submitted led to the successful enforcement of the Covered Action. First, Claimant 1 does not dispute that the Enforcement staff opened the Investigation on [Redacted] months prior to the analysis report Claimant 1 submitted to the Commission — in response to news stories concerning *** [Redacted] the Company. We therefore find that Claimant 1’s information did not cause the staff to open the investigation that culminated in the Covered Action.

Second, Claimant 1’s information did not cause the staff to inquire concerning different conduct as part of an ongoing investigation and did not significantly contribute to the Covered Action. Although Claimant 1 argues that the staff “should have” or “would have” reviewed Claimant 1’s submissions, the standard for award eligibility is not what the staff would have or could have done hypothetically, but, rather, what impact the whistleblower’s information actually had on the investigation.[fn12] The staff responsible for the Covered Action credibly declared, under penalty of perjury, that they neither communicated with Claimant 1 nor used Claimant 1’s information in the Investigation.[fn13] In summary, there is no evidence that the submissions or information provided by Claimant 1 were actually used by the staff responsible for the Covered Action.

Turning to Claimant 1’s contention that Claimant 1 qualifies for an award in connection with the [Redacted], this argument also fails. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance.[fn14] As Claimant 1 does not qualify for an award in the Covered Action, Claimant 1’s claim for an award in connection with related actions, including the [Redacted], cannot succeed.[fn15]

B. Claimants 2 and 3.

We find that none of the information that the Joint Claimants submitted led to the successful enforcement of the Covered Action. First, as explained above, the Enforcement staff opened the Investigation on [Redacted] — many months before the Joint Claimants began submitting their information in *** — in response to [Redacted] ***. Joint Claimants do not dispute this. We therefore find that the Joint Claimants’ information did not cause the staff to open the investigation that culminated in the Covered Action.

Second, Joint Claimants’ information did not cause the staff to inquire concerning different conduct as part of an ongoing investigation and did not significantly contribute to the Covered Action. Declarations from two staff attorneys who worked on the Investigation stated under penalty of perjury that none of the information provided by the Joint Claimants helped advance the Investigation nor was it used in, or had any impact on, the charges brought by the Commission in the Covered Action. Joint Claimants’ argue that the SEC could not have made the findings in its Covered Action absent the methodology contained in their TCRs. But the staff credibly declared, under penalty of perjury, the staff had already substantially completed its investigation by the time it received Joint Claimants’ TCRs.[fn16] Moreover, sworn declarations from the staff explained that Joint Claimants’ information was incorrect on certain key matters, and that it did not, as the staff stated, “aid or otherwise inform … pending settlement talks.” Specifically, the staff noted that, as the “[Redacted] [Joint] Claimants included in *** [Redacted] As such, [Joint] Claimants’ allegations reflected an [Redacted]. Further, Claimants incorrectly assumed that [Redacted].”[fn17]

We therefore conclude that Joint Claimants did not provide information that led to the success of the Covered Action and they are, therefore, ineligible for an award with respect to the Covered Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award applications of Claimants 1, 2, and 3 be, and hereby are, denied.
By the Commission.

[1] The Preliminary Determinations also recommended denying awards to two other claimants. Neither of these claimants contested the Preliminary Determinations. Accordingly, the Preliminary Determinations have become the Final Order of the Commission with respect to these claimants. Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] The Covered Action resulted from two investigations relating to the Company that were opened on [Redacted] and [Redacted] respectively, in response to news stories concerning the Company’s [Redacted]. For purposes of the Order, we refer to these two related investigations as the Investigation.
[3] In addition to Claimant 1’s timely written response, Claimant 1 also submitted hundreds of pages of documents to supplement his/her application after the expiration of the ninety-day period for filing applications in connection with the Covered Action. Given the CRS’s Preliminary Determinations that the staff conducting the Investigation never communicated with or received any information from Claimant 1, and that none of Claimant 1’s information contributed to the successful enforcement of the Covered Action, the CRS considered only those materials submitted by the deadline.
[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[5] See Exchange Act Rule 21F-4(c), 17 C.F.R. § 240.21F-4(c).
[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[7] According to Claimant 1, his/her analysis “highlight[ed] [Redacted] and the analysis further [Redacted]”
[8] Claimant 1 also raises a number of procedural objections to the Preliminary Determination, asserting, among other objections, that certain “[m]aterial declarations of record [by OWB attorneys] were not released to Claimant [1] as set forth in in Rule 21F-12(a) of the Securities and Exchange Act of 1934” and that it was improper for the CRS to only consider those whistleblower award application materials Claimant 1 submitted by the deadline since “[i]t appears that OWB and the investigative team don’t coordinate or share [Claimant 1]’s communication or certain NoCA [Redacted] WB-APP Related Action information.”
[9] According to the Joint Claimants, the insights from this TCR “had the impact of providing the SEC with the ammunition it needed to effectuate a settlement with [the Company] within just a few weeks after Claimants provided these insights [and that it was these] insights that enabled the SEC’s months-long settlement negotiation with [the Company] to be concluded.”
[10] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[11] See Exchange Act Rule 21F-4(c)(1)-(2), 17 C.F.R § 240.21F-4(c)(1)-(2).
[12] See Order Determining Whistleblower Award Claim, Release No. 34-88667 (April 16, 2020) (“We must look to whether the Claimant’s information actually contributed to the success of the Covered Action, not whether ‘it should have or could have,’ as Claimant urges us to do.”) (citing Order Determining Whistleblower Award Claim, Release No. 34-85412 (Mar. 26, 2019)).
[13] Claimant 1 claims in correspondence, dated [Redacted], with Commission staff that Claimant 1 submitted his/her analysis “to the OWB” on [Redacted]. However, a staff declaration stated under penalty of perjury that the staff on the actual Investigation did not receive information from Claimant 1. The declaration stated that the Investigation staff “had no communications with [Claimant 1] before or during the Investigation [and that] [a]dditionally, we did not receive information from [Claimant 1] before or during the Investigation nor did [Claimant 1] assist or contribute in any way to the Investigation that culminated in the [Company] Action.” The staff also declared that it did not independently search the TCR system and find Claimant 1’s TCRs during the pendency of the Investigation nor did it receive any analysis from Claimant 1 that was forwarded to it from OWB or other offices in the Commission.
[14] See Exchange Act Rules 21F-3(b) and -11(a), 17 C.F.R § 240.21F-3(b) and -11(a).
[15] We also reject Claimant 1’s procedural objections. See supra note 8. With regard to Claimant 1’s assertion that Claimant 1 should receive additional staff declarations, Exchange Act Rule 21F-10(e)(1)(i), 17 C.F.R § 240.21F-10(e)(1)(i), provides that a claimant objecting to his/her preliminary determination is entitled to “review the materials from among those set forth in § 240.21F-12(a) of this chapter that formed the basis of the Claims Review Staff’s Preliminary Determination.” Rule 21F-12(a), 17 C.F.R § 240.21F-12(a), states that “the record upon which an award determination is made shall consist of a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip and the claimant’s award application.” Claimant 1 received all of these materials, including all three staff declarations that were provided to the CRS in connection with its review of this matter.
With regard to Claimant 1’s objection to the CRS having only considered those of Claimant 1’s materials that were submitted by the deadline, we first note that the whistleblower rules require that “[a]ll claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award.” Exchange Act 21F-10(b)(1), 17 C.F.R § 240.21F-10(b)(1). We also note that any such materials presented after the deadline would not, in any event, change the disposition here since the record shows that the investigative staff never communicated with or received information from Claimant 1.
[16] A staff declaration averred under penalty of perjury that most of the Joint Claimants’ TCRs related to transactions unrelated to the Investigation and that, to the extent that the Joint Claimants’ TCRs did address the transactions at issue in the Investigation, the staff was already aware of the issues identified by the Joint Claimants, and nothing in those TCRs advanced the Investigation in any way. Additionally, the Joint Claimants’ TCRs were received after the staff had substantially completed the Investigation and were in late stages of settlement negotiations with the Company.
[17] In response to the Joint Claimants’ contentions in response to their Preliminary Determination, the staff provided an additional sworn declaration in which it noted under penalty of perjury that the Joint Claimants provided [Redacted].

CFTC

03/10/2022

The Commodity Futures Trading Commission (the “Commission”) received whistleblower award applications from four claimants in response to the above-referenced Notice of Covered Action regarding [Redacted] (collectively, “Orders” or “Covered Action”). The Claims Review Staff (“CRS”) evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“Act”), 7 U.S.C. § 26 (2018), and issued a Preliminary Determination. The Preliminary Determination recommended an aggregate award of *** of the monetary sanctions collected in the Covered Action, consisting of *** each to Claimant 1 and Claimant 2.[fn1] The Commission hereby adopts this recommendation for the reasons the CRS provided.

Claimant 1 and Claimant 2 are eligible for whistleblower awards because each voluntarily provided the Commission original information on a Form TCR that led to the successful enforcement of the Covered Action. Here, after the Division of Enforcement (“Division”) began the underlying investigation, Claimant 1 and Claimant 2 provided the Division information that “significantly contributed to the success” of the Covered Action. See 17 C.F.R. § 165.2(i)(2). Further, Claimant 1 and Claimant 2 do not fall into any of the categories of individuals ineligible for awards listed in Rule 165.6(a), id. § 165.6(a).

Claimant 1’s and Claimant 2’s information significantly contributed to the success of the Covered Action because it had a “meaningful nexus to the Commission’s ability to successfully complete its investigation, and to … obtain a settlement.” See Whistleblower Incentives and Protection, 76 Fed. Reg. 53,172, 53,177 (Aug. 25, 2011). First, the initial information that Claimant 1 and Claimant 2 provided [Redacted] led the Division to key evidence underlying the Orders. Second, part of Claimant 1’s and Claimant 2’s information [Redacted] expanded the potential scope of violations of the Act by the respondents in the Orders. This expanded scope increased Division staff’s expectation that the Commission would ultimately be able to charge the respondents with such violations. Also, the “meaningful nexus” exists because Claimant 1’s and Claimant 2’s information was of “high quality, reliability, and specificity.” See Whistleblower Incentives and Protection, 76 Fed. Reg. 53,172, 53,177 (Aug. 25, 2011).

For the determination of award percentages, three factors are especially relevant here. First, Claimant 1’s and Claimant 2’s information was significant [Redacted] to the Covered Action under Rule 165.9(a)(1), 17 C.F.R. § 165.9(a)(1). Though these claimants’ information was very useful at the start of the investigation, it did not ultimately support the Orders. See id. § 165.9(b)(1)(ii). Overall, their information [Redacted] conserved Commission resources. See id. § 165.9(b)(1)(i). Claimant 1 and Claimant 2’s information was equally significant in the early stages of the investigation and at the time the Commission issued the Orders.

Second, Claimant 1 and Claimant 2 were each willing to provide, and did provide, all the assistance that Division staff requested, and their assistance was substantial. See 17 C.F.R. § 165.9(a)(2), (b)(2). Furthermore, these claimants experienced “unique hardships” under Rule 165.2(b)(2)(vi), id. § 165.9(b)(2)(vi), based on the violations they were reporting. [Redacted]

Third, the type of violation of the Act that Claimant 1 and Claimant 2 reported is a Commission priority, and the respondents in the Orders engaged in this type of violation repeatedly. See 17 C.F.R. § 165.9(b)(3).

Based on these factors, the Commission agrees with the CRS’s recommendation of a *** award, split equally between Claimant 1 and Claimant 2. As of the date of this Order Determining Whistleblower Award Claims, the Commission has collected [Redacted] in connection with the Covered Action, so these awards will yield payments of [Redacted] for each of these whistleblowers. Accordingly, it is hereby ORDERED that Claimant 1 and Claimant 2 shall each receive *** of the monetary sanctions collected in the Covered Action, for a total of ***.

By the Commission.

[1] The Preliminary Determination also recommended denying Claimant 3’s and Claimant 4’s applications for
awards in the Covered Action and Claimant 1’s application for a related action award. Claimant 1 and
Claimant 3 did not contest their respective recommendations for denial, so pursuant to Rule 165.7(h), 17 C.F.R.
§ 165.7(h), these components of the Preliminary Determination have become the Commission’s Final Order.
Claimant 4 withdrew his/her award application pursuant to Rule 165.7(d), id. § 165.7(d).

SEC

94375

03/08/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination[fn1] recommending that [Redacted] (“Claimant”) receive a whistleblower award of *** percent (***%) of monetary sanctions collected or to be collected in the above-referenced Covered Action and that the Covered Action include a second proceeding, [Redacted], which arose out of the same nucleus of operative facts as the Covered Action.[fn2] The award will result in a payment of over $3.5 million. The recommendation of the CRS is adopted.

The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn3]

[Redacted].

Claimant provided information that significantly contributed to the success of the Covered Action, including providing new information that caused Commission staff to further investigate certain potential securities violations that were included in the Covered Action. Claimant’s information saved Commission time and resources and helped advance settlement discussions.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent (***%) of monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] The CRS also preliminarily determined that the Commission should deny the award claims of three other claimants who did not contest the preliminary determinations. Accordingly, the preliminary determinations for those claimants have become the Final Order of the Commission with respect to those claimants pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f). In addition, OWB preliminarily denied the award claim of a fifth claimant pursuant to the Summary Disposition process under Rule 21F-18, which was not contested.
[2] See 17 C.F.R. § 240.21F-4(d). The Preliminary Determination also recommended that the Commission award Claimant ***% of monetary sanctions collected in any pending or future Commission enforcement action that obtains monetary sanctions of $ 1 million or less and is determined by the Director of the Division of Enforcement or his or her designee to arise out of the same nucleus of operative facts as the Covered Action.
[3] See Exchange Act Section 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). [Redacted]

SEC

94366

03/07/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award equal to twenty percent (20%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action; and that [Redacted] (“Claimant 2,” and collectively with Claimant 1, the “Claimants”) receive a whistleblower award equal to ten percent (10%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action.[fn1] Claimants each provided written notice of their decisions not to contest the Preliminary Determinations.

The recommendation of the CRS is adopted. The record demonstrates that Claimants each voluntarily provided original information to the Commission, and that this information led to the successful enforcement of the Covered Action.[fn2]

Rule 21F-6(c) establishes a presumption of a statutory aggregate maximum award of 30% where (1) the maximum award would be $5 million or less; (2) for at least one claimant, none of the negative award factors under Rule 21F-6(b)— i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present; and (3) the award claim does not trigger Rule 21F-16.[fn3] The Commission may depart from the presumption if (1) the assistance provided by a whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn4] When determining the allocation of the award between multiple meritorious claimants, the Commission considers whether each individual claimant’s award application includes any negative award factors and whether Rule 21F-16 is triggered.[fn5] In addition, “the rule requires that in allocating [the statutory maximum] among the meritorious claimants, the Commission will consider all relevant facts.”[fn6]

The presumption applies here because the Commission finds that it does not reasonably anticipate that future collections would cause the maximum award to exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to at least one award applicant, and that claimant’s award claim does not trigger Rule 21F-16. In addition, the Commission finds that the presumption is not overcome, as that claimant provided more than limited assistance. The Commission also finds that application of the presumption would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.[fn7]

We find that an award of 20% for Claimant 1 and 10% for Claimant 2 is appropriate. In reaching that determination, we considered that: (1) Claimant 1’s information caused the staff to open the investigation; (2) Claimant 1 provided ongoing assistance by participating in interviews and providing documents, which saved the staff time and resources; and (3) while Claimant 2 provided information that assisted the staff’s investigation and saved the staff time and resources, Claimant 2 submitted the information several weeks after the staff’s investigation had commenced as a result of Claimant 1’s information and after Claimant 2 became aware of the investigation.

Accordingly, it is hereby ORDERED that (1) Claimant 1 shall receive an award equal to twenty percent (20%) of the monetary sanctions collected, or to be collected, in the Covered Action, and (2) Claimant 2 shall receive an award equal to ten percent (10%) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] There have been no collections in the Covered Action to date.
[2] See Exchange Act Section 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).
[3] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[4] Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv).
[5] Rule 21F-6(c)(3), 17 C.F.R. § 240.21F-6(c)(3).
[6] Whistleblower Program Rules, 85 Fed. Reg. 70898, 70912 (Nov. 5, 2020); Rule 21F-6(c)(3), 17 C.F.R. § 240.21F-6(c)(3).
[7 ]Id.

SEC

94288

02/22/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $600,000 which represents *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant provided new information that significantly contributed to the success of the Covered Action; Claimant provided substantial, ongoing assistance, including participating in an interview with Commission staff and providing helpful documents on multiple occasions; and the charges in the Covered Action were based, in part, on Claimant’s information.

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] [Redacted].
[3] [Redacted].
[4] [Redacted].

SEC

94282

02/18/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of $375,000, and that [Redacted] (“Claimant 2”) receive an award of $75,000, which represent [Redacted] percent (*** %) and *** percent (***%), respectively, of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). Neither claimant contested the Preliminary Determinations.

The recommendation of the CRS is adopted. The record demonstrates that Claimants 1 and 2 each voluntarily provided original information to the Commission that was a principal motivating factor in Enforcement staff’s decision to open an investigation, and that the Claimants’ original information led to the Covered Action.[fn1] Each claimant provided independent analysis that showed that [Redacted] (the “Company”) [Redacted] (“Issue A”).[fn2] Claimant 1 also provided original information based on Claimant 1’s personal knowledge about [Redacted] (“Issue B”).

Because the Rule 21F-6(c) presumption of a 30% award does not apply, as Claimant 1 unreasonably delayed in reporting information about Issue B and Claimant 2 provided limited assistance, the Commission decided each award amount based on the claimants’ respective contributions to the investigation.[fn3] An award that apportions *** % to Claimant 1 and *** % to Claimant 2 is appropriate based on the facts and circumstances of this case. We considered that: (1) Claimant 1 provided high quality information about Issue B but Claimant 2 did not, and Issue B was the basis for the bulk of the sanctions in the Covered Action; (2) Claimant 1 provided ongoing assistance to Enforcement staff; and (3) Claimant 1 delayed unreasonably in providing information about Issue B to the Commission. A larger award to Claimant 1 is appropriate here because Claimant 1’s information related to both Issues A and B and was therefore more significant for the investigation and because Claimant 1 provided ongoing assistance.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] *** percent (*** %) and Claimant 2 shall receive an award of *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[2] Claimants 1 and 2 both provided calculations showing that [Redacted].

[3] The Commission considered the following factors set forth in Rule 21F-6 of the Exchange Act in determining the appropriate award for each claimant: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the 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.

SEC

02/18/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received eight whistleblower award claims from the following claimants: [Redacted] (“Claimant 6”), [Redacted] (“Claimant 8”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations as follows:

[Redacted].

Claimant 6.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 6.

Claimant 6 did not provide original information that led to a successful enforcement action pursuant to Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder, because the information Claimant 6 provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 6’s information, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

While Enforcement staff responsible for the Covered Action received information from Claimant 6 during the investigation, Enforcement staff already had an ongoing investigation and had identified the fraudulent scheme and actors prior to Claimant 6’s submissions of information. Claimant 6’s information was vague and general and not directly related to the conduct that the staff developed evidence of in the investigation of the claims in the Covered Action. As such, Claimant 6 did not provide new, relevant information relating to the investigation or the resulting Covered Action. Claimant 6’s information was not used in the investigation or resulting Covered Action. In addition, the information Claimant 6 provided to the Commission does not qualify as “original information” within the meaning of Exchange Act Rule 21F-4(b)(1) because the information was derived from publicly available sources without any further independent analysis.

Claimant 8.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 8.

Claimant 8 did not provide original information that led to a successful enforcement action pursuant to Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder, because the information Claimant 8 provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 8’s information, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 8’s information, which was submitted after the filing of the Covered Action, was not received by Enforcement staff responsible for the Covered Action, nor did Enforcement staff responsible for the Covered Action have any communications with Claimant 8. Enforcement staff did not rely upon Claimant 8’s allegations when conducting the investigation, and Claimant 8’s information was not used in, nor had any impact on, the charges brought by the Commission in the Covered Action.

The Claims Review Staff has also preliminarily determined to recommend that the Commission deny an award to Claimant 8 for failure to comply with Rule 21F-10(b), which provides that a claimant’s WB-App must be received by OWB within 90 calendar days of the date of the Notice of Covered Action to be considered for an award. Claimant 8’s WB-App for the Covered Action was 41 days late. Nor does Claimant 8 qualify for a waiver from the timely filing requirement under Rule 21F-8 as his/her reason for failure to timely file — that Claimant 8 was busy — was not an extraordinary circumstance; nor does it justify the Commission’s use of exemptive authority under Section 36(a) of the Exchange Act.

By: Claims Review Staff.

SEC

02/18/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received eight whistleblower award claims from the following claimants: [Redacted] (“Claimant 2”), [Redacted]. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18, The Claims Review Staff sets forth its Preliminary Determinations as follows:

[Redacted].

Claimant 2.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2.

Claimant 2 did not provide original information that led to a successful enforcement action pursuant to Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder, because the information Claimant 2 provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 2’s information, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Enforcement staff responsible for the Covered Action did not receive Claimant 2’s information and never had any communications with Claimant 2. Enforcement staff did not rely upon Claimant 2’s allegations when conducting the investigation, and Claimant 2’s information was not used in, nor had any impact on, the charges brought by the Commission in the Covered Action.

[Redacted].

By: Claims Review Staff.

SEC

02/18/2022

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] and [Redacted] (“Claimant 3”) (collectively, “Claimants”) for the above-referenced Commission enforcement action (“Covered Action”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 3.

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the CRS notes that the record demonstrates that staff working on the investigation that led to the Covered Action reviewed Claimant 3’s [Redacted] TCR submission and determined that, while it provided some information alleging that [Redacted] the submission did not provide any substantive information showing securities fraud. Although Claimant 3 submitted other tips related to [Redacted], which were provided to the staff conducting the Covered Action investigation, those tips did not relate to [Redacted], which was the subject matter of the Covered Action. Claimant 3’s information did not cause the staff to open the investigation that led to the Covered Action nor did it significantly contribute to that investigation.

By: Claims Review Staff.

SEC

94022

01/22/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $1.5 million, which represents *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant provided new information that helped Commission staff formulate their investigative strategy and significantly contributed to the success of the Covered Action; and provided substantial and ongoing assistance to the Commission staff by helping the Commission staff understand the issues, which saved significant Commission staff time and resources.

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.

SEC

94021

01/21/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of $1.8 million, which represents *** percent (***%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that: (1) Claimant provided important, new information that prompted Commission staff to open an investigation into the alleged misconduct; (2) Claimant provided substantial, ongoing assistance, including voluntary interviews and additional information and documents; (3) the charges in the Covered Action were directly based on Claimant’s information; (4) Claimant quickly reported internally the misconduct in an effort to remedy it; and (5) Claimant suffered hardships as a result of reporting.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent (***%) of the monetary sanctions collected in the Covered Action.
By the Commission.

SEC

94020

01/21/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of thirty percent (30%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).

In reaching this determination, the Commission considered that Claimant expeditiously alerted the Commission to the ongoing fraud, prompting the opening of an investigation into the alleged misconduct. Claimant also provided testimony, documents and additional information that assisted the staff in its investigation, saving significant Commission time and resources. Finally, all of the charges brought by the Commission were based, in part, on information provided by Claimant. Because of the lack of collections in this matter, a 30% award would result in no current payment to Claimant.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

94019

01/21/2022

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that claimants [Redacted] (together, “Claimant”) jointly receive a whistleblower award equal to *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action. The CRS also recommended that Claimant receive a whistleblower award equal to *** percent (***%) of the monetary sanctions collected, or to be collected, in a separate, related action (the “Other Agency Action”) brought by another agency (the “Other Agency”).[fn1] The total whistleblower award to Claimant recommended by the CRS for the Covered Action and the Other Agency Action is approximately $37 million. Claimant did not contest the Preliminary Determinations.[fn2]

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of ***% for Claimant is appropriate.[fn4] In reaching that determination, we considered that Claimant provided Enforcement staff with key evidence that significantly contributed to the staff’s investigation and the Commission’s charges. Claimant helped the staff understand the evidence which also led the staff to identify additional valuable information that contributed to the Commission’s charges. Claimant also provided ongoing assistance as the staff’s investigation progressed.

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action and in the Other Agency Action.[fn5]
By the Commission.

[1] The Commission may pay an award based on amounts collected in a related action that is based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $1 million. [Redacted]. Here, the Commission finds that the [Redacted] constitute a “related action” within the meaning of Exchange Act Rules 21F-3(b) and 21F-4(d)(3).
[2] The CRS also preliminarily denied the award claims of two other claimants. Neither sought reconsideration of the Preliminary Determinations, and therefore the denial of their claims were deemed to be Final Orders of the Commission under Exchange Act Rule 21F-10(f).
[3] See Exchange Act Section 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] In assessing the appropriate award amount, Exchange Act 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.
[5] Our determination to treat Claimant as a joint whistleblower has not impacted the net total award percentage granted to Claimant. Unless Claimant, within ten (10) calendar days of the issuance of this Order, makes a joint request, in writing, for a different allocation of the award between the two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

SEC

93948

01/11/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $20,000, which is equal to *** percent (***%) of the amounts collected in the above-referenced Covered Action (“Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

In coming to this conclusion, the Commission considered that Claimant provided significant information that alerted Commission staff to an ongoing fraud, prompting the opening of the investigation. Claimant also provided critical documents and participated in post-tip conversations with Commission staff that helped advance the investigation.

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.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.
[2] [Redacted].
[3] [Redacted].
[4] [Redacted].

SEC

93947

01/11/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that “[Redacted]” (“Claimant”) receive a whistleblower award of more than $450,000, which represents percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that (i) Claimant provided important new information that prompted Commission staff to open an investigation into the alleged misconduct; (ii) Claimant provided substantial, ongoing assistance, including participating in voluntary interviews with Commission staff and providing voluminous important documents, and (iii) the charges brought by the Commission were based in significant part on conduct that was the subject of the information provided by Claimant.

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] [Redacted].
[3] [Redacted].

SEC

93946

01/11/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that “[Redacted]” (“Claimant”) receive a whistleblower award in the amount of thirty percent (30%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”). There have been no collections to date in this matter.

In reaching this determination, the Commission considered that Claimant provided important, new information that prompted Commission staff to open an investigation into the alleged misconduct; participated in voluntary interviews and provided additional information; and that certain charges in the Covered Action were directly based on Claimant’s information.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

93945

01/11/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that (“Claimant”) receive a whistleblower award in the amount of thirty percent “[Redacted]” (30%) of the monetary sanctions collected and to be collected in the above-referenced Covered Action (the “Covered Action”).

In reaching this determination, the Commission considered that Claimant alerted the Commission to the on-going fraud, in part, prompting the opening of a new investigation into the alleged conduct, gave testimony to the Commission staff, and provided numerous documents that assisted the staff in its investigation, saving Commission staff time and resources. There also have been minimal collections to date in the matter.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

93936

01/10/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with the above-referenced Covered Action (the “Covered Action”) recommending that *** [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) jointly receive a whistleblower award in the amount of percent (***%) of the monetary sanctions collected in the Covered Action for a total payout of approximately $1.5 million.

The recommendation of the CRS is adopted. The record demonstrates that Claimants 1 and 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

Claimants 1 and 2 provided substantial ongoing assistance throughout the course of the investigation, providing several interviews and consulting telephonically with staff via counsel on numerous occasions, including before and after witness testimony of key witnesses. [Redacted].

Accordingly, it is ORDERED that Claimants 1 and 2 shall receive a joint award of *** percent (***%) of the monetary sanctions collected or to be collected in the Covered Action.[fn4]
By the Commission.

[1] See Exchange Act Section 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).
[2] [Redacted].
[3] [Redacted].
[4] Our determination to treat Claimant 1 and Claimant 2 as joint whistleblowers has not impacted the net total award percentage to Claimant 1 and Claimant 2. Unless Claimant 1 and Claimant 2, 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

SEC

93935

01/10/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $2.6 million, which represents *** percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant initially reported his/her concerns internally before providing information to Commission staff that significantly contributed to an existing investigation. Claimant revealed misconduct of which Commission staff were not aware, and Claimant’s information helped Commission staff develop an efficient investigative plan to discover the full extent of the wrongdoing. Claimant also communicated with the staff over the course of the investigation and identified potential witnesses. Claimant’s information and assistance was particularly significant in that it helped Commission staff obtain evidence of wrongdoing that was occurring abroad, which would have been difficult to acquire in the absence of Claimant’s information and cooperation.

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
[2] [Redacted].

SEC

93913

01/06/2022

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action, for a total award of over $13 million.

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn1]

In determining the amount of award to recommend, the Commissions considers the following factors set forth in Rule 21F-6 of the Exchange Act as they apply to the facts and circumstances of the Claimant’s application: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the 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.

In reaching this determination, the Commission considered that: (1) Claimant expeditiously provided significant information that alerted Commission staff to an ongoing fraud, prompting the opening of the investigation; (2) Claimant provided extensive assistance to Commission staff by meeting in person and helping the staff understand the mechanics of the fraudulent scheme and preparing a declaration to help the Commission obtain emergency relief; and (3) the law enforcement interest is very high, as Claimant’s information and assistance helped the Commission shut down an ongoing fraud and return tens of millions of dollars to harmed investors.

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.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

SEC

12/24/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received five whistleblower award claims.[fn1] Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of the four below claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations as follows.

[Redacted].

[Redacted] (“Claimant 2”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2. The basis for this determination is that Claimant 2 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 2 ‘s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 2 provided vague, general information that appeared to be unrelated to the matters staff for the Covered Action was investigating or did not appear to involve securities law violations. Although Claimant 2 also provided some limited relevant information, it was already known to investigative staff at the time Claimant 2 submitted the information or was unable to be substantiated. None of Claimant 2’s information helped advance staffs investigation, saved Commission time and resources, or impacted the charges in the Covered Action.

[Redacted] (“Claimant 3”)

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 3. The basis for this determination is that Claimant 3 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any info1mation provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 3 provided information about two years before the investigation for the Covered
Action was opened. The tip was forwarded to Commission staff in connection with a different
investigation. None of the investigative staff for the Covered Action recall receving[sic] any
information from or communicating with Claimant 3. Claimant 3 provided no information that
impacted the Covered Action.

[Redacted] (“Claimant 4”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 4. The basis for this determination is that Claimant 4 did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 4’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn6]

None of the investigative staff for the Covered Action recall receiving any information provided by or communicating with Claimant 4. Claimant 4 provided no information that impacted the Covered Action.

By: Claims Review Staff.

[1] On May 14, 2021, OWB preliminarily denied the whistleblower award claim by [Redacted] (“Claimant 5”) pursuant to the Summary Disposition process under Rule 21F-18.

[6] In addition, Claimant 4 failed to meet the deadline for applying for an award in the Covered Action and submitted a F0rm WB-APP over a year late. See Exchange Act Rule 21F-10(b) (requiring claimants to submit a clam[sic] for award within 90 days of the date of the Notice for the Covered Action).

CFTC

12/21/2021

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1, Claimant 2, Claimant 3, and Claimant 4 (the “Claimants”) on the above-listed Forms WB-APP in response to the above-referenced Notice of Covered Action regarding [Redacted] (“Order” or “Covered Action”). The Order imposed monetary sanctions totaling [Redacted] (“Respondent”), which Respondent paid in their entirety, for violations of the Commodity Exchange Act (“Act”), 7 U.S.C. §§ 1–26 (2018), related to its failure to [Redacted] (“Transaction Type”) [Redacted] (“Transaction”). The Claims Review Staff (“CRS”) has evaluated the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2021), promulgated pursuant to Section 23 of the Act, 7 U.S.C. § 26. The CRS sets forth its Preliminary Determination for the Claimants as follows:

1. The CRS has determined to recommend that the Commission deny the Claimants’ applications on the Covered Action because each application fails to meet the requirements of Section 23 of the Act and the Rules. Specifically, each of the Claimants’ information did not lead to the successful enforcement of the Covered Action.

2. To begin with, the Order’s description of violations of the Act provides the Claimants no basis for believing that any of their information would have contributed to the Covered Action. Claimant 1, Claimant 2, and Claimant 4 did not give information relating to the Transaction Type. The TCR submissions of Claimant 1 and Claimant 4, in particular, do not even mention [Redacted]. Meanwhile, Claimant 3 offered no factual allegations about Respondent, only a bare assertion that Respondent and eighteen other entities should be investigated, which he/she made [Redacted] after Division of Enforcement (“Division”) staff had begun investigating Respondent regarding the specific Transaction.

3. Division staff assigned to the investigation underlying the Covered Action confirmed that the Claimants’ information did not lead to the successful enforcement of the Covered Action.

None of the Claimants provided any information to the Division that led to the opening of the investigation that would later result in the Covered Action. Instead, the Division opened the investigation that led to the Order based on [Redacted]. Accordingly, the Commission did not commence its investigation as a direct or indirect result of any of the Claimants’ information. See 17 C.F.R. § 165.2(i)(1).

According to Division staff, the Claimants did not provide any information of use to the Division staff in connection with the Covered Action.[fn1] Accordingly, the Claimants did not contribute at all to the Commission’s investigation related to Respondent, which means that none of the Claimants’ information significantly contributed to the Covered Action. See 17 C.F.R. § 165.2(i)(2).

4. The CRS also recommends denying Claimant 2’s, Claimant 3’s, and Claimant 4’s claims on purported related actions. A related action must be “based on the original information that the whistleblower voluntarily submitted to the Commission and led to a successful resolution of the Commission judicial or administrative action.” See 17 C.F.R. § 165.11(a)(2). Because Claimant 2, Claimant 3, and Claimant 4 did not provide information that led to the successful resolution of the Covered Action, these claimants are not eligible for related action awards.

[1] Division staff working on the investigation that led to the Covered Action had not heard of [Redacted]
until informed of their award claims in connection with the Covered Action.

SEC

93812

12/17/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that *** [Redacted] (“Claimant 1”) receive a whistleblower award of more than $900,000, equal to percent (*** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action and that the award claim of [Redacted] (“Claimant 2”) be denied. Claimant 2 submitted a timely request for reconsideration. For the reasons set forth below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed an enforcement action in [Redacted]. The Commission alleged that [Redacted].

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn1] recommending that Claimant 1 receive a whistleblower award in the amount of [Redacted] (*** %) of the monetary sanctions collected or to be collected in the Covered Action and that Claimant 2’s claim be denied. As explained in Claimant 2’s Preliminary Determination, Claimant 2 submitted a Form TCR after the Covered Action investigation had concluded and after the Covered Action was filed. Investigative staff responsible for the Covered Action do not recall having any communications or contact with Claimant 2, and Claimant 2’s information did not significantly contribute to the success of the Covered Action. Prior to submitting the TCR, Claimant 2 sent a letter and accompanying documents to the Commission under a different name, but the letter was sent several months after the investigation had opened. Investigative staff do not recall receiving the letter or having communicated with Claimant 2 under either name. As such, Claimant 2’s information did not lead to the successful enforcement of the Covered Action.

C. Claimants’ Responses to the Preliminary Determinations.

Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determination.

In connection with a request for the record, Claimant 2 submitted a timely written response contesting the Preliminary Determination.[fn2] Claimant 2 argues in his/her response that if his/her earlier-sent letter initiated the Covered Action investigation, he/she should be entitled to an award. After being provided with the record, Claimant 2 did not provide any additional information in support of his/her request for reconsideration.

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 1 qualifies for a whistleblower award. [Redacted]. Claimant 1 provided helpful information, including documents and analysis with Claimant 1’s tip, that caused Enforcement staff to open an investigation that led to the Covered Action and the return of money to harmed investors. In addition, Claimant 1 had subsequent communications with staff through Claimant 1’s counsel. Claimant 1’s information assisted Commission staff in subpoenaing [Redacted] that were meaningful to the success of the case. [Redacted].

B. Claimant 2.

Claimant 2’s information does not satisfy Exchange Act Rule 21F-4(c)(1) because it did not cause the Covered Action investigation to be opened or cause staff to inquire into different conduct in the Covered Action investigation. The record reflects that the Covered Action investigation was opened based on information received from Claimant 1 approximately six months before Claimant 2 asserts that he/she submitted a letter to the Commission under a pseudonym. As such, Claimant 2 did not provide information that caused the investigation to be opened. Moreover, according to a declaration provided by the relevant investigative staff, which we credit, investigative staff do not recall receiving the letter submitted by Claimant 2 under a pseudonym or communicating with Claimant 2 before or during the course of the investigation. Claimant 2 subsequently submitted a TCR, but this submission was approximately a month after the Commission filed the enforcement action. Therefore, Claimant 2 did not cause the staff to inquire into different conduct in the investigation.

Claimant 2’s information also does not satisfy Exchange Act Rule 21F-4(c)(2) because it did not significantly contribute to the success of Covered Action. As stated above, investigative staff do not recall receiving the letter submitted by Claimant 2 under a pseudonym or communicating with Claimant 2 before or during the course of the investigation. Moreover, Claimant 2’s TCR was submitted approximately a month after the Commission filed the enforcement action, and according to the staff declaration, the TCR did not contribute to the ongoing litigation.

Finally, it should be noted that Claimant’s letter may not be the basis for an award because the letter was not accompanied by a Form TCR or submitted through the Commission’s on-line portal; nor was the letter submitted under penalty of perjury. The letter was therefore not in conformity with the requirements of Exchange Act Rules 21F-9(a) & (b).

IV. Conclusion.

[1] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[3] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[4] Exchange Act Rule 21F-4(c)(1).
[5] Exchange Act Rule 21F-4(c)(2).
[6] See Order Determining Whistleblower Award, Whistleblower File No. 2019-4, at 9, 2019 SEC LEXIS 615 at *16 (Mar. 26, 2019); see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).

SEC

93726

12/07/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action, which would result in a current award of more than $4.9 million.[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn2]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed amount is appropriate.[fn4] In reaching that determination, we considered that: (1) Claimant quickly reported to the Commission that the defendants may have been misusing proceeds from a securities offering upon learning of the suspected misconduct; (2) Claimant’s information enabled Commission staff to more quickly and efficiently develop a case theory, subpoena important documents, investigate and establish the defendants’ misuse of offering proceeds, which ultimately became an important part of the Commission’s case against the defendants; (3) Claimant provided additional assistance to Commission staff by participating in two interviews and providing financial documents relating to the misuse of offering proceeds; and (4) Claimant’s information and assistance helped the Commission bring the Covered Action and return millions of dollars to harmed investors.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] Amounts distributed by a court-appointed receiver to defrauded investors as relief for the securities law violations may be included as “collected” monetary sanctions upon which a whistleblower award may be based. See Exchange Act Rule 21F-4(e) (“monetary sanctions” defined to include: (1) “[a]n order to pay money that results from a Commission action or related action and which is either (i) [e]xpressly designated as a penalty, disgorgement, or interest; or (ii) [o]therwise ordered as relief for the violations that are the subject of the covered action or related action; or (2) [a]ny money deposited into a disgorgement fund or other fund pursuant to section 308(b) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246)), as a result of such action or related action.”).
[2] See Exchange Act Section 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). The CRS also preliminarily determined to recommend that the award claim of a second claimant be denied. Because that claimant did not respond to the preliminary denial, it is now deemed to be the Final Order of the Commission through operation of law.
[3] See Exchange Act Section 21(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] In assessing the appropriate award amount, Exchange Act 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 in 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.

SEC

93685

12/01/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $175,000, which represents [Redacted] (***%) of the monetary sanctions collected in the above-referenced Covered Actions (the “Covered Actions”).[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information[fn2] to the Commission that led to the successful enforcement of the Covered Actions.[fn3]

Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30% where (1) the maximum award would be $5 million or less; (2) none of the negative award factors under Rule 21F-6(b)— i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present; and (3) the award claim does not trigger Rule 21F-16.[fn4] The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn5] The Commission finds that the presumption does not apply in this instance given Claimant’s “limited assistance” in the Covered Actions under the relevant facts and circumstances of the case, including, inter alia, that Claimant’s tip was one of several tips the Commission staff had received that contributed to the opening of the investigation and Claimant did not provide additional information or assistance after the initial submission of the tip.

Pursuant to Rule 21F-6, to determine the amount of an award, we consider the following factors as they apply to the facts and circumstances of Claimant’s applications: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Actions; (3) the law enforcement interests 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.
Here, Claimant performed calculations and otherwise assembled information that provided important insights about the company’s conduct that was not otherwise apparent. However, while Claimant’s information played a role in the Commission staff’s decision to open an investigation, the Commission received several other tips from multiple other sources that also contributed to the staff’s decision to open an investigation. Further, after submitting the tip, Claimant had no communication with Commission staff responsible for the investigation and provided no additional information or assistance.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] (***%) of the monetary sanctions collected or to be collected in the Covered Actions.
By the Commission.

[1] The court-appointed receiver distributed recovered funds to harmed investors. Amounts returned to harmed investors by receivers as relief for the securities law violation will ordinarily be treated as collected monetary sanctions for the purpose of paying a whistleblower award. See Adopting Release for Amendments to Whistleblower Rules, Release No. 34-89963 (Sept. 23, 2020) (“Adopting Release”) at n.63.
[2] Claimant satisfied the original information requirement by providing his/her independent analysis based on publicly available information. To be credited with providing “independent analysis,” the whistleblower’s examination and evaluation should contribute significant 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 at 112-13. Here, Claimant’s analysis of information from public sources revealed possible violations that were not apparent from the face of the publicly available materials.
[3] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[5] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

SEC

11/26/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received six whistleblower award claims for the above-referenced SEC enforcement action (“Covered Action”).[fn1] Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows:

[Redacted].

[Redacted] (Claimant 5).

The CRS has preliminarily determined to recommend that the Commission deny an award to Claimant 5. No information submitted by Claimant 5 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that Claimant 5 submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making the determination, the CRS notes that the record reflects that Claimant 5’s information was provided after the investigation was opened by Enforcement staff. Additionally, none of Claimant 5 ‘s information contributed to the success of the Covered Action. Enforcement staff did not review Claimant 5’s info1mation or communicate with Claimant 5. Therefore, Claimant 5’s information had no impact on the staff’s investigation or the Covered Action.

By: Claims Review Staff.

[1] The award claims of Claimants 1, 2, 3, 4, and 5 are addressed in the instant Preliminary Determination. The Commission received an award application from a sixth claimant, which the Office of the Whistleblower preliminarily denied through the preliminary summary disposition process.

SEC

11/26/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 2”), [Redacted] (collectively, “Claimants”) for the above-referenced Covered Action and Criminal Action. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 2.

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the CRS notes that the record demonstrates that Claimant 2’s information related to allegations of [Redacted] whereas the Covered Action investigation examined [Redacted]. The staff did not rely upon Claimant 2’s information in the investigation that led to the Covered Action.[fn2]

[Redacted].

By: Claims Review Staff.

[2] To the extent that Claimant 2 applied for a related action award in connection with the Criminal Action, because Claimant 2 does not qualify for an award in the Covered Action, Claimant 2 is not eligible for a related action award in connection with the Criminal Action. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

SEC

11/26/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 3”) (collectively, “Claimants”) for the above-referenced Covered Action and Criminal Action. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 3.

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the CRS notes that the record demonstrates that Claimant 3’s information was submitted after the Covered Action was filed and that Claimant 3’s information did not pertain to violations of the federal securities laws or pertain to the charges in the Covered Action. Claimant 3’s information was not reviewed by the Enforcement staff that worked on the investigation that led to the Covered Action.[fn3]

By: Claims Review Staff.

[3] To the extent that Claimant 3 applied for a related action award in connection with the Criminal Action, because Claimant 3 does not qualify for an award in the Covered Action, Claimant 3 is not eligible for a related action award in connection with the Criminal Action. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

SEC

93648

11/23/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award of almost $400,000, which is equal to [Redacted] percent (***) of the amounts collected, or to be collected, in both the above-referenced Covered Action (“Covered Action”), and in the related [Redacted] (“Related Action”). Claimant provided notice that Claimant would not contest the Preliminary Determinations.

The recommendations of the CRS are adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission, which in turn, provided the information to the [Redacted] and that this information led to the successful enforcement of both the Covered Action and the Related Action.[fn1] Further, under newly adopted Rule 21F-9(e), a claimant must file a TCR within 30 days of providing the Commission with the original information to be relied upon as a basis for claiming an award. However, the Commission shall waive noncompliance with Rules 21F-9(a) and (b)[fn2] if the claimant demonstrates to the satisfaction of the Commission that he/she complied with the requirements of Rules 21F-9(a) and (b) within 30 days of first obtaining actual or constructive notice about those requirements or 30 days from the date he/she retains counsel to represent him/her in connection with his/her submission of original information, whichever comes first. Here, Claimant satisfies Rule 21F-9(e) because Claimant submitted a Form TCR within two weeks of learning of the TCR filing requirement, and would otherwise be eligible for an award.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn3] In reaching that determination, we positively assessed the following facts: (1) Claimant’s information alerted Enforcement staff to the potential wrongdoing, which, in part, prompted Enforcement staff to open the investigation; (2) Claimant provided significant ongoing assistance to Enforcement staff during the investigation that saved Commission time and resources; (3) there are high law enforcement interests here as money was returned to harmed investors; (4) Claimant’s information and cooperation helped the Commission to shut down an ongoing Ponzi-like scheme preying on retail investors and obtain emergency relief in the action.

Against these positive factors, we also believe that Claimant’s award percentage should be reduced for culpability. While Claimant was not charged in the matter, the record reflects that Claimant became aware of [Redacted]. We also recognize there are several mitigating factors, including that Claimant [Redacted] were harmed investors, that Claimant was unaware of certain fraudulent aspects of the investment scheme, and took some steps to help remediate the harm, including [Redacted]. Accordingly, we believe that a award strikes the appropriate balance between Claimant’s significant contributions to the success of the Covered Action and Claimant’s level of culpability.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in both the Covered Action and the Related Action.[fn4]
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3(a) & (b), 17 C.F.R. § 240.21F-3(a) & (b). See also In the Matter of Claim for Award, Release No. 34-84046 (Sept. 6, 2018) (for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”) (citing Exchange Act Rule 21F-11(c); 17 C.F.R. § 240.21F-11(c)).
[2] Rule 21F-9(a) requires that the information be submitted online through the Commission’s TCR portal or by mailing or faxing a Form TCR to OWB. Rule 21F-9(b) requires a representation, under penalty of perjury, that the information is true and correct.
[3] In assessing the appropriate award amount, Exchange Act 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.
[4] We have treated those amounts distributed to injured investors by the court-appointed receiver in the Covered Action as collected monetary sanctions on which Claimant’s award can be based. See Order Determining Claim for Award, Rel. No. 34-77530 (April 5, 2016). There have been no collections to date in the Related Action.

CFTC

11/22/2021

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1, Claimant 2, Claimant 3, and Claimant 4 (collectively referred to as “Claimants”) in response to Notice of Covered Action No. [Redacted]. The corresponding enforcement action is [Redacted] (“Covered Action”), in which the Commission [Redacted].

I. PRELIMINARY DETERMINATION.

The Claims Review Staff (“CRS”) evaluated Claimants’ award claims in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). On [Redacted] the CRS issued a Preliminary Determination recommending an award each to Claimant 1 and Claimant 2. The CRS recommended that the total award amount should be *** of the monetary sanctions collected in the Covered Action, split as *** to Claimant 1 and *** to Claimant 2. The CRS further recommended that the Commission deny Claimant 3’s and Claimant 4’s award applications because they failed to meet the requirements of Section 23 of the CEA and the Rules. Claimant 3 withdrew his/her award application after the issuance of the Preliminary Determination. None of the other claimants contested the Preliminary Determination. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination with respect to Claimant 1 and Claimant 2, and the Preliminary Determination became the Final Order of the Commission with respect to Claimant 4. For the reasons set forth below, the CRS’s determination is adopted.

II. LEGAL ANALYSIS.

The CRS recommended that the Commission grant an award each to Claimant 1 and Claimant 2 for the Covered Action because their award applications meet the requirements of Section 23 of the CEA and the Rules. The recommendation of the CRS is adopted. Claimant 1 and Claimant 2 each voluntarily provided the Commission with original information that led to the successful enforcement of a covered action, as required under Section 23(b)(1) of the Commodity Exchange Act, 7 U.S.C. § 26(b)(1) (2018). Claimant 1 provided unique [Redacted] information that was previously unknown to the Commission. Claimant 1 provided information that was sufficiently specific, credible, and timely, which, along with other documents and information, caused staff of the Commission’s Division of Enforcement (“Division”) to open the investigation that led to the Covered Action. Claimant 1’s information also significantly contributed to the success of the Covered Action. Claimant 1 provided a voluntary submission because Claimant 1 voluntarily provided information to another regulatory authority and subsequently provided that information directly to the Commission [Redacted].

Claimant 2 provided unique [Redacted] information, much of which was previously unknown to the Commission. Claimant 2 provided information that significantly contributed to the success of the Covered Action. Claimant 2 provided a voluntary submission, even though [Redacted].

Claimant 1 and Claimant 2 also meet all eligibility requirements for a whistleblower award. See 17 C.F.R. §§ 165.5(b), 165.6. Further, neither Claimant 1 nor Claimant 2 falls into any of the categories of individuals ineligible for an award, as set forth in Rule 165.6(a), 17 C.F.R. § 165.6(a).

The CRS recommended that the total award amount granted should be *** of the *** in monetary sanctions collected in the Covered Action, split as *** to Claimant 1 and *** to Claimant 2, which would result in payments of [Redacted] to Claimant 1 and [Redacted] to Claimant 2. The Commission has discretion in determining an award amount but must consider certain criteria specified in the CEA, 7 U.S.C. § 26(c)(1)(A). The Rules contain both factors that incorporate the statutory criteria for determining the award amount and factors that may increase or decrease the award amount. The determination of the appropriate amount of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The factors for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not assigned relative importance, and the factors for increasing or decreasing award amounts are not listed in any order of importance. The Rules also do not specify how much these factors should increase or decrease the award amount. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is also true. The absence of all of the negative factors does not mean the award percentage must be greater than 10%.

In arriving at its recommended award amount, the CRS applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s and Claimant 2’s award applications. The recommendation of the CRS is adopted. Both Claimant 1 and Claimant 2 provided significant information and substantial assistance to Division staff. Each person’s information supported and ultimately led to different charges the Commission brought in the Covered Action. However, allocating a higher award percentage to Claimant 1 is appropriate because of the key role that Claimant 1’s information played in causing the Division to open the investigation that led to the Covered Action and focusing the Division’s efforts during the investigation’s earliest stages. Claimant 2 reported to the Commission while the investigation was ongoing. Opening investigations is crucial to the success and effectiveness of the Commission’s enforcement program. In addition, the Rules specify that the Commission may consider conservation of the Commission’s resources when determining whether to increase the award amount. See 17 C.F.R. § 165.9(b)(1)(i), (b)(2)(iii). Claimant 1’s submission of documents and sharing of knowledge about [Redacted] during the earliest stages of the matter helped Division staff conserve time and resources, as well as better focus the staff’s investigative efforts. Granting a larger award to Claimant 1 properly recognizes this added value of Claimant 1’s information.

However, increasing Claimant 1’s award amount above the recommended percentage, which would correspondingly decrease Claimant 2’s award amount, is unwarranted because Division staff considered Claimant 1 and Claimant 2 to have contributed equally to the investigation, with each person providing significant information and substantial assistance to Division staff that supported, and ultimately led to, different charges in the Covered Action. In addition, the recommended award allocation takes into account that, while Claimant 1 provided Division staff with unique [Redacted] information that was previously unknown to the Commission, [Redacted].

The CRS recommended in the Preliminary Determination that the Commission deny the award application of Claimant 4 because it failed to meet the requirements of Section 23 of the Act and the Rules. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Final Order of the Commission with respect to Claimant 4.

III. CONCLUSION.

It is hereby ORDERED that Claimant 1 shall receive *** and Claimant 2 shall receive *** of monetary sanctions collected in the Covered Action. It is further ORDERED that Claimant 4’s award claim shall be, and is, denied. By the Commission.

SEC

93637

11/22/2021

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed an [Redacted] action in [Redacted] against [Redacted] (collectively, the “Defendants”). The Commission alleged that [Redacted]. According to the complaint, [Redacted].

On [Redacted] the Court entered [Redacted] against the Defendants. On [Redacted] the court entered final judgments [Redacted] ordering them to pay, [Redacted] in disgorgement and [Redacted] in pre-judgment interest. [Redacted] were also ordered to pay [Redacted] in civil penalties, and [Redacted] was ordered to pay [Redacted] in disgorgement and interest.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn3] recommending that: (1) Claimant 1 receive an award of *** % of the monetary sanctions collected or to be collected in the Covered Action; and (2) Claimant 2 receive an award of ** % of the monetary sanctions collected or to be collected in the Covered Action.

C. Claimant 1’s Response to the Preliminary Determinations

Claimant 1 submitted a timely written response contesting Claimant 1’s award of *** % in the Preliminary Determinations. 4 Claimant 1 contends that he/she warrants a larger award on the grounds that Claimant 2 does not appear to be eligible for an award on the grounds that Claimant 2 did not appear to provide information that led to a successful enforcement action pursuant to Exchange Act Rule 21F-4(c), or in the alternative, if Claimant 2 is eligible for an award, Claimant 1’s relative contribution to the Covered Action warrants an award greater than *** % because Claimant 1 provided information to the Commission that caused Enforcement staff to open the investigation that led to the Covered Action and provided more critical information and assistance as compared to Claimant 2.

II. Analysis..

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 1 qualifies for a whistleblower award. Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, as well as our review of Claimant 1’s response to the Preliminary Determinations, we find that an award of [Redacted] percent ( *** %) is appropriate.[fn5] Claimant 1’s information caused the staff to open the investigation that led to the Covered Action, and Claimant 1 provided significant assistance to Commission staff during the investigation by providing documents and making himself/herself available for interviews. Claimant 1 also provided additional assistance as the investigation progressed, including key pieces of evidence that allowed the staff to complete the investigation more quickly.

We decline to accept the contentions raised in Claimant 1’s response to the Preliminary Determinations. As discussed below, the record demonstrates that Claimant 2 is eligible for an award, and a *** % award to Claimant 1 is appropriate given the relative value of each of the Claimants’ contributions.

B. Claimant 2.

Claimant 2 did not contest the Preliminary Determinations. The record demonstrates that Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 2 qualifies for a whistleblower award. Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of *** percent (** %) is appropriate. Claimant 2 provided new information that significantly contributed to the success of the Covered Action. [Redacted]. Because Claimant 2’s information was of substantially less value than that of Claimant 1, whose information alerted staff to the violations, we believe that a significantly lower award of ** % is warranted here.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award equal to [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action, and that Clamant 2 receive an award equal to *** percent (** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

SEC

93636

11/22/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that (1) [Redacted] (“Claimant 1”) receive [Redacted] percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action and *** percent ( *** %) of the monetary sanctions collected as a result of the [Redacted] “Other Agencies”) and [Redacted] (the “Related Action”),[fn1] which together would result in a payment of more than $6.2 million, and (2) award [Redacted] (“Claimant 2”) *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action, which, based on current collections, would yield an award of more than $1.3 million.[fn2] The recommendations of the CRS are adopted for the reasons discussed below.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action and the Related Action. The record also demonstrates that Claimant 2 voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed amounts are appropriate.[fn3] In reaching those determinations, we considered that: (i) both Claimant 1 and Claimant 2 provided new information during an existing investigation, alerting Commission staff to alleged [Redacted] schemes occurring in different geographic areas; (ii) while both Claimants’ information was important to the success of the Covered Action, Claimant 1’s information was more significant as Commission staff was able to corroborate all of Claimant 1’s information and the majority of the relief ordered in the case was based on the conduct alleged by Claimant 1; (iii) both Claimants provided substantial, ongoing assistance that conserved significant Commission time and resources; (iv) Claimant 1 reported the concerns internally prior to reporting to the Commission; and (v) Claimant 1 reported to the Commission expeditiously while Claimant 2 waited a period of approximately 16 months before reporting to the Commission.

Further, as to the Related Action, we find that the proposed *** % award to Claimant 1 is appropriate. Claimant 1 provided the same information to the Other Agencies, which commenced an investigation based on Claimant 1’s information and brought charges in the Related Action based on the same conduct alleged by Claimant 1 that formed the factual basis for part of the Covered Action. We find that the contributions made by Claimant 1 to the Covered Action are similar to Claimant 1’s contributions to the success of the Related Action, and, therefore, it is appropriate that Claimant 1 receive a *** % award percentage in the Related Action.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected in the Covered Action and *** percent ( *** %) of the monetary sanctions collected in the Relation Action, and Claimant 2 shall receive an award of *** percent (*** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[2] The CRS also recommended that Claimant 2’s award claim for the Related Action be denied and that the award claims of a third claimant (“Claimant 3”) with respect to both the Covered Action and the Related Action be denied. Because Claimant 2 and Claimant 3 did not contest the preliminary denials, the CRS’s preliminary determinations as to the denials became the final order of the Commission pursuant to Exchange Act Rules 21F-10(f) & 11(f); 17 C.F.R. §§ 240.21F-10(f) & 11(f).

[3] In assessing the appropriate award amount, Exchange Act Rule 21F-6 provides that the Commission consider: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the 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.

SEC

93635

11/22/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (collectively “Claimant 1”) jointly receive an aggregate whistleblower award of more than $240,000, equal to [Redacted] percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action and [Redacted] ( *** %) of the monetary sanctions collected or to be collected in an action brought by the [Redacted] (the “Other Agency”) (hereinafter, “Related Action”)[fn1], and that [Redacted] (“Claimant 2”) receive an aggregate whistleblower award of approximately $195,000, equal to [Redacted] percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action, and *** percent ( *** %) of the monetary sanctions collected in the Related Action. Claimants 1 and 2 provided written notice of their decision not to contest the Preliminary Determinations.

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 and Claimant 2 voluntarily provided original information to the Commission and to the Other Agency and that Claimant 1’s and Claimant 2’s original information led to the successful enforcement of both the Covered Action and the Related Action.[fn2]

[Redacted].

Claimant 1 alerted Commission staff to alleged fraudulent conduct that, in part, prompted staff to open an investigation. Claimant 1 met in person with Commission staff, as well as representatives from the Other Agency, and provided additional information following that meeting. Claimant 2 also met with Commission staff, along with representatives from the Other Agency, and provided new, detailed and highly valuable information early in the investigation that was instrumental in assisting the staff to develop its theory of liability. [Redacted].

Further, we find that it is appropriate that Claimant 1 and Claimant 2 receive an equal percentage in connection with the Covered Action because of their comparable contributions to the success of the Covered Action. With respect to the Related Action, we agree with the CRS’s recommendation that Claimant 1 receive a higher award, as Claimant 1’s information and assistance played a more significant role in the success of the Related Action as compared to the information and assistance provided by Claimant 2.

Accordingly, it is ORDERED that Claimant 1 shall receive a joint award of [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action, and [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the [Redacted] Action,[fn6] and Claimant 2 shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action, and *** percent ( *** %) of the monetary sanctions collected or to be collected in the Related Action.

By the Commission.

[1] The action brought by the Other Agency, [Redacted] ***, constitutes a “related action” to the Covered Action within the meaning of Section 21F(a)(5) of the Exchange Act, 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as a judicial action that was brought by [Redacted] and is based on the same original information that the whistleblower voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.

[2] See Exchange Act Section 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).

[3] [Redacted].

[4] [Redacted].

[5] [Redacted].

[6] Our determination to treat Claimant 1 as a joint whistleblower has not impacted the net total award percentage granted to Claimant 1. Unless Claimant 1, within ten (10) calendar days of the issuance of this Order, makes a joint request, in writing, for a different allocation of the award between the two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

SEC

11/19/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims submitted by [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 5”), [Redacted] (“Claimant 6″) [Redacted] for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the ”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the
Commission deny the above award claims.[fn1] The bases for these determinations are
marked below as follows:

Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 2’s whistleblower submission(s), upon which Claimant 2 bases the claim for an award, was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1) because Claimant 2 made the submission(s) after a request, inquiry, or demand that relates to same subject matter as the submission(s) was directed to Claimant 2 or anyone representing Claimant 2 (such as an attorney) by (i) the Commission, (ii) another regulatory or law enforcement agency or self-regulatory organization (such as FINRA), or (iii) Congress or any other authority of the federal government.[fn3]

By: Claims Review Staff.

[2] None of the Claimants provided any information that led to the opening of the investigation, or that was used in or contributed to the investigation that led to the Covered Action. Enforcement staff responsible for the Covered Action never received information from, or had communications with, Claimants 1, [Redacted], 5, and 6. While Enforcement staff responsible for the Covered Action received information from Claimants 2 and [Redacted], their information was submitted when the investigation had already been substantially completed, and after the [Redacted] had been brought, and when settlement negotiations with respondent the [Redacted] were in progress. Further, the information from Claimants 2 and [Redacted] did not relate directly to the settlement that was being negotiated, and did not impact the settlement negotiations or otherwise contribute to the investigation or the Covered Action.

[3] Commission Staff on the investigation received contact information for Claimant 2 from another individual, and staff contacted Claimant 2 in [Redacted] prior to Claimant 2 providing any information to the Commission.

SEC

93604

11/18/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that the Commission deny the award claims of [Redacted] (“Claimant”) in connection with the above-referenced eight Covered Actions (the “Covered Actions”). The CRS also recommended that the Commission determine that Claimant’s award applications were frivolous or lacking a colorable connection between the tip and the Covered Actions, and pursuant to 17 C.F.R. § 240.21F-8(e), that the Commission should permanently bar Claimant from participation in the Commission’s Whistleblower Program. Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claims are denied, Claimant’s award applications are deemed frivolous or lacking a colorable connection between the tip and the Commission actions for which Claimant has sought an award, and Claimant is barred from participating in the Commission’s Whistleblower Program.

I. Background.

A. Claimant’s Tip and the Covered Actions.

Claimant submitted a tip, and several supplements thereto, alleging violations of the tax laws. Claimant’s submissions do not allege violations of the securities laws. Claimant applied for an award in connection with the following eight Covered Actions, none of which have any relation to the subject of Claimant’s information.

[Redacted] Notice of Covered Action [Redacted].
[Redacted] Notice of Covered Action [Redacted].
[Redacted] Notice of Covered Action [Redacted].
[Redacted] Notice of Covered Action [Redacted].
[Redacted] Notice of Covered Action [Redacted].
[Redacted] Notice of Covered Action [Redacted].
[Redacted] Notice of Covered Action [Redacted].
[Redacted] Notice of Covered Action [Redacted].

B. Notice and Preliminary Determinations.

Claimant began submitting award applications to the Office of the Whistleblower (“OWB’) in 2017 and since then has submitted over 1600 applications. Claimant bases the award claims in the Covered Actions on a single tip (with multiple supplements) concerning alleged tax violations. None of Claimant’s submissions referenced any of the entities, individuals, organizations or companies identified in the Covered Actions nor did they identify any possible securities law violations. Each one was closed with a disposition of No Further Action and none were forwarded to Commission investigative staff.

On March 4, 2021, pursuant to Exchange Act Rule 21F-8(e), OWB provided notice to Claimant that it had determined that the award applications for the Covered Actions were frivolous or lacking a colorable connection between the submissions and the actions for which Claimant has sought awards. OWB also informed Claimant that the Commission has the authority to bar permanently a claimant from its Whistleblower Program if the claimant makes three or more award applications that the Commission finds to be frivolous or lacking a colorable connection between the claimant’s submissions and the Commission actions for which the claimant seeks awards. Accordingly, OWB recommended that Claimant withdraw all frivolous or noncolorable claims that he/she had submitted. Claimant declined to withdraw any of his/her pending claims.

On April 26, 2021, the Claims Review Staff issued Preliminary Determinations recommending that Claimant’s applications for award in the above Covered Actions be denied and further recommended the Commission find that his/her award claims are frivolous or lacking a colorable connection between the claimant’s submissions and the Commission actions for which the claimant seeks awards because the information submitted by Claimant did not relate to the subject matter of the referenced Covered Actions and the record showed the information could not have contributed to any successful enforcement action. Finally, the CRS recommended that the Commission permanently bar Claimant from participation in the Commission’s Whistleblower Program.

C. Claimant’s Response to the Preliminary Determinations.

On April 28, 2021, as permitted by Exchange Act Rule 21F-10(e)(1), Claimant requested the record that formed the basis of the Preliminary Determinations (“Record Request”). In the Record Request, Claimant principally argued: i) he/she was denied due process because the Preliminary Determinations involved eight Covered Actions and Claimant was purportedly limited to one response, ii) the Commission has never tried to bar Claimant in the past, iii) the Commission lacks the legal authority to bar Claimant, iv) the CRS was not provided the totality of Claimant’s thousands of pages of submissions for review, and v) the thousands of pages Claimant submitted should not be considered frivolous or result in a bar because of Claimant’s ongoing voluntary help, information, theories, and documenting of “everything” for many years.

In response to the Record Request, OWB sent Claimant a standard Confidentiality Agreement (“CA”) which, under the Commission’s rules, OWB may require claimants to sign before providing them the materials comprising the record.[fn1] Claimant declined to sign the CA and argued: i) that requiring Claimant to sign and return the CA violated the due process protections of “the Constitution of the United States: The Sarbanes Oxley Act; The Administrative Procedures Act (A.P.A.); The All Writs Act: and, the Whistle Blowers Act, and precedents;” ii) that Claimant was subject to Cybercrimes that interfered with the ability to use electronic devices, iii) that Claimant refused to withdraw any applications/claims, iv) that signing the CA is discretionary, and v) that requiring the Claimant to respond to eight Covered Actions in one filing and within specific deadlines violates Claimant’s due process rights.

III. Analysis.

The record demonstrates that Claimant did not provide information that led to the successful enforcement of any of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action.[fn3]

This is because the record demonstrates that Claimant’s submissions were never forwarded to investigative staff on any of the Covered Actions, and it therefore did not lead to any of the Covered Actions. Further, they were unrelated to any of the Covered Actions and as such, Claimant’s award applications are frivolous and lacking a colorable connection to the Covered Actions.

As noted above, Claimant argued in his/her responses to the Preliminary Determinations that allowing Claimant only one response to the denial of awards in eight Covered Actions violates the Claimant’s due process rights. However, the rules require that before a claimant be barred from participating in the Commission’s Whistleblower Program, that the claimant be given notice that at least three of the claimant’s award applications are frivolous or lacking a colorable connection between the submissions and the Covered Actions pursuant to Rule 21F-8(e). Therefore, the rules foresaw that a claimant would be given notice and opportunity to respond to the denial of multiple award claims at one time. Further, the basis for denying each of Claimant’s applications is straightforward — none of Claimant’s submissions were forwarded to Enforcement staff in connection with any investigation and they lacked any nexus to the Covered Actions. Claimant has not identified any precedent requiring that Claimant be permitted to file a separate response to each denial, nor has Claimant explained how Claimant has been prejudiced by being limited to filing just one consolidated response.

As to Claimant’s objections concerning the Confidentiality Agreement, Rule 21F-12 identifies the materials that may form the basis of an award determination and that may comprise the record on appeal, and the rule specifies that OWB may request an executed CA as a precondition to providing these materials to a claimant. OWB’s request that Claimant sign a CA is consistent with OWB’s approach of asking all claimants who request the record to sign a standard CA. Moreover, Rule 21F-12(b), requiring the execution of a CA, is reasonably designed to protect whistleblower confidentiality and the Commission’s law enforcement interests.

Finally, we find that permanently barring Claimant from the whistleblower program is appropriate. Exchange Act Rule 21F-8(e), which became effective on December 7, 2020, authorizes the Commission to permanently bar a claimant from the Whistleblower Program based on submissions or applications that are frivolous or fraudulent, or that otherwise hinder the effective and efficient operation of the Whistleblower Program. The Commission’s Adopting Release defines “frivolous claims” as “those that lack any reasonable or plausible connection to the covered or related action.”[fn4]

The Commission finds that the Claimant’s award applications are frivolous or lacking a colorable connection between the submissions and the Commission actions for which Claimant has sought an award within the meaning of Rule 21F-8(e) of the Exchange Act. There is no relation between the information provided by Claimant and the Covered Actions.

As such, pursuant to Rule 21F-8(e), the Commission permanently bars Claimant from participation in its Whistleblower Program because Claimant has filed three or more applications for award that are frivolous or fraudulent, or otherwise hinder the effective and efficient operation of the Whistleblower Program. Claimant has submitted over 1600 award applications that are unrelated to any of the claimed Covered Actions. Claimant’s filing of frivolous claims has consumed considerable staff time and resources and has hindered the efficient operation of the Whistleblower Program. As such, we find it appropriate to permanently bar Claimant from the Commission’s Whistleblower Program. This permanent bar applies to any pending applications from Claimant at any stage of the claims review process as well as to all future award claims.

IV. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s award claims in the Covered Actions are denied, and it is determined that the applications are frivolous or lacking a colorable connection between the tip and the Covered Actions. It is further ORDERED that Claimant is permanently barred from participation in the Commission’s Whistleblower Program.
By the Commission.

[1] Rule 21F-12(b) states: “These rules do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section. Moreover, the Office of the Whistleblower may make redactions as necessary to comply with any statutory restrictions, to protect the Commission’s law enforcement and regulatory functions, and to comply with requests for confidential treatment from other law enforcement and regulatory authorities. The Office of the Whistleblower may also require you to sign a confidentiality agreement, as set forth in § 240.21F-(8)(b)(4) of this chapter before providing these materials.”
[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[3] Alternatively, all eight of Claimant’s award applications are untimely, which would provide an independent basis for denying them. See Rule 21F-10(b). In fact, some of Claimant’s award claims were submitted years after the deadline and after the Commission already made awards in connection with the Covered Action.
[4] Further, Rule 21F-8(e)(4) states: “(i) Paragraph (e) of this section shall apply to all award applications pending as of December 7, 2020, which is the effective date of paragraph (e) of this section. But with respect to any such pending award applications, the Office of the Whistleblower shall advise you, before any Preliminary Determination or Preliminary Summary Disposition is issued that may recommend a bar, of any assessment by that Office that the conditions for issuing a bar are satisfied….” OWB provided such notice to the Claimant.

SEC

93569

11/12/2021

For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

In [Redacted], Claimant, who was then the [Redacted] of [Redacted] (“Company”), sent an email to the Commission alleging that the Company had [Redacted]. In [Redacted], Commission staff from the Division of Enforcement (“Enforcement”), along with an official from another agency, telephonically interviewed Claimant, during which call, Claimant made similar allegations to those in Claimant’s [Redacted] email.[fn1]

On [Redacted], the Commission staff opened an investigation of the Company that culminated in the Covered Action (“Investigation”). On [Redacted], the Investigation staff sent a subpoena for documents and materials to the Company, as well as a preservation letter for additional evidence. The subpoena and the preservation letter required the production of documents concerning [Redacted] going back to [Redacted], and encompassed all products and [Redacted] of the Company. Pursuant to the subpoena and preservation letter, the Company began preserving, collecting, and producing responsive materials in the days, weeks, and months following on a rolling basis.

On [Redacted], Enforcement staff, along with an official from another agency, interviewed Claimant in person. According to the Enforcement staff, during the meeting, Claimant reiterated the allegations made in his/her [Redacted] email to the Commission, but did not provide the staff with any new and useful information about the Company’s [Redacted], beyond what Claimant had already provided in the [Redacted] email and [Redacted] telephonic interview.

On [Redacted], the Commission filed an enforcement action against the Company and charged the Company with violation of [Redacted]. Specifically, the Commission charged that [Redacted]. The Company was also charged with [Redacted]. The Commission ordered the Company to pay disgorgement of [Redacted], prejudgment interest of [Redacted] and a civil penalty of [Redacted].

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant’s claim be denied because the information provided by Claimant before July 21, 2010, the date of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), did not constitute original information within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b)(1)(iv) thereunder (“original information” must, among other requirements , have been “[p]rovided to the Commission for the first time after July 21, 2010 (the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act)”) and the information provided to the Commission after July 21, 2010 did not lead to the success of the Covered Action under Rule 21F-4(c)(2) of the Exchange Act. With regard to the information Claimant provided after July 21, 2010, the CRS found that, while Claimant met with the Enforcement staff in [Redacted] and submitted additional written communications to the staff, Claimant did not provide any new information that was used by the staff during the Investigation or in the Covered Action. The record supporting the Preliminary Determination included the declaration (the “First Declaration”) of one of the attorneys who was assigned to the Investigation and the resulting Covered Action.[fn3] The First Declaration stated under penalty of perjury that, during the in-person interview in [Redacted], Claimant did not provide helpful new information but, rather, repeated his/her earlier allegations and did not provide the staff with any new and useful information about the Company’s [Redacted] activities beyond what Claimant had already provided in his/her [Redacted] email and the [Redacted] telephonic interview. The First Declaration noted that Claimant did make other allegations and provide other information at and after the [Redacted] meeting, but none of these allegations nor any of the additional information became a part of the case ultimately brought by the Commission against the Company, which charged that the Company had violated [Redacted].

C. Claimant’s Response to the Preliminary Determination.

On [Redacted], Claimant submitted a timely written response contesting the Preliminary Determination.[fn4] Specifically, Claimant argues in response to the Preliminary Determination that he/she provided the Commission with original information after July 21, 2010 that caused the Commission to inquire into different conduct as part of the open Investigation and that this information significantly contributed to the success of the Covered Action. According to Claimant, prior to July 21, 2010, Claimant’s information was “limited to detailed information, that Claimant subsequently added to and enhanced [after July 21, 2010], regarding [the Company]’s [Redacted]. Claimant states that the importance of Claimant’s post-July 21, 2010 information is shown by the scope of the information requested in an SEC subpoena issued to the Company after that date.[fn5] Claimant points in particular to the [Redacted] in-person meeting Claimant had with the staff and an official from another agency as a key moment in causing the Commission to inquire into different conduct by the Company, namely, [Redacted] Claimant also notes other information he/she submitted after the [Redacted] meeting that, Claimant asserts, “made a substantial and important contribution to the successful resolution of the Covered Action … and strengthened the Commission’s case by meaningfully increasing Enforcement staff’s leverage during the settlement negotiations.”[fn6]

In addition to the purported assistance Claimant provided to the Commission after July 21, 2010, which Claimant asserts supports granting him/her an award, Claimant also requests that the Commission consider the personal harm he/she suffered as a result of the purported retaliation Claimant faced from his/her supervisor at the Company and be cognizant of the fact that “Claimant very much needs the award from this successful settlement to begin to put [Claimant]’s life back to some normalcy after more than *** years since [the Company’s ***] exercised *** vengeance on the Claimant because [Claimant] told the truth [Redacted] that worked with [the supervisor] to cover up the crimes.”[fn7]

II. Analysis.

To qualify for an award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn8] As relevant here, to be considered original information the submission must be provided to the Commission for the first time after July 21, 2010.[fn9] Additionally, original information will be deemed to lead to a successful enforcement action if either: (i) the original information caused the staff to open an investigation “or to inquire concerning different conduct as part of a current . . . investigation” and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information;[fn10] or (ii) the conduct was already under examination or investigation, and the original information “significantly contributed to the success of the action.”[fn11]

Claimant does not dispute that the information Claimant provided to the staff in his/her [Redacted] email and the [Redacted] telephonic meeting with the staff and an official from another agency pre-dated the enactment of the Dodd-Frank Act and therefore does not qualify as original information under Exchange Act Rule 21F-4(b)(iv), and thus cannot form the basis of a whistleblower award.[fn12]

With regard to the information Claimant provided after the enactment of the Dodd-Frank Act, we find that Claimant’s information did not cause the Commission to inquire concerning different conduct as part of its existing investigation nor did it significantly contribute to the success of the Covered Action.[fn13] As noted, the First Declaration stated that Claimant did not provide the staff with any new and useful information about the Company’s [Redacted] activities beyond what Claimant had already provided in his/her [Redacted] email and the [Redacted] telephonic interview and that none of the other allegations and information he/she provided at and after the [Redacted] meeting became a part of the [Redacted] case ultimately brought by the Commission against the Company.[fn14]

In response to Claimant’s letter contesting the Preliminary Determination, the attorney who wrote the First Declaration wrote two supplemental declarations (the “Second Declaration” and the “Third Declaration”). The Second and Third Declarations reconfirmed under penalty of perjury that Claimant did not provide the staff with any new and useful information about potential [Redacted] after July 21, 2010 beyond what he/she had already provided in his/her [Redacted] email and [Redacted] telephonic interview. As noted, pursuant to the subpoena and preservation letter the staff sent the Company in [Redacted], the Company provided responsive materials to the staff over the next several weeks and months. The Second and Third Declarations affirmed that the evidence produced by the Company was the primary source of information which led to the success of the Covered Action, including the scheme involving [Redacted] and [Redacted] involving [Redacted].[fn15]

Claimant presents no reason to believe that any information he/she submitted after July 21, 2010 was used by the staff responsible for the Covered Action. We therefore credit the three staff declarations and find that Claimant’s information did not significantly contribute to the success of the Covered Action.

IV. Conclusion.

Accordingly, it is hereby ORDERED that the whistleblower award application of Claimant be, and it hereby is, denied.

By the Commission.

[1] Claimant further alleged that the Company’s [Redacted] According to Claimant, [Redacted]

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] The whistleblower rules contemplate that the record upon which an award determination is made shall consist of a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip and the claimant’s award application. See Exchange Act Rule 21F-12(a).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] Claimant asserts that “[i]t is clear that in [Redacted] the SEC had no evidence, plans, or intent to investigate [the Company]’s [Redacted] and their role in the [Redacted]

[6] For example, Claimant states that a later tip he/she submitted alerted the investigative staff to the Company’s [Redacted] and that this tip “was the basis for [the Company’s [Redacted] initiation to investigate the matter [Redacted] thereby saving the need for the Commission to investigate . . . [and] provided the Commission with the leverage, whether used explicitly or implied, to bring the action and settlement to efficient conclusion with fewer resources.”

[7] See supra note 1. According to Claimant, the retaliation forced Claimant [Redacted]

[8] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[9] See Exchange Act Rule 21F-4(b)(1)(iv); 17 C.F.R. § 240.21F-4(b)(1)(iv).

[10] See Exchange Act Rule 21F-4(c)(1); 17 C.F.R. § 240.21F-4(c)(1).

[11] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R § 240.21F-4(c)(2).

[12] See also Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[13] Moreover, since the Investigation was opened on [Redacted], Claimant’s post-Dodd-Frank Act information did not cause the opening of the Investigation.

[14] See supra note 6.

[15] The Second Declaration stated that, while Claimant made allegations after Claimant’s [Redacted] in-person interview about the Company’s efforts to [Redacted] the staff was already aware of this information from information provided by the Company pursuant to the subpoena and preservation letter. Further, the Third Declaration stated that the staff did not send any additional subpoenas or requests for documents or other information to the Company as a result of information it received from Claimant during or after the [Redacted] in-person interview.

SEC

93547

11/10/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of more than $12.5 million, equal to [Redacted] percent ( *** %) of monetary sanctions collected or to be collected in the above-referenced Covered Action, and [Redacted] (“Claimant 2”) receive a whistleblower award of more than $2.5 million, equal to *** percent (*** %) of monetary sanctions collected or to be collected in the Covered Action.[fn1]

The recommendations of the CRS are adopted. The record demonstrates that Claimants 1 and 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]

While both whistleblowers provided substantial assistance to the staff in the Division of Enforcement, Claimant 1’s information was more significant, as it alerted Commission staff to the fraudulent scheme, prompting the opening of the investigation. Claimant 1’s information also was more comprehensive, relating to the overall scheme, whereas Claimant 2’s information was more limited in nature and had less of an impact on the success of the enforcement action. As a result, a [Redacted] percent ( *** %) award to Claimant 1, and a *** percent ( ***%) award to Claimant 2 appropriately reflects their respective levels of contribution to the Covered Action.

Accordingly, it is ORDERED that Claimant 1 shall receive an award of [Redacted] percent ( *** %) and Claimant 2 shall receive an award of *** percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying an award to a third claimant who did not submit a request for reconsideration. Accordingly, the preliminary denial of the third claimant’s award application has become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Section 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).

SEC

11/06/2021

In response to the above-referenced Notice of Covered Actions, the Securities and Exchange Commission (“Commission”) received [Redacted] whistleblower award claims from the following claimants: [Redacted] and [Redacted] (“Claimant 5”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations as follows:

[Redacted].

Claimant 5.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 5.

Claimant 5 did not provide original information that led to a successful enforcement action pursuant to Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder, because the information Claimant 5 provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 5’s information, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this recommendation. we note that the record reflects that Claimant 5’s information was submitted after the investigation had opened and many months after the [Redacted] action had been filed in federal court. Claimant 5 made allegations about another company, and the information was forwarded to Enforcement staff in another office who were investigating that matter. Enforcement staff working on the Covered Actions never received the information or had any communications with Claimant 5. Claimant 5’s information was not used in, nor had any impact on, the charges brought by the Commission in the Covered Actions.

By: Claims Review Staff.

SEC

11/06/2021

In response to the above-referenced Notice of Covered Actions, the Securities and Exchange Commission (“Commission”) received [Redacted] whistleblower award claims from the following claimants: [Redacted] (“Claimant 3”), [Redacted] and [Redacted]. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F- 10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations as follows:

[Redacted].

Claimant 3.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 3.

Claimant 3 did not provide original information that led to a successful enforcement action pursuant to Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4( c) thereunder, because the information Claimant 3 provided did not: (1) under Rule 21F-4(c)(1) of the Exchange Act, cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s information, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this recommendation, we note that the record reflects that Claimant 3 submitted information to the Commission after the investigation had been opened and consisted largely of publicly-available information. While Enforcement staff responsible for the Covered Actions received Claimant 3’s information, they never had any communications with Claimant 3, and did not rely upon Claimant 3’s information, which was general and conclusory in nature. Claimant 3’s information was not used in, nor had any impact on, the charges brought by the Commission in the Covered Actions.

[Redacted].

By: Claims Review Staff.

SEC

10/29/2021

In response to the above-referenced Notices of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (collectively, “Claimants”) for the above referenced matters. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is marked below as follows:

The information provided by Claimants was never provided to or used by staff handling the Covered Actions or underlying investigation (or examination), and those staff members otherwise had no contact with Claimants. Therefore, Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Office of the Whistleblower.

[2] Investigative staff responsible for the Covered Actions never received any information from Claimants
or had any communications with Claimants. As such, Claimants did not provide any information that was
used in, or otherwise had any impact on, the investigation or resulting Covered Actions.

SEC

10/29/2021

In response to the above-referenced Notice of Covered Action. the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

Tue Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The bases for this determination is marked below as follows:

Claimant failed to submit the claim for award to the Office of the Whistleblower within ninety (90) clays of the date of the above-referenced Notice for the Covered Action, as required under Rule 21F-10(b) of the Exchange Act.[fn2]

Claimant’s whistleblower submission(s), upon which Claimant bases the claim for an award, was not made voluntarily as required by Exchange Act Section 21F and Rule s 21F-3 and 21F-4(a)(1) because Claimant made the submission(s) after a request, inquiry, or demand that relates to same subject matter as the submission(s) was directed to Claimant or anyone representing Claimant (such as an attorney) by (i) the Commission, (ii) another regulatory or law enforcement agency or self-regulato1y organization (such as FINRA), or (iii) Congress or any other autho1ity of the federal government.[fn3]

By: Claims Review Staff.

[2] The deadline to file award claims for the Covered Action was [Redacted]. Claimant’s award application was dated [Redacted] approximately 13 months after the deadline.

[3] [Redacted] Claimant was contacted by the [Redacted] in connection with its ongoing investigation to discuss the facts and circumstances surrounding Claimant’s investments with [Redacted]. Additionally, on [Redacted] Commission staff contacted Claimant to discuss [Redacted] investment with [Redacted] and [Redacted] communications with [Redacted]. As such, Claimant submitted [Redacted] information after both the [Redacted] and SEC directed requests for information to [Redacted] related to the subject matter of Claimant’s later submission of information.

SEC

10/29/2021

fu response to the above-referenced Notices of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant”) for the above referenced matters. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimant was never provided to or used by staff handling the Covered Actions or underlying investigation (or examination), and those staff members otherwise had no contact with Claimant. Therefore, Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Office of the Whistleblower.

[2] Investigative staff responsible for the Covered Actions never received any information from Claimant or had any communications with Claimant. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Actions.

SEC

10/29/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, Claimant is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

SEC

10/29/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) a received whistleblower award claim from [Redacted] (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[1] Investigative staff responsible for the Covered Action never received any info1mation from Claimant or had any communications with Claimant. As such, Claimant did not provide any information that was used in, or othe1wise had any impact on, the investigation or resulting Covered Action.

SEC

93465

10/29/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $2,000,000, equal to *** percent ( *** %) of collected monetary sanctions in connection with the [Redacted] (“Related Action”). Claimant previously received a whistleblower award in connection with the SEC Covered Action [Redacted][fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination for the Related Action.

The recommendation of the CRS for the Related Action is adopted. The record demonstrates that Claimant voluntarily provided the same original information to the DOJ and the Commission, and that information led to the successful enforcement of the Related Action.[fn2]

[Redacted].

Claimant provided information that prompted the opening of the DOJ and SEC investigations, and Claimant provided extensive, ongoing assistance in the investigations.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] ( *** %) of the monetary sanctions collected or to be collected in the Related Action.
By the Commission.

[1] The Commission may pay an award based on amounts collected in a related action, which is defined as a “judicial or administrative action that is brought by” one of the enumerated entities, including the Department of Justice (“DOJ”), “and is based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $ 1,000,000.” See Order Determining Whistleblower Award Claim, Release No. 82966 (April 5, 2018). The recent amendments to the Whistleblower Rules, which became effective December 7, 2020, deem a [Redacted] agreement entered into by the DOJ after July 21, 2010 to be an administrative action that may be a “related action” that is eligible for a whistleblower award. See Rule 21F-4(d)(3)(i), 17 C.F.R. § 240.21F-4(d)(3)(i); Adopting Release for Whistleblower Rule Amendments, Rel. No. 34-89963 (Sept. 23, 2020) (“Adopting Release”) at 11-20. [Redacted].
[2] See Rule 21F-3(b); 17 C.F.R. § 240.21F-3(b); Rule 21F-4(d)(3)(i); 17 C.F.R. § 240.21F-4(d)(3)(i).

SEC

93441

10/28/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $750,000 which represents [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant alerted the Commission to the on-going conduct, prompting the opening of the investigation, and thereafter provided substantial, ongoing assistance, including participating in multiple voluntary interviews with Commission staff, identifying key witnesses, providing helpful documents, and explaining complex issues, which saved significant Commission staff time and resources.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

SEC

93440

10/28/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $24,000, which represents *** percent ( *** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant provided substantial assistance to an investigation by meeting in person with Commission staff, providing documents, and identifying potential witnesses, which enabled the Commission to bring an emergency action and significantly contributed to the success of the Covered Action.

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

SEC

93414

10/25/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations in connection with the above-referenced Covered Actions[fn1] (the “Covered Actions”) recommending that [Redacted] (“Claimant 1”)[fn2] and [Redacted] (“Claimant 2”) jointly receive a whistleblower award in the amount of *** percent (***%) the monetary sanctions collected in the Covered Actions for a total payout of more than $1.5 million. Claimants 1 and 2 provided written notice of their decision not to contest the Preliminary Determinations.[fn3]

[Redacted].

Claimants 1 and 2 spoke telephonically with staff after submitting their tips and provided critical information concerning the breadth of the alleged wrongdoing, additional parties involved with the conduct, and the credibility of certain witnesses, which helped expedite the staff’s discovery requests and advance the investigation. [Redacted].

Accordingly, it is ORDERED that Claimants 1 and 2 shall receive a joint award of *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Actions.[fn7]
By the Commission.

[1] For the purposes, of making an award in this matter, we are treating all of the actions listed in connection with Notice of Covered Action [Redacted] as a single Covered Action as the proceedings arose out of the same nucleus of operative facts. See Rule 21F-4(d)(1). The proceeding posted as Covered Action [Redacted] also arose out of the same nucleus of operative facts. As such, and in light of the unique facts and circumstances here, including Claimants 1 and 2’s clear intention to apply for awards in connection with all actions that arose out of the same nucleus of operative facts, that the NoCA posting for Covered Action [Redacted] cross-referenced the proceeding later posted as Covered Action [Redacted], that Claimants 1 and 2 were unrepresented, and the fact that the claims for the Covered Actions had not yet been adjudicated, we treat Claimant 1 and 2’s award claims in both Covered Actions as timely.
[2] [Redacted].
[3] The Preliminary Determination of the CRS also recommended denying an award to a third claimant in connection with Notice of Covered Action [Redacted], who did not submit a request for reconsideration. Accordingly, the preliminary denial of the third claimant’s award application has become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[4] See Exchange Act Section 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).
[5] [Redacted].
[6] [Redacted].
[7] Our determination to treat Claimant 1 and Claimant 2 as a joint whistleblower has not impacted the net total award percentage to Claimant 1and Claimant 2. Unless Claimant 1 and Claimant 2, 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

SEC

93370

10/18/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $400,000, which is equal to [Redacted] percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action (“Covered Action”). Claimant provided written notice, through counsel, that Claimant did not contest the Preliminary Determination.

The presumption, however, does not apply here because two negative factors — unreasonable reporting delay and culpability — under Rule 21F-6(b) are present. Based on the facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission and was culpable in some of the underlying misconduct. In particular, Claimant’s information was submitted approximately four years from the date on which he/she first became aware of the underlying misconduct, during which time investors continued to suffer harm. In addition, Claimant was a [Redacted] who facilitated the underlying misconduct by, for example, [Redacted] in an effort to hide the misconduct.

Applying the award criteria in Rule 21F-6 to the facts and circumstances here, we find the *** % award determination to be appropriate.[fn4] In coming to this determination, we considered that (i) Enforcement staff was unaware of the misconduct until Claimant submitted the tip, (ii) Claimant’s documents and assistance allowed the staff to conserve considerable resources, (iii) the charges brought by the Commission were based on conduct that was the subject of the information provided by Claimant, (iv) Claimant unreasonably delayed reporting to the Commission while investors continued to be harmed, and (v) Claimant was a [Redacted] who facilitated the underlying misconduct by [Redacted] and was therefore culpable.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[3] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).
[4] In assessing the appropriate award amount, Exchange Act Rules 21F-6(a) and (b) provide 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. Rules 21F-6(a) and (b); 17 C.F.R. § 240.21F-6(a) and (b).

SEC

10/18/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), and [Redacted] (“Claimant 4”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimants were never provided to or used by staff handling the Covered Actions or underlying investigation (or examination), and those staff members otherwise had no contact with Claimants. Therefore, Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Office of the Whistleblower.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Actions, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Commission staff responsible for the underlying investigation in the Covered Action never received any information from Claimants 1-4 or had any communications with Claimants 1-4. As such, Claimants 1-4 did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

10/17/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) received a whistleblower award claim from [Redacted] (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminary determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Actions, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Commission staff responsible for the underlying investigation in the Covered Action never received any information from Claimant or had any communications with Claimant. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

10/15/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received three whistleblower award claims.[fn1] Pursuant to Section 21F of the Securities Exchange Act of 1934 (the ”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows:

[Redacted].

[Redacted] (“Claimant 2”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2. Claimant 2 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information Claimant 2 provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (ii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2).

In reaching this preliminary determination, we note that the record reflects that Claimant 2’s provided information to the Commission approximately a year after Enforcement staff had opened the investigation and had already conducted significant investigative steps. The information provided by Claimant 2 was already known by the Covered Action staff, repeated publicly-reported information, and did not materially add to the information already known by the Covered Action staff. As a result, Claimant 2 did not provide the Covered Action staff with any original information that significantly contributed to the [Redacted] action.

By: Claims Review Staff.

CFTC

10/15/2021

On [Redacted], the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that we deny Claimant 1’s whistleblower award application in relation to [Redacted] (“Order” and “Covered Action”), and for related actions brought by the [Redacted] (“Federal Regulator”), [Redacted] (“Foreign Regulator”), and [Redacted] (“State Regulator”) (collectively, the “Related Actions”).[fn1]

Claimant 1 submitted a timely request for reconsideration of the Preliminary Determination, providing additional information in relation to how Claimant 1’s information was utilized by a Federal Regulator, which conducted a parallel [Redacted] investigation into the conduct at issue in the Covered Action.[fn2] The Commission evaluated the award applications under Section 23 of the Commodity Exchange Act (“CEA”), 7 U.S.C. § 26 (2018), and the Whistleblower Rules, 17 C.F.R. pt. 165 (2020). Based on the additional information received from Claimant 1 and the Federal Regulator, the Commission has determined that Claimant 1 significantly contributed to the success of the Covered Action and two of the Related Actions.

For the reasons stated below, Claimant 1’s award claim is approved in the amount of [Redacted]% for the Covered Action, [Redacted]% for the related action brought by the Federal Regulator, and [Redacted]% for the related action brought by the Foreign Regulator. Claimant 1’s additional related action award application is denied because he/she did not establish that his/her information was provided to the State Regulator.

I. BACKGROUND.

A. Preliminary Determination.

On [Redacted], the CRS preliminarily determined to recommend that the Commission deny Claimant 1’s claim because he/she had not provided sufficient information to establish that he/she had led to the successful enforcement of the Covered Action. The CRS determined that the information Claimant 1 provided contained original information and was voluntarily provided.

B. Request for Reconsideration.

[Redacted]. Claimant 1’s counsel provided additional specific information that related to the assistance Claimant 1 provided to the Federal Regulator. On [Redacted], Claimant 1 submitted a timely request for reconsideration, arguing that he/she was entitled to an award because the information he/she provided “significantly contributed” to the successful enforcement action by providing assistance that benefited both the Federal Regulator and the Commission’s Division of Enforcement (“Division”) staff. Claimant 1 also claimed to have reinvigorated the Federal Regulator’s investigation by contributing to a [Redacted] article.

II. CLAIMANT 1’S ASSISTANCE TO THE FEDERAL REGULATOR.

The Commission’s Whistleblower Office (“WBO”) staff investigated Claimant 1’s contentions on reconsideration. The Federal Regulator’s investigative staff provided a sworn declaration corroborating that Claimant 1 was the first to explain that certain [Redacted] (“Company X”) had a large position that would benefit from [Redacted] (“Trading Position”).[fn3] Although Claimant 1 did not himself/herself provide direct evidence of [Redacted] Claimant 1’s information led directly to evidence [Redacted]: Claimant 1 increased the Federal Regulator’s understanding of the Trading Position, and the Federal Regulator benefitted from this increased understanding when it questioned a [Redacted] for Company X ([Redacted]). During the Federal Regulator’s interview of the [Redacted], the Federal Regulator obtained several admissions as to the frequency of the [Redacted] in relation to the Trading Position. The Federal Regulator staff and Division staff benefitted from these admissions, and both agencies incorporated these admissions into the [Redacted] valuations of their respective cases.

A. The Covered Action and Claimant 1’s Tip.

The Covered Action arose out of an investigation that was opened in response to [Redacted] that related to the [Redacted]. On [Redacted] Claimant 1 submitted through his/her counsel a detailed description of the Trading Position on a CFTC Form TCR. As a result of this information, Division staff and staff from the Federal Regulator and the [Redacted] interviewed Claimant 1 multiple times. Claimant 1 did not provide direct evidence of [Redacted].

B. Claimant 1’s Contribution Through [Redacted].

Claimant 1 has satisfied the Commission that he/she was the original source of a [Redacted]. The [Redacted] revealed that certain Company X traders had a position, the Trading Position, that [Redacted]. The [Redacted] also alerted other regulators that Division staff had information from a [Redacted] which caused the Federal Regulator and the Foreign Regulator to request copies of the information Claimant 1 had provided the Division.[fn5] Division staff provided Claimant 1’s Form TCR to both regulators. The Federal Regulator started interviews of Company X witnesses [Redacted], and Division staff attended some of those interviews. Claimant 1 was the second person the Federal Regulator interviewed in this set of interviews.

III. RULE REGARDING SIGNIFICANT CONTRIBUTION.

A whistleblower’s information can lead to a successful enforcement action by either causing an investigation to be opened or by significantly contributing to the success of an ongoing action.[fn6] Because the Division opened the Covered Action on the basis of [Redacted], the only avenue to an award for Claimant 1 is by establishing that he/she significantly contributed to the matter. In this instance, Claimant 1 provided information that led to direct evidence of the underlying violations but did not provide direct evidence of violations themselves. Therefore, the question before the Commission is whether a whistleblower can significantly contribute to the success of an action by providing information that leads to direct evidence.

The Whistleblower Rules do not define the term “significantly contribute.” However, the adopting releases for the Proposed and Final Whistleblower Rules provide insight into how the Commission should interpret the term. First, the adopting release for the Proposed Whistleblower Rules contemplated a whistleblower receiving an award for providing information that led staff to direct evidence:

“A whistleblower whose information did not provide this degree of evidence in itself, but who played a critical role in advancing the investigation by leading the staff directly to evidence that provided important support for one or more of the Commission’s claims could also receive an award, in particular if the evidence the whistleblower pointed to might have otherwise been difficult to obtain.”[fn7]

Second, the adopting release for the Final Whistleblower Rules clarified that, in order for a whistleblower to receive a whistleblower award, there must be a “meaningful nexus” between the information the whistleblower provided and the “Commission’s ability to successfully complete its investigation, and to either obtain a settlement or prevail in a litigated proceeding.[fn8]

IV. ANALYSIS OF COVERED ACTION AWARD APPLICATION.

Upon review of the record, with the information provided by the Federal Regulator following Claimant 1’s request for reconsideration, we determine that Claimant 1 provided information that led to the successful enforcement of the Covered Action and two of the related actions because he/she significantly contributed to the Division’s investigation through original information that he/she voluntarily provided, pursuant to Section 23(b)(1) of the CEA.[fn9]

Claimant 1 provided information to the Commission voluntarily by submitting it prior to any request by the Division for information from Claimant 1.[fn10] Claimant 1 submitted his/her information to the government before the publication of the [Redacted] article. Therefore, the information he/she provided as a source for the article was also voluntarily submitted to the Federal Regulator.[fn11] The Federal Regulator interviewed Claimant 1 after reading the [Redacted] article but prior to Claimant 1 providing information to the Federal Regulator. The Commission considers the information Claimant 1 provided to the Federal Regulator to be voluntarily submitted because he/she had voluntarily provided information to other agencies of the government before the [Redacted] article was published.[fn12]

Although Division and Federal Regulator staff already knew about the Trading Position from documents provided by Company X, Claimant 1 provided original information because certain information he/she provided related to the Trading Position was unknown to Division staff.[fn13] Claimant 1 also provided original information through the [Redacted] article because the Commission determines that he/she has provided sufficient information through phone records to establish he/she was a source for the article.[fn14]

Claimant 1’s information significantly contributed to the successful enforcement of the Covered Action. The [Redacted] article caused the Federal Regulator to focus its attention on the information Claimant 1 provided. Shortly after the [Redacted] article was published, the Federal Regulator obtained a copy of Claimant 1’s Form TCR and initiated interviews of current and former Company X employees [Redacted]. Division staff attended some of these interviews and learned valuable information related to the frequency of Company X’s [Redacted] as a result of the interviews. Additionally, Federal Regulator staff used the Trading Position information from Claimant 1 to question the [Redacted] about his/her [Redacted]. In this way, Claimant 1’s information led directly to evidence of [Redacted]. When questioned by the Federal Regulator, the [Redacted] admitted [Redacted] the Trading Position that Claimant 1 highlighted.

Claimant 1’s information significantly contributed to the success of the Covered Action. Information regarding the [Redacted] admissions, a description of the underlying position, and an explanation of how the underlying position allowed Company X to profit from [Redacted] all helped justify the outcome and sanctions imposed on Company X not only in the Federal Regulator’s Order but also in the Commission Order and the Foreign Regulator’s Order. Claimant 1’s information thereby led to a successful enforcement action because it had a meaningful nexus to the Commission’s ability to obtain [Redacted] of the Covered Action.

V. ANALYSIS OF RELATED ACTION AWARD APPLICATIONS.

Claimant 1 applied for awards based on related actions brought by the Federal Regulator, the Foreign Regulator, and the State Regulator. We evaluated these claims and determined that Claimant 1 qualifies for an award for the Federal and Foreign Regulator actions but does not qualify for an award brought by the State Regulator.

Under the CEA, a related action is a “judicial or administrative action” brought by certain agencies. A whistleblower will qualify for an award on a related action if the other regulator’s case was “based on the original information provided by a whistleblower pursuant to subsection (a) that led to the successful enforcement of the Commission action.”[fn16] We interpret this Rule to be satisfied when the whistleblower’s information was shared with the other agency.[fn17]

We find that Claimant 1’s information led to the successful resolution of a related action brought by the Federal Regulator. The Commission shared Claimant 1’s information with the Federal Regulator, and Claimant 1 later provided additional information to the Federal Regulator (and the Division) through interviews. The Federal Regulator’s [Redacted] action was based, at least in part, on the original information that Claimant 1 voluntarily submitted to the Commission and led to the successful resolution of the Federal Regulator action (and the Covered Action).[fn18] The Federal Regulator related action constituted a [Redacted] matter [Redacted] and a [Redacted] matter [Redacted] against two different Company X entities.[fn19]

We similarly find that the Commission shared Claimant 1’s information with the Foreign Regulator, and note that the Foreign Regulator’s Order also relies on the Trading Position and the [Redacted] admissions. We also find that Claimant 1 timely applied for the Foreign Regulator related action [Redacted].

We find that Claimant 1’s application for an award related to the State Regulator action should be denied because Claimant 1’s information was not shared with the State Regulator.

VI. AWARD DETERMINATION.

In determining the appropriate award percentage, we weighed the factors specified in Rule 165.9(a), including the significance of the information provided by Claimant 1, the assistance that Claimant 1 provided, and the law-enforcement interests at issue.[fn20] Our determination of the percentage reflects the fact that Claimant 1 did not provide direct evidence but instead provided information that led to direct evidence. Additionally, the significance of his/her assistance was not readily obvious to Division staff, his/her information related to only some of the misconduct in the Covered Action, and Claimant 1 delayed reporting the misconduct to regulators until [Redacted]. Based on the confluence of these factors, we find that Claimant 1 should receive an award of [Redacted]% of the monetary sanctions collected in the Covered Action.

With respect to the Federal Regulator action[fn21] and the Foreign Regulator action,[fn22] we find that Claimant 1 should also receive awards of [Redacted]% for each action, based primarily on the indirect nature of the evidence of the underlying violations Claimant 1 submitted.

VII. CONCLUSION.

Upon consideration of the record, including Claimant 1’s request for reconsideration, as well as the additional factual information provided by Federal Regulator staff, we find that Claimant 1’s information led to the successful enforcement of the Covered Action, the related Federal Regulator action, and the related Foreign Regulator action.

It is hereby ORDERED that Claimant 1 shall receive an award of the monetary sanctions collected, or to be collected of [Redacted] ([Redacted]%) in the Covered Action, [Redacted] ([Redacted]%) in the related Federal Regulator action, and [Redacted] ([Redacted]%) in the related Foreign Regulator action. Claimant 1’s application for an award for the State Regulator’s action is denied. The total award for Claimant 1 would amount to approximately $[Redacted]. By the Commission.

[1] See Order Instituting Proceedings Pursuant to Sections 6(c) and 6(d) of the Commodity Exchange Act, Making Findings, and Imposing Remedial Sanctions. [Redacted].

[2] The Preliminary Determination further recommended that the award applications submitted by Claimant 2 be denied. Claimant 2 failed to submit a request for reconsideration of the Preliminary Determination, and therefore, the Preliminary Determination denying his/her claims for an award has become the Final Order of the Commission. 17 C.F.R. § 165.7(h).

[3] Prior to Claimant 1 filing his/her Form TCR, the Federal Regulator’s investigators had already identified documents relating to the Trading Position that were provided by Company X.

[4] [Redacted].

[5] Division staff provided an unredacted version of Claimant 1’s Form TCR to the Federal Regulator on [Redacted] and a redacted version of that Form TCR to the Foreign Regulator on [Redacted].

[6] 17 C.F.R. § 165.2(i).

[7] Implementing the Whistleblower Provisions of Section 23 of the Commodity Exchange Act, 75 Fed. Reg. 75,728, 75,731 (Dec. 6, 2010) (emphasis added).

[8] Whistleblower Incentives and Protection, 76 Fed. Reg. 53,172, 53,177 (Aug. 25, 2011).

[9] 7 U.S.C. § 26(b)(1) (2018).

[10] Claimant 1 first voluntarily submitted information about the Covered Action to the [Redacted].

[11] 17 C.F.R. § 165.2(o)(1).

[12] The Whistleblower Program is designed to motivate whistleblowers to come forward and report wrongdoing to regulators. As the Commission explained: “The statutory purpose of [the Whistleblower Program is] creating a strong incentive for whistleblowers to come forward early with information about possible violations of the CEA rather than wait until Government or other official investigators ‘come knocking on the door.’” Implementing the Whistleblower Provisions of Section 23 of the Commodity Exchange Act, 75 Fed. Reg. 75,734.

[13] We note that the burden is on the whistleblower to provide additional information to substantiate claims that he/she provided information to another regulator or entity that assisted Division staff: “[t]he whistleblower must satisfy the whistleblower’s claims as the original source of information to the Commission’s satisfaction.” 17 C.F.R. § 165.2(l). In this case, Claimant 1 met that burden by providing (1) a summary of what the other regulator told Claimant 1 about his/her assistance, (2) the names of the Federal Regulator contacts, and (3) information that corroborated he/she was the original source of the [Redacted] Article that was relevant to the Commission’s investigation. The Federal Regulator confirmed that Claimant 1’s information was helpful.

[14] See 7 U.S.C. § 26(a)(2); 17 C.F.R. § 165.2(k)(3). A whistleblower can provide original information through the news media if the whistleblower is a source of the information.

[15] 7 U.S.C. § 26(a)(5).

[16] Id.

[17] The interpretation is consistent with the SEC’s related action requirements. The SEC’s Rules make this requirement explicit: WBO “may ask the whistleblower to demonstrate that [they] directly (or through the Commission) provided the governmental agency, regulatory authority, or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.” 17 C.F.R. § 240.21F-11(c).

[18] See 7 U.S.C. § 26(a)(5); 17 C.F.R. § 165.11.

[19] [Redacted].

[20] 17 C.F.R. § 165.9(a).

[21] The Commission also recognizes the hardships that Claimant 1 suffered [Redacted].

[22] [Redacted]

SEC

93340

10/15/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent ( *** %) of the monetary sanctions collected, or to be collected, in [Redacted] and [Redacted] (the “Covered Actions”). These proposed awards would yield a current payout to the Claimant of more than $300,000.

The recommendation of the CRS is adopted.

[Redacted].

Claimant alerted Enforcement staff to the potential wrongdoing, prompting the opening of the investigation. Claimant also provided significant ongoing assistance to Enforcement during the investigation that saved time and resources that helped shut down an ongoing fraudulent scheme.

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 Actions.
By the Commission.

SEC

93339

10/15/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of about $32 million, which represents [Redacted] percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action. The CRS further recommended that [Redacted] (“Claimant 2”) receive a whistleblower award of about $8 million, which represents *** percent ( ** %) of the monetary sanctions collected in the Covered Action.[fn1] Both Claimants provided written notice of their decisions not to contest the Preliminary Determination. For the reasons discussed below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted a settled public administrative and cease-and-desist proceeding against [Redacted] (the “Firm”), that, among other things, [Redacted] finding that the Firm violated [Redacted]. In its enforcement action, the Commission found that, between [Redacted] the Firm [Redacted]. Among other relief, the Firm was ordered to pay disgorgement of [Redacted] prejudgment interest of [Redacted] and a civil money penalty of [Redacted] all of which has been fully collected.

On [Redacted] the Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending that Claimants 1 and 2 receive whistleblower awards of *** % and ** %, respectively, of the monetary sanctions collected in the Covered Action. In recommending that Claimant 1 receive a larger award than Claimant 2, the CRS considered the fact that Claimant 1’s information was received by the Commission several years before Claimant 2’s information. The CRS also recommended that Claimant 2’s award be reduced for unreasonable reporting delay.

II. Analysis.

We find that Claimant 1 contributed substantially more to the success of the Covered Action than Claimant 2. Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amounts are appropriate.[fn3] In reaching our award determinations, we positively assessed the following facts in determining Claimant 1’s award percentage: (1) Claimant 1’s tip was the initial source of the underlying investigation; (2) Claimant 1’s tip exposed abuses [Redacted] including at the Firm, that would have been difficult to detect without Claimant 1’s information; (3) Claimant 1 provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses, including [Redacted] and helping staff understand complex fact patterns and issues related to the matters under investigation; (4) the Commission used information Claimant 1 provided to devise an investigative plan and to craft its initial document requests to the Firm and [Redacted] (5) Claimant 1 made persistent efforts to remedy the issues, while suffering hardships; and (6) Claimant 1 was the main source of information for the investigation and an important source of information for the Covered Action.

Finally, we note that, in contrast to Claimant 1, who persistently alerted the Commission to the ongoing abusive practices for a number of years before the investigation was opened, Claimant 2 delayed reporting to the Commission for several years after becoming aware of the wrongdoing. Accordingly, we find that Claimant 2 unreasonably delayed reporting to the Commission and that a reduction in Claimant 2’s award percentage is appropriate.[fn4]

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] *** percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action and Claimant 2 shall receive an award of *** percent ( ** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[2] See Exchange Act Section 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] We have taken into consideration in this regard the fact that Claimant 2 provided Claimant 1 with information [Redacted] knowing that Claimant 1 was forwarding this information to the Commission staff. As a result, we have reduced Claimant 2’s award by a smaller amount than we otherwise might have.

SEC

93286

10/12/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of almost $1.3 million, which is equal to *** percent (***%) of the amounts collected in the above-referenced Covered Action (“Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

In coming to this conclusion, the Commission considered that Claimant provided significant information that prompted the opening of the investigation by the Commission staff, participated in multiple interviews with Commission staff, and continued to provide helpful information over a two year period.

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.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3, 17 C.F.R. § 240.21F-3.

SEC

93275

10/08/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of thirty percent (30%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).

In reaching this determination, the Commission considered that Claimant alerted the Commission to an on-going fraud prompting the opening of the investigation, participated in multiple voluntary interviews with Commission staff, and provided numerous documents that assisted the staff in its investigation, saving Commission staff time and resources. There also have been no collections to date in the matter.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

93274

10/08/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $100,000, which represents [Redacted] percent ( ***%) of the monetary sanctions collected in the above-referenced Covered Action (“Covered Action”).

[Redacted].

In reaching this determination, we considered that (i) Claimant provided important new information that prompted Commission staff to open an investigation into the alleged misconduct; (ii) Claimant’s assistance during the investigation assisted the staff and saved Commission time and resources; and (iii) the charges in the Covered Action were directly based on Claimant’s information.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

93233

10/01/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of more than $1.7 million, equal to *** percent (*** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action and that the award claim of [Redacted] (“Claimant 2”) be denied. Claimant 2 submitted a timely request for reconsideration. For the reasons set forth below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed an enforcement action in [Redacted]. The Commission alleged in its complaint that the Defendants [Redacted]. On the same day, the court [Redacted]. On [Redacted] the court entered a final judgment against [Redacted] in favor of the Commission. Among other relief, the court ordered that [Redacted]. On [Redacted] the court entered a final judgment against [Redacted]. The court found [Redacted]. On [Redacted] the Court approved the [Redacted].

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn2] recommending that Claimant 1 receive a whistleblower award in the amount of *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action and that Claimant 2’s claim be denied. The Preliminary Determination explained that Claimant 2’s information did not cause the opening of the investigation or identify any new issues or areas of investigation that subsequently became part of the Commission’s Covered Action. In addition, Claimant 2’s information and supporting materials were duplicative of information Enforcement staff already had in its possession. As such, Claimant 2’s information did not lead to the successful enforcement of the Covered Action.

C. Claimants’ Responses to the Preliminary Determinations.

Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determination.

After receiving a copy of the record, Claimant 2 submitted a timely written response contesting the Preliminary Determination.[fn3] Claimant 2 was [Redacted]. Claimant 2 submitted a tip to the Commission dated [Redacted] which discussed [Redacted].

Claimant 2 argues in response to the Preliminary Determination that there are additional facts that must be considered regarding when Claimant 2’s cooperation with Enforcement staff began. Specifically, Claimant 2 states that Claimant 2 first reached out to [Redacted] and subsequently participated in a telephonic interview with [Redacted] prior to filing a TCR with the Commission in [Redacted]. Claimant 2 asserts that the information Claimant 2 provided during [Redacted] was used in examining one of the defendants in the Covered Action, [Redacted] during investigative testimony that took place in [Redacted]. Claimant 2 also claims to have provided extensive documentation to [Redacted] which documentation Claimant 2 asserts SEC staff used [Redacted] a witness who was not charged in the Covered Action.

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 1 qualifies for a whistleblower award. [Redacted]. Claimant 1 provided new, detailed, and highly valuable information that prompted the opening of the investigation and provided substantial assistance during the course of the investigation. Claimant 1 met with staff multiple times, provided sworn testimony that was critical to the investigation, provided information that formed part of the Commission’s charges in the Covered Action, and helped the court-appointed Receiver secure millions of dollars which were returned to harmed investors. [Redacted].

B. Claimant 2.

Claimant 2’s information also does not satisfy Exchange Act Rule 21F-4(c)(2) because it did not significantly contribute to the success of Covered Action. According to a declaration and supplemental declaration provided by the relevant investigative staff, which we credit, prior to the [Redacted] timeframe when Claimant 2 asserts that he/she began communicating with [Redacted]. Enforcement staff had already identified the anticipated defendants in the investigation and obtained evidence showing the [Redacted] by the eventual defendants based on information Claimant 1 provided. Enforcement staff was also already aware by [Redacted]. The information Claimant 2 provided about [Redacted] was not helpful to the investigation because Claimant 2’s information did not identify any new issues or areas of investigation that subsequently became part of the Commission’s Covered Action. The information Claimant 2 provided consisted of additional examples of conduct by parties that had already been identified by the Commission staff prior to receiving Claimant 2’s information and who were not charged in connection with the Covered Action. The information Claimant 2 provided did not prompt the staff to take the testimony of any of the anticipated defendants and Claimant 2’s information was not used by the staff during such testimony. Based on information Claimant 1 provided, Enforcement staff had been investigating the [Redacted] aspect of the case before Claimant 2 provided *** information.[fn8] As such, Claimant 2’s information did not provide the basis for any of the charges in the Covered Action and did not otherwise contribute to the success of the enforcement action.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 shall receive an award of *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action and that Claimant 2’s whistleblower award application be, and hereby is, denied.
By the Commission.
[1] [Redacted].
[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[4] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[5] Exchange Act Rule 21F-4(c)(1).
[6] Exchange Act Rule 21F-4(c)(2).
[7] See Order Determining Whistleblower Award, Whistleblower File No. 2019-4, at 9, 2019 SEC LEXIS 615 at *16 (Mar. 26, 2019); see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).
[8] [Redacted].

SEC

09/29/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received timely whistleblower award claims from [Redacted] (“Claimant 3”) for the above-referenced Commission enforcement action (“Covered Action”) as well as [Redacted] (the “Criminal Action”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 3.

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

In making this determination, the CRS notes that the record demonstrates that the investigation that resulted in the Covered Action was not opened based on information provided by Claimant 3. Further, Claimant 3’s information did not significantly contribute to the success of the Covered Action as it related to alleged misconduct in a geographic region that was not part of the Covered Action, and which Commission staff could not substantiate.[fn3]

By: Claims Review Staff.

[2] In addition, Claimant 3 applied for a related action award in connection with the Criminal Action. Because Claimant 3 does not qualify for an award in the Covered Action, the request for a related action award is denied. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

[3] See 17 C.F.R. §§ 240.21F-3(b), 240.21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

SEC

93145

09/28/2021

On June 7, 2021, the Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that the Commission deny the award claims of [Redacted] (“Claimant”) in connection with the following three Notices of Covered Action: [Redacted] (the “Covered Actions”). The CRS also recommended that the Commission determine that Claimant’s award applications were frivolous or lacking a colorable connection between the tip(s) and the Commission Covered Actions, and pursuant to Rule 21F-8(e), that the Commission permanently bar Claimant from participation in the Commission’s Whistleblower Program.

The recommendations of the CRS are adopted.

Background.

Claimant began submitting award applications to the Office of the Whistleblower (“OWB”) in November 2017, and since then has submitted hundreds of applications. Claimant bases the award claims in the Covered Actions on tips Claimant submitted involving Claimant’s personal mortgage foreclosure. Claimant’s tips were closed and do not on their face bear any relation to the charges in the Covered Actions.

On March 25, 2021, pursuant to Exchange Act Rule 21F-8(e), OWB provided notice to Claimant that it had determined that the award applications for four Covered Actions were frivolous. OWB also informed Claimant that the Commission has the authority to bar permanently a claimant. Accordingly, OWB recommended that Claimant withdraw all frivolous or noncolorable claims that he/she had submitted to include the four Covered Actions identified in the notice. On March 26, 2021, Claimant withdrew one application. However, the 30-day deadline for Claimant to withdraw the remaining three award claims expired on April 26, 2021.

Preliminary Determinations.

On June 7, 2021, the Claims Review Staff issued Preliminary Determinations recommending that Claimant’s applications for award in the Covered Actions be denied and further recommended the Commission find that his/her award claims are frivolous because the information submitted by Claimant did not relate to the subject matter of the referenced Covered Actions and could not have contributed to any successful enforcement action. Finally, the CRS recommended that the Commission permanently bar Claimant from participation in the Commission’s Whistleblower Program. Claimant did not request reconsideration by the August 6, 2021 deadline.

Analysis.

On September 23, 2020, the Commission adopted amendments to the Whistleblower Program Rules, which became effective on December 7, 2020. New Exchange Act Rule 21F-8(e) authorizes the Commission to permanently bar a claimant from the Whistleblower Program based on submissions or applications that are frivolous or fraudulent, or that otherwise hinder the effective and efficient operation of the Whistleblower Program. The Commission’s Adopting Release defines “frivolous claims” as “those that lack any reasonable or plausible connection to the covered or related action.”[fn1]

First, the record demonstrates that Claimant is not eligible for an award in the Covered Actions because he/she did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Second, the Commission finds that the Claimant’s award applications are frivolous or lacking a colorable connection between the tip(s) and the Commission actions for which Claimant has sought an award within the meaning of Rule 21F-8(e) of the Exchange Act. This is because there is no relation between the information provided by Claimant to the Commission and the Covered Actions.

Third, pursuant to Rule 21F-8(e)(1), the Commission permanently bars Claimant from participation in its Whistleblower Program because Claimant has filed three or more applications for award that the Commission finds are frivolous or lacking a colorable connection between the Claimant’s tip(s) and Covered Actions for which the Claimant is seeking awards. In addition, Claimant has submitted hundreds of award applications over the years. Claimant also has engaged in a pattern of submitting award claims, then withdrawing the claims, and then resubmitting the claims. Claimant’s filing of frivolous claims has consumed considerable staff time and resources and has hindered the efficient operation of the Whistleblower Program. As such, we find it appropriate to permanently bar Claimant from the Commission’s Whistleblower Program. This permanent bar applies to any pending applications from Claimant at any stage of the claims review process as well as to all future award claims.

Accordingly, it is hereby ORDERED that Claimant’s award claims in the Covered Actions are denied and it is determined that the applications are frivolous or lacking a colorable connection between the tips and Covered Actions and that Claimant shall be permanently barred from participation in the Commission’s Whistleblower Program.
By the Commission.

[1] Further, Rule 21F-8(e)(4) states: “(i) Paragraph (e) of this section shall apply to all award applications pending as of December 7, 2020, which is the effective date of paragraph (e) of this section. But with respect to any such pending award applications, the Office of the Whistleblower shall advise you, before any Preliminary Determination or Preliminary Summary Disposition is issued that may recommend a bar, of any assessment by that Office that the conditions for issuing a bar are satisfied….” OWB provided such notice to the Claimant.
[2] Claimant’s information did not relate to the subject matter of the Covered Actions and was not provided to investigative staff responsible for the Covered Actions.

SEC

93142

09/28/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending the denial of the joint whistleblower award claims submitted by [Redacted] (“Claimant 1”) 1 and [Redacted] (“Claimant 2”) (together, “Claimants”) in connection with [Redacted], Notice of Covered Action [Redacted] (the “[Redacted] Covered Action”), and [Redacted] Notice of Covered Action [Redacted] (the “[Redacted] Covered Action”) (together, the “Covered Actions”). Claimants filed timely responses contesting the preliminary denials. For the reasons discussed below, Claimants’ joint award claims are denied.

I. Background.

A. The Covered Actions.

1. The [Redacted] Covered Action.

The Commission opened the investigation that culminated in the [Redacted] Covered Action in [Redacted] (the “[Redacted] Investigation”) based on a referral from the Commission’s examination start concerning possible [Redacted], (“[Redacted]”) a registered broker-dealer. The examination staffs decision to review [Redacted] records was not initiated as a result of a tip from the Claimants or any other whistleblower; rather, the staff selected the Company to review due to [Redacted]. The exam staffs findings, which led to its decision to refer the matter to the Division of Enforcement, resulted from its interviews and review of documents provided by [Redacted].

On [Redacted], the Commission instituted settled administrative and cease-and-desist proceedings against [Redacted] and [Redacted], finding that [Redacted] had violated ***.[fn2] The Commission found that, from at least [Redacted] through at least [Redacted], at the direction of [Redacted]. Among other sanctions, [Redacted] was ordered to pay a civil penalty of [Redacted] and [Redacted] was ordered to pay a civil penalty of [Redacted].

2. The [Redacted] Covered Action.

The Commission opened the investigation that culminated in the [Redacted] Covered Action in [Redacted] (the ” [Redacted] Investigation”) as a result of staff’s investigative efforts in connection with an earlier investigation (together, the [Redacted] Investigation and the [Redacted] Investigation are referred to as the “Investigations”). The [Redacted] Investigation was not opened based on any information provided by the Claimants. The focus of the [Redacted] Investigation was to determine whether [Redacted] a registered broker-dealer and investment adviser, and its affiliate, [Redacted], a registered broker-dealer had violated [Redacted][fn3] and, if so, to understand the scope of the violations.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings against [Redacted] finding that [Redacted] had violated [Redacted] in connection with [Redacted]. Among other sanctions, [Redacted] was ordered to pay disgorgement of [Redacted] and prejudgment interest of [Redacted].

On [Redacted] and [Redacted], the Commission’s Office of the Whistleblower posted Notices of Covered Action for the [Redacted] Covered Action and the [Redacted] Covered Action, respectively, on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn4] Claimants filed timely whistleblower award applications for the Covered Actions.

B. Claimants’ Tips.

Claimants base their joint award claims on a tip they submitted to the Commission on [Redacted] (the “[Redacted] Tip”), which was [Redacted] after the [Redacted] Investigation was opened and [Redacted] that the [Redacted] Investigation was opened.[fn5] In the [Redacted] Tip, the Claimants alleged “[m]ultiple potential securities law violations spanning a number of years regarding [Redacted] and blue chip companies and the potential operation of Ponzi-type schemes.” They further stated that they had previously provided detailed information about these allegations to the Division of Enforcement’s then-Chief of the Market Abuse Unit (“MAU”).

On [Redacted], the Commission’s Office of Market Intelligence forwarded the [Redacted] Tip to the MAU investigative staff that was working on an investigation that was separate from, and unrelated to, the Investigations. The [Redacted] Tip was not forwarded to either of the Investigations’ staffs, nor did either staff receive any information from, or communicate with, the Claimants, before or during the course of their Investigations. In addition, representatives of both the [Redacted] and the [Redacted] Investigation staffs stated in sworn declarations that the Claimants “provided no information that was used in or that contributed to the success of [their respective] [I]nvestigation[s] or . . . [Covered] Action[s].”

C. The Preliminary Determination.

The CRS issued separate Preliminary Determinations[fn6] for each of the Covered Actions recommending that the Claimants’ award claims be denied because the information that the Claimants submitted to the Commission did not lead to the successful enforcement of the Covered Actions under Exchange Act Rules 21F-4(c)(1) and (2)[fn7] since none of the information Claimants submitted was received by or forwarded to the staffs handling the Investigations, nor did either staff have any contact with them or use any of their information in the Commission’s successful enforcement of the Covered Actions.

D. Claimants’ Responses to the Preliminary Determinations.

Claimants submitted timely written responses contesting the Preliminary Determinations.[fn8] Specifically, Claimants argue in response to the Preliminary Determinations that they submitted information to the Commission *** times between [Redacted] including, as noted, at times directly to the then-head of the MAU. According to the Claimants, their information relating to [Redacted] which “discussed [Redacted]” would have been valuable to the SEC staff and furthered the resulting enforcement action against [Redacted] at issue here, if the SEC had not failed to distribute relevant tips, follow-up on leads and upload the information [Claimants] sent to the TCR database in a timely manner.” Similarly, Claimants assert their information relating to “violations of [Redacted] submitted by [Claimants] would have been valuable to the SEC staff and furthered the resulting enforcement action against [Redacted] at issue here, if the SEC had not failed to distribute relevant tips and follow-up on leads.” Claimants also point out that they met with the then-head of the MAU and other staff of the MAU in [Redacted] On this basis, Claimants argue that the Commission’s staff improperly ignored the information they had submitted and failed to distribute it properly to the appropriate investigative staff.[fn9] To further substantiate this argument, Claimants requested declarations from certain persons in the MAU, documents from the Commission’s investigative files, and explanations from the staff as to why Claimants’ information was not handled differently.

II. Analysis.

None of the information that Claimants submitted led to the successful enforcement of either Covered Action, in that their information did not cause either staff to commence an examination, open an investigation, or inquire concerning different conduct as part of a current investigation, nor did it contribute in any way to the success of these actions. We find, based on the evidence in the record, including declarations which we credit from the investigative staffs and another staff attorney who participated in the [Redacted] examination that was referred to the [Redacted] investigative staff,[fn13] that Claimants’ information played no part in the opening of the [Redacted] examination or either Investigation nor was their information received, considered or used by either investigative staff during the course of their Investigations. As noted, Claimants do not dispute this. In addition to the staff declarations from the examination and investigative staffs, the record also includes a declaration from one of the MAU attorneys that Claimants asserted possessed relevant information about Claimants’ interactions with Commission staff.[fn14] This declaration states that the Enforcement attorneys who met with Claimants as part of a separate investigation did not share the information they received from Claimants with any other investigative team,[fn15] except for two emails that contained minimal information and related to a different matter under investigation.[fn16]

Finally, Claimants assert that the staff mishandled their information and that they should be entitled to discovery to ascertain why it was not handled differently. Claimants recently raised this very same objection in another matter for which they had applied for a whistleblower award. Our response to that objection is equally applicable here:

In essence, Claimants argue that their information would have led to the success of the Covered Action had it been handled differently. But the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s information actually had on the investigation. Here, the [staff] [d]eclarations are clear that Claimants’ information neither caused the staff to open its investigation nor significantly contributed to the success of the Covered Action, and thus we need not consider Claimants’ request for discovery of additional information.[fn17]

We therefore conclude that Claimants’ information did not lead to the successful enforcement of the Covered Actions and that, as a result, Claimants are ineligible for awards with respect to the Covered Actions.

III. Conclusion.

Accordingly, it is ORDERED that Claimants’ whistleblower award applications for the Covered Actions be, and hereby are, denied.

By the Commission.

[1] [Redacted].

[2] [Redacted].

[3] [Redacted].

[4] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[5] To date, Claimants have applied for whistleblower awards in fourteen matters, including the Covered Actions. Of these twelve other matters, the Claimants have received final orders for seven of their award claims, all of which have been denials.

[6] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[7] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3(a) & 4(c), 17 C.F.R. §§ 240.21F-3(a) & 4(c).

[8] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[9] Because of these perceived errors, Claimants requested in their response “an extension on the appeal period . . . until the SEC provides responses to our questions, document[] requests and reasoning for withholding this information.” The whistleblower rules do not provide for such an extension. See Exchange Act Rule 21F-10(e)(2) (providing that a decision to contest a Preliminary Determination must be submitted “within sixty (60) calendar days of the date of the Preliminary Determination, or if a request to review materials is made pursuant to paragraph (e)(1) of this section, then within sixty (60) calendar days of the Office of the Whistleblower making those materials available for your review”). Moreover, this Order addresses Claimants’ questions and requests, so there is no need for such an extension.

[10] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[11] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[12] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[13] The whistleblower rules contemplate that the record upon which an award determination is made shall consist of a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip and the claimant’s award application. See Exchange Act Rule 21F-12(a).

[14] This declaration was sent to Claimants in connection with another matter for which they had applied for a whistleblower award subsequent to their submitting their reconsideration request for the Covered Actions. Since Claimants received the MAU staff declaration and it is included as part of the record for both Covered Actions, their request for this declaration is moot and need not be addressed further.

[15] According to the declarant from the MAU, the declarant shared certain of the Claimants’ submissions with staff in the Division of Trading and Markets (“TM”) and the Commission’s Division of Economic and Risk Analysis (“DERA”); however, after further consultations with TM and DERA staff, the Enforcement staff determined to close the investigation because it could not substantiate the Claimants’ allegations.

[16] One was a [Redacted] email from Claimant 1 in which Claimant 1 commented on the Commission’s filing a few days earlier of the other enforcement action and the second was a [Redacted] email from one of the two Enforcement attorneys who participated in a meeting with the Claimants, noting that others in the Division of Enforcement were looking at certain allegations made by the Claimants about that other matter.

[17] Order Determining Whistleblower Award Claim, Exchange Act Rel. No. 90872 at 4 (Jan. 7, 2021) (internal citations omitted), available at https://www.sec.gov/rules/other/2021/34-90872.pdf.

SEC

93118

09/24/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of approximately $36 million, equal to *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action and in [Redacted] actions brought by the [Redacted] (the “Other Agency”). The CRS recommended the denial of the award applications from [Redacted] (“Claimant 2”) and [Redacted] (“Claimant 3”). Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determinations, and Claimant 2 and Claimant 3 submitted timely notices contesting the preliminary denial of their award claims. For the reasons discussed below, the CRS’s recommendations are adopted with respect to Claimant 1, Claimant 2, and Claimant 3.

I. Background.

A. The Covered Action.

The Commission opened the investigation that culminated in the Covered Action in *** [Redacted] (the “Commission Investigation”) based upon information developed in a separate investigation and upon an anonymous tip related to potential misconduct by a financial institution not charged in the Covered Action (the “Financial Institution”). The Claimants did not provide the anonymous tip to the Commission. The Commission Investigation examined [Redacted] including employees of [Redacted] (the “Foreign Government Entity”), [Redacted]. The Commission Investigation focused on, among other things, [Redacted].

On [Redacted], the Commission instituted settled [Redacted] in the Covered Action, [Redacted].

On [Redacted], the Office of the Whistleblower posted the above-referenced Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn1] Claimants 1, 2, and 3 all filed timely whistleblower award claims.

B. The Other Agency Actions.

On [Redacted], the Other Agency resolved matters arising from substantially the same facts underlying the Covered Action (collectively, the following actions are the “Other Agency Actions”).[fn2] [Redacted].

The Commission may pay an award based on amounts collected in a related action that is based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $1 million.[fn4] [Redacted]. The Commission finds that the Other Agency Actions constitute “related actions” within the meaning of Exchange Act Rules 21F-3(b) and 21F-4(d)(3).

C. The Preliminary Determinations.

The CRS[fn6] issued Preliminary Determinations[fn7] recommending that: (1) Claimant 1 receive an award of *** % of the monetary sanctions collected in the Covered Action and the Other Agency Actions[fn8]; (2) the award claims of Claimant 2 and Claimant 3 be denied with regard to the Covered Action and the Other Agency Actions.

The CRS recommended that Claimant 2’s and Claimant 3’s award claims be denied on the grounds that they did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The record showed that Claimant 2’s information was not a basis for opening the investigation nor did it assist the staff during the course of the investigation. Claimant 2’s information was already known to the staff and focused on an entity that was not charged in the Covered Action. In addition, the CRS recommended that Claimant 2’s award application be denied on the grounds that Claimant 2 was functioning as an employee or official of a foreign government or instrumentality of a foreign government, and therefore Claimant 2 was ineligible for an award pursuant to Rule 21F-8(c)(2) and Rule 21F-8(c)(6).

The record showed that Claimant 3’s information was not a basis for opening the investigation and did not assist Enforcement staff. Claimant 3’s whistleblower submission was provided to the Commission approximately six years after Enforcement staff began its investigation and approximately eight months before the Covered Action was filed. The CRS also recommended to deny Claimant 3’s award application because Claimant 3 did not voluntarily provide information to the Commission as defined by Rule 21F-4(a) of the Exchange Act because the staff requested materials from Claimant 3 approximately five years before he/she provided the whistleblower submission to the Commission.

D. Claimant 2’s Response to the Preliminary Determination.

Claimant 2 submitted a timely written response contesting the CRS’s Preliminary Determination that Claimant 2’s award claim be denied.[fn9] Among other things, Claimant 2 contends that the record relied upon by the CRS did not include a declaration from Claimant 2’s primary Enforcement staff contact, who has since left the Commission. Claimant 2 also contends that he/she provided valuable information to the Commission beginning at the time of Claimant 2’s first contact with the staff in [Redacted], approximately eight months after the staff opened the Investigation, and through subsequent communications with the staff over the next several years. Claimant 2 also contends that he/she was not employed by the Foreign Government Entity, but was instead employed by another entity that *** provided [Redacted] services to the Foreign Government Entity [Redacted].

E. Claimant 3’s Response to the Preliminary Determination.

Claimant 3 submitted a timely written response contesting the CRS’s Preliminary Determination that Claimant 3’s award claim be denied.[fn10] Among other things, Claimant 3 contends that while Claimant 3 was [Redacted] of the Foreign Government Entity from [Redacted]. Claimant 3 focused on [Redacted]. Claimant 3 also contends that significant evidence of the misconduct committed [Redacted] emerged directly from the actions Claimant 3 took while [Redacted]. While Claimant 3 concedes that the information uncovered due to Claimant 3’s actions [Redacted] was not included in Claimant 3’s *** whistleblower submission—and could not have been pursuant to Rule 21F-8(c)(2)—Claimant 3 argues that as a matter of equity and fairness the efforts Claimant 3 undertook as [Redacted] should be considered when evaluating the merits of Claimant 3’s whistleblower application.

Claimant 3 further contends that Claimant 3’s whistleblower information, provided to the Commission approximately eight months before the Covered Action was filed, showed that [Redacted] engaged in [Redacted] involving the [Redacted]. Claimant 3 argues that Claimant’s whistleblower submission was of high value in the context of the Commission Investigation and the investigation by the Other Agency.

II. Analysis.

A. Claimant 1.

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of *** percent (*** %) is appropriate.[fn11] In reaching that determination with regard to Claimant 1, we considered that Claimant 1’s information significantly contributed to the success of the Covered Action and the Other Agency Actions. Claimant 1 met with Enforcement staff on multiple occasions, provided information that allowed Enforcement and Other Agency staff to identify and request key documents, and provided crucial information regarding the illegal scheme. The award percentage also recognizes that Claimant 1 unreasonably delayed reporting to the Commission for over five years and that Claimant 1 was culpable in the underlying scheme. Based upon a review of the facts and circumstances in the record, we have determined that Exchange Act Rule 21F-16 does not apply because Claimant 1 did not “direct[], plan[], or initiate[]” the misconduct.[fn12] Accordingly, we believe that a *** percent award strikes the appropriate balance between Claimant 1’s significant contributions to the success of the Covered Action and Claimant 1’s unreasonable reporting delay and level of culpability.

B. Claimant 2.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must have “voluntarily provided original information to the Commission that led to the successful enforcement of the covered judicial or administrative action.”[fn13] As relevant here, information will be deemed to have led to a successful enforcement action if it was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation . . . or to inquire concerning different conduct as part of a current . . . investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information.”[fn14] Alternatively, information will be deemed to have led to a successful enforcement action where the information was “about conduct that was already under examination or investigation by the Commission” and the “submission significantly contributed to the success of the action.”[fn15] In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn16] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn17] As discussed below, Claimant 2’s information does not satisfy either prong of the “led to” requirement, as the information did not cause the staff to open the Commission Investigation, or to inquire concerning different conduct as part of a current investigation, nor did it significantly contribute to the success of the Covered Action.[fn18]

The record demonstrates that Claimant 2’s information does not satisfy Exchange Act Rule 21F-4(c)(1) as the Commission Investigation was opened in [Redacted] approximately eight months before Claimant 2’s tip was submitted to the Commission. Claimant 2 does not dispute this.[fn19]

Because the Commission Investigation had already been opened by the time Claimant 2 submitted a tip, Claimant 2’s information can only be deemed to have led to the success of the Covered Action if it caused the staff to inquire concerning different conduct as part of a current investigation[fn20] or “significantly contributed to the success of the action.”[fn21] We find, based on the evidence in the record, including multiple declarations from the responsible investigative staff, which we credit, that Claimant 2’s information did not cause the Enforcement staff to inquire into different conduct and did not make a substantial and important contribution to the success of the Covered Action.[fn22] Instead, Enforcement staff, including the former Enforcement attorney whom Claimant 2 asserts was his/her primary contact, confirmed that Claimant 2’s information focused on the Financial Institution (which was not charged in the Covered Action), was already known by the staff, or was not related to the Commission Investigation that resulted in the Covered Action. Accordingly, Claimant 2 did not provide information to the Commission that led to the success of the Covered Action and, therefore, Claimant is not eligible to receive a whistleblower award.[fn23]

As stated above, Claimant 2 has put forth new information about his/her work as a [Redacted]. In light of the new information, we decline to reach the merits of the applicability of Rule 21F-8(c)(2). We need not reach this issue because Claimant 2’s information did not lead to a successful enforcement action and Claimant 2 is thus ineligible for an award on that ground.

C. Claimant 3.

As an initial matter, the record demonstrates, and Claimant 3 does not dispute, that the staff first contacted Claimant 3 requesting materials while he/she was [Redacted] of the Foreign Government Entity in [Redacted], approximately five years before Claimant 3 made a whistleblower submission. Accordingly, Claimant 3’s information is not voluntary pursuant to Exchange Act Rules 21F-3(a)(1) and 21F-4(a), and Claimant 3 is ineligible for an award.[fn24]

The record further demonstrates that the Commission Investigation was opened in *** approximately six years before Claimant 3’s whistleblower tip was submitted to the Commission. Accordingly, because the Commission Investigation had already been opened by the time Claimant 3 submitted a tip, Claimant 3’s information can only be deemed to have led to the success of the Covered Action if it caused the staff to inquire concerning different conduct as part of a current investigation or “significantly contributed to the success of the action.”[fn25]

As an initial matter, pursuant to Rule 21F-8(c)(2), Claimant 3 cannot be credited with any information he/she may have provided or caused to be provided to the staff while Claimant 3 [Redacted] of the Foreign Government Entity in [Redacted]. Individuals who are, or were at the time they acquired their information, employees, officers, or members of a foreign government or any political subdivision, department, agency or instrumentality thereof, are ineligible for whistleblower awards.[fn26] Claimant 3 does not dispute this, citing to Rule 21F-8(c)(2) in Claimant 3’s response to the Preliminary Determinations. Claimant 3 instead argues that “as a matter of equity and fairness” Claimant 3’s actions while [Redacted] of the Foreign Government Entity should weigh as a “strong positive” when evaluating whether Claimant 3 is entitled to an award based upon Claimant 3’s *** whistleblower submission.

However, we ultimately need not consider Claimant 3’s request given that Claimant 3’s *** whistleblower submission and the staff’s subsequent conversations with Claimant 3 and Claimant 3’s counsel did not cause the staff to inquire concerning different conduct and did not significantly contribute to the success of the Covered Action. Claimant 3’s information was submitted approximately six years after the staff opened the Commission Investigation and only about eight months before the Covered Action was issued. We find, based on the evidence in the record, including a declaration from Enforcement staff, that Claimant 3’s information did not cause the staff to inquire concerning different conduct and did not make a substantial and important contribution to the success of the Covered Action. Instead, the record shows that at the time of Claimant 3’s *** submission, the Commission Investigation was substantially complete and settlement negotiations were in progress. The declaration from Enforcement staff indicated that Claimant 3’s information did not impact the settlement negotiations or otherwise contribute to the Covered Action.[fn27] Accordingly, Claimant 3 does not satisfy Exchange Act Rule 21F-4(c)(1) or 21F-4(c)(2) and is not eligible for a whistleblower award.

III. Conclusion.

Accordingly, it is hereby ORDERED that (1) Claimant 1 shall receive an award equal to *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action and the Other Agency Actions.

It is further ORDERED that Claimant 2’s and Claimant 3’s whistleblower award applications in the Covered Action and the Other Agency Actions be, and hereby are, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] The Other Agency Actions are [Redacted].

[3] [Redacted].

[4] Exchange Act Rule 21F-3(b), 17 C.F.R. § 240.21F-3(b).

[5] [Redacted].

[6] Rule 21F-10(d) under the Exchange Act provides that the CRS will “evaluate all timely whistleblower award claims submitted on Form WB-APP in accordance with the criteria set forth in the rules.” 17 C.F.R. § 240.21F-10(d); see also Rule 21F-11(d).

[7] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d); Exchange Act Rule 21F-11(d), 17 C.F.R. § 240.21F-11(d).

[8] [Redacted].

[9] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[10] Id.

[11] In assessing the appropriate award amount, Exchange Act 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.

[12] Exchange Act Rule 21F-16, 17 C.F.R. § 240.21F-16.

[13] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[14] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[15] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[16] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4. See also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).

[17] Exchange Act Rel. No. 85412 at 8-9.

[18] Claimant 2’s response to the Preliminary Determinations also implied that some information might be missing from the record. Claimant 2 requested and was provided the record upon which the award determination as to Claimant 2’s claim was based. As such, any argument that the record was insufficient or incomplete under the law is contrary to the plain language of the Commission’s whistleblower rules. Claimants are not entitled to receive additional materials outside those enumerated in Exchange Act Rule 21F-12(a), as any such additional materials were not used as a basis for the award determination.

[19] Claimant 2 admits in Claimant 2’s response that he/she did not provide the anonymous tip that caused the staff to open the Commission Investigation. Claimant 2 claims that beginning in *** Claimant 2 urged the Financial Institution to report what Claimant 2 viewed as potential violations [Redacted] to the authorities, and that the *** anonymous tip may have resulted from those communications with the Financial Institution. We cannot credit such a claim because the record offers no evidence to support a link between Claimant 2’s *** communications and the anonymous tip.

[20] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[21] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[22] Claimant 2 also refers to materials that were provided directly to Enforcement staff and not included on Claimant 2’s Form TCR submission. However, a declaration from the former Enforcement staff attorney confirmed Claimant 2’s information, including Claimant 2’s TCR submission and subsequent emails to the staff, did not significantly contribute to the Covered Action.

[23] Because Claimant 2 does not qualify for an award in the Covered Action, Claimant 2’s request for a related action award is denied. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

[24] Exchange Act Rule 21F-3(a)(1), 17 C.F.R. § 240.21F-3(a)(1); Exchange Act Rule 21F-4(a), 17 C.F.R. § 240.21F-4(a).

[25] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[26] See Exchange Act Rule 21F-8(c)(2), 17 C.F.R. § 240.21F-8(c)(2).

[27] For the reasons discussed above regarding the denial of Claimant 2’s application for a related action award, because Claimant 3 likewise does not qualify for an award in the Covered Action, Claimant 3’s request for a related action award is denied.

SEC

93055

09/20/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). This will result in an award of more than $2.5 million to Claimant.[fn1]

[Redacted].

In reaching this determination, we note that: (1) Claimant’s information was significant, as it resulted in Enforcement staff initiating an investigation into misconduct by [Redacted] (“the Company”), and it ultimately led to the Covered Action; (2) Claimant submitted information and documents to Enforcement staff, participated in interviews with Enforcement staff, and helped Enforcement staff identify key individuals and entities involved in the investigation; (3) Claimant’s information and assistance helped Enforcement staff focus its investigation into the Company’s conduct and helped the Commission conserve significant time and resources; and (4) Claimant raised *** concerns multiple times at the Company in efforts to remedy the relevant misconduct.

[Redacted].

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.

[1] A second claimant (“Claimant 2”) did not contest the Preliminary Determination denying Claimant 2’s claim. Accordingly, the Preliminary Determination with respect to Claimant 2’s award claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

SEC

93049

09/17/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of nearly $7 million, which represents [Redacted] percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action. The CRS further recommended that [Redacted] (“Claimant 2”) receive a whistleblower award of more than $4.5 million, which represents [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action.[fn1] Both Claimants provided written notice of their decisions not to contest the Preliminary Determination. For the reasons discussed below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted a settled public administrative and cease-and-desist proceeding against [Redacted] (the “Firm”), that, among other things, [Redacted] finding that the Firm violated [Redacted]. In its enforcement action, the Commission found that, between [Redacted] the Firm [Redacted] in circumstances where the Firm was negligent with respect to [Redacted]. Among other relief, the Firm was ordered to pay disgorgement of [Redacted] prejudgment interest of [Redacted] and a civil money penalty of [Redacted], all of which has been fully collected.

On [Redacted] the Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days. Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determination.

II. Analysis.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amounts are appropriate.[fn3] In reaching our award determinations, we positively assessed the following facts in determining Claimant 1’s award percentage: (1) Claimant 1’s tip was the initial source of the underlying investigation; (2) Claimant 1’s tip exposed abuses [Redacted] including at the Firm, that would have been difficult to detect without Claimant 1’s information; (3) Claimant 1 provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses, including [Redacted] ***, and helping staff understand complex fact patterns and issues related to the matters under investigation; (4) the Commission used information Claimant 1 provided to devise an investigative plan and to craft its initial document requests to the Firm and [Redacted] (5) Claimant 1 made persistent efforts to remedy the issues, while suffering hardships; and (6) Claimant 1 was the main source of information for the underlying investigation and an important source of information for the Covered Action.

Claimant 2’s specific information about the Firm was particularly helpful to the staff in the Covered Action because it was based on Claimant 2’s more recent experience [Redacted] *** and, specifically, with the [Redacted] and allowed the staff to have a much better understanding of this aspect of the [Redacted]. In addition, we positively assessed the following facts in determining Claimant 2’s award percentage: (1) based on Claimant 2’s information, the staff was able to tailor requests to the Firm that resulted in the Firm’s production of exhibits which evidenced the [Redacted] and assisted the staff in its settlement negotiations with the Firm; (2) Claimant 2 provided the staff with significant information about [Redacted] at the Firm, which informed the staff’s understanding of [Redacted] provided helpful information relevant to the practices engaged in by the Firm; and (4) Claimant 2 provided information and documents, participated in staff interviews, and provided clear explanations to the staff regarding the issues that Claimant 2 brought to the staff’s attention.

Finally, we note that, in contrast to Claimant 1, who persistently alerted the Commission to the ongoing abusive practices for a number of years before the investigation was opened, Claimant 2 delayed reporting to the Commission for several years after becoming aware of the wrongdoing. Accordingly, we find that Claimant 2 unreasonably delayed reporting to the Commission and that a reduction in Claimant 2’s award percentage is appropriate.[fn4]

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action and Claimant 2 shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] The CRS also preliminarily determined to recommend that the award applications of three other claimants be denied. None of these claimants submitted a request for reconsideration and, as such, the Preliminary Determinations with respect to their award claims became the Final Order of the Commission, pursuant to Rule 21F-10(f).
[2] See Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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.
[4] We have taken into consideration in this regard the fact that Claimant 2 provided Claimant 1 with information [Redacted] that Claimant 1 was forwarding this information to the Commission staff. As a result, we have reduced Claimant 2’s award by a smaller amount than we otherwise might have.

SEC

93016

09/16/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimants”) jointly receive a whistleblower award representing thirty percent (30%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (“Covered Action”) and thirty percent (30%) of the monetary sanctions collected, or to be collected, in a related [Redacted] action, [Redacted] (the “Related Action”).[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimants voluntarily provided original information to the Commission and (the [Redacted] “Other Agency”) and that this original information led to the successful enforcement of both the Covered Action and Related Action.[fn2]

The presumption applies here because the statutory maximum award would not exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to the award application, and the award claim does not trigger Rule 21F-16. In addition, the Commission finds that the presumption is not overcome, as Claimants provided more than limited assistance. The Commission also finds that application of the presumption would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program to do so.[fn5]

In reaching this determination, we considered that (1) the Claimants’ information both caused the opening of the Commission’s and the Other Agency’s investigations and was the underlying source that formed the basis for the Covered Action and Related Action; (2) Claimants provided substantial, ongoing assistance that focused the investigation and conserved significant Commission and Other Agency time and resources; and (3) there was substantial law enforcement interest in the information provided, as it related to a fraud involving the misappropriation of investor funds. There also have been no collections to date in these matters.

Finally, we find that the contributions made by Claimants to the Covered Action are similar to the contributions of the Claimants to the success of the Related Action, and, therefore, it is appropriate that the Claimants receive the same award percentage for the Related Action.

Accordingly, it is hereby ORDERED that Claimants shall jointly receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action and Related Action.[fn6]
By the Commission.

[1] The [Redacted] Action constitutes a “related action” to the Covered Action within the meaning of § 21F(a)(5) of the Exchange Act, 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as a [Redacted] and is based on the same original information that the whistleblower voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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). See also In the Matter of Claim for Award, Release No. 34-84046 (Sept. 6, 2018) (for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”) (citing Exchange Act Rule 21F-11(c); 17 C.F.R. § 240.21F-11(c)).
[3] Exchange Act Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[4] Exchange Act Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).
[5] Id.
[6] Our determination to treat Claimants as a joint whistleblower has not impacted the net total award percentage. 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

SEC

93013

09/16/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $1.2 million, equal to *** percent (***%) of collected monetary sanctions in the above-referenced Covered Action (the “Covered Action”). The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

In reaching this determination, we note that the record reflects that Claimant’s information prompted the opening of the investigation, and Claimant thereafter provided substantial, continuing assistance that saved Commission time and resources. Claimant communicated with Commission staff multiple times, identified potential witnesses, helped the staff draft targeted information requests, and explained key documents.

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.

[1] See Exchange Act Section 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).

SEC

92985

09/15/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations in connection with the above-referenced Covered Action (“Covered Action”) and related [Redacted] actions, recommending that: (1) [Redacted] (“Claimant 1”) receive a [Redacted] percent (***%) award in (a) the Covered Action, (b) [Redacted] (“Related Action 1”), and (c) [Redacted] (“Related Action 2”), for a payout of almost $110,000,000;[fn1] (2) the award claim for the Covered Action and Related Action 1 submitted by [Redacted] (“Claimant 2”) be denied; and (3) [Redacted] (“Claimant 3”) receive a *** percent (***%) award in the Covered Action. for a payout of approximately $4,000,000.

Claimant 1 and Claimant 3 provided written notice of their decisions not to contest the Preliminary Determinations.[fn2] Claimant 2 filed a timely response contesting the Preliminary Determinations. For the reasons discussed below, the CRS’s recommendations are adopted.

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted the Covered Action. The Commission charged [Redacted] (“Company 1”) [Redacted] paid in full. [Redacted].

On [Redacted], the Office of the Whistleblower posted a Notice for the Covered Redacted Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn3] Claimant 1, Claimant 2, and Claimant 3 each filed a timely whistleblower award claim.

B. Related Action 1.

[Redacted] paid in full.

C. Related Action 2.

[Redacted] (“Company 2”) [Redacted] paid in full.

D. The Preliminary Determinations.

The CRS issued Preliminary Determinations recommending that the Commission (1) grant Claimant 1 an award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action, Related Action 1, and Related Action 2; (2) grant Claimant 3 an award equal to *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; and (3) deny an award to Claimant 2 in the Covered Action and Related Action 1 [Redacted].

E. Claimants’ Responses to the Preliminary Determinations.

Claimant 1 and Claimant 3 provided written notice of their decisions not to contest the Preliminary Determinations.

Claimant 2 submitted a timely, written response contesting the Preliminary Determinations. Claimant 2 argues that the CRS incorrectly concluded that [Redacted].[fn5]

Claimant 2 alleges that [Redacted]. In this way, Claimant 2 alleges, [Redacted]. Claimant 2 asserts that [Redacted]. Instead, Claimant 2 purportedly [Redacted]. Claimant 2 alleges that [Redacted].

In support of these assertions, Claimant 2 points to the fact that [Redacted]. Additionally, Claimant 2 argues that [Redacted].

Claimant 2 also argues that [Redacted]. Further, Claimant 2 asserts that [Redacted]. Additionally, Claimant 2 makes an equitable argument, asserting that [Redacted]. According to Claimant 2, it would be unjust to [Redacted].

Claimant 2 accordingly believes that Claimant 2 is entitled to a whistleblower award for [Redacted].

II. Analysis.

A. Claimant 1.

As to Claimant 1, the record demonstrates that Claimant 1 voluntarily provided original information[fn8] to the Commission and to the Other Agency, and Claimant 1’s original information led to the successful enforcement of the Covered Action,[fn9] Related Action 1,[fn10] and Related Action 2.[fn11] Further, the record reflects that: (1) Claimant 1’s information, which included a detailed suggested witness list and other charts reflecting [Redacted], was important in connection with the Commission’s allegations [Redacted] involving Company 1 [Redacted]; (2) Claimant 1’s information and supporting documents saved the Commission significant time and resources; (3) Claimant 1 provided substantial, ongoing assistance to staff in the Division of Enforcement (the “Staff”), which included multiple written submissions and communications, including in-person meetings; and (4) Claimant 1 suffered personal and professional hardships as a result of Claimant 1’s whistleblower activities.

However, while Claimant 1’s information was important, it was submitted after the Staff had already opened an investigation and after the Staff had already become aware of potential misconduct by Company 1 [Redacted]. Furthermore, Claimant 1’s information assisted the Staff in connection with only some of the misconduct that the Staff was investigating and which the Commission ultimately charged in the Covered Action.

We further find that Related Action 1 and Related Action 2 are “related actions” under Exchange Act Rule 21F-3(b)(1) [Redacted]. Claimant 1 satisfies the requirements of Exchange Act Rule 21F-3(b)(2) [Redacted] for related action awards because Related Action 1 and Related Action 2 were based in part on the same original information that Claimant 1 voluntarily provided to the Commission. Specifically, Claimant 1 voluntarily provided original information to the Commission as well as to the Other Agency, and Claimant 1’s information led to the successful enforcement of Related Action 1 and Related Action 2.

In light of these considerations and the relevant factors specified in Exchange Act Rule 21F-6,[fn12] it is appropriate that Claimant 1 receive an award of [Redacted] (***%) of the Redacted monetary sanctions collected, or to be collected, in the Covered Action, Related Action 1 and Related Action 2.

B. Claimant 3.

The record demonstrates that Claimant 3 voluntarily provided original information to the Commission, and Claimant 3’s original information led to the successful enforcement of the Redacted Covered Action.[fn13] Further, the record reflects that: (1) Claimant 3’s information was submitted [Redacted] after the Staff’s investigation had been opened and the Staff had undertaken significant investigative steps; and (2) Claimant 3’s information and assistance was much more limited as compared to the information and assistance provided by Claimant 1.

In light of these considerations and the relevant factors specified in Exchange Act Rule 21F-6, it is appropriate that Claimant 3 receive an award of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

C. Claimant 2.

We deny an award to Claimant 2 in connection with the Covered Action.

[Redacted].

In sum, we see no reason for the Commission to [Redacted].

There is no reason to disturb the CRS’s preliminary determination that Claimant 2’s award claim should be denied because [Redacted].

III. Conclusion.

Accordingly, it is hereby ORDERED that: (1) Claimant 1 shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action, Related Action 1, and Related Action 2; (2) Claimant 3 shall receive an award of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; and (3) Claimant 2 shall be denied an award in the Covered Action [Redacted].

By the Commission.

[1] Related Action 1 and Related Action 2 were brought by [Redacted] (the “Other Agency”).

[2] The CRS also preliminarily determined to recommend that Claimant 1’s award claim [Redacted] and that Claimant 3’s related action award claims be denied. Because Claimant 1 and Claimant 3 did not contest those portions of the Preliminary Determinations, the preliminary denials of those related action award claims are now deemed to be final through operation of law.

[3] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[5] Claimant 2 has only applied for an award in connection with the Covered Action and Related Action 1.

[8] Claimant 1’s information was based on Claimant 1’s “independent analysis,” a constituent element of “original information.” Specifically, Claimant 1 utilized publicly available information in a way that went beyond the information itself and afforded the Commission with important insights into the extent of Company 1’s misconduct as well as other relevant conduct. Additionally, Claimant 1’s information was derived from multiple sources that were not readily identified and accessed by members of the public without specialized knowledge, unusual effort, or substantial cost. Moreover, the sources that Claimant 1 cultivated collectively raised a strong inference of securities law violations that was not otherwise reasonably inferable from any of the sources individually. In all, Claimant 1’s own examination, evaluation, and analysis contributed significant independent information that bridged the gap between certain publicly available information and the possible securities violations that the Commission and the Other Agency were investigating.

[9] See Exchange Act Section 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).

[10] Related Action 1 [Redacted]. Here, Related Action 1 constitutes a “related action” to the Covered Action within the meaning of Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5), and Exchange Act Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as it is [Redacted] and it is based on the same original information that the whistleblower voluntarily provided to the Commission and which led the Commission to obtain monetary sanctions totaling more than $1,000,000.

[11] [Redacted].

[12] In determining the amount of the awards to Claimant 1, we considered the following factors set forth in Exchange Act Rule 21F-6 as they apply to the facts and circumstances of Claimant 1’s application: (1) the significance of information; (2) the assistance provided; (3) the 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.

[13] See Exchange Act Section 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).

[16] Because Claimant 2 is not eligible for an award in the Covered Action, Claimant 2 is not eligible for a related action award. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(l); Exchange Act Rule 21F-4(f) and (g); Exchange Act Rule 21F-11(a).

SEC

92969

09/14/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that the Commission deny the award claims of [Redacted] (“Claimant”) in connection with the following three Notices of Covered Action: [Redacted] (the “Covered Actions”). The CRS also recommended that the Commission determine that Claimant’s award applications were frivolous or lacking a colorable connection between the tip(s) and the Commission Covered Actions, and pursuant to Rule 21F-8(e), that the Commission permanently bar Claimant from participation in the Commission’s Whistleblower Program.

The recommendations of the CRS are adopted.

Background.

Claimant began submitting award applications to the Office of the Whistleblower (“OWB”) in November 2017, and since then submitted hundreds of applications. Claimant bases the award claims in the Covered Actions on tips Claimant submitted involving Claimant’s personal mortgage foreclosure. Claimant’s tips were closed and do not on their face bear any relation to the charges in the Covered Actions.

On January 25, 2021, pursuant to Exchange Act Rule 21F-8(e), OWB provided notice to Claimant that it had determined that the award applications for the Covered Actions were frivolous. OWB also informed Claimant that the Commission has the authority to bar permanently a claimant. Accordingly, OWB recommended that Claimant withdraw all frivolous or noncolorable claims that he/she had submitted.

In response, Claimant withdrew all of his/her pending claims. However, a few days later, Claimant submitted a letter to OWB stating that he/she had reconsidered and did not wish to withdraw any of his/her award applications.

Preliminary Determinations.

On May 17, 2021, the Claims Review Staff issued Preliminary Determinations recommending that Claimant’s applications for award in the above Covered Actions be denied and further recommended the Commission find that his/her award claims are frivolous because the information submitted by Claimant did not relate to the subject matter of the referenced Covered Actions and could not have contributed to any successful enforcement action. Finally, the CRS recommended that the Commission permanently bar Claimant from participation in the Commission’s Whistleblower Program. Claimant did not request reconsideration and the time-period to submit a Request for Reconsideration passed on July 16, 2021.

Analysis.

First, the record demonstrates that Claimant is not eligible for an award in the Covered Actions because he/she did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Third, pursuant to Rule 21F-8(e)(1), the Commission permanently bars Claimant from participation in its Whistleblower Program because Claimant has filed three or more applications for award that the Commission finds are frivolous or lacking a colorable connection between the Claimant’s tip(s) and Covered Actions for which the Claimant is seeking awards. In addition, Claimant has submitted hundreds of award applications over the years. Claimant also has engaged in a pattern of submitting award claims, then withdrawing the claims, and then resubmitting the claims. Claimant’s filing of frivolous claims has consumed considerable staff time and resources and has hindered the efficient operation of the Whistleblower Program. As such, we find it appropriate to permanently bar Claimant from the Commission’s Whistleblower Program. This permanent bar applies to any pending applications from Claimant at any stage of the claims review process as well as to all future award claims.

SEC

92931

09/10/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with the above-referenced Covered Action (the “Covered Action”) recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of ***percent (***%) of the monetary sanctions collected for a payout of more than $400,000. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

[Redacted].

Claimant, a harmed investor, provided information that prompted the opening of the investigation and thereafter provided substantial ongoing assistance throughout the course of the investigation, meeting with Commission staff in person, communicating with staff dozens of times, and providing the information that led to the recovery of the sole assets used to compensate harmed investors. [Redacted].

Accordingly, it is 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.

[1] The Preliminary Determination of the CRS also recommended denying an award to a second claimant, who did not submit a request for reconsideration. Accordingly, the preliminary denial of the second claimant’s award application has become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Section 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).

SEC

92929

09/10/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant [Redacted] (“Claimant”) receive a whistleblower award in the amount of ***percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (“Covered Action”), which will presently result in an award of over $700,000.[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this original information led to the successful enforcement of the Covered Action.[fn2]

[Redacted].

In reaching this determination, we considered that (i) Claimant provided substantial, ongoing assistance that conserved significant Commission time and resources; and (ii) there was substantial law enforcement interest in the information provided, as it related to detecting an ongoing fraud involving the misappropriation of investor funds.

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.

SEC

92780

08/27/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $350,000, which represents [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).[fn1] 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,[fn2] and the Commission brought the Covered Action based in part on conduct that was the subject of Claimant’s information.[fn3] Claimant satisfied the original information requirement by providing independent analysis[fn4] 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.[fn5] Claimant’s timely identification of the Company helped secure [Redacted] and an enforcement action [Redacted].

Claimant assisted the investigation by speaking with Enforcement staff at least twice and providing real-time information about the incipient promotional campaign. [Redacted].

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.

[1] The Commission directs that in the event monetary sanctions of $ 1 million or less are ordered in the enforcement action [Redacted] [Redacted] the [Redacted] Action be treated as part of the Covered Action under Rule 21F- 4(d)(1) for purposes of determining the amount of the award because the [Redacted] Action arose out of the same nucleus of operative facts as the Covered Action.
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[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”).

SEC

92777

08/27/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $1.2 million, which represents *** percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”).[fn1]

[Redacted].

In reaching this determination, the Commission considered that Claimant provided new and useful information to Commission staff based on Claimant’s “independent analysis,”[fn6] by creating and applying a complex algorithm to publicly available data and sharing Claimant’s own knowledge and experience using the publicly available data. Claimant’s information, provided early in the investigation, allowed the staff to conserve time and resources and assisted the staff during settlement negotiations with the company, which significantly contributed to the success of the Covered Action. Claimant also provided ongoing assistance to the staff during the investigation through multiple phone calls and emails.

[Redacted]

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.

[1] The CRS also recommended the denial of a related action award to Claimant. Because Claimant did not contest the preliminary denial, the CRS’s preliminary determination as to the denial of the related action award became the final order of the Commission pursuant to Exchange Act Rule 21F-11(f); 17 C.F.R. § 240.21F-11(f).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
[3] [Redacted].
[4] [Redacted].
[5] [Redacted].
[6] See Rule 21F-4(b)(3) (defining “independent analysis” as “[the whistleblower’s] own analysis, whether done alone or in combination with others. Analysis means [the whistleblower’s] examination and evaluation of information that may be publicly available, but which reveals information that is not generally known or available to the public”). 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, Exchange Act Release No. 34-89963 (Sept. 23, 2020) at 112-13.

SEC

08/27/2021

In response to the above-referenced Notice of Covered Action the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[2] Claimant was not the source of, or impetus for, the underlying investigation. The information provided by Claimant was not related to the focus of the underlying investigation, or was otherwise already known to Commission staff, and Commission staff did not communicate with the Claimant regarding the Covered Action. The information provided by Claimant was not used in, and did not contribute to, the investigation or Covered Action.

SEC

08/27/2021

In response to the above-referenced Notices of Covered Action,[fn1] the Securities and Exchange Commission. (the “Commission”) received joint whistleblower award claims from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively, the “Claimants”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the ”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to both Claimants. The basis for this determination is marked below as follows:

Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimants were not “whistleblowers” under Exchange Act Sections 21F(a)(6) and 21F(b)(1), and Exchange Act Rule 21F-2(a)(1) thereunder, with respect to the Covered Action until they submitted their information to the Commission. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9(a), which Claimant did not do until nearly two years after the investigation was opened that led to the above-referenced Covered Actions.[fn3]

By: Claims Review Staff.

[1] The two referenced covered actions [Redacted] arising from the same investigation.

[2] Claimants submitted their information to the Commission nearly two years after the staff opened the investigation leading to the above-referenced Covered Actions. Claimants’ submission did not significantly contribute to the success of the above-referenced Covered Actions because, by the time Claimants’ tip was submitted to the Commission, the investigation was substantially complete and the staff was about to enter into settlement discussions with the defendants. Further, the investigative staff was aware of Claimants’ information by the time Claimants submitted their information to the Commission, in part because the staff had previously read this information in several articles posted on the Internet by Claimant 1 several years before the Claimants submitted their tip.

[3] Claimants first submitted information to the Commission in [Redacted]. Posting articles on the Internet does not satisfy the requirement that individuals provide their information to the Commission.

SEC

92778

08/27/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of [Redacted] percent (***%) of monetary sanctions collected or to be collected in the above-referenced Covered Action, [Redacted] (“Claimant 2”) receive a whistleblower award of *** percent (***%) of monetary sanctions collected or to be collected in the Covered Action, and [Redacted] (“Claimant 3”) receive a whistleblower award of [Redacted] percent (**%) of monetary sanctions collected or to be collected in the Covered Action. The awards will collectively result in payment of over $1 million. Claimants 1, 2, and 3 did not contest the Preliminary Determinations.[fn1] The recommendations of the CRS are adopted.

The record demonstrates that Claimants 1, 2, and 3 each voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]

[Redacted].

In determining that Claimant 1 should receive an award of *** % of monetary sanctions collected or to be collected in the Covered Action, we considered that Claimant 1 provided the most significant and comprehensive information about the conduct to staff that proved vital to the success of the Covered Action. Claimant 1 also provided extraordinary assistance during the course of the investigation. In determining that Claimant 2 should receive an award of *** % of monetary sanctions collected or to be collected in the Covered Action, we considered that Claimant 2 was the first claimant to report to the Commission, and Claimant 2’s information provided a framework for developing information requests. Claimant 2 also provided continuing assistance. In determining that Claimant 3 should receive an award of *** % of monetary sanctions collected or to be collected in the Covered Action, we considered that while helpful, Claimant 3’s information was not as significant to the overall success of the Covered Action as the information submitted by Claimants 1 and 2. Claimant 3 also provided continuing assistance.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent (***%) of monetary sanctions collected or to be collected in the Covered Action, Claimant 2 shall receive an award of *** percent (***%) of monetary sanctions collected or to be collected in the Covered Action, and Claimant 3 shall receive an award of [Redacted] percent (** %) of monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] The CRS also recommended denying an award to a fourth claimant (“Claimant 4”), who did not contest the preliminary denial. As such, the Preliminary Determination has become the Final Order of the Commission with respect to Claimant 4 pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Section 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). Although Claimants 1, 2, and 3 held compliance roles, they are each eligible for an award because they satisfy the 120-day exception under Exchange Act Rule 21F-4(b). Claimants 1 and 2 waited more than 120 days after reporting the potential securities violations internally before contacting the Commission. Claimant 3 reported the potential violations to the Commission over 120 days after receiving information indicating that senior management was already aware of the alleged misconduct.

[3] Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv).

SEC

92767

08/26/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending [Redacted] (“Claimant”) receive a whistleblower award that in the amount of thirty percent (30%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that significantly contributed to a successful enforcement action.[fn1]

The presumption applies here because a maximum award would not exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to the award application, and the award claim does not trigger Rule 21F-16. Further, Claimant provided more than limited assistance, as Claimant spoke with and provided documents to Commission staff, and application of the presumption would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program. Rather, Claimant was a harmed investor who provided the Commission with important information about misrepresentations made to induce Claimant’s investment. Based on the lack of collections, a 30% award would not result in any payment to Claimant.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).
[2] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[3] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

SEC

92708

08/19/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award equal to *** percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action. The CRS also recommended the denial of the award application from [Redacted] (“Claimant 4”). Claimant 1 did not contest the Preliminary Determinations and Claimant 4 filed a timely response contesting the Preliminary Determinations.[fn1] For the reasons discussed below, the CRS’s recommendation is adopted with respect to both Claimant 1 and Claimant 4.[fn2]

I. Background.

A. The Covered Action.

On [Redacted] the Commission brought a civil action against *** [Redacted]. The Commission amended its complaint on [Redacted] (the “Amended Complaint”), adding defendants [Redacted] (collectively, the “Additional Defendants”). On [Redacted] the Court entered final judgment against [Redacted].
On [Redacted] the Office of the Whistleblower (“OWB”) posted the above-referenced Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn3] Claimants 1 and 4 filed timely whistleblower award claims.

B. The Preliminary Determinations.

The CRS[fn4] issued Preliminary Determinations[fn5] recommending that: (1) Claimant 1 receive an award of *** % of the monetary sanctions collected or to be collected in the Covered Action; and (2) the award claim of Claimant 4 in the Covered Action be denied. The CRS recommended that Claimant 4’s award claim be denied on the grounds that Claimant 4 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Claimant 4 provided information more than two years after Enforcement staff opened its investigation and approximately two months after the Commission filed the Covered Action in federal court. The CRS found that Enforcement staff responsible for the Covered Action did not rely upon the information provided by Claimant 4.

C. Claimant 4’s Response to the Preliminary Determinations.

Claimant 4 submitted a timely written response contesting the Preliminary Determinations.[fn6] Claimant 4 contends that he/she first contacted the Commission in [Redacted] [Redacted] and attached an email with Enforcement staff from that time. Claimant 4 argues that the information he/she provided to the Commission advanced the Enforcement staff’s investigation because it helped the staff connect the Additional Defendants to the fraudulent scheme and the Additional Defendants were later added to the Amended Complaint.

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 1 qualifies for a whistleblower award.
[Redacted].
Claimant 1 provided new information to the staff that caused the staff to open a new investigation, and Claimant 1 provided ongoing assistance to the staff during the course of its investigation. The charges brought by the staff were directly based on the information Claimant 1 provided. [Redacted].

B. Claimant 4.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn10] Under the whistleblower rules, an individual’s original information leads to the success of an action where it causes staff to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and the Commission brings a successful judicial or administrative action based in whole or in part on conduct that was the subject of the individual’s original information, under Rule 21F-4(c)(1) of the Exchange Act; or alternatively, where in the context of an existing investigation, the individual’s original information significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. In determining whether an individual’s information significantly contributed to an action, we consider factors such as whether the information allowed us to bring the action in significantly less time or with significantly fewer resources; additional successful claims; or successful claims against additional individuals or entities. The individual’s information must have been “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn11]

Claimant 4 concedes in his/her request for reconsideration that Claimant 4’s information does not satisfy Exchange Act Rule 21F-4(c)(1) as the investigation was opened before Claimant 4 provided his/her information. The information submitted by Claimant 4 also did not significantly contribute to the success of the Covered Action pursuant to Exchange Act Rule 21F-4(c)(2). Enforcement staff confirmed in a supplemental declaration, which we credit, that by the time Claimant 4 provided his/her information in [Redacted] Enforcement staff was already aware of the Additional Defendants, and the staff had already developed evidence supporting the allegations that would be added in the Amended Complaint. Accordingly, the information Claimant 4 provided did not significantly contribute to the Covered Action.

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award equal to [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action. It is further ORDERED that Claimant 4’s whistleblower award application in the Covered Action be, and hereby is, denied.
By the Commission.

[1] The CRS also recommended the denial of the award applications from Claimant 2 and Claimant 3, neither of whom contested the Preliminary Determinations. Accordingly, the Preliminary Determinations with respect to Claimant 2’s and Claimant 3’s award claims became the Final Orders of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] The CRS recommended the denial of a related action award to Claimant 4. Because Claimant 4 did not contest the preliminary denial of the related action award, the CRS’s preliminary determination as to the denial of the related action award became the final order of the Commission pursuant to Exchange Act Rule 21F-11(f); 17 C.F.R. § 240.21F-11(f).
[3] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[4] Rule 21F-10(d) under the Exchange Act provides that the CRS will “evaluate all timely whistleblower award claims submitted on Form WB-APP in accordance with the criteria set forth in these rules.” 17 C.F.R. § 240.21F-10(d).
[5] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e). [Redacted] [Redacted] [Redacted]
[7] [Redacted].
[8] [Redacted].
[9] [Redacted].
[10] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[11] Whistleblower Award Proceeding File No. 2018-6, Rel. No. 34-82897 (Mar. 19, 2018); Whistleblower Award Proceeding File No. 2016-9, Rel. No. 34-77833 (May 13, 2016).

SEC

08/16/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 4”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets fo1th its Preliminary Determinations for the award claimants as follows.

[Redacted].

[Redacted] Claimant 4.

The CRS has preliminarily determined to recommend that the Commission deny an award to [Redacted] Claimant 4. No information submitted by [Redacted] Claimant 4 led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that [Redacted] Claimant 4 submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[Redacted].

Claimant 4’s information was designated in the Commission’s Tips, Complaints and Referrals (“TCR”) System with a disposition of NFA, or no further action. A disposition of NFA generally means that no further action is planned with respect to that TCR unless subsequent information leads Commission staff to reopen, or reexamine that TCR. Claimant 4’s information was not forwarded to the Enforcement staff responsible for the Covered Action, and Enforcement staff do not recall receiving any information from Claimant 4 or reviewing the information provided by Claimant 4.

By: Claims Review Staff.

SEC

08/13/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in a SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept.. 9, 2019).

[2] Claimant did not submit information until after the Covered Action was instituted and settled. Claimant’s information also did not significantly contribute to the success of the underlying investigation or resulting Covered Action because Claimant’s information did not relate to the investigation or the claims brought in the Covered Action. Further, Covered Action staff had no communications with Claimant.

SEC

92621

08/10/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $3.5 million, which represents *** percent (***%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant alerted Commission staff of alleged securities laws violations, prompting Enforcement staff to expand an existing investigation into an additional geographic area. Claimant, a foreign national, also provided significant assistance to Commission staff by traveling to meet in person with staff, identifying an important witness, and providing multiple supplemental submissions that assisted the Commission in bringing the charges in the Covered Action.

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

SEC

92623

08/10/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $17,000, which represents *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission[fn1] that led to the successful enforcement of the Covered Action.[fn2]

[Redacted].[fn3]

[Redacted].[fn4]

[Redacted].[fn5]

In reaching this determination, the Commission considered that Claimant alerted the Commission to an ongoing fraudulent scheme, which, in part, prompted the opening of the investigation, participated in several interviews with Commission staff, identified witnesses, and provided documents that provided important evidence of misrepresentations.

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.

[1] Claimant satisfies Exchange Act Rule 21F-9(e) because the record reflects that Claimant submitted a Form TCR under penalty of perjury within 30 days of learning of the filing requirement, and Claimant otherwise qualifies for an award.
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[3] [Redacted].
[4] [Redacted].
[5] [Redacted].

SEC

92622

08/10/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $2.4 million, which represents [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”).

[Redacted].

In reaching this determination, the Commission considered that Claimant alerted Commission staff of alleged securities laws violations after initially reporting concerns internally to Claimant’s employer, prompting staff to open an investigation that led to the Covered Action. Claimant also provided significant assistance by meeting in person with Commission staff, providing documents, and identifying potential witnesses.

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

SEC

92587

08/06/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $2 million, which represents *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).[fn1]

[Redacted].

In reaching this determination, the Commission considered that Claimant alerted the Commission to the on-going fraud prompting the opening of an investigation into the alleged conduct, participated in multiple voluntary interviews with Commission staff, and provided documents and additional information that assisted the staff in its investigation, saving Commission staff time and resources.

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.

[1] The Commission also concludes that, if the monetary sanctions ordered in connection with [Redacted] Action”) are less than $1,000,000, that the *** Action be treated as part of the Covered Action under Rule 21F-4(d)(2) because it arose out of the same nucleus of operative facts as the Covered Action.
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

SEC

92589

08/06/2021

[Redacted].

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of *** % for Claimant 1 and *** % for Claimant 2 is appropriate. In reaching that determination, we assessed the following facts: (1) Claimant 1 provided Enforcement staff with information that served as a roadmap for the staff’s investigation; (2) Claimant 1 provided ongoing assistance to the staff as the investigation progressed; (3) while Claimant 2’s independent analysis was helpful to the staff by narrowing the investigation’s focus and by assisting with the crafting of a subpoena, it was less impactful as compared to Claimant 1’s information; and (4) Claimant 2’s observations and insights assisted the staff and informed the final charges brought by the Commission.

Accordingly, it is hereby ORDERED that (1) Claimant 1 shall receive an award equal to [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action, and (2) Claimant 2 shall receive an award equal to *** percent ( ***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

By the Commission.

[1] A third claimant (“Claimant 3”) did not contest the Preliminary Determination denying Claimant 3’s claim. Accordingly, the Preliminary Determination with respect to Claimant 3’s award claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Section 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). [Redacted] [Redacted] [Redacted] [Redacted] [Redacted]

CFTC

08/03/2021

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application on Form WB-APP, Application for Award for Original Information Provided Pursuant to Section 23 of the Commodity Exchange Act, from Claimant, in response to the above-listed Notice of Covered Action. The corresponding enforcement actions are [Redacted], and [Redacted], (together, the “[Redacted] Orders”), as well as [Redacted], (the “[Redacted] Order”), which arose out of the same nucleus of operative facts as the [Redacted] Orders. See 17 C.F.R. § 165.2(a)(1). The [Redacted] Orders and the [Redacted] Order are, together, referred to herein as the “Covered Action.”

The Claims Review Staff (“CRS”) has evaluated Claimant’s application in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (the “Act”), 7 U.S.C. § 26 (2018). The CRS sets forth its Preliminary Determination as follows:

CFTC

08/03/2021

The Claims Review Staff (“CRS”) has evaluated Claimants’ award claims for the Covered Action in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). The CRS sets forth its Preliminary Determination for each Claimant as follows:

1. The CRS has determined to recommend that the Commission deny all three applications because they do not meet the requirements for an award.

2. Claimant 3 is unknown to staff in the CFTC’s Division of Enforcement (“Division staff”) in connection with the investigation underlying the Covered Action. Division staff responsible for the matter never contacted Claimant 3 during the investigation, and a search of the Division’s database for the Covered Action did not uncover any documents under Claimant 3’s name.

3. Division staff also had no contact with Claimant 2 during the investigation, and Claimant 2 never submitted a Form TCR and is therefore not a whistleblower.

4. Although Claimant 1 provided information to the Division during the investigation, Claimant 1 never submitted the information on a Form TCR for this matter, which is required for award consideration. Even if Claimant 1 had provided his or her information on a Form TCR, however, Claimant 1’s information did not lead to the successful resolution of the Covered Action. See 17 C.F.R. § 165.5(a)(3). Claimant 1 [Redacted]. In addition, Claimant 1’s complaint was not a Form TCR.

5. Claimant 1’s information also did not “significantly contribute[] to the success of the action,” id. § 165.2(i)(2). After receiving his or her complaint [Redacted], Division staff attempted to schedule an interview with Claimant 1. Despite leaving several messages for Claimant 1 by email and telephone [Redacted], Division staff was unable to interview Claimant 1. Division staff did not hear from Claimant 1 again until almost three years later.

6. On [Redacted], Claimant 1 emailed Division staff wanting to provide information [Redacted]. Division staff then interviewed Claimant 1 [Redacted]. While Division staff found Claimant 1 to be credible, Division staff identified some evidentiary issues regarding the admissibility of these [Redacted].

7. Even before Claimant 1 contacted Division staff in [Redacted], Division staff had already obtained information from numerous other sources. The Division received multiple [Redacted]. Moreover, Division staff obtained documents and materials produced directly by [Redacted]. The Division also obtained [Redacted]. In light of all of the above, Claimant 1 did not significantly contribute to the success of the Covered Action.

SEC

92542

08/02/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of more than $1.1 million, which represents *** percent ( *** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”),[fn1] and that [Redacted] (“Claimant 2”) receive a whistleblower award of more than $500,000, which represents *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action. 2 Claimant 1 declined to contest the Preliminary Determination. However, Claimant 2 timely requested reconsideration, arguing that Claimant 2 should receive a higher award allocation as compared to Claimant 1. For the reasons discussed below, the recommendations of the CRS are adopted.

I. Background.

A. The Covered Action.

[Redacted]. The Commission charged that [Redacted] (“Issue A”). [Redacted].[fn3]

B. The Preliminary Determinations.

The CRS preliminarily determined that Claimant 1 should receive an award of ***% of the monetary sanctions collected or to be collected, Claimant 2 should receive an award of the monetary sanctions collected or to be collected, and Claimant 3’s claim should be denied. In allocating the award percentages between Claimants 1 and 2, the CRS observed that: (1) Claimant 1’s information was more significant than Claimant 2’s information as it was the first information received by the Commission staff relating to Issue A and thus established the outlines of the misconduct; (2) although Claimant 1 initially provided assistance to the Enforcement staff, Claimant 1 did not provide assistance after [Redacted] despite staff’s request to do so, while Claimant 2 provided ongoing assistance to the Enforcement staff during the course of the investigation; (3) Claimant 1 raised concerns internally in an effort to remedy the conduct; and (4) Claimant 2 unreasonably delayed by waiting several years to report the conduct to the Commission, during which time Claimant 2 did not take any steps to report or remediate the conduct.

C. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 timely filed a request for reconsideration of the preliminary determinations and argued that Claimant 2 should receive a higher award percentage. Claimant 2 contended that (1) Claimant 2 provided information about other conduct that was charged in an enforcement action against the Company (“Issue B”) but not in the Covered Action under consideration here; (2) Claimant 2 should receive credit for information Claimant 2 provided about charges that the Commission could have but chose not to bring; (3) Claimant 2’s information was more significant than Claimant 1’s information; and (4) Claimant 2 did not unreasonably delay in providing information about Issue A to the Commission.

II. Analysis.

The record demonstrates that both Claimants 1 and 2 voluntarily provided original information to the Commission that led to the Covered Action.[fn4] Claimant 1 filed a Form TCR in [Redacted] alleging, among other things, facts concerning Issue A. Claimant 2 filed a Form TCR in [Redacted] that described facts concerning Issue A, Issue B, and other issues. The information Claimants 1 and 2 each provided was a principal motivating factor in the staff’s decision to open an investigation, which led to two covered actions: (1) the Covered Action, which only involved Issue A and was based in part on original information that Claimants 1 and 2 provided, and (2) an action against the Company (the “Other Covered Action”), the charges for which involved both Issue A and Issue B.

[Redacted].

Claimant 1’s application presents no negative factors, and Claimant 1 provided more than limited assistance. Claimant 1 provided a telephonic interview and submitted additional supporting documents to Enforcement staff. And application of the presumption would not be inconsistent with the public interest, protection of investors, or the objectives of the whistleblower program.

Based on the record, and after considering Claimant 2’s arguments on reconsideration, we find that making a ***% award to Claimant 1 and a ***% award to Claimant 2 is appropriate. Claimant 1’s information, which was submitted several months before Claimant 2’s information, was more significant as it was the first to inform Enforcement staff of Issue A, the conduct relevant to the Covered Action, which established the broad outlines of the case and rendered some of Claimant 2’s information duplicative. Claimant 1’s information also was broader and more current as compared to Claimant 2’s information. We also considered that Claimant 2 unreasonably delayed in reporting the information to the Commission by waiting approximately four years to provide the information concerning Issue A to the Commission after learning of the conduct and took no steps in the meantime to try to remedy the conduct. By contrast, Claimant 1 repeatedly raised concerns internally about the alleged conduct.

Many of Claimant 2’s arguments on reconsideration are framed in terms of Claimant 2’s purported contributions regarding Issue B—(1) that Claimant 2 should receive credit for Claimant 2’s purported contributions to the Other Covered Action, which involved Issue B; (2) that Claimant 2’s information was broader because Claimant 2 provided information about Issue B and Claimant 1 purportedly did not;[fn6] and (3) that Claimant 2’s reporting delay should be measured from when Claimant 2 learned information about Issue B, not Issue A. However, the question before the Commission is how to weigh the claimants’ relative contributions to and reporting delay in connection with this Covered Action, which only involves Issue A. Claimant 2’s contributions to the Other Covered Action will be considered separately.

Nor do Claimant 2’s other arguments warrant departing from the CRS’s recommendation. Claimant 2 seeks credit for providing information that Claimant 2 believes could have led to other charges. However, as we recently stated in a related context, “the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s information actually had on the investigation.”[fn7] In evaluating the appropriate award percentage for Claimant 2, the Commission will not speculate on what others charges might have been brought with Claimant 2’s information.

Finally, the Commission rejects Claimant 2’s argument that Claimant 2’s reporting delay was reasonable in the circumstances. Claimant 2 does not dispute that Claimant 2 took no steps to remedy the misconduct during the period of delay. Rather, Claimant 2 contends that it would have been futile to raise Claimant 2’s concerns with the Company’s management during the period of delay because they were aware of the issue and had not addressed it. But this purported futility only underscores the urgency of timely reporting to the Commission if Claimant 2 believed the Company was unlikely to address the issue itself. Claimant 2 also argues that Claimant 2 did not understand that the conduct involving Issue A potentially violated the securities laws until Claimant 2 was researching Issue B several years later. However, the record is clear that Claimant 2 understood that the alleged conduct was wrongful, and yet chose not to take any actions to try to remedy the conduct by reporting to the Commission or another government authority.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action, and Claimant 2 shall receive an award of *** percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] The Commission finds that [Redacted], arose out of the same nucleus of operative facts under Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(d), and should be treated together as a single Covered Action for the purpose of making this whistleblower award.

[2] The CRS also preliminarily recommended denying the award application of a third claimant, who did not seek reconsideration. Accordingly, the Preliminary Determination has become the Final Order of the Commission with respect to the third claimant pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[3] [Redacted].

[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[6] Claimant 2 also argues that Claimant 2’s information must have been more significant than Claimant 1’s information because the investigation was opened closer in time to the receipt of Claimant 2’s information. But the record, which includes a supplemental declaration from the responsible Covered Action investigation staff, which we credit, reflects that the timing of the opening of the investigation was affected by the progression of a relate investigation and does not reflect the relative importance of Claimant 1’s and 2’s information.

[7] Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 90872 , at 4 (Jan. 7, 2021).

SEC

92541

08/02/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that: (i) [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”); and (ii) [Redacted] (“Claimant 2”) receive a whistleblower award in the amount of *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action. This will result in awards of more than $2 million to Claimant 1 and more than $150,000 to Claimant 2. Claimant 1 and Claimant 2 provided written notice of their decisions not to contest the Preliminary Determinations.

The recommendations of the CRS are adopted. The record demonstrates that Claimant 1 and Claimant 2 each voluntarily provided original information to the Commission, and each claimant’s original information led to the successful enforcement of the Covered Action.[fn1]

[Redacted].

With respect to Claimant 1, we note that: (i) Claimant 1’s information was significant, as it resulted in Enforcement staff initiating an investigation into misconduct that [Redacted] (“the Company”) engaged in in ***, and it ultimately led in part to the Covered Action; (ii) Claimant 1 submitted information and documents to Enforcement staff, participated in interviews with Enforcement staff, and helped Enforcement staff identify key individuals and entities involved in the investigation; (iii) Claimant 1’s information and assistance helped Enforcement staff focus its investigation into the Company’s conduct in *** and helped the Commission conserve significant time and resources; and (iv) Claimant 1 raised *** concerns multiple times at the Company in efforts to remedy the relevant misconduct. [Redacted]

With respect to Claimant 2, we note that: (i) Claimant 2’s information advanced the Covered Action in that it alerted Enforcement staff of possible wrongdoing occurring in [Redacted], prompting Enforcement staff to expand its investigation into potential misconduct committed by the Company in [Redacted]; (ii) Claimant 2’s specific allegations about certain actors who were later identified in the Covered Action were not part of the specific conduct charged by the Commission in the Covered Action; (iii) after submitting *** information, Claimant 2 did not provide additional information or assistance to Enforcement staff; and (iv) Claimant 2’s information was much more limited as compared to the information and assistance provided by Claimant 1 (whose information opened the investigation).

Based on the facts and circumstances of this matter, we believe a ***% whistleblower award to Claimant 1 and a **% whistleblower award to Claimant 2 would recognize the significance of Claimant 1’s and Claimant 2’s information and the high law enforcement interest involved in this matter.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action, and that Claimant 2 receive an award of *** percent ***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

By the Commission.

[1] See Exchange Act Section 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).

SEC

07/29/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

SEC

07/29/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Claimant submitted an untimely award application because Claimant failed to submit the claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act.[fn3]

By: Office of the Whistleblower.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, he is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

[3] The deadline to file an award claim for the Covered Action was [Redacted]. Claimant’s award application was dated [Redacted], more than 7 months after the deadline.

[4] The information provided by Claimant was not “original” within the meaning of Rules 21F-3(a)(2) and 21F-4(b) because the information was already known to the Commission from another source at the time Claimant submitted the information.

SEC

07/25/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”), and [Redacted] (“Claimant 2”) (collectively “Claimants”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the
Commission deny the above award claims.[fn1] The basis for this determination is marked
below as follows:

Claimant 2 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 1 is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9(a), which Claimant did not do.[fn3]

Claimant 1’s submissions, upon which Claimant 1 bases the claim for an award, were not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1) because Claimant made the submissions after a request, inquiry, or demand that relates to same subject matter as the submissions was directed to Claimant or anyone representing Claimant (such as an attorney) by (i) the Commission, (ii) another regulatory or law enforcement agency or self-regulatory organization (such as FINRA), or (iii) Congress or any other authority of the federal government.[fn4]

Claimant 2 did not provide ” original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information was not derived from Claimant’s: (1) “independent knowledge,” as defined under Rule 21F-4(b)(2), but instead was derived entirely from “publicly available sources;” or (2) “independent analysis,” as defined under Rule 21F-4(b)(3), because the information did not include an examination and evaluation of information that “reveals information that is not generally known or available to the public.”[fn5]

By: Claims Review Staff.

[1] To the extent Claimants have applied for awards in a related action, because Claimants are not eligible for an award in an SEC Covered Action, Claimants are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Investigative staff responsible for the Covered Action opened the Covered Action investigation based on information received from other sources, and not because of information provided by Claimant 2. Claimant 2’s information also did not significantly contribute to the success of the Covered Action because it contained information of which the responsible investigative staff was already aware or concerned matters that did not become part of the Commission’s Covered Action.

[3] Claimant 1 did not submit information on Form TCR or online, through the Commission’s website under the Commission’s Whistleblower Program. In addition, Claimant 1 did not sign the required whistleblower declaration as required under Exchange Act Rule 21F-9(b).

[4] Claimant 1 submitted information after another federal agency had directed a request for such information from Claimant 1 or Claimant 1’s representative in connection with an investigation.

[5] Claimant 2’s award application on Form WB-APP includes emails Claimant 2 sent to Commission staff which consist p1ima1ily of links to publicly-available information, such as to Internet sites, which cannot, standing alone, be the basis for an award claim.

SEC

07/24/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received three whistleblower award claims, two of which were submitted jointly. Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

[Redacted].

[Redacted] Claimant 2.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2. The basis for this determination is as follows:

First, Claimant 2 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information Claimant 2 provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn3]

Second, Claimant 2 did not provide “original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder, because the information was not derived from Claimant 2’s: (1) “independent knowledge,” as defined under Rule 21F-4(b)(2), but instead was derived entirely from “publicly available sources,” or (2) “independent analysis,” as defined under Rule 21F-4(b)(3), because the information did not include an examination and evaluation of information that “reveals information that is not generally known or available to the public.”[fn4]

By: Claims Review Staff.

[3] The record reflects that the investigation was opened prior to Claimant 2’s submission of information. Claimant 2’s information also did not significantly contribute to the success of the Covered Action as it contained information that was publicly available and which Enforcement staff was already aware of prior to Claimant 2’s submission. In addition, Enforcement staff responsible for the Covered Action had no communications with Claimant 2. As such, Claimant 2’s information was not used in, and and had no impact on, the investigation.

[4] The information contained in Claimant 2’s tip was already known to staff and consisted of publicly available information that did not contain either independent knowledge or independent analysis.

SEC

07/23/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received five whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

[Redacted] (Claimant 3), [Redacted] (Claimant 4) and [Redacted] (Claimant 5).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claims of Claimant 3, Claimant 4 and Claimant 5. Neither Claimant 3, Claimant 4, nor Claimant 5 provided information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information they provided did not:

(1) under Rule 21F-4(c)(1) of the Exchange Act cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s, Claimant 4’s or Claimant 5’s information; or

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by Claimant 3, Claimant 4 or Claimant 5. In addition, none of the information provided by Claimant 3 or Claimant 4 contributed to the success of the Covered Action, in that the staff was already aware of the information at the time the staff received it or the information did not help to establish liability in the Covered Action. Finally, with regard to Claimant 5, staff responsible for the investigation and Covered Action did not review Claimant’s information, therefore, Claimant 5’s information had no impact on the staffs investigation or the Covered Action.

By: Claims Review Staff.

SEC

07/23/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 3”), and [Redacted]. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 3 [Redacted].

The CRS has preliminarily determined to recommend that the Commission deny an award to Claimant 3 [Redacted]. No information submitted by Claimant 3 [Redacted] led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that Claimant 3 [Redacted] submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making the determination, the CRS notes that Enforcement staff assigned to the Covered Action first communicated with Claimant 3 regarding the Covered Action after the Commission had commenced its action in federal court. Further, Enforcement staff did not find Claimant 3’s submissions to be relevant to the Covered Action, and Claimant 3’s information did not contribute to the Covered Action.

[Redacted].

By: Claims Review Staff.

SEC

07/23/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received two whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Determinations as follows.

[Redacted].

[Redacted] (Claimant 2).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2 on two grounds.

First, to be eligible for an award, claimants must submit their information in the form and manner required, see Rule 21F-2(b), by submitting their information on Form TCR or online through the Commission’s website, and sign the required whistleblower declaration, as required under Exchange Act Rules 21F-9(a) and (b), which Claimant 2 did not do. Based on the current record, Claimant 2 is not eligible for the automatic waiver under Exchange Act Rule 21F-9(e), which waives the TCR filing requirement for otherwise meritorious whistleblowers who submit their information within 30 days of obtaining actual or constructive notice of the TCR filing requirement. This is because whistleblowers who are represented by counsel in connection with the submission of their information are deemed to be on constructive notice of the TCR filing requirement. Claimant 2 is represented by counsel in connection with Claimant 2’s award claim, but has never submitted a Form TCR to the Commission related to the information Claimant 2 provided to Commission staff in connection with this Covered Action. Further, based on the current record before us, the CRS has preliminarily determined not to recommend that the Commission exercise its discretionary exemptive authority under Section 36(a) of the Exchange Act to waive the Form TCR filing requirements.

Second, Claimant 2 failed to submit the claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice for the Covered Action, as required under Rule 21F-10(b) of the Exchange Act.[fn4] Claimant 2’s application for whistleblower award for the Covered Action is dated more than three months past the end of the application period for the Covered Action.

Exchange Act Rule 21F-8 provides that “the Commission may, in its sole discretion, waive” these procedural requirements “based upon a showing of extraordinary circumstances.” In determining whether a claimant has demonstrated extraordinary circumstances for purposes of Rule 21F-8(a), the Commission has previously looked to its decision in In the Matter of the Application of PennMont Securities, et. al (“PennMont”).[fn5] There, in determining whether applicants had demonstrated extraordinary circumstances that would trigger the Commission’s discretion to waive the thirty-day filing deadline under Commission Rule of Practice 420(b), the Commission explained that “the ‘extraordinary circumstances’ exception is to be narrowly construed and applied only in limited circumstances.” An extraordinary circumstance is one “where the reason for the failure timely to file was beyond the control of the applicant . . . .” Further, “[e]ven when circumstances beyond the applicant’s control give rise to the delay, . . . an applicant must also demonstrate that he or she promptly arranged for the filing . . . as soon as reasonably practical thereafter.” In reaching this preliminary determination, we note that competing demands on Claimant 2’s time and attention and [Redacted] lack of knowledge regarding the Commission’s whistleblower program do not demonstrate that extraordinary circumstances prevented Claimant 2 from complying with Rules 21F-9(a) and (b) or Rule 21F-10.[fn6]

By: Claims Review Staff.

[4] See Order Determining Whistleblower Award Claim, Release No. 34-77368 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. Sept. 7, 2017), cert. denied, 138 S.Ct. 2005 (2018).

[5] PennMont Sec., Release No. 34-61967 (Apr. 23, 2010), pet. for rev. denied sub nom. PennMont Sec. v. SEC, 414 F. App’x 465 (3rd Cir. 2011)

[6] The Commission has declined requests to waive the ninety-day filing deadline for whistleblower award claims because of claimants’ failures to meet the PennMont standard. See Order Determining Whistleblower Award Claim, Release No. 34-77368 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018), reh’g denied, 138 S. Ct. 2715 (2018); see also Order Determining Whistleblower Award Claim, Release No. 34-85273 (Mar. 8, 2019); Order Determining Whistleblower Award Claim, Release No. 34-82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 34-72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 34-72178 (May 16, 2014).

SEC

92456

07/21/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of approximately $2.9 million, which is equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in [Redacted] (collectively, the “Covered Action”).[fn1] Claimant provided written notice, through counsel, that Claimant does not contest the Preliminary Determination.[fn2]

The presumption, however, does not apply here because at least one negative factor — unreasonable reporting delay — under Rule 21F-6(b) is present.[fn6] Based on the unique facts and circumstances of this matter, the Commission finds that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant’s information was submitted approximately two years from the date on which Claimant first suspected that there could possibly be a securities law violation occurring. Further, the Commission has determined not to waive this criterion under Rule 21F-6(c)(iii).[fn7]

Applying the award criteria in Rule 21F-6 to the specific facts and circumstances here, we find the *** % award determination to be appropriate.[fn8] In coming to this determination, we considered that (i) Enforcement staff was unaware of the misconduct until Claimant submitted the tip, (ii) Claimant’s documents and assistance allowed the staff to conserve considerable resources, (iii) the charges brought by the Commission were based in significant part on conduct that was the subject of the information provided by Claimant, (iv) Claimant suffered significant personal and professional hardships, and (v) Claimant unreasonably delayed reporting to the Commission while investors continued to be harmed.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] *** percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] For the purposes of making an award, we determined to treat the judicial and administrative actions in this matter as a single Covered Action because they arose out the same nucleus of operative facts. See Securities Exchange Act of 1934 Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).
[2] An additional claimant on the matter did not seek reconsideration of their denial and, as such, the Preliminary Determination with respect to their claim became the Final Order of the Commission, pursuant to Exchange Act Rule 21F-10.
[3] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[5] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).
[6] Rule 21F-6(b) provides that in determining whether to decrease the amount of an award, the Commission will consider the following negative factors — culpability, unreasonable reporting delay, and interference with an internal compliance and reporting system.
[7] Rule 21F-6(c)(iii) provides that the Commission, in its sole discretion, “may in certain limited circumstances determine to waive this criterion if the claimant can demonstrate that doing so based on the facts and circumstances of the matter is consistent with the public interest, the promotion of investor protection, and the objectives of the whistleblower program.”
[8] In assessing the appropriate award amount, Exchange Act Rules 21F-6(a) and (b) provide 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. Rules 21F-6(a) and (b); 17 C.F.R. § 240.21F-6(a) and (b).

SEC

92214

07/21/2021

Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules thereunder, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that the award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced Covered Action (“Covered Action”) be denied. Claimant filed a timely written response contesting the Preliminary Determination.

After careful consideration of the administrative record, including Claimant’s written response, we agree with the Preliminary Determination and deny Claimant’s award claim.

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted a settled administrative and cease-and-desist proceeding charging [Redacted].

On [Redacted], the Office of the Whistleblower posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted].[fn1] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant’s award claim be denied because Claimant’s information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The record supporting the Preliminary Determination included the declaration (the “First Declaration”) of one of the attorneys in a regional office of the Commission’s Division of Enforcement who was responsible for the Covered Action. The First Declaration stated, under penalty of perjury, that none of the members of the investigative team recalled receiving any information provided by Claimant or communicating with Claimant. The First Declaration further attested that Claimant’s information did not cause the Commission staff to open the Investigation or otherwise contribute to the success of the Covered Action.

C. Request for Reconsideration.

On [Redacted], Claimant filed a timely request for reconsideration of the Preliminary Determination. Specifically, Claimant argues in response to the Preliminary Determination that Claimant submitted a specific, viable, and credible tip to the Commission before it began its Investigation and that it is likely that Commission staff reviewed *** tip, or if they did not, it was because the staff did not follow the procedures set out in the SEC’s Enforcement Manual regarding the handling of tips, complaints, and referrals. Claimant alleges that the Claimant’s tip should have been reviewed between the time of its filing and the end of the Investigation. Attached to the Claimant’s request for reconsideration is an email that the Claimant sent to an attorney in a regional office of the Commission’s Division of Enforcement on [Redacted] (“[Redacted] email”). Claimant sent this email a year after submitting *** initial tip, and in *** email, Claimant recommended that the Enforcement attorney review Claimant’s TCR concerning “[Redacted].”[fn2]

II. Analysis.

The Investigation was opened based on a referral by staff in the Commission’s Division of Examinations’ Risk Analysis Examination team, which used data analytics to identify *** [Redacted]. The Investigation was not opened based on information from the Claimant.

We find that none of the information that Claimant submitted led to the successful enforcement of the Covered Action. The *** attorney who wrote the First Declaration confirmed that (1) the investigative team did not review any of Claimant’s submissions prior to the filing of the Covered Action; and (2) the Division of Examinations, whose referral prompted the opening of the Investigation culminating in the Covered Action, never reviewed Claimant’s tip. 6 Further, the attorney, who received the [Redacted] email from Claimant and who shares the same last name of the email’s intended recipient, provided a declaration (the “Second Declaration”) stating that the email was not sent to the staff responsible for the Investigation that resulted in the Covered Action. This is consistent with statements in the First Declaration, stating that the investigative team never received or reviewed Claimant’s tip.

As noted above, Claimant also argues that the staff mishandled their information. In short, Claimant argues that their tip would have led to the success of the Covered Action if it had been handled differently. However, the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s tip actually had on the investigation. Here, the First and Second Declarations, which we credit, are clear that Claimant’s information 1) did not cause the staff to open the Investigation (which was instead opened by data analytics), and 2) the Claimant’s information was never reviewed or received by investigative or exam staff. Accordingly, we find that Claimant’s information did not lead to the successful enforcement of the Covered Action. As a result, Claimant is ineligible for an award.[fn7]

III. Conclusion.

For the foregoing reasons, it is ORDERED that the whistleblower award claim from Claimant be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] The Claimant’s request for reconsideration identifies a specific attorney in the Commission’s Division of Enforcement to whom the email was sent. However, the Claimant did not send the email to that identified attorney. Instead, the Claimant sent the email to a different attorney [Redacted] in a different Commission regional office. The attorney who received the email has provided a declaration under penalty of perjury.

[3] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[4] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[5] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2). In determining whether information significantly contributed to an enforcement action, we consider factors such as “whether the information allowed us to bring: (1) Our successful action in significantly less time or with significantly fewer resources; (2) additional successful claims; or (3) successful claims against additional individuals or entities.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011). “The individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.’” Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 , 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).

[6] Investigative staff confirmed that the data analytics identifying [Redacted] was initiated by data analytics on [Redacted] and that the Claimant’s tip played no role in the initiation of the data analytics on either of the companies.

[7] See Order Determining Whistleblower Award Claim, Release No. 34-85412 (Mar. 26, 2019) (denying whistleblower award to claimant who argued that staff errors resulted in improper processing of submission, because information submitted did not actually lead to successful enforcement of covered action); Order Determining Whistleblower Award Claim, Release No. 34-79294 (Nov. 14, 2016) (same), pet. rev. denied sub nom. Doe v. SEC, 729 F. App’x 1 (D.C. Cir. 2018).

CFTC

07/17/2021

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1, Claimant 2, and Claimant 3 (collectively, “Claimants”) in response to the above-referenced Notice of Covered Action (“NCA”) regarding [Redacted] (“Order” or “Covered Action”). The Claims Review Staff has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). The Claims Review Staff sets forth its Preliminary Determination for Claimants as follows:

1. The Claims Review Staff has determined to recommend that the Commission deny all applications because Claimants did not provide information that led to the successful enforcement outcome in the Covered Action. Division of Enforcement (“Division”) staff responsible for the investigation did not contact Claimants or use any information provided by Claimants to bring, investigate, or settle the Covered Action.

2. Claimant 3 is ineligible for an award, having failed to file a Form TCR with the Commission and to file his/her Form WB-APP by the deadline in the NCA and the Rules. See 17 C.F.R. §§ 165.3(a), 165.5(b)(1)-(2), 165.7(b)(2).

3. Throughout the investigation leading to the Order, Division staff relied on documents and information provided by [Redacted] and other financial institutions, as well as statements made by their employees and former employees during interviews. Division staff also relied on data analysis conducted by Division economists and an outside expert.

4. The CRS also recommends denying any claims for awards on related actions. Under the CEA, in order to be eligible for awards on related actions, a whistleblower must have provided information that led the Commission to a successful Commission action. See 17 C.F.R. §§ 165.2(m), 165.11. Since none of the Claimants contributed to the investigation leading to the Order, Claimants are ineligible for awards on any purported related actions.

SEC

07/16/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), and [Redacted] (“Claimant 4”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants [Redacted] 2, 3 and 4 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

[Redacted] failed to submit the claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice for the Covered Action, as required under Rule 21F-10(b) of the Exchange Act.[fn3]

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action opened the Covered Action
investigation based on a source other than Claimants. Nor did Covered Action staff rely on
any information from Claimants , 3 and 4, and did not have any communications with
Claimants 2, 3 and 4. As such, none of their information significantly contributed to the
success of the Covered Action.

[3] [Redacted].

SEC

07/16/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[2] The Covered Action investigation was not opened based on information provided by Claimant. Claimant also did not significantly contribute to the success of the Covered Action. Investigative staff responsible for the Covered Action never received any information from Claimant or had any communications with Claimant.

SEC

07/16/2021

In response to the above-referenced Notice of Covered Action the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter(s ). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(l); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Claimant was not the source of, or impetus for, the underlying investigation, and the information Claimant provided was already known to the Commission staff. Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or Covered Action.

[3] Claimant provided information that was already known to the Commission staff from other sources.

SEC

92416

07/16/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $40,000, which represents [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in [Redacted] (the “Covered Action”).[fn1] 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, and that Claimant’s original information led to the successful enforcement of the Covered Action.[fn2]

The presumption does not apply here, however, because one negative factor under Rule 21F-6(b) – unreasonable reporting delay – is present.[fn5] Based on the facts and circumstances of this matter, we find that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant’s information was submitted approximately 33 months from the date on which Claimant first believed that securities violations were occurring. Moreover, investors suffered harm during the period of delay. Given the impact of the delay, the CRS concluded that this criterion under Rule 21F-6(c)(1)(iii) should not be waived.[fn6]

Applying the award criteria in Rules 21F-6(a) and (b) of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn7] In coming to the ***% award determination, we considered that (i) Claimant offered a detailed list of allegations for staff concerning the misconduct, (ii) Claimant provided information about the leadership structure of the relevant entity and the responsibilities of its personnel, which helped staff interpret and understand information received in document productions and testimony, (iii) Claimant provided substantial, ongoing assistance, including providing voluminous, important documents not otherwise available to staff, (iv) the charges brought by the Commission were based in significant part on conduct that was the subject of the information provided by Claimant and (v) Claimant unreasonably delayed reporting to the Commission for approximately 33 months while investors continued to be harmed.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] For the purposes of making an award, we have determined to treat the judicial and administrative actions in this matter as a single Covered Action because they arose out the same nucleus of operative facts. See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[3] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[4] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).
[5] Rule 21F-6(b) provides that in determining whether to decrease the amount of an award, the Commission will consider the following negative factors – culpability, unreasonable reporting delay, and interference with an internal compliance and reporting system.
[6] Rule 21F-6(c)(1)(iii) provides that the Commission, in its sole discretion, “may in certain limited circumstances determine to waive this criterion if the claimant can demonstrate that doing so based on the facts and circumstances of the matter is consistent with the public interest, the promotion of investor protection, and the objectives of the whistleblower program.” 17 C.F.R. § 240.21F-6(c)(1)(iii).
[7] In assessing the appropriate award amount, Exchange Act Rules 21F-6(a) and (b) provide 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. Rules 21F-6(a) and (b); 17 C.F.R. § 240.21F-6.

SEC

92413

07/15/2021

In reaching this determination, the Commission considered that Claimant alerted the Commission to the on-going fraud prompting the opening of the investigation, participated in a voluntary interview with Commission staff, and provided numerous documents that assisted the staff in its investigation, saving Commission staff time and resources. There also have been no collections to date in the matter.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

92412

07/15/2021

In reaching this determination, the Commission considered that Claimant alerted the Commission to the on-going fraud prompting the opening of the investigation, participated in multiple voluntary interviews with Commission staff, and provided numerous documents that assisted the staff in its investigation, saving Commission staff time and resources. There also have been no collections to date in the matter.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

92411

07/15/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $1.2 million, which represents *** percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).[fn1]

[Redacted].

In reaching this determination, the Commission considered that Claimant alerted the Commission to the securities law violations prompting the opening of a new investigation into the alleged conduct, participated in a voluntary interview with Commission staff, and provided documents and additional information that assisted the staff in its investigation, saving Commission time and resources.

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.

[1] Although Claimant [Redacted] and learned the information from [Redacted], we find that Claimant’s information is not subject to [Redacted] exclusion since Claimant first reported the underlying information to Claimant’s supervisor and then waited at least 120 days before filing a Form TCR with the Commission. Rule 21F-4(b)(4)(v)(C), 17 C.F.R. § 240.21F-4(b)(4)(v)(C). We also find that Claimant’s information is not subject to the Rule 21F-4(b)(4)(vi), 17 C.F.R. § 240.21F-4 21F-4(b)(4)(vi), exclusion since [Redacted] first reported the underlying information to Claimant and then Claimant waited at least 120 days before filing a Form TCR with the Commission. Rule 21F-4(b)(4)(v)(C), 17 C.F.R. § 240.21F-4(b)(4)(v)(C).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

SEC

92375

07/12/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

On [Redacted], the Commission filed a civil injunctive action against [Redacted] for *** participation in a fraudulent scheme to [Redacted]. On [Redacted] this enforcement action was settled with [Redacted] consenting to a judgment ordering *** to pay an amount under $1 million in monetary sanctions (the “[Redacted] Action”). The settlement with [Redacted] followed the [Redacted] issuance by the Commission of administrative orders brought against [Redacted] (the “[Redacted] Covered Action”).

The [Redacted] Action and the [Redacted] Covered Action arose out of the same Commission investigation of [Redacted]. In [Redacted], during the course of the investigation, Commission staff, along with staff of [Redacted] other agencies, interviewed Claimant by telephone. This interview was initiated when members of the investigative team approached Claimant’s former employer about making Claimant available for an interview.[fn1] In [Redacted], Claimant then submitted a Form TCR and, later, submitted additional information and documents to the Commission. Claimant’s submissions related to the same subject matter as the information requested from Claimant during the [Redacted] interview.

On [Redacted], the Commission’s Office of the Whistleblower (“OWB”) posted a Notice of Covered Action (“NoCA”) on the Commission’s public website for the [Redacted] Covered Action, inviting claimants to submit whistleblower award applications within 90 days.[fn2] OWB did not post a NOCA for the [Redacted] Action which, as noted, was settled several years after the settlement of the [Redacted] Covered Action.[fn3] Claimant filed a whistleblower award application on [Redacted].

II. The Preliminary Determination and Response.

The CRS issued a Preliminary Determination[fn4] recommending that Claimant’s award claim be denied because Claimant’s whistleblower submission was not made voluntarily as required by Exchange Act Section 21F(b)(1) and Rules 21F-3 and 21F-4(a)(1).[fn5] The CRS found that Claimant’s submission was not voluntary because Claimant made the submission after receiving a request for an interview concerning the same subject matter from Commission staff through Claimant’s former employer.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn6] Claimant’s response raises two objections. First, Claimant contends that the “internal disclosures” *** made to *** supervisors beginning in [Redacted] render *** eligible for an award.[fn7] Second, *** asserts that the information *** provided to the Commission “significantly contributed to the successful outcomes of the *** SEC Enforcement Actions covered by or related to [Redacted].” According to Claimant, *** “‘reported original information through [*** company’s] internal … procedures for reporting allegations of possible violations of law before … [ *** ] reported to the Commission’” and the company “‘later provided [ *** ] information to the Commission …; and the information [the company] provided to the Commission … significantly contributed to the success of the action … that was already under … investigation by the Commission [ quoting Exchange Act Rule 21F-4(c)(2) and (3)].’” Claimant notes that, in addition to *** internal disclosures, *** “also voluntarily met with the SEC, [Redacted]” and that, during this meeting, *** “answered and expanded on questions regarding *** interactions with [Redacted] as well as *** discussions and emails with other . . . employees.”

III. Analysis.

Section 21F(b)(1) of the Exchange Act requires that a whistleblower submit original information “voluntarily” in order to be considered for an award.[fn8] The purpose of this requirement is to “create a strong incentive for whistleblowers to come forward early with information about possible violations of the federal securities laws, rather than wait to be approached by investigators.”[fn9] Rule 21F-4(a)(1) establishes a “simple and straightforward test when we will treat a whistleblower as having submitted information voluntarily; as relevant here, the whistleblower must provide his or her tip to the Commission before investigators direct a ‘request, inquiry, or demand’ to the whistleblower that relates to the subject matter of the tip.”[fn10] While we do not treat an information request to an employer as necessarily “directed to” all employees who may possess responsive information, we do treat a request to an employer specifically seeking an interview of a particular employee as “directed to” that employee for purposes of Rule 21F-4(a)(1).[fn11]

Claimant maintains that *** internal reporting to *** former employer beginning in *** and the employer’s subsequent reporting of this information to the Commission makes *** eligible to receive a whistleblower award. Rule 21F-4(b)(7) provides that if an individual reports allegations of possible wrongdoing to an entity and then, “within 120 days, submit[s] the same information to the Commission pursuant to § 240.21F-9,” the Commission will consider that the individual provided the information to the Commission as of the date it was first provided to the entity.[fn12] Even if Claimant internally reported before receiving the Commission’s request for an interview in ***, that internal report occurred years prior to the request from the Commission and thus Claimant cannot avail [Redacted] of the Rule 21F-4(b) 120-day lookback provision. Accordingly, the effective date of *** submission of information to the Commission is [Redacted], not *** which is subsequent to the request from the Commission.

Here, it is undisputed that Commission staff contacted Claimant’s former employer in [Redacted] to request an interview with Claimant, and that Claimant was interviewed by the Commission’s and other agencies’ staff before Claimant submitted *** Form TCR to the Commission in [Redacted]. It is further undisputed that the interview related to the subject matter of Claimant’s later tip. We thus find that Claimant’s submission of information to the Commission was not done voluntarily and, therefore, Claimant does not qualify for a whistleblower award.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] Claimant participated in the interview without receiving a subpoena directing *** to testify.

[2] Exchange Act Rule 21F-10(a), 17 C.F.R § 240.21F-10(a). Claimant contends that the [Redacted] Action should be combined with the [Redacted] Covered Action to allow for the posting of a second NoCA so that Claimant could apply for an award for that NoCA. Given that Claimant did not voluntarily submit information to the Commission and is thus not eligible for a whistleblower award, as discussed below, we do not address this contention in our order.

[3] The monetary sanctions ordered against [Redacted] were less than $ 1 million. Exchange Act Section 21F(a)(1) defines a “Covered Action” as an enforcement action “brought by the Commission under the securities laws that results in monetary sanctions exceeding $ 1,000,000.”

[4] Exchange Act Rule 21F-10(d), 17 C.F.R § 240.21F-10(d).

[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3 & 4(a)(1), 17 C.F.R. §§ 240.21F-3 & 4(a)(1).

[6] Exchange Act Rule 21F-10(e), 17 C.F.R § 240.21F-10(e).

[7] Claimant asserts that by first reporting internally and then later reporting *** allegations to the Commission, Claimant complied with the requirements of Exchange Act Rule 21F-4(c)(3), 17 C.F.R § 240.21F-4(c)(3) by having “reported original information through [*** employer’s] internal … procedures for reporting allegations of possible violations of law before … [ *** ] reported to the Commission; [and Claimant’s employer] later provided [Claimant’s] information to the Commission …; and the information [Claimant’s employer] provided to the Commission … significantly contributed to the success of the action … that was already under … investigation by the Commission.”

[8] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[9] Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1939, Exchange Act Rel. No. 64545 (May 25, 2011) at 25.

[10] Whistleblower Award Proceeding No. 2018-11, Exchange Act Release No. 84046 (Sept. 6, 2018) at 8.

[11] Whistleblower Award Proceeding No. 2019-7, Exchange Act Release No. 86010 (June 3, 2019) at 2.

[12] 17 C.F.R. § 240.21F-4(b)(7).

SEC

92357

07/09/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-captioned covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

The Commission opened the investigation that culminated in the Covered Action in [Redacted] (the “Investigation”) based on the staff’s review of the financial statements of [Redacted] (“Company”) and other publicly available information about the Company. The Investigation primarily focused on the potential fraudulent [Redacted].

Claimant submitted Claimant’s tip to the Commission in [Redacted] — more than two and a half years after the Investigation was opened. In the tip, Claimant alleged that [Redacted]. Claimant also asserted that [Redacted]. Claimant alleged that Claimant had previously provided much of this information to the [Redacted] (“Other Agency”) and was actively assisting the Other Agency in its investigation.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings in [Redacted], finding that the Company had engaged in [Redacted] fraud [Redacted]. The Commission determined that the Company [Redacted]. In addition, the Commission found that [Redacted]. The Company was ordered to pay [Redacted].

On [Redacted], [Redacted] the Commission’s Office of the Whistleblower (“OWB”) posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn1] Claimant filed a timely whistleblower award application.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant’s award claim be denied because the information that Claimant submitted to the Commission did not lead to the successful enforcement of the Covered Action under Exchange Act Rule 21F-4(c)(1) and (2)[fn3] since Claimant’s information was already known to the staff or did not relate to the charges brought by the Commission in the Covered Action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn4] Claimant’s response contends that the staff declaration relied upon by the CRS in its Preliminary Determination “gave insufficient and incomplete information” about Claimant’s contribution to the Investigation that led to the Covered Action. Claimant states that, beginning in [Redacted], as a result of Claimant’s [Redacted], Claimant came to possess information about [Redacted] fraud, including [Redacted]. Claimant points out that Claimant “actively participated as an [Other Agency] informant” during and after Claimant’s [Redacted]. According to Claimant, Claimant “provided multiple documents (too numerous to list)” and “communicated to the [Other Agency] multiple times . . . about the [Redacted], and other fraud” that was ongoing at the Company. Claimant maintains that it was Claimant’s understanding that the Other Agency was sharing all this information with the Commission and urges that “the Office of the Whistleblower should speak with the [Other Agency] involved in this investigation . . . to assess the value of [Claimant’s] help.”

II. Analysis.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must have “voluntarily provided original information to the Commission that led to the successful enforcement of the covered judicial or administrative action.”[fn5] As relevant here, information will be deemed to have led to a successful enforcement action if it was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation . . . or to inquire concerning different conduct as part of a current . . . investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information.”[fn6] Alternatively, information will be deemed to have led to a successful enforcement action where the information was “about conduct that was already under examination or investigation by the Commission” and the “submission significantly contributed to the success of the action.”[fn7] In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn8] For example, the Commission will consider a claimant’s information to have significantly contributed to the success of an enforcement action if it allowed the Commission to bring the action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities.[fn9] As discussed below, Claimant’s information does not satisfy either prong of the “led to” requirement, as the information did not cause the opening of the investigation that led to the Covered Action, nor did it significantly contribute to the success of the Covered Action.[fn10]

Claimant, as noted, submitted a tip to the Commission approximately two and a half years after the Investigation was opened; thus it did not cause the staff to open the Investigation that resulted in the Covered Action. Claimant does not dispute this.

Since the Investigation had already been opened by the time Claimant submitted a tip, the submission can only be deemed to have led to the success of the Covered Action if it “significantly contributed to the success of the action.”[fn11] We find, based on the evidence in the record, including a declaration from the responsible investigative staff, which we credit,[fn12] that Claimant’s information did not make a substantial and important contribution to the success of the Covered Action by, for example, allowing the Commission to bring the Covered Action in significantly less time or with significantly fewer resources, or to bring additional successful claims or successful claims against additional individuals or entities. Rather, the responsible investigative staff determined, based not only on Claimant’s submission, but also on communications with other law enforcement agencies with whom Claimant was cooperating, that Claimant’s information primarily related to [Redacted], which was unrelated to what was being investigated by the staff (*** [Redacted]). As the Investigation staff stated, “[w]hile [Claimant] provided limited information regarding the [Redacted] under investigation, the information was vague and non-specific and it did not contribute to the . . . Investigation.” This limited information, the staff noted, “basically stated that [Claimant] heard [Redacted], without providing any other detail or context.” Moreover, by the time the staff received Claimant’s tip, it was already aware of this information from other sources. The Investigation staff concluded that “[n]one of the information provided by [Claimant] helped advance the . . . Investigation and [n]one of [Claimant]’s information was used in, or had any impact, on the charges brought by the Commission” in the Covered Action. Accordingly, Claimant did not provide information to the Commission that led to the success of the Covered Action and, therefore, Claimant is not eligible to receive a whistleblower award.

III. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3(a) & 4(c), 17 C.F.R. §§ 240.21F-3(a) & 4(c).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[6] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[7] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[8] Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 90922 (Jan. 14, 2021) at 4. See also Order Determining Whistleblower Award Claims, Exchange Act Rel. No. 85412 (Mar. 26, 2019) at 9 (same).

[9] Exchange Act Rel. No. 85412 at 8-9.

[10] We do not read Claimant’s response as raising any argument that Claimant’s information caused the staff to commence an examination or to inquire into different conduct as part of an existing examination or investigation. See Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[11] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[12] The whistleblower rules contemplate that the record upon which an award determination is made shall consist of a sworn declaration provided by the relevant Commission staff, in addition to the publicly available materials related to the Covered Action, the claimant’s tip and the claimant’s award application. See Exchange Act Rule 21F-12(a). Here, the Claimant requested and was provided the record upon which the award determination was based, which included a declaration from the relevant investigative staff. As such, Claimant’s argument that the record was insufficient or incomplete under the law is contrary to the plain language of the Commission’s whistleblower rules. Claimants are not entitled to receive additional materials outside those enumerated in Rule 21F-12(a), as any such additional materials were not used as a basis for the award determination.

SEC

92356

07/09/2021

I. Background.

A. The Covered Action.

Around [Redacted], staff from the Commission’s Division of Enforcement opened an investigation to review [Redacted] (the “Underlying Investigation”). The staff opened the Underlying Investigation based on [Redacted] analyses conducted by staff in the Division of Enforcement’s [Redacted].

On [Redacted] the Commission instituted administrative and cease-and-desist proceedings against [Redacted] (“Company A”). Pursuant to Company A’s offer of settlement, the Commission found that Company A had [Redacted].

The Commission ordered Company A to pay [Redacted].

On [Redacted] the Office of the Whistleblower posted a Notice of Covered Action on the Commission’s public website, inviting claimants to submit whistleblower award applications within 90 days.[fn1] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant’s claim be denied, because Claimant did not provide information that led to the successful enforcement of the Covered Action. The CRS found that staff in the Division of Enforcement opened the Underlying Investigation based on [Redacted] analyses conducted by staff [Redacted] and not because of any information provided by the Claimant. Further, investigative staff responsible for the Covered Action and the Underlying Investigation received no information from, and had no communications with, the Claimant before or during that investigation.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn3] Claimant does not contest the CRS’s determination that the staff responsible for the Covered Action received no information from Claimant during the Underlying Investigation. Rather, Claimant argues that a whistleblower tip that Claimant submitted about a different entity (“Company B”) “for the same conduct” entitles Claimant to an award for this Covered Action.

On [Redacted] Claimant submitted a whistleblower tip to the Commission about Company B. In Claimant’s tip, the Claimant alleged, among other things, that [Redacted]. Claimant acknowledges that the Commission did not bring a covered action based on these allegations. Instead, staff in the Division of Enforcement closed the investigation related to Company B in [Redacted].

Claimant argues that, through Claimant’s tip regarding Company B, Claimant supplied the Commission with the “thesis, theme, idea or notion [Redacted] and that information caused staff [Redacted] to conduct the [Redacted] analysis, which prompted the opening of the Underlying Investigation. Thus, Claimant surmises, Claimant’s tip “played a role in helping bring a successful covered action” related to Company A several years later. Claimant points to [Redacted] news article that referenced “three overlapping [Redacted] investigations involving [Redacted] Claimant surmises that the investigations of Company A and Company B were two of those overlapping investigations.

III. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn4] Claimant argues that Claimant is eligible for an award under this standard because Claimant’s tip related to Company B indirectly caused the staff to open, and contributed to the success of, the investigation that led to the Covered Action. The evidence does not support Claimant’s argument.

Claimant’s information regarding Company B does not satisfy Exchange Act Rule 21F-4(c)(1), because the information did not cause staff in the Division of Enforcement to open the Underlying Investigation. The staff responsible for the Underlying Investigation has confirmed that neither the investigation, nor [Redacted] analysis, which prompted the investigation, were opened based on any information provided by Claimant. Rather, the [Redacted] analysis was opened based on [Redacted].

Claimant’s information also did not contribute to the success of the Covered Action under Exchange Act Rule 21F-4(c)(2). Claimant’s Company B tip was assigned to Enforcement staff in a Regional Office in connection with their investigation into Company B. Enforcement staff in the Regional Office attested in a declaration, which we credit, that they did not find evidence to substantiate the Claimant’s allegations, closed the Company B investigation without recommending that the Commission bring an enforcement action, and did not forward Claimant’s information to the Enforcement staff responsible for the Underlying Investigation and had no communications with them about Claimant’s information.

There is no nexus between Claimant’s information and the Covered Action. Claimant’s tip contained no allegations about Company A. The Enforcement staff responsible for the Covered Action and the Underlying Investigation did not receive Claimant’s information directly or indirectly. Claimant’s allegations about Company B do not entitle *** to award eligibility for an enforcement action involving Company A’s [Redacted].

As for the news article’s mention of three “overlapping investigations,” even if the subject matter of the Company B investigation and the Underlying Investigation “overlapped,” Claimant would not be entitled to an award unless the information provided was used by the staff involved in the Underlying Investigation and Covered Action. Here, it was not.

IV. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

SEC

92355

07/09/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award application submitted by [Redacted] (“Claimant”) in connection with the above-referenced Covered Action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the Commission filed a civil enforcement action in federal district court charging [Redacted] (together, the “Initial Defendants”) with various violations of the securities laws, including [Redacted] [Redacted] The complaint alleged, among other things, that [Redacted].

On [Redacted], the Commission amended its complaint [Redacted] (together with [Redacted] the “Entity Defendants”). [Redacted]. On or about [Redacted] the District Court overseeing the Commission’s action ordered [Redacted] (the “Other Action”). On or about [Redacted] following the Other Action, the District Court [Redacted]. On [Redacted] the Commission filed [Redacted].

On [Redacted] the district court entered final judgments in favor of the Commission. The final judgments required [Redacted] to pay [Redacted] to pay [Redacted] each of the Entity Defendants to pay, [Redacted].

On [Redacted] the Office of the Whistleblower posted the Notice for the Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination 3 recommending that Claimant’s claim be denied for three reasons.

First, the CRS recommended that Claimant’s claim be denied because Claimant did not voluntarily provide original information to the Commission as defined by Rule 21F-4(a) of the Exchange Act. The CRS’s recommendation was supported, in part, by Claimant’s own acknowledgement that Claimant’s first direct communication with the Commission regarding the matter came following a request by [Redacted] (“Other Agency”) for Claimant to meet with the Other Agency and Commission staff, which Claimant did for the first time on [Redacted].

Second, the CRS recommended that Claimant’s claim be denied because the information provided by Claimant was provided prior to July 21, 2010 and was, therefore, not “original information” pursuant to Rule 21F-4(b)(1)(iv) of the Exchange Act. This recommendation was supported by, among other things, the declaration of one of the primary attorneys in the Commission’s Division of Enforcement who was responsible for the Covered Action (the “Staff Declaration”). According to the Staff Declaration, the staff obtained information from Claimant at a meeting attended by staff from the Commission and the Other Agency and through a limited number of communications following the Other Agency’s action, with [Redacted] as the date of the last communication that Commission staff working on the Covered Action had with Claimant.

Third, the CRS recommended that Claimant’s claim be denied because any information provided by Claimant for the first time after July 21, 2010 did not lead to successful enforcement of a covered judicial or administrative action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder. The CRS’s recommendation was supported by the Staff Declaration which stated that “[Claimant’s tip], which consists of [Claimant’s] [Redacted] and [Redacted] submissions, did not contribute in any way to the Commission’s original complaint, which had been filed nearly six years before [Claimant] submitted [the tip], nor the Commission’s *** amended complaint, which had been filed in [Redacted].” The Staff Declaration concluded that “[w]hile [Claimant] provided limited assistance to us in the [Covered Action], all of [Claimant’s] assistance was provided prior to July 21, 2010, with no assistance provided after this date that helped advance the Commission Action.”

C. Claimant’s Response to the Preliminary Determination.

After requesting and receiving a copy of the record, Claimant submitted a timely written response contesting the Preliminary Determination.[fn4] Claimant contests the Preliminary Determination’s conclusions that Claimant’s information was not provided voluntarily, that the information provided by Claimant prior to July 21, 2010 did not constitute “original information,” and that information provided after July 21, 2010 did not lead to successful enforcement of a covered judicial or administrative action.

Claimant contends that his/her provision of information was “voluntary” despite the fact that he/she did not provide any information regarding the fraud directly to the Commission before he/she was asked by the Other Agency to meet with the Other Agency and Commission staff. Claimant asserts that he/she voluntarily informed his/her [Redacted] who was a victim of the fraud, of the misappropriation from the [Redacted] accounts before Claimant was requested to meet with the government and that Claimant’s *** then informed the Commission of the fraud that Claimant uncovered. According to Claimant, the provision of information regarding a securities fraud to the victim of that fraud constitutes the “voluntary” provision of information to the Commission pursuant to Rule 21F-4(a) of the Exchange Act where the victim, in turn, relays the information to the Commission even where, as in Claimant’s case, the provider of the information to the victim does not directly and voluntarily submit the information to the Commission him/herself. In the alternative, Claimant argues that the Commission should exercise its discretionary authority under Section 36(a) of the Exchange Act to grant a waiver of the Rule 21F-4(a) requirement.

Claimant next argues that Rule 21F-4(b)(1)(iv) of the Exchange Act,[fn5] which defines “original information” to include only information provided to the Commission for the first time after July 21, 2010 is contrary to the definition of “original information” contained in Section 21F of the Dodd-Frank Act (“Dodd-Frank”)[fn6] and should therefore be precluded.

Finally, Claimant disputes the CRS’s recommendation that Claimant’s claim be denied because any information Claimant provided for the first time after July 21, 2010 did not lead to successful enforcement of a covered judicial or administrative action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder.[fn7] In his/her response, Claimant repeats his/her contention that Rule 21F-4(b)(1)(iv) of the Exchange Act[fn8] does not apply and thus information he/she claims to have provided prior to July 21, 2010 should be considered. Claimant asserts that information he/she provided prior to July 21, 2010 led to the successful enforcement of the Covered Action and should qualify him/her for a whistleblower award.

II. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn9] We find that Claimant’s information was (i) not provided “voluntarily,” (ii) not “original information” to the extent it was first provided to the Commission prior to July 21, 2010, and (iii) did not lead to the successful enforcement of the Covered Action to the extent it was provided on or after July 21, 2010.

A. Voluntariness.

To be considered voluntary, a claimant’s information must have been submitted “before a request, inquiry, or demand that relates to the subject matter of [the] submission is directed” to the claimant or his/her representative, by the Commission, or by certain other enumerated entities (including the Other Agency) in connection with an investigation.[fn10]

The relevant facts here are not in dispute. Claimant acknowledges that he/she did not directly provide information to the Commission prior to receiving a request from the Other Agency to meet with the Other Agency and Commission staff regarding the fraud on Claimant’s [Redacted] Instead, Claimant argues that, prior to receiving the Other Agency’s request to meet, he/she voluntarily disclosed the fraud to his/her *** and that the ***, in turn, reported the information to the Commission. Only after Claimant’s *** reported the information to the Commission did the government contact Claimant’s employer and request to meet with Claimant.

According to Claimant, once a whistleblower has voluntarily disclosed information about a fraud to a victim it should be immaterial whether the government later requested information from the whistleblower prior to the whistleblower’s submission of the information to the Commission itself. However, Section 21F(a)(6) of the Exchange Act plainly requires that for information to be the basis for award eligibility it must be provided by the submitter either “alone or acting jointly” with another submitter.[fn11] There is nothing in the record to suggest that Claimant’s *** was acting “jointly” with Claimant when the *** provided information regarding the fraud to the government.

Claimant contends that failing to credit a whistleblower’s voluntary disclosure of a fraud to the victim of the fraud as a “voluntary” submission under Section 21F of the Exchange Act would act as a disincentive to future whistleblowers from disclosing information regarding a fraud to the victim of the fraud. Claimant’s argument is unavailing. As Claimant acknowledges, a whistleblower may make a voluntary disclosure to the victim of a fraud without losing eligibility for a whistleblower award. If a whistleblower is the “original source” of the information, the whistleblower may still be eligible for an award even if the Commission first learned of the information from the victim of the fraud or another source.[fn12] Thus, nothing in the Rules disincentivizes a whistleblower from notifying both the victim of the fraud and the Commission at or around the same time and before any request for information from the whistleblower is made.

The determination of whether a whistleblower’s submission was “voluntary” hinges on when the whistleblower him/herself provided the information to the Commission and whether it was before any request for information from the whistleblower is made. Here, Claimant does not contest that he/she was asked to meet with the Other Agency regarding the fraud on his/her prior to Claimant’s submission of any information to the Commission.

Finally, Claimant has asked that we invoke our exemptive authority under Section 36(a) of the Exchange Act to waive the voluntary requirement. We decline to do so. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person … from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” However, one of the principal objectives of Section 21F of the Exchange Act “is to promote effective enforcement of the federal securities laws by providing incentives for persons with knowledge of misconduct to come forward and share their information with the Commission.”[fn13] Granting an exemption to the “voluntary” requirement under these circumstances is inconsistent with the statutory purpose of incentivizing whistleblowers to come forward early rather than waiting for authorities to “come knocking on the door.”[fn14] As a result, we do not believe that Claimant has met his/her burden to demonstrate any considerations that would satisfy the requirements for us to exercise our Section 36(a) exemptive authority.

We find that Claimant’s provision of information to the Commission was not “voluntary” as required by Section 21F of the Exchange Act.[fn15]

B. Pre-Dodd Frank Information Is Not Original.

For a submission to qualify as “original information” it must have been “[p]rovided to the Commission for the first time after July 21, 2010,” the date of enactment of Dodd-Frank.[fn16] Here, even if Claimant’s disclosure of the fraud to his/her *** were sufficient to qualify as a “voluntary” submission of information to the Commission (for the reasons described above, we find that it is not), the information at issue was provided prior to July 21, 2010 and therefore does not constitute “original information” as defined by Rule 21F-4(b)(1)(iv).

Claimant does not dispute that the information at issue was provided to the Commission prior to July 21, 2010. Instead, Claimant argues that Rule 21F-4(b)(1)(iv)’s definition of “original information” to exclude information provided prior to July 21, 2010 is precluded by the definition of “original information” contained in the statute itself, which contains no such limitation.[fn17] The Second Circuit rejected that argument in Stryker v. S.E.C., 780 F.3d 163 (2d Cir. 2015), upholding Rule 21F-4(b)(1)(iv)’s exclusion of information provided to the Commission prior to July 21, 2010 from the definition of “original information.”

Nevertheless, Claimant argues that the Commission must reconsider its reliance on the holding in Stryker in light of the Supreme Court’s decision in Digital Realty Tr., Inc. v. Somers, ___U.S. ___, 138 S. Ct. 767 (2018). In Digital Realty, the Supreme Court held that the Dodd-Frank definition of “whistleblower” was “clear and conclusive” and therefore declined to adopt a broader interpretation of the term with respect to the anti-retaliation provisions of Dodd-Frank.[fn18]

Claimant argues that Dodd Frank’s definition of “original information” is similarly “clear and conclusive” and thus the Commission’s rule excluding from the definition information provided before July 21, 2010 must be rejected. We disagree.

Unlike the definition of “whistleblower” that the Supreme Court held was limited to those who provided information to the Commission because that language is explicitly included within Dodd-Frank’s statutory definition of a “whistleblower,” Dodd Frank’s definition of “original information” is silent as to the time period in which the information must be provided. As the Second Circuit in Stryker noted, Congress recognized that the definition of “original information” left “a number of loose ends” and therefore provided that “a putative whistleblower must provide the requisite information in the form and manner required by SEC’s rules and regulations.”[fn19] Rule 21F-4(b)(1)(iv)’s definition of “original information” is thus consistent with the statute as well as legislative intent.[fn20]

We therefore conclude that the information provided by Claimant prior to July 21, 2010 does not qualify as “original information” as required by Rule 21F-4(b)(1)(iv) and that, as a result, Claimant is ineligible for an award with respect to the Covered Action.

C. Post-Dodd Frank Information Did Not Lead to the Success of the Covered Action.

To qualify for an award, the original information provided by a whistleblower must lead to the successful enforcement of a covered action.[fn21] Original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to commence an examination, open an investigation, or reopen an investigation that was closed or inquire concerning different conduct as part of a current examination or investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.[fn22]

We find that none of the information submitted to the Commission by Claimant after July 21, 2010 led to the successful enforcement of the Covered Action. While Claimant provided information to the Commission after July 21, 2010, in the form of submissions on Form TCR in [Redacted] and [Redacted], the Staff Declaration states that the information contained in those submissions “did not contribute in any way to the Commission’s original complaint … nor the Commission’s *** amended complaint.” Moreover, the Staff Declaration attests that the Claimant’s submissions “did not impact, affect, or contribute in any way to the Commission’s *** the prosecution of the Commission’s Action, the judgments or orders entered by the District Court, or any other efforts by the Commission after the filing of the original complaint.”

Claimant argues that the Staff Declaration is based on mistaken legal assumptions as to what information qualifies for a whistleblower award under Dodd-Frank. Specifically, Claimant claims that the Staff Declaration improperly discounts information provided by Claimant prior to July 21, 2010, and that Claimant should be credited for the information Claimant provided in meetings and communications with the staff prior to that time. For the reasons discussed above, we find that the information provided by Claimant before July 21, 2010 was not provided “voluntarily” and did not constitute “original information.”

Claimant does not demonstrate that any information contained in Claimant’s *** tips contributed in any way to the successful enforcement of the Covered Action. We therefore conclude that, with respect to information provided by Claimant on or after July 21, 2010, Claimant’s information did not lead to the successful enforcement of the Covered Action and that, as a result, Claimant is ineligible for an award.

IV. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.

By the Commission.

[1] [Redacted].

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] See Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[6] See Exchange Act Section 21F(a)(3), 15 U.S.C. § 78u-6(a)(3).

[7] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3(a) and 21F-4(c), 17 C.F.R. §§ 240.21F-3(a) and 240.21F-4(c).

[8] See Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[9] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[10] See Exchange Act Rule 21F-4(a)(1), 17 C.F.R. § 240.21F-4(a)(1).

[11] See Exchange Act Section 21F(a)(6) (The term ‘whistleblower’ means any individual who provides, or two or more individuals acting jointly who provide, information relating to a violation of the securities laws to the Commission in a manner established, by rule or regulation, by the Commission) (emphasis added), 15 U.S.C. § 78u-6(a)(6); See also Rule 21F-2(a)(1) (you are a whistleblower for purposes of Section 21F of the Exchange Act (15 U.S.C. § 78u-6) if, “alone or jointly with others, you provide the Commission with information in writing that relates to a possible violation of the federal securities laws” (emphasis added)), 17 C.F.R. § 240.21F-2(a)(1).

[12] See Rule 21F-4(b)(5) (“The Commission will consider [the whistleblower] to be an original source of the same information that we obtain from another source if the information satisfies the definition of original information and the other source obtained the information from you . . .”), 17 C.F.R. § 240.21F-4(b)(5) (emphasis in original).

[13] See Adopting Release for Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, 34,308 (June 13, 2011).

[14] See Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, 70,490 (November 3, 2010).

[15] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[16] See Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[17] Section 21F defines “original information” as information that: (A) is derived from the independent knowledge or analysis of a whistleblower; (B) is not known to the Commission from any other source, unless the whistleblower is the original source of the information; and (C) is not exclusively derived from an allegation made in a judicial or administrative hearing, in a governmental report, hearing, audit, or investigation, or from the news media, unless the whistleblower is a source of the information. 15 U.S.C. § 78u-6(a)(3).

[18] Digital Realty Tr., Inc. v. Somers, U.S. , 138 S. Ct. 767, 781-82 (2018).

[19] See Stryker v. S.E.C., 780 F.3d 163, 166 (2d Cir. 2015).

[20] Id. at 166-67.

[21] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[22] Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

SEC

07/02/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received five whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Prelimina1y Determination for each award claimant as follows.

[Redacted].

[Redacted] (Claimant 3) and [Redacted] (Claimant 4).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claims of Claimant 3 and Claimant 4. Neither Claimant 3 nor Claimant 4 provided information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information they provided did not:

(1) under Rule 21F-4(c)(1) of the Exchange Act cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of either Claimant 3’s or Claimant 4’s information; or

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[Redacted] (Claimant 5).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claim of Claimant 5. Claimant 5 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not:

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by Claimant 5. In addition, staff responsible for the investigation and Covered Action received no information from, nor had any communications with Claimant 5, and Claimant 5 did not provide any information that had any impact on the staffs investigation or the Covered Action.

Finally, Claimant 5 failed to submit Claimant 5’s claim for an award on Form WB-APP within ninety (90) days of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act in order to be considered for an award. Further, Claimant 5 has not demonstrated that the Commission should waive, in its discretion, the filing deadline based on “extraordinary circumstances,” as provided under Rule 21F-8(a) of the Exchange Act.

By: Claims Review Staff.

SEC

06/26/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] and [Redacted] (“Claimant 2”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimants [Redacted] 2 was never provided to or used by staff handling the Covered Action or underlying investigation (or examination), and those staff members otherwise had no contact with Claimants [Redacted] 2. Therefore, Claimants [Redacted] 2 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 2 failed to comply with the requirements of Rule 21F-9 of the Exchange Act when submitting the tip upon which the award claim is based, and Claimant 2 is not eligible for a waiver under either Rule 21F-9(e) or the Commission’s other waiver authorities.[fn3]

By: Office of the Whistleblower.

[2] The Covered Action investigation was opened based on a source other than [Redacted] Claimant 2. Further, staff responsible for the Covered Action never received any information from, or had any communications with, [Redacted] Claimant 2.

[3] Claimant 2 did not provide information relating to the Covered Action on a Form TCR or through the Commission’s on-line TCR portal, or sign the requisite whistleblower declaration.

SEC

06/25/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), and [Redacted] (“Claimant 3”) (collectively, “Claimants”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1, 2, and 3 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F 3(a)(3) and 21F 4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F 4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[1] To the extent Claimants applied for an award in a related action, because the Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11 (a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] The Covered Action investigation was not opened based on information provided by any of the Claimants. Nor did the Claimants significantly contribute to the success of the Covered Action, as investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants 1, 2, or 3.

SEC

06/25/2021

In response to the above-referenced Notice of Covered Actions, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is as follows:

Claimant did not provide “original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) (2) and 21F-4(b) thereunder because the information was not derived from Claimant’s: (1) “independent knowledge,” as defined under Rule 21F-4(b)(2), but instead was derived entirely from “publicly available sources;” or (2) “independent analysis,” as defined under Rule 21F-4(b)(3), because the information did not include an examination and evaluation of information that “reveals information that is not generally known or available to the public.”

In order to qualify as “independent analysis,” a whistleblower must bring to the public information some additional evaluation, assessment, or insight beyond what would be reasonably apparent to the Commission from publicly available information. “Independent analysis” is not satisfied where the whistleblower merely identifies “common hallmarks of fraud” or red flags.[fn1] Here, Claimant pointed to “red flags” based on publicly available information on the firm’s website. Claimant failed to provide additional evaluation or insight beyond what was apparent from the statements made on the publicly-available website. Specifically, Claimant identified certain website statements that appeared to be inconsistent with [Redacted] but failed to provide additional evaluation or insight beyond what was apparent from the statements on the publicly-available website. As a result, Claimant failed to provide information that served to “bridge the gap” between the publicly available information and the possible securities laws violations.[fn2]

By: Claims Review Staff.

[1] See Adopting Release for Whistleblower Rule Amendments, Release No. 34-89963 at 123 (Sept. 23, 2020) (“Adopting Release”).

[2] Id. at 122.

SEC

92251

06/24/2021

In reaching this determination, the Commission considered that Claimant alerted the Commission to the on-going fraud, prompting the opening of the investigation, communicated with Commission staff dozens of times, and provided documents that assisted the staff in its investigation, saving Commission time and resources. Further, there have been no collections to date.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions to be collected in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] Exchange Act Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[3] Exchange Act Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv).
[4] Id.

SEC

92248

06/24/2021

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and that this information significantly contributed to the success of the Covered Action.[fn1]

Exchange Act Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30% where (1) the maximum award would be $5 million or less; (2) none of the negative award factors under Rule 21F-6(b)– i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system–are present; and (3) the award claim does not trigger Rule 21F-16.[fn2] The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn3]

In reaching that determination, we considered that (i) Claimant’s tip assisted the Commission’s investigation and was one of the underlying sources that formed the basis for the charges in the Covered Action; (ii) Claimant provided helpful assistance related to the Covered Action; and (iii) there was substantial law enforcement interest in the information provided, as it related to detecting an ongoing fraud that was harming investors. There also have been no collections to date.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
[2] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[3] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).
[4] Id.

SEC

92247

06/24/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $1 million, which represents [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). 1

[Redacted].

In reaching this determination, the Commission considered that (i) Claimant’s tip caused the opening of the Commission’s investigation and was the underlying source that formed the basis for the charges in the Covered Action; (ii) Claimant provided ongoing assistance to Commission staff, including by participating in two interviews with Commission staff, helping staff to understand the key players in the investigation, and providing information that was not otherwise accessible to staff, which conserved significant staff time and resources; (iii) there was substantial law enforcement interest in the information; and (iv) Claimant suffered personal and professional hardships.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] For purposes of making an award, we determined to treat the administrative actions against [Redacted] as part of the Covered Action, given that the actions arose from the same nucleus of operative facts. See Securities Exchange Act of 1934 Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21-F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

SEC

92210

06/21/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of nearly $4 million, which represents *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that caused an investigation to be opened and that led to the successful enforcement of the Covered Action.[fn2]

[Redacted].

Claimant provided extraordinary assistance to Enforcement staff, including: (1) participating in hours of telephonic interviews and exchanging more than 125 emails with staff; (2) providing documents and explaining their significance to staff; and (3) identifying key witnesses. Claimant also took personal and professional risks by raising concerns internally in an effort to remedy the misconduct.

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.

[1] The CRS also preliminarily recommended denying the award applications of three other claimants, who did not seek reconsideration. Accordingly, the Preliminary Determinations have become the Final Order of the Commission with respect to Claimants 2, 3, and 4 pursuant to Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Section 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).

SEC

92212

06/21/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending a [Redacted] percent ( *** %) award, allocated as follows: an award of over $1,000,000 (equal to *** % of monetary sanctions collected in the Covered Action) to [Redacted] (“Claimant 1”) and a joint award of over $270,000 to [Redacted] (“Claimant 2”) and [Redacted] (“Claimant 3”) (equal to *** percent ( ***%) of monetary sanctions collected in the Covered Action).[fn1] Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determination; Claimant 2 and Claimant 3 jointly filed a timely response contesting the Preliminary Determination. For the reasons discussed below, the CRS’s recommendations are adopted in all regards.

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted settled administrative and cease-and-desist proceedings in [Redacted] the Commission’s Orders charged [Redacted]. The Commission’s Order found that for the [Redacted].

With respect to the [Redacted] the Commission’s Orders charged [Redacted]. The Commission ordered [Redacted] to pay [Redacted]. The Commission ordered [Redacted] each have paid the amounts due under the Orders.

The Commission also instituted cease-and-desist proceedings against [Redacted]. This proceeding remains pending.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination recommending a total *** % award, allocated as follows: an award of over $1,000,000 (equal to ***% of monetary sanctions collected in the Covered Action) to Claimant 1 and a joint award of over $270,000 to Claimant 2 and Claimant 3 (equal to *** % of monetary sanctions collected in the Covered Action). The CRS further recommended (1) that [Redacted] be treated as a single Covered Action pursuant to Exchange Act Rule 21F-4(d)(1), and (2) that, pursuant to Rule 21F-4(d)(2), Claimant 1 receive *** % of any monetary sanctions collected in the separate, related administrative proceeding pending against [Redacted], if $1 million or less are ordered in monetary sanctions.

C. Claimants’ Responses to the Preliminary Determination.

Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determination.

Claimant 2 and Claimant 3 jointly submitted a timely written response contesting the Preliminary Determination.[fn2] Specifically, Claimant 2 and Claimant 3 argue that they (1) should receive a higher award percentage and (2) should not be treated as joint whistleblowers.

III. Analysis.

The record reflects that all three claimants meet the definition of a whistleblower under Rule 21F-2(a) and satisfy the statutory criteria for a whistleblower award under Rule 21F-3(a). They provided original information that related to a possible violation of the securities laws that had occurred, was ongoing, or was about to occur, and submitted the information in accordance with the requirements of Rule 21F-9. In addition, they provided the information voluntarily, the information was original, and the information led to the successful enforcement by the Commission of an administrative action in which the Commission obtained monetary sanctions totaling more than $1,000,000. The information provided by Claimant 1 concerning alleged securities violations by [Redacted] caused Enforcement staff to open an investigation. The information provided by Claimant 2 and Claimant 3 concerning alleged securities violations by [Redacted] caused Enforcement staff to open a separate investigation. Both investigations culminated in the filing of the Covered Action.

[Redacted].

We find the award allocation is appropriate. In reaching that determination, we assessed the following facts: First, Claimant 1 provided detailed and specific information about [Redacted] Redacted conduct that played a critical role in the success of the Covered Action. Claimant 1 also provided substantial, ongoing assistance that saved the Enforcement staff considerable time and resources. Second, while Claimant 2 and Claimant 3 provided significant information concerning [Redacted] misconduct, their information was limited to potential violations by [Redacted]; in contrast to Claimant 1, they did not provide any investigative leads with respect to [Redacted].[fn4]

Claimant 2 and Claimant 3 argue that they should receive a larger award allocation and that they should not be treated as joint whistleblowers. With respect to the ***% allocation, Claimant 2 and Claimant 3 contend that the information they provided to the Enforcement Staff “exposed a much larger scheme” than the [Redacted], was the “but for” cause of the Enforcement Staff’s investigation of [Redacted], involved “direct” investor harm and that the [Redacted] investigation started before the *** investigation. All of these factors were considered by the CRS and relate to the information Claimant 2 and Claimant 3 provided about misconduct by [Redacted]. While the [Redacted] *** investigation eventually led the Enforcement Staff to investigate [Redacted], the record demonstrates that Claimant 2 and Claimant 3 did not provide any information about misconduct by [Redacted]. Rather, the Enforcement Staff independently developed the evidence that led to the charges against [Redacted] with respect to the [Redacted]. We therefore find that the *** % allocation to Claimant 2 and Claimant 3 and *** % allocation to Claimant 1 appropriately reflects their respective contributions under the circumstances.

We also find that Claimant 2 and Claimant 3 should be treated as joint whistleblowers. We previously treated Claimant 2 and Claimant 3 as joint whistleblowers in connection with the [Redacted] Covered Action and issued them a joint *** % award; at no time did they contest their status as joint whistleblowers. Additionally, here, they submitted a joint whistleblower award application through the same counsel with respect to the same underlying information provided to the Commission.

IV. Conclusion.

Accordingly, it is ORDERED that (1) [Redacted] are deemed a single Covered Action pursuant to Exchange Act Rule 21F-4(d)(1), as we find that both proceedings arise out of the same nucleus of operative facts; (2) Claimant 1 shall receive an award equal to *** % of monetary sanctions collected in the Covered Action, including, pursuant to Rule 21F-4(d)(2), any monetary sanctions collected in a separate administrative proceeding, [Redacted] which we find also arises out of the same nucleus of operative facts as the Covered Action, if $1 million or less is ordered in monetary sanctions; and (3) Claimant 2 and Claimant 3 shall receive a joint award equal to *** % of monetary sanctions collected in the Covered Action.[fn6]

By the Commission.

[1] As discussed further below, while the CRS issued the Preliminary Determination prior to the Whistleblower Rule Amendments, [Redacted].

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] [Redacted].

[4] [Redacted].

[5] [Redacted].

[6] Our determination to treat Claimant 2 and Claimant 3 as a joint whistleblower has not impacted the net total award percentage to Claimant 2 and Claimant 3. Unless Claimant 2 and Claimant 3, 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

SEC

06/21/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

SEC

92164

06/14/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of twenty-eight percent (28%) of monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”), and that [Redacted] (“Claimant 2”) receive a whistleblower award of two percent (2%) of monetary sanctions collected, or to be collected, in the Covered Action. Neither Claimant 1 nor Claimant 2 contested the Preliminary Determinations.[fn1] The recommendations of the CRS are adopted.

The record demonstrates that both Claimant 1 and Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a).

Exchange Act Rule 21F-6(c) creates a presumption for a maximum award where, as here, an award would be less than $5 million, a claimant has no negative factors — i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system, and Rule 21F-16 regarding culpable whistleblowers does not apply. The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn2] Further, under Rule 21F-6(c)(3), if one whistleblower qualifies for the presumption, the aggregate award paid to all meritorious whistleblowers is the statutory maximum and, in allocating the award, the Commission will consider whether an individual claimant’s award application satisfies Rules 21F-6(c)(1)(ii) and (iii). In addition, in allocating the award amount among meritorious claimants, the Commission will consider all relevant facts.[fn3]

The 30% presumption applies here. The statutory maximum award of 30% would be less than $5 million. Claimant 1’s award application presents no negative award factors, as Claimant 1 was not culpable, did not unreasonably delay in reporting the wrongdoing, and did not interfere with any internal compliance or reporting system. In addition, the presumption of a maximum award should not be departed from because Claimant 1 provided substantial assistance and the maximum award would not be inconsistent with the public interest, protection of investors, or the objectives of the whistleblower program.

In determining that Claimant 1 should receive an award of 28% of any monetary sanctions collected or to be collected in the Covered Action, we considered that Claimant 1 alerted government authorities to the underlying misconduct first, resulting in the opening of the investigation; Claimant 1 provided significant new information that made a substantial and important contribution to the success of the Covered Action; and Claimant 1 provided substantial and continuing assistance during the investigation and litigation that helped stop a fraudulent scheme preying on investors. In determining that Claimant 2 should receive a smaller award percentage, we considered that Claimant 2 provided the information after a period of delay, that much of the information Claimant 2 provided was already known to the Commission because of information previously provided by Claimant 1, and Claimant 2’s new, helpful information was limited in nature.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of twenty-eight percent (28%) of any monetary sanctions collected or to be collected in the Covered Action, and Claimant 2 shall receive an award of two percent (2%) of any monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

[2] Rule 21F-6(c)(1)(iv).

[3] Whistleblower Rule Amendments, Adopting Release at 56 (Sept. 23, 2020).

SEC

92163

06/14/2021

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 and Claimant 2 each voluntarily provided original information to the Commission, and that this information led to the successful enforcement of the Covered Action.[fn2]

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award percentages for the Covered Action are appropriate.[fn3] In reaching that determination with regard to Claimant 1, we considered that Claimant 1 provided Enforcement staff with assistance early in the investigation and helped the staff focus its resources and theories. In reaching that determination with regard to Claimant 2, we considered that Claimant 2 helped Enforcement staff uncover misappropriated funds and fraudulent transfers. Both Claimant 1 and Claimant 2 provided ongoing assistance to Enforcement staff through multiple interviews and document productions. Based on the facts and circumstances of this matter, we believe that a ***% whistleblower award to Claimant 1 and a ***% whistleblower award to Claimant 2 would recognize the independent significance of the assistance of Claimant 1’s and Claimant 2’s information and the high law enforcement interest involved in this matter.

Accordingly, it is hereby ORDERED that (1) Claimant 1 shall receive an award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action, and (2) Claimant 2 shall receive an award equal to [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

By the Commission.

[1] The Commission has determined to treat as collected monetary sanctions under Section 21F(b)(1) of the Exchange Act those amounts already distributed or to be distributed to investors [Redacted] in the Covered Action. See Exchange Act Rule 21F-4(e): “Monetary sanctions means: (1) An order to pay money that results from a Commission action or related action and which is either: (i) Expressly designated as penalty, disgorgement, or interest; or (ii) Otherwise ordered as relief for the violations that are the subject of the covered action or related action . . . .” 17 C.F.R. § 240.21F-4(e).

[2] See Exchange Act Section 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).

SEC

06/13/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[2] Claimant did not provide information until after the underlying investigation was opened. Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or Covered Action.

SEC

06/13/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

SEC

06/13/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) received a whistleblower award claim from (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

SEC

06/13/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) received two whistleblower award claims from (“Claimant”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[2] Claimant did not provide information until after the underlying investigation was opened, and Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or Covered Action.

SEC

06/13/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Claimant failed to specify in the award application the Form TCR submission pursuant to Rule 21F-9(a) on which the Claimant’s claim for an award is based.

By: Office of the Whistleblower.

[2] The Covered Action staff received Claimant’s information after the Matter Under Inquiry had been opened. Claimant’s information also did not significantly contribute to the success of the investigating or resulting Covered Action because Claimant’s information was already known to the Covered Action staff, was based on publicly available information, or otherwise did not appear to relate to the investigation or the charges in the Covered Action. Further, Covered Action staff had no communications with Claimant.

SEC

06/13/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[2] Commission staff responsible for the Covered Action never received any information from Claimant or had any communications with Claimant. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

06/06/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] and [Redacted] (together “Claimant 4”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1, 2, [Redacted] and 4 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants 1, 2, [Redacted] and 4. [Redacted].

SEC

92102

06/03/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that Claimant [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent (*** %) of the monetary sanctions collected, or to be collected, in [Redacted] (“Covered Action”) and *** percent (*** %) of the monetary sanctions collected, or to be collected, in a related [Redacted] action [Redacted] *** (“Related Action”)[fn1] for a total award to the Claimant of over $180,000.

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and to [Redacted] (the “Other Agency”), and that this original information led to the successful enforcement of both the Covered Action and the Related Action.[fn2]

[Redacted].

In reaching this determination, the Commission considered that (i) Claimant alerted the Commission to fraudulent conduct in a new geographic area the Commission was previously unaware of, (ii) Claimant participated in a voluntary interview with Commission staff and provided documents that assisted the Commission in its investigation, saving Commission time and resources, (iii) Claimant provided a declaration in support of [Redacted]; and (iv) there was substantial law enforcement interest in the information provided, as it related to [Redacted].

The Commission shared Claimant’s information with the Other Agency, which commenced a Related Action concerning the same fraudulent conduct that formed the factual basis for the Covered Action. We find that the contributions made by Claimant to the Covered Action are similar to Claimant’s contributions to the success of the Related Action, and, therefore, it is appropriate that Claimant receive the same award percentage for both actions.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** percent ( *** %) of the monetary sanctions collected in the Covered Action, and *** percent ( *** %) of the monetary sanctions collected in the Related Action, as well as any monetary sanctions collected in either action after the date of this Order.
By the Commission.

SEC

92101

06/03/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $10,000, which represents [Redacted] percent (***%) of the monetary sanctions collected in the above-referenced [Redacted] (the “Related Action”). Claimant previously received a whistleblower award for ***% of the monetary sanctions collected or to be collected in connection with Covered Action [Redacted].[fn1]

The recommendation of the CRS for the Related Action is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission, that the Commission passed the information to [Redacted] and that the information led to the successful enforcement of the Related Action.[fn2]

[Redacted].[fn4][fn5]

In reaching this determination, we considered: (1) Claimant’s information was significant in that it revealed an ongoing fraudulent scheme that had harmed investors; (2) Claimant provided substantial assistance during the Covered Action investigation, including several interviews, which resulted in important information being conveyed by the Commission to the [Redacted] ; and (3) the close nexus between the Claimant’s information and the charges in the Related Action.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the Related Action.[fn6]
By the Commission.

[1] Rule 21F-11(a) of the Securities Exchange Act of 1934 (“Exchange Act”) provides that, “If you are eligible to receive an award following a Commission action that results in monetary sanctions totaling more than $1,000,000, you also may be eligible to receive an award based on the monetary sanctions that are collected from a related action.” 17 C.F.R. § 240.21F-11(a). If, as here, “a final order imposing monetary sanctions in a related action has not been entered at the time you submit your claim for an award in connection with a Commission action, you must submit your claim on Form WB-APP [] within ninety (90) days of the issuance of a final order imposing sanctions in the related action.” 17 C.F.R. § 240.21F-11(b)(2).
[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(b), 17 C.F.R. § 240.21F-3(b).
[3] [Redacted].
[4] [Redacted].
[5] [Redacted].
[6] Monetary sanctions collected by the Commission in connection with the Covered Action that have been used to satisfy any payment obligation in the Related Action shall not be double counted for purposes of paying an award in the Related Action.

SEC

92100

06/03/2021

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that caused Commission staff to commence an examination that resulted in a successful enforcement action.[fn1]

The presumption applies here because a maximum award would not exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to the award application, and the award claim does not trigger Rule 21F-16. The Commission finds that the presumption is not overcome. Claimant provided more than limited assistance, as Claimant spoke with and provided documents to Commission staff, and application of the presumption would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program. Rather, Claimant was a [Redacted] who alerted the Commission of the alleged violations, prompting the initiation of an examination. Based on the lack of collections, a 30% award would not result in any payment to Claimant.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

92099

06/03/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of almost $200,000, equal to [Redacted] percent (*** %) of collected monetary sanctions in the above-referenced Covered Action (“Covered Action”). The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn1]

Exchange Act 21F-9 sets forth certain procedural requirements that claimants must comply with including, among other things, filing a tip on a Form TCR within 30 days of supplying information to the Commission, in order to be eligible for a whistleblower award. Exchange Act Rule 21F-9(e) provides for a waiver of this procedural requirement in certain circumstances where: (1) a claimant can demonstrate to the satisfaction of the Commission that he or she complied with the Form TCR requirement within 30 days of first obtaining actual or constructive notice about the requirement (or 30 days from the date a claimant retains counsel to represent him or her in connection with the submission of original information to the Commission, whichever occurs first); and (2) the Commission can readily develop an administrative record that unambiguously demonstrates that claimant would otherwise qualify for an award. Here, although Claimant did not file a Form TCR within 30 days of first contacting the Commission, Claimant satisfies Exchange Act Rule 21F-9(e) and is entitled to a waiver of this procedural requirement because the record reflects that Claimant submitted a Form TCR within 30 days of learning of the TCR filing requirement and Claimant otherwise unambiguously qualifies for an award.

[Redacted].

Claimant [Redacted] saved Enforcement staff time and resources in conducting the investigation. Claimant provided meaningful information that advanced the investigation and assisted in establishing the underlying misconduct. Claimant provided continuing assistance throughout the investigation, including providing documents and meeting with the staff. Claimant also acted quickly [Redacted].

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action.[fn6]
By the Commission.

[1] See Exchange Act Section 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).
[6] For purposes of determining the payment of the Claimant’s award under Exchange Act Rule 21F-14, the Director of the Division of Enforcement, or his or her designee, may determine whether any subsequent Commission enforcement action where the total monetary sanctions do not exceed $ 1 million should be treated as part of this Covered Action pursuant to Exchange Act Rule 21F-4(d)(2).

SEC

92086

06/02/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending: (i) that [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in [Redacted] (the “Covered Action”) and in a related [Redacted] action, [Redacted] (the “Related Action”);[fn2] and (ii) that [Redacted] (“Claimant 2”) receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action and in the Related Action. This will result in awards of approximately $13 million to Claimant 1 and $10 million to Claimant 2. Claimant 1 and Claimant 2 provided written notice of their decisions not to contest the Preliminary Determinations.

The recommendations of the CRS are adopted. The record demonstrates that Claimant 1 and Claimant 2 each voluntarily provided original information to the Commission and to the [Redacted] (the “Other Agency”), and each Claimant’s original information led to the successful enforcement of both the Covered Action and the Related Action.[fn3] The Related Action is a [Redacted] between [Redacted] the Whistleblower Rules, [Redacted] deem [Redacted] a “related action” that is eligible for a whistleblower award, and Claimant 1 and Claimant 2 satisfy the requirements for such an award.[fn4]

Moreover, as to Claimant 2, we have determined that it would be in the public interest and consistent with the protection of investors for the Commission to exercise our discretionary authority under Section 36(a) of the Exchange Act to exempt Claimant 2 from the Form WB- APP 90-day filing deadline specified in Rules 21F-10(a) and (b)(1) of the Exchange Act in light of the specific facts and circumstances present here.[fn5]

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amounts are appropriate. 6 In reaching that determination, we considered that: (i) Claimant 1 submitted a whistleblower tip providing information that led to the initiation of investigations by the Commission and the Other Agency; (ii) Claimant 2 submitted a whistleblower tip providing information that significantly contributed to the Commission’s and the Other Agency’s investigations; (iii) Claimant 1’s and Claimant 2’s information led to [Redacted] actions related to a complex and fraudulent [Redacted] scheme involving multiple individuals and tens of millions of dollars in ill-gotten gains; (iv) Claimant 1 and Claimant 2 substantially assisted the Commission and the Other Agency by, among other things, submitting information and documents, participating in interviews, and identifying key individuals and systems involved in the investigations; but (v) Claimant 2 unreasonably delayed by waiting several years to report the conduct to the Commission, during which time the conduct continued. Based on the facts and circumstances of this matter, we believe a *** % whistleblower award to Claimant 1 and a *** % whistleblower award to Claimant 2 would recognize the significance of Claimant 1’s and Claimant 2’s information and the high law enforcement interest involved in this matter.

Finally, we find that the contributions made by Claimant 1 and Claimant 2 to the Covered Action are similar to Claimant 1’s and Claimant 2’s contributions to the success of the Related Action, and, therefore, it is appropriate that Claimant 1 and Claimant 2 receive the same award percentage for both actions.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action and in the Related Action, and that Claimant 2 receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action and in the Related Action.

By the Commission.

[1] [Redacted].

[2] Rule 21F-11(a) of the Securities Exchange Act of 1934 (“Exchange Act”) provides that, “If you are eligible to receive an award following a Commission action that results in monetary sanctions totaling more than $ 1,000,000, you also may be eligible to receive an award based on the monetary sanctions that are collected from a related action.” 17 C.F.R. § 240.21F-11(a).

[3] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[4] [Redacted] Here, the Related Action constitutes a “related action” to the Covered Action within the meaning of Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as it is [Redacted], it is based on the same original information that the whistleblower voluntarily provided to the Commission, and it led the Commission to obtain monetary sanctions totaling more than $ 1,000,000.

[5] Rules 21F-10(a) and (b)(1) of the Exchange Act provide that a claimant must submit a claim for an award within 90 calendar days of the Notice of Covered Action to be considered for an award. Here, Claimant 2’s award application was first received by the Commission’s staff 18 days after that 90-day deadline. Claimant 2 asserts several mitigating factors, but because the record does not demonstrate that compliance with the deadline was beyond Claimant 2’s control, we find that the facts do not present “extraordinary circumstances” that would trigger our discretion to waive the deadline under Rule 21F-8(a) of the Exchange Act. See, e.g., Claim for Award, Release No. 34-77368 , 2016 WL 1019130, at *2 (Mar. 14, 2016), pet. denied sub nom. Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017). We determine, however, that the record supports the exercise of our separate, discretionary authority under Section 36(a) of the Exchange Act to exempt Claimant 2 from the 90-day deadline. Strict application of the deadline would result in undue hardship to Claimant 2, particularly in light of Claimant 2’s significant contributions to the successful enforcement of the Covered Action and certain unique obstacles faced by Claimant 2. Accordingly, we find it in the public interest and consistent with the protection of investors to exempt Claimant 2 from the 90-day deadline.

[6] In assessing the appropriate award amounts, Rule 21F-6 of the Exchange Act 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.

SEC

05/31/2021

In response to the above-referenced Notices of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 2”), [Redacted] and [Redacted] collectively, “Claimants”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The bases for these determinations are marked below as follows:

Claimants [Redacted] 2, [Redacted] did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Co1mnission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimants 2 and [Redacted] did not provide “original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information provided by Claimant was already known to the Commission.[fn3]

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] None of the Claimants provided information that caused the Covered Actions investigation to open. Investigative staff responsible for the Covered Actions opened the investigation prior to receiving information from any of the Claimants. Nor did any of the Claimants significantly contribute to the Covered Actions. [Redacted]. Claimant 2 and Claimant [Redacted] contacted the staff after the first Covered Action was publically announced. However, none of the information submitted by Claimants 2 and [Redacted] assisted staff in the investigation or resulting charges as the information was duplicative of information already obtained by investigative staff or otherwise did not support the Commission’s charges.

[3] Claimant 2’s information and Claimant [Redacted] information was based primarily on publicly-available information and was duplicative of information of which investigative staff responsible for the Covered Actions was already aware.

SEC

92067

05/28/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the [Redacted] denial of the whistleblower award application submitted by [Redacted] (“Claimant”) in connection with the above referenced Covered Action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the United States Securities and Exchange Commission (“Commission”) filed a civil action in federal district court charging [Redacted]. On [Redacted], the district court entered a final judgment in favor of the Commission that ordered *** [Redacted].

On [Redacted], the Office of the Whistleblower posted the Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications for the Covered Action within ninety days, by [Redacted]. Claimant submitted an award claim on Form WB-APP for the Covered Action years later on [Redacted].

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn1] recommending that Claimant’s application be denied because Claimant failed to submit a claim for award on Form WB-APP to the Office of the Whistleblower within ninety days of the date of the Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act. Claimant submitted Claimant’s application for award on Form WB-APP on [Redacted], nearly three years after the deadline. The CRS noted that Claimant asserted that Claimant’s prior counsel submitted a Form TCR in [Redacted], which was meant to serve as Claimant’s award application for the Covered Action. However, the Form TCR did not cite to any covered action or judicial or administrative action.

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn2] Specifically, Claimant argues in response to the Preliminary Determination that the Commission should consider Claimant’s award application under the “extraordinary circumstances” exception found in Rule 21F-8(a) of the Exchange Act.[fn3] Claimant asserts that Claimant “fired [Claimant’s] former counsel for poor performance” and asks that the Commission not deny Claimant’s award application because “[Claimant’s] counsel mistakenly filed the wrong document within the correct window.”

III. Analysis.

Claimants must give the Commission information in the form and manner that the Commission requires in order to be eligible for a whistleblower award.[fn4] The Commission’s rules require Claimants to file any application for a whistleblower award on Form WB-APP.[fn5] Further, the Form WB-APP must be filed within ninety days from the date of the Notice of Covered Action or the claim will be barred.[fn6] Claimants bear the ultimate responsibility to learn about and follow the Commission’s rules regarding the award application process.[fn7]

Notwithstanding these important programmatic functions, the whistleblower program rules recognize that there may be rare situations where an exception should be made. To allow for this, Rule 21F-8(a) of the Exchange Act provides that “the Commission may, in its sole discretion, waive” the filing requirements “upon a showing of extraordinary circumstances.”[fn9] In determining whether a claimant has demonstrated extraordinary circumstances to excuse an untimely submission under Rule 21F-8(a), we have looked to our analogous decision in In the Matter of the Application of PennMont Securities.[fn10] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn11] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn12]

Applying that demanding standard here, we find that the Claimant has failed to show that extraordinary circumstances beyond Claimant’s control were responsible for the years of delay between the application deadline for the Covered Action and Claimant’s award application. Claimant asserts that Claimant filed a Form TCR within the proper timeframe for filing an award application for this Covered Action. However, the Commission’s rules require that all award applications be filed on Form WB-APP. Further, Claimant’s Form TCR does not cite to any covered action or judicial or administrative action and makes no mention of applying for an award. As such, we decline to treat Claimant’s Form TCR as a timely application for an award.

We are unpersuaded by Claimant’s assertion that the untimeliness should be forgiven because it stemmed from mistakes made by Claimant’s former attorney. As noted above, we have acknowledged that attorney misconduct may give rise to extraordinary circumstances. But, the requisite level of attorney misconduct causing the untimely submission must be severe in order for equitable relief to be warranted — ordinary negligence will not suffice.[fn13] In this case, it appears that Claimant is merely asserting that Claimant’s former attorney failed to properly file the award application. This type of attorney error does not constitute an extraordinary circumstance.

Finally, we note that “[e]ven when circumstances beyond the applicant’s control give rise to the delay…an applicant must also demonstrate that he or she promptly arranged for the filing…as soon as reasonably practicable thereafter.”[fn14] Claimant has not provided any explanation as to why it took Claimant until [Redacted] to properly file the award application on Form WB-APP. We observe that Claimant alleges that Claimant severed Claimant’s relationship with the former attorney in *** after the attorney became unresponsive and withheld certain files for a period of months. However, there is nothing in the record to explain why Claimant did not follow up on the Form TCR until years later when Claimant’s new counsel first contacted the Office of the Whistleblower in [Redacted].

We therefore conclude that Claimant failed to submit a claim for award on Form WBAPP to the Office of the Whistleblower within ninety days of the date of the Notice of Covered Action as required under Rule 21F-10(b) of the Exchange Act and that, as a result, Claimant is ineligible for an award with respect to the Covered Action.

IV. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] 17 C.F.R § 240.21F-8(a) (“[Y]ou need to follow [these procedures] in order to be eligible for an award, except that the Commission may, in its sole discretion, waive any of these procedures based upon a showing of extraordinary circumstances.”).

[4] See Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

[5] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[6] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[7] See Order Determining Whistleblower Award Claim, Release No. 34-72659 , at 5 (July 23, 2014).

[8] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34343 (June 13, 2011).

[9] 17 C.F.R. § 240.21F-8(a).

[10] Release No. 34-61967 , 2010 WL 1638720 (April 23, 2010).

[11] Order Determining Whistleblower Award Claim, Release No. 34-77368 , at 3 (Mar. 14, 2016).

[12] See, e.g., Id.; PennMont, 2010 WL 1638720, at *4; Order Determining Whistleblower Award Claim, Release No. 34-72659 , at 6 (July 23, 2014).

[13] See, e.g., Irwin v. Dep ‘t of Veterans Affairs, 498 U.S. 89, 96 (1990) (explaining that an attorney’s ordinary negligence generally does not warrant equitable tolling); Rouse v. Lee, 339 F.3d 238, 248 (4th Cir. 2003) (noting that a majority of the circuits have held that basic attorney errors such as miscalculation of a filing deadline are generally insufficient to support equitable tolling).

[14] PennMont, 2010 WL 1638720, at *4.

SEC

92065

05/28/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award application submitted by [Redacted] (“Claimant”) in connection with the above referenced Covered Action (the “Covered Action”). Claimant filed a timely response contesting the prelimina1y denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

In [Redacted], staff in the United States Securities and Exchange Commission’s (“Commission”) Division of Enforcement (“Enforcement”) opened a matter under inquiry to review [Redacted]. The matter was converted to a formal investigation in [Redacted]. Early in the investigation, the Enforcement staff began focusing its efforts on investigating possible [Redacted]. The staff took significant investigative steps, including reviewing [Redacted], phone records and other documents, taking testimony from witnesses, and coordinating its investigation with [Redacted] (“Other Agency”). The Commission filed its first enforcement action related to the investigation in [Redacted].[fn1]

In [Redacted], Claimant submitted information to the Commission regarding *** [Redacted] involving individuals who were implicated in the Enforcement staff’s ongoing investigation. Claimant later provided answers to follow-up questions from the staff and met with members of the Enforcement staff and representatives from the Other Agency.

On [Redacted], the Commission filed a civil action in federal district court charging *** individuals with [Redacted]. The Commission’s Complaint alleged [Redacted]. According to the Enforcement staff, the information submitted by Claimant was either already known to the staff based on more than four years of investigative work, or, to the extent any information was new to the staff, that information did not help substantially advance the ongoing investigation, help the Commission bring additional charges or charges against additional individuals or entities, or serve as the basis for any charges included in the Complaint. While Claimant’s information related to the same individuals charged in the Commission’s action, it did not relate to any of the [Redacted] alleged by the Commission.

On [Redacted] the district court entered a final judgment in favor of the Commission that ordered [Redacted].

B. The Related Action.

On [Redacted], the Other Agency filed [Redacted] in a case arising out of the same facts as the Covered Action (“Related Action”).

[Redacted].

C. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant’s application be denied because Claimant did not submit information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. In reaching the preliminary determination, the CRS noted that the Enforcement staff opened the underlying investigation more than four years before Claimant submitted Claimant’s tip to the Commission and that Claimant’s information either was already known to the Enforcement staff or did not form the basis of the Commission’s charges in the Covered Action.

The CRS also noted that because Claimant is not eligible for an award in the Covered Action, Claimant cannot be eligible for an award in connection with the Related Action.

D. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination.[fn3] Specifically, Claimant appears to argue that Claimant is entitled to an award because (1) the information Claimant provided to the Commission “parallels the underlying information utilized by the SEC in its enforcement actions,” and (2) Claimant’s substantial contributions to the Other [Redacted] Agency’s investigation and resulting [Redacted] had to expedite a favorable resolution of the SEC’s action.

III. Analysis.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn4] For the reasons that follow, and based on our review of the entire record, we find that Claimant’s information did not lead to the success of the Covered Action.

Under the whistleblower rules, an individual’s original information leads to the success of an action where it causes staff to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and the Commission brings a successful action “based in whole or in part on conduct that was the subject of [the individual’s] original information.”[fn5] Alternatively, an individual’s original information may lead to the success of a covered action where it significantly contributes to the success of a Commission judicial or administrative enforcement action.[fn6] In determining whether an individual’s information significantly contributed to an action, we consider factors such as whether the information allowed the Commission to bring: the action in significantly less time or with significantly fewer resources; additional successful claims; or successful claims against additional individuals or entities.[fn7] The individual’s information must have been “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn8]

Claimant does not satisfy Rule 21F-4(c)(1) as the investigation underlying the Covered Action was opened in [Redacted], more than four years before Claimant first submitted information to the Enforcement staff in [Redacted]. Further, Claimant’s information did not cause the Enforcement staff to inquire into different conduct.

Claimant also does not satisfy Rule 21F-4(c)(2) as none of Claimant’s information significantly contributed to the Covered Action. A member of the Enforcement staff who was assigned to the investigation prepared a detailed declaration regarding the matter, and we credit the statements made in that declaration. Claimant provided information about [Redacted]. The information provided by Claimant was either already known to the staff or did not serve as the basis for any charges included in the Covered Action. The Commission’s Complaint in the Covered Action alleged [Redacted]. Claimant’s information did not relate to any of those [Redacted]. Even if there is some known to the staff or did not serve as the basis for any charges included in the Covered Action. factual resemblance between Claimant’s information and the allegations in the Covered Action, a member of the Enforcement staff who investigated and prosecuted the action attested that the Enforcement staff did not use Claimant’s information, including the information Claimant provided in response to follow-up questions and in a meeting with the Enforcement staff and representatives from the Other Agency. As such, Claimant’s information did not make a substantial and important contribution to the success of the action.

Claimant further argues that because Claimant provided information and assistance to the Other Agency, including in multiple [Redacted], and because the Other Agency and the Commission conducted parallel investigations, Claimant is therefore eligible for an award. Claimant’s argument fails for the simple reason that information provided to a different government entity is not information provided to the Commission. As we have explained, “our whistleblower rules require that the individual must provide his or her tip directly to the Commission.”[fn9] Assisting a different enforcement action brought by another agency does not demonstrate that the claimant assisted in the Commission’s Covered Action.[fn10] As discussed above, the information Claimant directly provided to the Commission was not used by Commission staff in the Covered Action, and to the extent Claimant provided additional information to the Other Agency, that information cannot support an award claim for the Covered Action. Finally, Claimant cannot qualify for an award with respect to the Related Action because Claimant is not eligible for an award in connection with the Covered Action.[fn11]

We therefore conclude that Claimant did not submit information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder, and that, as a result, Claimant is ineligible for an award with respect to the Covered Action.

IV. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.

By the Commission.

[1] See [Redacted].

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[5] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[6] Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

[7] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300, 34,325 (June 13, 2011).

[8] Order Determining Whistleblower Award Claim, Release No. 34-86902 , at 4 (Sept. 9, 2019); Order Determining Whistleblower Claim, Release No. 34-77833 , at 3 (May 13, 2016).

[9] In the Matter of the Claims for Award in Connection with [Redacted], Release No. 80596 , 2017 WL 1738015, n.9 (May 4, 2017).

[10] See Order Determining Whistleblower Award Claims, Release No. 87662 , at 13-14 (Dec. 5, 2019), aff’d per curium, John Doe v. SEC, No. 20-1001 (D.C. Cir. Feb. 16, 2021).

[11] See Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5) (defining a “related action” as based upon the same original information provided by the whistleblower that led to the successful enforcement of the Commission action); Exchange Act Rules 21F-3(b) & 11(a), 17 C.F.R. §§ 240.21F-3(b) & 240.21F-11(a); Order Determining Whistleblower Award Claim, Rel. No. 34-84503 at n.4 (Oct. 30, 2018) (“The Commission may make an award to a whistleblower in connection with a related action only if the Commission has determined that the whistleblower is entitled to an award for a Commission covered action.”).

SEC

92037

05/27/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with Redacted the above-captioned Covered Action (the “Covered Action”) recommending that [Redacted] (“Claimant 1”) receive an award of *** percent (***%) amounts collected in the Covered Action, and that the award claim submitted by [Redacted] (“Claimant 2”) be denied.[fn1] Claimant 1 did not submit a response contesting the Preliminary Determination, but Claimant 2 filed a timely response contesting the Preliminary Determination. Subsequent to issuing the Preliminary Determination, the Commission [Redacted]. As such, the CRS now recommends that Claimant 1 receive an award of $4.2 million, equal to ***% of amounts collected in the Covered Action.

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted an administrating proceeding captioned [Redacted].

The Covered Action resulted from *** separate investigations (the “Underlying Investigations”), and it related to *** categories of misconduct [Redacted]. One type of misconduct (as relevant to Claimant 1) stemmed from [Redacted]. The Commission alleged that [Redacted]. Another category involved [Redacted]. The Covered Action alleged that, during [Redacted] the Commission ordered [Redacted].

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant 1 receive an award equal to *** percent (*** %) of the amounts collected in the Covered Action. The CRS subsequently recommended that Claimant 1 receive an award of $4.2 million, equal to [Redacted] percent (*** %) of amounts collected in the Covered Action, [Redacted].

The CRS also preliminarily determined to recommend that Claimant 2’s claim be denied. The Preliminary Determination explained that Claimant 2 is ineligible for an award. Enforcement staff responsible for the Underlying Investigations confirmed in a sworn declaration that they received no information from, and had no communications with, Claimant 2. Thus, Claimant 2’s information did not lead to the success of the Covered Action, as required by Exchange Act Rules 21F-3(a)(3) and 21F-4(c).

C. Claimant 2’s Response to the Preliminary Determination.

Claimant 2 submitted a timely written response contesting the Preliminary Determination.[fn3] Claimant 2 contends that the declaration provided by the Enforcement staff was impermissible “speculation” that the Commission should “throw[] out.” Claimant 2 argues that even if the Enforcement staff declarant did not receive Claimant 2’s information, others in the Commission may have. Claimant 2 argues that while he/she never spoke to the staff responsible for any of the *** Underlying Investigations, his/her information may have still contributed to the Covered Action. Claimant 2 points to a tip Claimant 2 submitted to the Commission on [Redacted] (submission number [Redacted]) that Claimant 2 claims related to one of the *** categories of misconduct discussed in the Covered Action — [Redacted].[fn4] Claimant 2 suggests that “people high up at the SEC” may have used the information to “assign” staff to perform an investigation related to his/her tip, without attributing the initiating information to Claimant 2. As evidence that Commission staff must have read his/her tip, Claimant 2 points to the use of the term [Redacted] (which also appeared in Claimant 2’s tip) in the Covered Action.

III. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn5] Specifically, Claimant 1 provided detailed information that caused Enforcement staff to open one of the *** investigations that resulted in the Covered Action.

[Redacted].

The record reflects that Claimant 1 learned of the wrongdoing over time, and when Claimant 1 had gathered enough information, Claimant 1 made a detailed and credible report to the Commission. Claimant 1 also provided substantial assistance by meeting with investigative staff multiple times, identifying key players, and Redacted providing additional helpful information and documents. [Redacted]. Claimant 1 provided detailed and credible information that alerted the Commission to the alleged violations, prompting the opening of the investigation, and then continued to cooperate with the investigative staff.

B. Claimant 2.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn7] The record conclusively shows that Claimant 2 does not meet this standard because Claimant 2 failed to provide information that caused any of the Underlying Investigations to open or that significantly contributed to the Underlying Investigations or resulting Covered Action. Claimant 2 argues that he/she is eligible for an award because of the information he/she submitted to the Commission regarding [Redacted]. But, the staff’s inquiry into [Redacted] was opened more than five months before Claimant 2 submitted the tip. Further, the Enforcement staff responsible for the Underlying Investigations submitted a declaration averring that they did not communicate with, or use any information from, Claimant 2.

We credit the declaration provided by Enforcement staff responsible for the Covered Action. The declaration was not mere speculation. The declarant based his statement that Claimant 2 provided no information that was used in or otherwise contributed to the Covered Action not only on the declarant’s own personal involvement with the investigation, but also on consultation with other members of the Enforcement teams responsible for each of the *** Underlying Investigations. The declarant’s statement that Claimant 2’s information neither “was used in” or “otherwise contributed to” the action also forecloses the possibility of as Claimant 2 suggests, senior officers or Commissioners having directed the staff to Claimant 2’s information. Further, staff in the Office of the Whistleblower provided a declaration confirming that the tip that Claimant 2 relies on as the basis for the award claim was closed with a disposition of “No Further Action” (or “NFA”) and not forwarded to Commission staff.

That the term [Redacted] appears in both Claimant 2’s tip and the Order Instituting Proceedings in the Covered Action is a coincidence, as it is a common term. This term’s coincidental use in both documents cannot overcome the conclusive evidence that Enforcement staff responsible for the Underlying Investigations and Covered Action never received or used Claimant 2’s information.

Claimant 2’s other arguments fail because, while Claimant 2 correctly notes that the staff and members of the Commission discussed [Redacted]. Claimant 2 cites no basis to link his/her tip with those statements, or to suggest that he/she provided any unique information or insight that would have influenced the Commission’s views of a well-known, heavily analyzed [Redacted].[fn8] In fact, in his/her tip, Claimant 2 attributes the information to “common sense.”

We therefore conclude that Claimant 2’s information did not lead to the success of the Covered Action, as required by Exchange Act Rules 21F-3(a)(3) and 21F-4(c) and that, as a result, Claimant 2 is ineligible for an award with respect to the Covered Action.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action. It is further ORDERED that Claimant 2’s whistleblower award application be, and hereby is, denied.

By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying the award claim of a third claimant, who has not filed a written response. Thus, the Preliminary Determination with respect to the third claimant has become the Final Order of the Commission under Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] Claimant 2 also timely filed an addendum to *** submission, as well as another document styled as a “Concluding Statement,” all of which were considered together.

[4] Claimant 2’s tip was based on a highly-publicized [Redacted] that occurred about six months before Claimant 2’s tip.

[5] See Exchange Act Section 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).

[7] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[8] [Redacted].

CFTC

05/27/2021

The Commodity Futures Trading Commission (“Commission”) received a whistleblower
award application from Claimant in response to Notice of Covered Action No. [Redacted]. The
corresponding enforcement action is [Redacted]. The Claims Review Staff (“CRS”) has evaluated Claimant’s award claims for the Covered Action and a related [Redacted] action, [Redacted] (“Related Action”), in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018).

I. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that
Claimant receive a whistleblower award in the amount of *** of monetary sanctions collected in
the Covered Action. The CRS also recommended denying Claimant an award for the Related
Action. Claimant did not contest the Preliminary Determination. Accordingly, the Preliminary
Determination became the Proposed Final Determination under 17 C.F.R. § 165.7(h). For the
reasons set forth below, the CRS’s determination is adopted.

II. LEGAL ANALYSIS.

In arriving at this award amount, the CRS applied the factors set forth in Rule 165.9, 17
C.F.R. § 165.9, in relation to the facts and circumstances of Claimant’s award application.
Claimant provided significant information that formed the basis of the Division’s investigation.
When the Commission brought the Covered Action, the Division made numerous statements in
[Redacted] that were based on Claimant’s information. Claimant also provided a substantial
amount of assistance. After causing the Division to open an investigation, Claimant significantly
assisted the Division’s investigation by providing additional information and producing materials
that were direct evidence of Defendants’ violations. Division staff interviewed Claimant in-depth at an in-person meeting and several times after by phone as Claimant produced additional
documents and provided explanations about those documents. In addition, the CRS did not find
any negative factors to decrease the award amount. Accordingly, [Redacted] award amount is
appropriate.

III. CONCLUSION.

It is hereby ORDERED that Claimant shall receive *** of monetary sanctions collected in the Covered Action. By the Commission.

[1] [Redacted].

CFTC

05/25/2021

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1, Claimant 2, and Claimant 3, in response to the above-referenced Notice of Covered Action regarding [Redacted] (“Covered Action”). The Claims Review Staff (“CRS”) has evaluated the applications of Claimant 1, Claimant 2, and Claimant 3 in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“Act”), 7 U.S.C. § 26 (2018). The CRS sets forth its Preliminary Determination for Claimant 1, Claimant 2, and Claimant 3 as follows:

1. The CRS recommends that the Commission deny the award applications of Claimant 1, Claimant 2, and Claimant 3 because they do not meet the requirements of Section 23 of the Act and the Rules.

2. Claimant 3 did not file a Form TCR, Tip Complaint, or Referral, with the Commission so does not qualify as a whistleblower. See 17 C.F.R. §§ 165.2(p), 165.3.

3. No claimant provided original information to the Commission that led to the successful enforcement of the Covered Action. See 17 C.F.R. § 165.2(i). No claimant’s information caused the Commission to commence the investigation underlying the Covered Action or contributed in any way to the investigation or the Covered Action. Division staff assigned to the investigation did not communicate with Claimant 1, Claimant 2, or Claimant 3 in regard to this investigation.

CFTC

05/25/2021

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications on Form WB-APP from Claimant 1, Claimant 2, and Claimant 3 in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted] (the “Order” or “Covered Action”). The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018).[fn1] The CRS sets forth its Preliminary Determination for each Claimant as follows:

1. The CRS has determined to recommend that the Commission deny awards to Claimant 1, Claimant 2, and Claimant 3 because each of their award applications did not meet the requirements of Section 23 of the CEA and the Rules.

2. To become a whistleblower under the CFTC’s Whistleblower Program, an individual must submit a Form TCR to the Commission. See 17 C.F.R. §§ 165.2(p), 165.3. Claimant 1 and Claimant 3 never filed a Form TCR with the Commission. Therefore, Claimant 1 and Claimant 3 may not be considered whistleblowers under the Rules and are ineligible for an award. However, as further discussed below, even if Claimant 1 and Claimant 3 had filled out and submitted a Form TCR, the information provided by Claimant 1 and Claimant 3 did not significantly contribute to the Covered Action.

3. Claimant 1, Claimant 2, and Claimant 3 did not provide information to the Division of Enforcement (“Division”) that led to the opening of the investigation that would later result in the Order. The Division opened an investigation in this matter not because of Claimant 1, Claimant 2, or Claimant 3 but because it received a Form TCR on [Redacted] from an individual other than Claimant 1, Claimant 2, or Claimant 3. Claimant 1, Claimant 2, and Claimant 3 each contacted Division staff for the first time after the Commission filed its Complaint against the Defendants [Redacted]. See 17 C.F.R. §§ 165.2(i).

4. Even if Claimant 1 had filed a Form TCR to qualify as an eligible whistleblower, Claimant 1’s assistance did not significantly contribute to the success of the Covered Action. Claimant 1 first approached the Commission on [Redacted], after the Commission filed its complaint against the Defendants in the Covered Action. On [Redacted], Claimant 1 submitted [Redacted]. Although Division staff found that the documents provided by Claimant 1 to be somewhat helpful, all of Claimant 1’s assistance came after the Commission had completed its investigation and filed the enforcement action against the Defendants. In addition, much of the information provided by Claimant 1 was already known to Division staff because Division staff was already aware of the [Redacted]. Overall, Division staff found Claimant 1 to be only minimally helpful in the enforcement action against the Defendants given that the information [Redacted]. Division staff was already aware of [Redacted], at the time it filed its Complaint against the Defendants on [Redacted]. For the above reasons, Claimant 1 did not significantly contribute to the Covered Action.

5. Claimant 2 did not significantly contribute to the success of the Covered Action. On [Redacted], Claimant 2 contacted Division staff via email. Claimant 2, however, did not file a Form TCR with the Commission until [Redacted]. On [Redacted], Division staff exchanged emails with Claimant 2, and also interviewed Claimant 2 via telephone. During the telephone interview, Claimant 2 described *** [Redacted]; however, much of the information provided by Claimant 2 was already known to Division staff. On [Redacted], Claimant 2 submitted a [Redacted]. Division staff found Claimant 2’s information to be only minimally helpful given that, by the time Claimant 2 came forward, Division staff was already aware of the [Redacted] Claimant 2. Claimant 2 did not provide any documents to
Division staff. Overall, Division staff found that Claimant 2 provided little, if any, meaningful
assistance to Division staff in its enforcement action against the Defendants given that *** information [Redacted]. Division staff was already aware of [Redacted] at the time it filed its Complaint against the Defendants on [Redacted]. For that reason, Division staff did not find the information to be particularly helpful to the enforcement action against the Defendants.

6. Even if Claimant 3 had filed a Form TCR to qualify as an eligible whistleblower, Claimant 3’s assistance did not significantly contribute to the success of the Covered Action. On [Redacted], Claimant 3 contacted Division staff via email. On [Redacted], Division staff exchanged emails with Claimant 3, and interviewed Claimant 3 by telephone that same day. During this telephone call, Claimant 3 explained [Redacted]. On [Redacted], Claimant 3 submitted a [Redacted]. All of Claimant 3’s assistance came after the Commission had completed its investigation and filed an enforcement action against the Defendants. Overall, Division staff found Claimant 3 to be only minimally helpful in the enforcement action against the Defendants given that the information [Redacted]. Division staff was already aware of [Redacted], at the time it filed its Complaint against the Defendants on [Redacted]. For the above reasons, Claimant 3 did not significantly contribute to the Covered Action.

7. For the above reasons, the CRS has determined to recommend that the Commission deny the award applications of Claimant 1, Claimant 2, and Claimant 3.

[1] The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9(b) (2020) does not mean that the presence of negative factors will result in an award percentage lower than 30%, nor does the absence of negative factors in Rule 165.9(c) mean the award percentage will be higher than 10%. Not all factors may be relevant to a particular decision.

SEC

05/21/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received four whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The Claims Review Staff sets forth its Preliminary Detenninations as follows.

[Redacted].

[Redacted] (“Claimant 4”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 4. The basis for this determination is that Claimant 4 did not timely file a Form TCR pursuant to Exchange Act Rules 21F-9(a) and (b).[fn19]

By: Claims Review Staff.

[19] Rule 21F-9(a) provides that “[t]o be considered a whistleblower… you must submit your information… online, through the Commission’s website… or by mailing or faxing a Form TCR.” Rule 21F-9(b) provides that “to be eligible for an award, you must declare under penalty of perjury at the time you submit your information… that your information is true and correct to the best of your knowledge and belief.” Under Rule 21F-9(e), a whistleblower must follow the procedures in Rules 21F-9(a) and (b) within 30 days of when he or she provides the Commission with original information upon which the award claim is based. Also under Rule 21F-9(e), the Commission shall waive a whistleblower’s noncompliance with Rules 21F-9(a) and (b) if (i) the whistleblower demonstrates that he or she complied with the TCR filing requirements within 30 days of first obtaining actual or constructive notice of the requirements or 30 days from the date the whistleblower retains counsel to represent him or her in connection with the whistleblower’s submission of original information, whichever occurs first; and (ii) the record unambiguously demonstrates that the whistleblower would otherwise qualify for an award. Based on the current record before us, Claimant 4 does not qualify for the waiver under Rule 21F-9(e) because Claimant 4 did not comply with Rules 21F-9(a) and (b) by filing a Form TCR within 30 days of retaining counsel. Claimant 4’s counsel represented Claimant 4 in connection with Claimant 4’s [Redacted] testimony before SEC staff, but did not file a Form TCR until [Redacted], more than 30 days later. According to a declaration provided by Claimant 4’s counsel, Claimant 4’s counsel delayed filing a Form TCR because of counsel’s concern that a submission would have to be disclosed [Redacted]. Similarly, based on the current record before us, the CRS has preliminarily determined not to recommend that the Commission exercise its discretionary exemptive authority under Section 36(a) of the Exchange Act to waive the Form TCR filing requirements.

SEC

05/19/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[2] Claimant did not provide information that caused the Covered Action investigation to open, as the investigation was opened prior to Claimant submitting his information. Claimant also did not significantly contribute to the success of the Covered Action. While investigative staff responsible for the Covered Action received information from Claimant several months after the opening of the investigation, Claimant’s information was duplicative of information staff was already aware of and was otherwise vague and nonspecific.

[3] See Order Determining Whistleblower Award Claim, Release No. 34-77368 (Mar. 14, 2016),pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. Sept. 7, 2017), cert. denied 138 S.Ct. 2005 (2018). The deadline to file award claims for the Covered Action was [Redacted]. Claimant’s award application was dated [Redacted], more than a month after the deadline.

SEC

05/19/2021

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Office of the Whistleblower.

[2] Investigative staff responsible for the Covered Action never received any information from Claimant or had any communications with Claimant. As such, Claimant did not provide any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action. Although not a separate ground for denial, Claimant’s tips relied only on publicly available information, including links to websites and news reports, and did not provide any independent knowledge or independent analysis, a constituent element of “original information”.

SEC

91933

05/19/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $28 million, equal to *** percent *** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”)[fn1] and [Redacted] (“Other Agency”) [Redacted] (“Related Action”).[fn2] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn3]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and to the Other Agency that led to the successful enforcement of both the Covered Action[fn4] and the Related Action.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed amount is appropriate.[fn5] In reaching that determination, we considered that: (1) Claimant’s information prompted staff at the Commission and the Other Agency to begin investigating the Covered Action company’s conduct in a certain country, (2) the record supports that the Covered Action company reported similar improprieties in a different geographical region because of the ongoing Commission and Other Agency investigations, and (3) the Covered Action’s and the Related Action’s charges involved misconduct in geographical regions that were not the subject of the Claimant’s information. Because there is not a strong nexus between the Claimant’s information and the Commission’s and Other Agency’s charges, and the charges were based on information [Redacted] and subsequent investigative efforts of the Commission and Other Agency staff and not assistance provided by Claimant, a *** percent (*** %) award appropriately recognizes Claimant’s level of contribution to the Covered Action and Related Action.

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 and the Related Action.
By the Commission.

[1] The Commission finds that the administrative proceedings brought against the individual respondents [Redacted] arose out of the same nucleus of operative facts as the Covered Action under Rule 21F-4(d)(1) under the Securities Exchange Act of 1934 (“Exchange Act”), 17 C.F.R. § 240.21F-4(d)(1), and should be treated together as part of the Covered Action for the purpose of making a whistleblower award.
[2] The Commission may pay an award based on amounts collected in a related action that is based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $ 1 million. Exchange Act Rule 21F-3(b), 17 C.F.R. § 240.21F-3(b). [Redacted] entered into after July 21, 2010, is deemed to be an administrative action that may be a “related action” that is eligible for a whistleblower award. Rule 21F-4(d)(3)(i), 17 C.F.R. § 240.21F-4(d)(3)(i). The Commission finds that the [Redacted] constitutes a “related action” within the meaning of Exchange Act Rules 21F-3(b) and 21F-4(d)(3)(i).
[3] See Exchange Act Section 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] See Exchange Act Section 21(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-(3)(a), 17 C.F.R. § 240.21F-3(a).
[5] In assessing the appropriate award amount, Exchange Act 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 in 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.

SEC

05/18/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 3”), and for the above-referenced Commission enforcement action (“Covered Action”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18. The CRS sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

[Redacted] Claimant 3 [Redacted].

The CRS has preliminarily determined to recommend that the Commission deny an award to [Redacted] Claimant 3, [Redacted].[fn4] No information submitted by [Redacted] Claimant 3, [Redacted] led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that [Redacted] Claimant 3, [Redacted] submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this determination, the CRS notes that the record demonstrates that [Redacted] Claimant 3, [Redacted] provided info1mation after [Redacted] had alerted Enforcement staff to the fraudulent scheme and after Enforcement staff had begun its investigation.

[Redacted].

Claimant 3 provided information to the Commission approximately ten months after [Redacted] submitted the information that caused the Enforcement Staff to open the investigation. At that time, the Enforcement Staffs investigation was already in an advanced stage, and the information provided by Claimant 3 was largely duplicative of information the staff already knew. Claimant 3’s information did not significantly contribute to the success of the Covered Action.

[Redacted].

By: Claims Review Staff.

[4] To the extent [Redacted] Claimant 3, [Redacted] has applied for an award in a related action, because they are not eligible for an award in the Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

SEC

05/17/2021

In response to the above-referenced Notices of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 3”) and [Redacted] (collectively, “Claimants”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The bases for these determinations are marked below as follows:

Claimants [Redacted] 3 and [Redacted] did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimants [Redacted] and 3 did not provide “original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information provided by Claimant was already known to the Commission.[fn3]

By: Claims Review Staff.

[3] [Redacted].

SEC

91903

05/17/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of approximately [Redacted], equal to *** percent *** of the monetary sanctions collected in the above-referenced Covered Action.[fn1] The CRS recommended the denial of the award application from [Redacted] (“Claimant 2”), as well as the denial of the award applications submitted by [Redacted] (“Claimant 3”), [Redacted] (“Claimant 4”), and [Redacted] [Redacted] (“Claimant 5”).[fn2] Claimants 1, 2, 4, and 5 submitted timely notices contesting the preliminary determinations of their award claims.[fn3]

After review of the reconsideration requests and the new evidence submitted by Claimant 2, the CRS found Claimant 2 eligible for an award. Taking a de novo review of the Rule 21F-6 award factors,[fn4] the CRS determined on reconsideration that a [Redacted] percent [Redacted] award to Claimant 2 and a *** percent *** award to Claimant 1 is appropriate. For the reasons discussed below, we agree. Based upon our own independent review of the materials before us, we award Claimant 1 *** percent of the monetary sanctions collected in the Covered Action, equal to approximately $750,000, and we award Claimant 2 [Redacted] percent of the monetary sanctions collected in the Covered Action, equal to approximately $3,750,000.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted and simultaneously settled administrative proceedings against [Redacted] (the “Company”), finding [Redacted] (the “Company Action”). [Redacted]. Under the settlement, the Company paid [Redacted] in disgorgement, interest, and a civil monetary penalty to the Commission.[fn5]

On [Redacted] the Commission also instituted and simultaneously settled administrative proceedings (the “Individual Action”) against [Redacted] (the “Individual”), [Redacted]. Under the settlement, Individual paid [Redacted] to the Commission as a civil monetary penalty.

On [Redacted] the Office of the Whistleblower posted the above-referenced Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn6] Claimants 1, 2, 4, and 5 all filed timely whistleblower award claims. [Redacted].

Claimant 1 also sought an award based on [Redacted] as a related action to the Covered Action.

C. The Preliminary Determinations.

The CRS[fn7] issued Preliminary Determinations[fn8] recommending that: (1) Claimant 1 receive an award of *** of the monetary sanctions collected in the Covered Action[fn9]; (2) the claims of Claimants 1 and 3 in connection with [Redacted] be denied. The CRS award claims of Claimants 2, 3, 4, and 5 in the Covered Action be denied; and (3) the award preliminarily determined that while Claimant 1 provided information that the staff previously lacked and that was useful in negotiating a settlement of one of the proceedings that comprised the Covered Action, Claimant 1’s information was provided almost one year after the staff’s investigation had begun, Claimant 1’s information only supported the Individual Action, which resulted in a monetary sanction of [Redacted] and that Claimant 1 delayed almost five years in reporting to the Commission.[fn10]

The CRS recommended that Claimant 2’s award claim be denied on the grounds that Claimant 2 did not voluntarily provide information to the Commission as required by Exchange Act Rule 21F-4(a).[fn11] At the time, the record showed that [Redacted] and the Enforcement Staff separately requested information from Claimant 2 prior to Claimant 2 providing information to Enforcement staff. The CRS also recommended that Claimant 4’s and Claimant 5’s award claims be denied because their information did not lead to the success of the Covered Action as required under Exchange Act Rule 21F-4(c).[fn12] The record showed that Claimant 4 did not provide any new information relevant to the action, and Claimant 5’s information was not forwarded to Enforcement staff.[fn13]

D. Claimant 1’s Response to the Preliminary Determination.

Claimant 1 submitted a timely written response contesting the CRS’s Preliminary Determination of a *** percent award.[fn14] Claimant 1 contends that the information Claimant 1 provided to Enforcement staff was relevant in the Covered Action against the Company and in civil and criminal actions against [Redacted] even if such information was not ultimately used by the Enforcement Staff in the Company Action. Claimant 1 also argues that the CRS did not adequately weigh the Rule 21F-6 factors used to determine awards. Claimant 1 provided further detail regarding claims of harassment and retaliation Claimant 1 suffered because of his/her internal reporting of the misconduct, including threats and harassment suffered since *** and the Company’s dissolution of [Redacted]. Claimant 1 also claims wrongful termination by the Company and significant financial hardship as a result.[fn15]

E. Claimant 2’s Response to the Preliminary Determination.

Claimant 2 submitted a timely written response contesting the Preliminary Determination. Claimant 2 contends that Claimant 2 provided information voluntarily before [Redacted] contacted Claimant 2. Claimant 2’s request for reconsideration included new evidence showing that Claimant 2 [Redacted] and that during [Redacted] in [Redacted], Claimant 2 disclosed information to [Redacted] including information regarding the misconduct that was the subject of the Covered Action and [Redacted].

F. Claimant 4’s Response to the Preliminary Determination

Claimant 4 submitted a timely written response contesting the Preliminary Determination. Claimant 4 contends that the information Claimant 4 provided, including [Redacted] was relevant to the Covered Action. Claimant 4 cited [Redacted]. Claimant 4 also provided documents showing that his/her counsel was in contact with Enforcement staff on several occasions, in apparent contradiction of evidence in the record indicating that Enforcement staff did not seek additional information from Claimant 4.

G. Claimant 5’s Response to the Preliminary Determination.

Claimant 5 submitted a timely written response contesting the Preliminary Determination. Claimant 5 provided a summary of the information he/she previously provided and requested that the Commission re-review the information. Claimant 5 also attached an email showing that Claimant 5 forwarded his/her TCR submission number to Enforcement staff on [Redacted].

II. Analysis.

[Redacted].

A. Claimant 1.

The record on reconsideration demonstrates that Claimant 1 voluntarily provided original information to the Commission that contributed to an existing investigation that led to the successful enforcement of the Covered Action. As relevant here, information leads to the success of an enforcement action if it: (1) was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation… or to inquire concerning different conduct as part of a current… investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information” or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action.[fn21] Here, Claimant 1 voluntarily submitted a tip to the Commission in [Redacted] that alleged misconduct by the Individual and [Redacted] relating to [Redacted] which significantly contributed to the success of the Individual Action. Accordingly, Claimant 1 qualifies for a whistleblower award.

Applying the award criteria as specified in Rule 21F-6 of the Exchange Act based on the specific facts and circumstances here, we find that an award of *** percent *** is appropriate. In reaching that determination, we assessed the following facts: (1) Claimant 1’s information assisted Enforcement staff during settlement negotiations and contributed to [Redacted] charges in the Individual Action; (2) Claimant 1’s information contributed only to the success of the Individual Action, and did not contribute to the success of the much larger Company Action; (3) Claimant 1 delayed in reporting information to the Commission, providing it more than five years after learning of the violations and approximately one year after Claimant 2 provided information to Enforcement staff; (4) Enforcement staff found Claimant 2’s information more valuable and of more assistance than the information provided by Claimant 1; and (5) Claimant 1 suffered professional and personal hardship as a result of Claimant 1’s whistleblowing activities. In response to Claimant 1’s argument on reconsideration that allegedly valuable information submitted to the Commission should be considered and weighed positively—regardless of whether such information was used by Enforcement staff in the Company Action—we note that position is contrary to the Exchange Act and the whistleblower program.[fn22] The whistleblower program rewards meritorious claimants based upon, among other things, the significance of their information and how that information helped Enforcement staff bring a successful enforcement action.[fn23] As noted above, Claimant 1’s information did not assist Enforcement staff’s resolution of the Company Action, but did provide assistance with regard to the Individual Action—and the monetary sanctions ordered as a result of the Individual Action were only a small fraction of those ordered in the Company Action. In short, the value and significance of Claimant 1’s information, coupled with the delayed reporting to the Commission, warrant only a *** percent award.

B. Claimant 2.

The record on reconsideration demonstrates that Claimant 2 voluntarily provided original information to the Commission that contributed to an existing investigation that led to the successful enforcement of the Covered Action. Claimant 2 provided new evidence demonstrating that in *** Claimant 2 gave the same information to [Redacted] prior to being contacted by [Redacted] or the Commission.[fn24] Claimant 2’s information and continued assistance significantly contributed to the success of the Company Action and the Individual Action. Accordingly, the record demonstrates that Claimant 2 voluntarily provided original information to the Commission that significantly contributed to an existing investigation that led to the successful enforcement of the Covered Action.[fn25] Claimant 2 qualifies for a whistleblower award.

C. Claimant 4.

The record demonstrates that Claimant 4’s information does not satisfy Exchange Act Rule 21F-4(c)(1) as the investigation was opened in [Redacted] based on information provided by the Company, not Claimant 4. The information submitted by Claimant 4 also did not significantly contribute to the success of the Covered Action pursuant to Exchange Act Rule 21F-4(c)(2). Claimant 4’s information was provided in [Redacted] at which time the staff’s investigation was already at an advanced stage and Enforcement staff had already collected voluminous documents and testimony over the course of the prior year. The information provided by Clamant 4—including [Redacted]—did not provide any materially new information to the Enforcement staff. In response to Claimant 4’s reconsideration request, Enforcement staff confirmed in a supplemental declaration that the information provided by Claimant 4 did not advance Enforcement staff’s investigation. Enforcement staff also confirmed that communications with Claimant 4 cited in Claimant 4’s reconsideration request did not provide the staff with any new information that contributed to the investigation.

D. Claimant 5.

The record demonstrates that Claimant 5’s information does not satisfy Exchange Act Rule 21F-4(c)(1) or Rule 21F-4(c)(2) as Claimant 5’s information did not cause Enforcement to open the investigation, nor did Claimant 5’s information significantly contribute to the success of the Covered Action. In response to Claimant 5’s request for reconsideration, Enforcement staff confirmed that Claimant 5’s email and TCR was reviewed by Enforcement staff at or around the time Claimant 5 sent it and that it was not relevant to the staff’s investigation.

III. Conclusion.

Accordingly, it is hereby ORDERED that (1) Claimant 1 shall receive an award equal to *** percent *** of the monetary sanctions collected in the Covered Action, and that (2) Claimant 2 shall receive an award equal to [Redacted] percent *** of the monetary sanctions collected in the Covered Action.
It is further ORDERED that Claimant 4’s and Claimant 5’s whistleblower award applications in the Covered Action be, and hereby are, denied.
By the Commission.

[1] Pursuant to Rule 21F-4(d), we are treating the enforcement action [Redacted] (the “Individual Action”) together with [Redacted] (the “Company Action”) as a single Covered Action as they both arise from the same underlying facts. The Individual Action and Company Action are collectively referred to as the “Covered Action.”
[2] In addition, the CRS recommended that Claimant 1’s claim for an award in connection with [Redacted] be denied. Because Claimant 1 did not contest the preliminary denial, the CRS’s preliminary determination as to the denial of the [Redacted] became the final order of the Commission pursuant to Exchange Act Rule 21F-11(f); 17 C.F.R. § 240.21F-11(f).
[3] Claimant 3 did not contest the Preliminary Determination. Accordingly, on [Redacted] the Preliminary Determination with respect to Claimant 3’s award claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[4] See Exchange Act Rule 21F-6, 17 C.F.R. § 240.21F-6.
[5] [Redacted].
[6] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[7] Rule 21F-10(d) under the Exchange Act provides that the CRS will “evaluate all timely whistleblower award claims submitted on Form WB-APP in accordance with the criteria set forth in these rules.” 17 C.F.R. § 240.21F-10(d); see also Rule 21F-11(d).
[8] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[9] Ten percent is the minimum statutory award when there is a single meritorious claimant, and thirty percent the maximum. When there are multiple meritorious claimants, the total amount awarded to the meritorious claimants in the aggregate shall not be less than 10 percent and not greater than 30 percent. See Exchange Act Rule 21F-5, 17 C.F.R. § 240.21F-5.
[10] The Preliminary Determinations determined that [Redacted] did not use any information provided by Claimant 1, Claimant 1 was not eligible for an award in connection with [Redacted]. See Exchange Act Rule 21F-11, 17 C.F.R. § 240.21F-11.
[11] See Exchange Act Rule 21F-4(a), 17 C.F.R. § 240.21F-4(a), which provides that a submission of information is considered voluntary if, among other things, it is provided “before a request, inquiry, or demand that relates to the subject matter of [the claimant’s] submission is directed to [the claimant] . . . (i) [b]y the Commission; [or] (ii) [i]n connection with an investigation, inspection, or examination by . . . any self-regulatory organization; or (iii) [i]n connection with an investigation by…any other authority of the Federal government.”
[12] See Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 at 11 (Mar. 19, 2018).
[13] The Preliminary Determinations also determined that because Claimant 3 was not eligible for an award in the Covered Action, Claimant 3 did not qualify for an award in any related action. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a).
[14] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[15] Claimant 1 did not contest the CRS’s preliminary determination as to the denial of a related action award claim with regard to [Redacted] Accordingly, the CRS’s preliminary determination as to the denial of the related action award became the final order of the Commission pursuant to Exchange Act Rule 21F-11(f); 17 C.F.R. § 240.21F-11(f).
[16] [Redacted].
[17] [Redacted].
[18] [Redacted].
[19] [Redacted].
[20] [Redacted].
[21] See Exchange Act Rule 21F-4(c)(1), (2), 17 C.F.R. § 240.21F-4(c)(1), (2). See also Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 , 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).
[22] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[23] See Rule 21F-6(c).
[24] See Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2). The “same information” requirement of Rule 21F-4(a)(2) is satisfied when the information “relates to the same subject matter of” the Commission’s later inquiry. See Order Determining Whistleblower Award Claims, Release No. 34-82181 , n.3 (Nov. 30, 2017).
[25] See Exchange Act Rule 21F-4(c)(1), (2), 17 C.F.R. § 240.21F-4(c)(1), (2). See also Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 , 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).

SEC

91902

05/17/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) jointly receive a whistleblower award of *** percent (***%) of the amounts collected in the above-referenced Covered Action (“Covered Action”). The CRS also preliminarily recommended that the award claim of [Redacted] (“Claimaint 3”) should be denied. Claimant 1 and Claimant 3 filed timely responses contesting the Preliminary Determinations, and Claimant 2 provided written notice of Claimant 2’s decision not to contest the Preliminary Determinations.[fn1] After reviewing the response filed by Claimant 1, the CRS recommended that the joint award for Claimants 1 and 2 be increased from *** percent (***%) to [Redacted] percent (***%), which would result in a joint award of almost $27 million. For the reasons discussed below, the CRS’s recommendations are adopted with respect to Claimant 1, Claimant 2, and Claimant 3.

I. Background.

A. The Covered Action.

On [Redacted], the Commission instituted settled administrative and cease-and-desist proceedings, [Redacted]. The Commission found that, between [Redacted] (“the Company”) made [Redacted].

On [Redacted] the Office of the Whistleblower posted the relevant Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimants 1, 2 and 3 each separately filed a timely whistleblower award claim.

B. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn3] recommending that Claimant 1 and Claimant 2 jointly receive a whistleblower award equal to *** percent ( *** %) of the monetary sanctions collected in the Covered Action and that Claimant 3’s award be denied because Claimant 3 did not provide original information that “led to” the success of the Covered Action as required under Exchange Act Rule 21F-4(c).

C. Claimants’ Responses to the Preliminary Determination.

Claimant 1 submitted a timely written response contesting the Preliminary Determination.[fn4] Specifically, Claimant 1 argues in response to the Preliminary Determination that (1) Claimant 1 should not be considered a joint whistleblower with Claimant 2, and that (2) Claimant 1 should receive a higher award.[fn5]

Claimant 3 submitted a timely written response contesting the Preliminary Determination.[fn6] Specifically, Claimant 3 submitted a one-page email arguing that there is a “history of the US Government in treating [Redacted] whistleblowers differently than others, including the specific performance of the Securities and Exchange Commission.” Claimant 3 also references [Redacted].

III. Analysis.

A. Claimant 1 and Claimant 2.

The record demonstrates that Claimant 1 and Claimant 2 jointly and voluntarily provided original information to the Commission that significantly contributed to the success of the Covered Action.[fn7] The record reflects that in [Redacted], staff of the Division of Enforcement (“Enforcement”) opened an investigation, based on [Redacted], to determine if the Company had [Redacted].

On [Redacted], Claimant 1 and Claimant 2, who were represented by the same counsel, met in-person with Enforcement staff over two days. Although most of the information provided by Claimant 1 and Claimant 2 was already known to Enforcement staff from other sources, they identified, in writing, [Redacted] which helped to meaningfully advance the staff’s investigation and was the basis for certain allegations in the Commission’s Order against the Company. The record also reflects that Claimants 1 and/or 2 met with Enforcement staff on [Redacted].

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed joint award of [Redacted] percent ( *** %), which would result in an almost $27 million joint award, to be appropriate. While Claimants 1 and 2 provided new but limited information years after the investigation had opened, Claimants 1 and 2 also provided additional assistance and cooperation to the Enforcement staff, by, for example, meeting with them in-person on three separate days. Furthermore, Claimants 1 and 2 internally reported their concerns, and their information and assistance helped the Commission bring an important enforcement action that resulted in the return of millions of dollars to harmed investors.

Claimant 1 argues in Claimant 1’s request for reconsideration that (i) Claimant 1 should not be viewed as a joint whistleblower with Claimant 2, and that the Commission must determine Claimant 1’s individual award percentage. According to Claimant 1, Claimant 1 had an agreement with Claimant 2 (as well as with a third individual who did not submit an award application) that Claimant 1, [Redacted] would be responsible for filing the whistleblower application and determining the distribution of any award to the group. Claimant 1 claims Claimant 2 violated this agreement by hiring Claimant 2’s own attorney and filing an award application. Notably, Claimant 1 does not point to any written agreement; rather, this was a purported understanding that Claimant 1, Claimant 2, and the third individual had reached that was never reduced to writing.

Whatever Claimant 1 and Claimant 2’s private understanding may have been, and regardless of their apparent subsequent falling out, the record is clear that they presented themselves to the Commission as joint whistleblowers when they provided their information to the Commission in [Redacted] . Both Claimant 1 and Claimant 2 attended the [Redacted] meeting together, and were represented by the same counsel at the meeting. Furthermore, their then-counsel submitted a letter to the Enforcement staff dated [Redacted], confirming that Claimant 1 and Claimant 2 (as well as the third individual) were part of a “team” and that the “[Redacted]” developed the original information and that the “[Redacted]” provided the information to the Commission. At no point during the investigation did Claimant 1, Claimant 2 or their then-counsel delineate what information was being provided on behalf of Claimant 1 versus what was being provided on behalf of Claimant 2. In short, Claimant 1 and Claimant 2 represented themselves to the Commission staff as a “team” who had jointly developed and were jointly providing the information to the Commission staff.

B. Claimant 3.

To qualify for an award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn9] As relevant here, information will be deemed to have led to a successful enforcement action if it was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation . . . or to inquire concerning different conduct as part of a current . . . investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information;”[fn10] or, alternatively, the information was “about conduct that was already under examination or investigation by the Commission” and the “submission significantly contributed to the success of the action.”[fn11]

Claimant 3 does not satisfy Rule 21F-4(c)(1), as Enforcement staff opened the Covered Action investigation based on a source other than Claimant 3. Nor does Claimant 3 satisfy Rule 21F-4(c)(2) because Enforcement staff responsible for the Covered Action received no information from Claimant 3, nor had any communications with Claimant 3, before or during the course of the Covered Action investigation.

In Claimant 3’s response, Claimant 3 seeks to incorporate by reference various constitutional arguments Claimant 3 previously raised in connection with an unrelated claim for award that the Commission denied on the same grounds.[fn12] Claimant 3 does not explain how Claimant 3 provided information that was used by Enforcement staff in connection with the Covered Action investigation. Claimant 3 also points to no information that Claimant 3 provided to the Commission that even relates to the Covered Action. As such, Claimant 3’s award claim in the Covered Action is denied because Claimant 3 did not provide original information that led to the success of the Covered Action.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 and Claimant 2 receive a joint award of [Redacted] percent (*** %) of the monetary sanctions collected or to be collected in the Covered Action and that Claimant 3’s award application is denied.[fn13]
By the Commission.

[1] The CRS also preliminarily determined to recommend denying an award to a fourth claimant, who has not filed a written response. Accordingly, the fourth claimant has failed to exhaust administrative remedies and the preliminary denial of that award claim has become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[5] While Claimant 2 expressed Claimant 2’s intention not to contest the Preliminary Determination, because we deem Claimant 1 and Claimant 2 to be joint whistleblowers, Claimant 1’s decision to contest inures to them both.
[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[7] See Exchange Act Section 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). In determining whether information significantly contributed to an enforcement action, the Commission considers whether the information allowed the agency to bring: “(1) [the] successful action in significantly less time or with significantly fewer resources; (2) additional successful claims; or (3) successful claims against additional individuals or entities.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34325 (Time 13, 2011). In other words, “[t]he individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.” Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 82897, 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).
[8] Under the whistleblower rules, a whistleblower’s “submission of information to the Commission will be considered voluntary” if the whistleblower “voluntarily provided the same information to one of the other [enumerated] authorities . . . prior to receiving a request, inquiry, or demand from the Commission.” Exchange Act Rule 21F-4(a)(2).
[9] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).
[10] Rule 21F-4(c)(1).
[11] Rule 21F-4(c)(2).
[12] Claimant 3 alleged that the denial of this earlier claim for an award violated the Equal Protection Clause of the Fourteenth Amendment and the First Amendment to the U.S. Constitution. Claimant 3 appealed the Commission’s final determination [Redacted]. The Court granted the Commission’s motion for summary affirmance [Redacted]. We therefore reject Claimant 3’s apparent attempt to use this whistleblower claim proceeding to re-litigate constitutional questions that were fully litigated and affirmed on appeal in the earlier proceeding.
[13] Our determination to treat Claimant 1 and Claimant 2 as joint whistleblowers has not impacted the net total award percentage to Claimant 1 and Claimant 2. Unless Claimant 1 and Claimant 2, within ten (1) calendar days of the issuance of this Order, make a joint request, in writing, for a different allocation of the award between the two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

SEC

91896

05/14/2021

In reaching this determination, the Commission considered that Claimant alerted the Commission to the on-going fraud, participated in a voluntary interview with Commission staff, and provided documents that assisted the staff in its investigation, saving Commission time and resources.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.[fn5]
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(b)(l), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
[2] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[3] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).
[4] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).
[5] The Commission has determined to treat as collected monetary sanctions under Section 21F(b)(1) of the Exchange Act those amounts already distributed or to be distributed to investors by [Redacted] in the Covered Action. See Exchange Act Rule 21F-4(e): “Monetary sanctions means: (1) An order to pay money that results from a Commission action or related action and which is either: (i) Expressly designated as penalty, disgorgement, or interest; or (ii) Otherwise ordered as relief for the violations that are the subject of the covered action or related action . . .” (emphasis added).

SEC

05/14/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily dete1mined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Claimant submitted information approximately 18 months after the opening of the investigation that led to the Covered Action. In addition, Claimant’s information did not substantially contribute to the success of the Covered Action because the information was already previously known to staff responsible for the Covered Action, or did not relate to the charges brought by the Commission in the Covered Action.

SEC

91854

05/12/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of approximately $3.6 million, equal to [Redacted] percent (***%) of the monetary sanctions collected in the above-referenced Covered Action. The CRS also recommended the denial of the award application from [Redacted] (“Claimant 2”). Claimant 1 did not contest the Preliminary Determination, and Claimant 2 filed a timely response contesting the Preliminary Determinations.[fn1] For the reasons discussed below, the CRS’s recommendation is adopted with respect to both Claimant 1 and Claimant 2.

I. Background. A. The Covered Action.

On [Redacted], the Commission instituted settled administrative and cease-and-desist proceedings against [Redacted] (collectively, the “Company”), finding that the Company [Redacted]. Pursuant to the settlement, the Company paid a [Redacted] civil monetary penalty to the Commission. On [Redacted], the Office of the Whistleblower (“OWB”) posted the above-referenced Notice of Covered Action on the Commission’s public website, inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determinations.

The CRS[fn3] issued Preliminary Determinations[fn4] recommending that (1) Claimant 1 receive an award of ***% of the monetary sanctions collected in the Covered Action; and (2) the award claim of Claimant 2 in the Covered Action be denied. The CRS recommended that Claimant 2’s award claim be denied on the grounds that Claimant 2 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Enforcement staff responsible for the Covered Action did not rely upon the information provided by Claimant 2, nor did they have any communications with Claimant 2 before or during the investigation.

C. Claimant 2’s Response to the Preliminary Determinations.

Claimant 2 submitted a timely written response contesting the Preliminary Determinations.[fn5] Claimant 2 contends in response to the Preliminary Determinations that the information Claimant 2 provided to the staff was related to violations by the Company. Claimant 2 further claims that Claimant 2 provided a flash drive of information to Commission staff during a meeting in [Redacted], and that the contents of the drive were directly relevant to the allegations in the Covered Action. Claimant 2 did not retain a copy of this flash drive and requests access to the Commission’s investigative file or the contents of the flash drive in order to substantiate Claimant 2’s claim. Claimant 2 also argues that discussions Claimant 2 had with representatives of OWB in [Redacted] may have contributed to the success of the Covered Action. Lastly, in the event that the information provided was not utilized by the staff, Claimant 2 requests the Commission find that Claimant 2 “constructively” provided information that led to a successful enforcement action and therefore Claimant 2 is eligible for an award.

II. Analysis A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Accordingly, Claimant 1 qualifies for a whistleblower award. [Redacted]. Claimant 1 provided new information to the staff that caused the staff to open a new investigation, and Claimant 1 provided ongoing assistance to the staff during the course of its investigation. The charges brought by the staff against the Company were directly based on the information Claimant 1 provided. [Redacted].

B. Claimant 2.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn9] Under the whistleblower rules, an individual’s original information leads to the success of an action where it causes staff to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and the Commission brings a successful judicial or administrative action based in whole or in part on conduct that was the subject of the individual’s original information, under Rule 21F-4(c)(1) of the Exchange Act; or alternatively, where in the context of an existing investigation, the individual’s original information significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. In determining whether an individual’s information significantly contributed to an action, we consider factors such as whether the information allowed us to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities. The individual’s information must have been “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn10]

The record on reconsideration demonstrates that Claimant 2’s information does not satisfy Exchange Act Rule 21F-4(c)(1) as the investigation was opened based on information provided by Claimant 1, not Claimant 2. The information submitted by Claimant 2 also did not significantly contribute to the success of the Covered Action pursuant to Exchange Act Rule 21F-4(c)(2).[fn11] First, the record reflects that Claimant 2’s submission of information through the TCR system related to alleged violations of [Redacted] and not the subject matter of the Covered Action [Redacted]. Accordingly, the information Claimant 2 submitted through the TCR system was not used by the Enforcement staff assigned to the investigation that led to the Covered Action. Second, the Enforcement staff assigned to the investigation that led to the Covered Action confirmed that it did not review the materials Claimant 2 submitted on a flash drive. Commission staff from the Division of Examinations (“Examinations”), formerly known as the Office of Compliance Inspections and Examinations, investigated [Redacted] based upon Claimant 2’s TCR submissions. In [Redacted] Examinations staff met with Claimant 2 and Claimant 2 provided Examinations staff with a flash drive. Examinations staff referred [Redacted] to the Division of Enforcement in [Redacted] Enforcement staff declined to open an investigation based upon the Examinations referral.[fn14] The [Redacted] identified in the Examinations referral were not relevant to the Covered Action, and the information in the Examinations referral did not contribute to the success of the Covered Action. Nor did any discussions between Examinations staff and Enforcement staff regarding the referral contribute to the success of the Covered Action. In short, the information Claimant 2 submitted on the flash drive did not contribute to the investigation. Third, Enforcement staff confirmed that they did not discuss any information provided by Claimant 2 with representatives from OWB prior to Claimant 2’s submission of Claimant 2’s application for a whistleblower award [Redacted], after the Covered Action was complete. Claimant 2’s alternative argument that the information provided should be viewed as “constructively” contributing to the success of the Covered Action is without merit and contrary to the plain language of the whistleblower rules.[fn15]

Finally, Claimant 2’s request for access to the Commission’s investigative files is denied. The whistleblower rules permit an award claimant to request and receive a copy of the materials that form the basis of the Preliminary Determinations as to that claimant.[fn16] Claimant 2 made such a request and received a copy of those materials. But the whistleblower rules do not entitle access to the Commission’s investigative file.[fn17] Moreover, as already stated above, the declarations provided by the staff are clear that Claimant 2’s information neither caused the staff to open its investigation nor significantly contributed to the success of the Covered Action.[fn18] Thus, we deny Claimant 2’s request for access to this information.[fn19]

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award equal to [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action. It is further ORDERED that Claimant 2’s whistleblower award application in the Covered Action be, and hereby is, denied. By the Commission.

[1] A third claimant (“Claimant 3”) did not contest the Preliminary Determination. Accordingly, the Preliminary Determination with respect to Claimant 3’s award claim became the Final Order of the Commission through the operation of Exchange Act Rule 21F-10(f), 17 C.F.R. §240.21F-10(f).

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[5] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[6] [Redacted].

[7] [Redacted].

[8] [Redacted].

[9] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[10] Whistleblower Award Proceeding File No. 2018-6, Rel. No. 34-82897 (Mar. 19, 2018); Whistleblower Award Proceeding File No. 2016-9, Rel. No. 34-77833 (May 13, 2016).

[11] In the course of reviewing Claimant 2’s response to the Preliminary Determinations, facts came to light indicating that Claimant 2 learned of the information Claimant 2 provided to the Commission [Redacted]. Nevertheless, we do not rely upon [Redacted] as a basis for the denial of Claimant 2’s claim, the grounds for which are set forth above.

[12] [Redacted].

[13] [Redacted].

[14] Enforcement staff subsequently referred the potential deficiencies raised in the Examinations referral to the [Redacted] for any further action.

[15] See Exchange Act Rule 21F-4(c), 17 C.F.R. § 240.21F-4(c); see also In the Matter of Claim for Award [Redacted] at 2, 2015 WL 5000113, Securities Exchange Act Release No. 75752 (Aug. 24, 2015) (finding that claimant’s information had not led to success in an enforcement action because, among other reasons, “the investigative team did not receive, review, or use any information” from the claimant, “nor did the team otherwise have any contact” with the claimant).

[16] See Exchange Act Rule 21F-10(e)(1)(i), 17 C.F.R. § 240.21F-10(e)(1)(i).

[17] See id., Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b) (noting that the whistleblower rules “do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section”).

[18] See Doe v. SEC, 729 F. App’x 1, 3 (D.C. Cir. 2018) (rejecting claimant’s appeal on grounds that substantial evidence supported Commission’s determination that the investigative staff “either never had access to [claimant’s] information, or had access but never used the information.”) instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b)(1) and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award

[19] In Claimant 2’s reconsideration request, Claimant 2 also seeks an award based upon an enforcement action brought by [Redacted]. However, a related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b)(1) and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018). Further, Claimant 2 first raised the request for a related action award in Claimant 2’s reconsideration request, and thus did not submit *** claim for an award on Form WB-APP within the time allowed pursuant to Rule 21F-11(b)(2).

SEC

91808

05/10/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of nearly $18 million, which represents [Redacted] percent [Redacted] of the monetary sanctions collected in each of the above- referenced Covered Actions (the “Covered Actions”). The CRS further recommended that [Redacted] (“Claimant 2”) receive a whistleblower award of more than $4 million, which represents *** [Redacted] percent [Redacted] of the monetary sanctions collected in each of the Covered Actions.[fn1] Both Claimant 1 and Claimant 2 contested the award percentages recommended in the Preliminary Determinations in both Covered Actions. After reviewing both Claimants’ arguments and an additional staff declaration provided in response to Claimants’ arguments, the CRS confirmed its original award recommendations that Claimant 1 and Claimant 2 receive *** and *** respectively, of the monetary sanctions collected in both Covered Actions. For the reasons discussed below, the CRS’s recommendations are adopted.

I. Background.

A. The Commission’s Enforcement Actions.

1. [Redacted] Covered Action.

On [Redacted] the Commission instituted settled public administrative and cease-and-desist proceedings against [Redacted] a financial services firm that, among other things, serves as [Redacted], finding that [Redacted] violated [Redacted]. In its order, the Commission found that, between [Redacted]. Among other relief, [Redacted] was ordered to pay [Redacted] all of which has been collected.

2. [Redacted] Covered Action.

Also on [Redacted] the Commission instituted settled public administrative and cease-and-desist proceedings against [Redacted] finding that [Redacted] violated [Redacted]. In its order, the Commission found that, between [Redacted]. Among other relief, [Redacted] was ordered to pay [Redacted] all of which has been collected.

3. Posting of Covered Actions.

On [Redacted] the Office of the Whistleblower posted Notices of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimants 1 and 2 filed timely whistleblower award claims.

B. The Preliminary Determinations.

On [Redacted] the CRS issued Preliminary Determinations recommending that Claimant 1 and 2 receive whistleblower awards of *** and *** respectively, of the monetary sanctions collected in each of the Covered Actions. In recommending that Claimant 1 receive a significantly larger award than Claimant 2, the CRS determined that Claimant 1’s information was more important to the investigation because Claimant 1’s information was received by the Commission several years before Claimant 2’s information. The CRS also recommended that Claimant 2’s award be reduced for unreasonable reporting delay.

C. Claimants’ Responses to the Preliminary Determinations.

Claimant 1 asserts that Claimant 2 should not receive any award and that Claimant 1 should receive a maximum 30% award. Claimant 1 makes two principal objections to the award recommendation for Claimant 2:

Claimant 1 states that Claimant 2 did not provide new, original information that led to the success of the enforcement action, but instead only confirmed what Claimant 1 had already told the Commission, thus rendering Claimant 2 ineligible for an award. Claimant 1 further contends that Claimant 1, not Claimant 2, was the first to inform the SEC about [Redacted] and provides in support of this contention copies of three emails Claimant 1 had sent the staff in [Redacted], prior to the submission of Claimant 2’s tip to the Commission.

Claimant 1 asserts that Claimant 2’s award recommendation should be reduced because Claimant 2 [Redacted]. Claimant 1 maintains that it is [Redacted].

Claimant 2, in contrast, contends that the CRS failed to properly weigh the value of Claimant 2’s contribution to the investigation relative to Claimant 1’s, arguing that much of the information for which the CRS credited Claimant 1 was, in actuality, information Claimant 1 had received from Claimant 2. Claimant 2 asserts, moreover, that the information Claimant 2 provided was more valuable to the investigation than Claimant 1’s in that Claimant 2, unlike Claimant 1, had current, first-hand knowledge of [Redacted] Claimant 2 further maintains that it was Claimant 2, not Claimant 1, who provided the staff with information about the fact that [Redacted] which Claimant 2 characterizes as a “much graver issue” than the issues related to the information Claimant 1 provided. Finally, Claimant 2 disputes the CRS’s finding that Claimant 2 unreasonably delayed reporting *** information to the Commission.

III. Analysis.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amounts are appropriate and reject both Claimant 1’s and Claimant 2’s arguments for different award percentage allocations.[fn3] In response to the assertions made by the Claimants in their responses, the Office of the Whistleblower obtained an additional declaration from a member of the Enforcement staff, which we credit in resolving the conflicting contentions of the Claimants.

We find that Claimant 1 contributed substantially more to the success of the Covered Actions than Claimant 2. In reaching our award determinations, we positively assessed the following facts: (1) Claimant 1’s tip was the initial source of the underlying investigation; (2) Claimant 1’s tip [Redacted]; (3) Claimant 1 provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; (4) the Commission used information Claimant 1 provided to devise an investigative plan and to craft its initial document requests; (5) Claimant 1 made persistent efforts to remedy the issues, while suffering hardships; (6) Claimant 2 was a valuable first-hand witness who also provided helpful information relevant to the practices engaged in by the respondents in the Covered Actions, albeit several years after the Commission had received Claimant 1’s information; (7) Claimant 2 provided information and documents, participated in staff interviews, and provided clear explanations to the staff regarding the issues that Claimant 2 brought to the staff’s attention; (8) Claimant 2’s information gave the staff a more complete picture of how events from an earlier period impacted the respondents’ practices and put the respondents on notice that [Redacted] were likely not complying with [Redacted] which the staff was able to use in settlement discussions with the respondents’ counsel; and (9) while Claimant 2 was a helpful whistleblower, Claimant 1 was the main source of information.

With regard to Claimant 2’s contentions, we find no support in the record, other than Claimant’s 2’s general assertion, that much of the information Claimant 1 provided to the Commission came originally from information Claimant 2 had provided to Claimant 1; rather the only information that the record shows Claimant 2 gave to Claimant 1 was a single email indicating that [Redacted]. Finally, with respect to Claimant 2’s assertion that Claimant 2, not Claimant 1, first provided the staff with information about [Redacted] the record shows that Claimant 1 did, in fact, advise the staff at least a year before Claimant 2 submitted *** tip to the Commission that [Redacted].

However, contrary to Claimant 1’s assertion, the staff did not conclude that Claimant 2 was the original source of information that [Redacted]. Rather, the staff noted that Claimant 2 had made some crucial original contributions beyond that basic fact — namely that Claimant 2 was the first witness who was able to tell the staff that [Redacted]. The staff further emphasized that, as a recent insider [Redacted], Claimant 2 provided important information as a percipient witness which helped establish [Redacted] liability, with factual details on those topics that went beyond what Claimant 1 had been able to provide.

We further reject Claimant 1’s contention that Claimant 2’s award percentage should be reduced because of Claimant’s 2’s participation in [Redacted]. While Claimant 2 did participate [Redacted] there is no evidence that Claimant 2 engaged in any culpable activity in connection with the specific transactions that are the subject of the Covered Actions. Accordingly, we do not believe Claimant 2’s award percentage should be reduced as a result of Claimant 2’s participation in [Redacted].

Finally, we note that, in contrast to Claimant 1, who persistently alerted the Commission to the ongoing [Redacted] practices for a number of years before the investigation was opened, Claimant 2 delayed reporting to the Commission for several years after becoming aware of the wrongdoing. Accordingly, we find that Claimant 2 unreasonably delayed reporting to the Commission and that a reduction in Claimant 2’s award percentage is appropriate.[fn4]

IV. Conclusion

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] *** percent [Redacted] of the monetary sanctions collected or to be collected in both Covered Actions and Claimant 2 shall receive an award of *** percent *** of the monetary sanctions collected or to be collected in both Covered Actions.

By the Commission.

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] In assessing the appropriate award amount. Exchange Act 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.

[4] We have chosen to reduce the award by a smaller amount than we otherwise might have because we believe that part of this delay is mitigated by the fact that Claimant 2 provided Claimant 1 with information indicating [Redacted] knowing that Claimant 1 was forwarding this information to the Commission staff.

SEC

91805

05/10/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the [Redacted] denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-captioned covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted], the Commission’s Office of the Whistleblower (“OWB”) posted a [Redacted] Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications for the Covered Action within 90 days.[fn1] The 90-day deadline for this posting was [Redacted]. The Commission received Claimant’s award application for the Covered Action on [Redacted], approximately 32 months after the deadline.[fn2] Claimant stated that Claimant did not know the Notice for the Covered Action had been published but did not attempt to explain or justify the late filing of the award claim beyond stating that Claimant believed the Commission would notify Claimant of the posting of the Covered Action.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn3] recommending that Claimant’s award claim be denied because Claimant failed to submit the claim for award to OWB within ninety (90) days of the date of the Notice of Covered Action, as required under Rule 21F-10 of the Exchange Act.[fn4]

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written request contesting the Preliminary Determination.[fn5] In the reconsideration request, Claimant contends that the Commission never alerted Claimant to the necessity of filing for a whistleblower award in the Covered Action.

II. Analysis.

The requirement that claimants file whistleblower award claims within ninety days of the posting of a Notice of Covered Action, set forth in Exchange Act Rule 21F-10, serves important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that the Commission can make timely awards to meritorious whistleblowers.[fn6]

Notwithstanding these important programmatic functions, we recognize that there may be rare situations where an exception should be made. To allow for this, Exchange Act Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive” the ninety-day filing requirement “upon a showing of extraordinary circumstances.”[fn7] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn8] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn9]

Claimant provided the same explanation for Claimant’s tardiness in filing an award application in the Covered Action as Claimant provided in four previous late-filed award applications,[fn10] namely that the Commission failed to alert Claimant to the necessity of filing for a whistleblower award. As we explained in our previous orders, Claimant has failed to satisfy the “demanding showing” for our waiving the ninety-day filing requirement:

Applying that demanding standard here, we find that Claimant has failed to show that extraordinary circumstances beyond Claimant’s control were responsible for the years of delay between the application deadline for the Covered Action[] and Claimant’s untimely whistleblower application in [Redacted]. Contrary to Claimant’s contentions, the Commission is not obligated to notify a claimant of the posting of a NoCA or the deadline for submitting an award application. As we have explained, our whistleblower rules provide “for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim.” The NoCA[] for the Covered Action[] w[as] clearly posted on the Commission’s website, along with the requisite deadline[]. Under our rules, that is all the notice that Claimant was due.

III. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] Claimant’s award application also sought awards in connection with six other covered actions. On March 26, 2019, we denied Claimant’s award claim in Covered Action [Redacted] because it had been submitted after the deadline for submitting award claims for that covered action. See Order Determining Whistleblower Award Claim, Release No. 34-85412 (Mar. 26, 2019). Then on March 24, 2020, we denied Claimant’s award claims in Covered Actions [Redacted] because each had been submitted after the deadline for submitting award claims for those covered actions. See Order Determining Whistleblower Award Claim, Release No. 34-88464 (Mar. 24, 2020).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] Exchange Act Rules 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred”) and 10(b)(1) (“All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award”). See also Order Determining Whistleblower Award Claim, Release No. 34-77368 , at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018).

[5] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[6] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545 , 76 Fed. Reg. 34300, 34300; Order Determining Whistleblower Award Claim, Release No. 34-88464 at 3 (Mar. 24, 2020).

[7] Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

[8] Order Determining Whistleblower Award Claim, Release No. 34-77368 at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S.Ct. 2005 (2018). See also supra note 2 (previous orders denying award claims by Claimant on grounds of untimeliness).

[9] See supra Order Determining Whistleblower Award Claim, Release No. 34-77368 at 3; Order Determining Whistleblower Award Claim, Release No. 34-82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 34-72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 34-72178 (May 16, 2014).

[10] See supra note 2.

[11] Order Determining Whistleblower Award Claim, Release No. 34-88464 at 3-4 (Mar. 24, 2020) (internal citations omitted). If the Commission believes that an award is merited notwithstanding that the untimely filing was within the claimant’s control, we still have recourse to our general exemptive authority under Section 36(a) of the Exchange Act. However, we do not find any evidence that would support exercising this authority to exempt Claimant from Claimant’s obligation to have timely filed.

SEC

05/03/2021

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (Claimant 2), [Redacted] (Claimant 3), and [Redacted] (Claimant 4). Pursuant to Section 21F of the Securities Exchange Act of 1934 (”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

[Redacted].

Claimants 2, 3, and 4.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny awards to Claimants 2, 3, and 4 because the information they provided did not lead to a successful enforcement action. Original information may lead to a successful enforcement action if it “was sufficiently specific, credible, and timely to cause the staff to . . . open an investigation . . . and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [the whistleblower’s] original information.”[fn5] Alternatively, original information may lead to a successful enforcement action if a whistleblower “gave the Commission original information about conduct that was already under . . . investigation by the Commission . . . and [the] submission significantly contributed to the success of the action.”[fn6] In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn7]

Claimants 2, 3, and 4 did not provide information that caused the investigation to be opened. The investigation that gave rise to the Covered Action was opened more than [Redacted] months before Claimant 2 submitted a tip, about [Redacted] months before Claimant 3 submitted a tip, and more than [Redacted] months before Claimant 4 submitted a tip. The investigation was opened because of information provided by another tipster to the Commission, and not because of any information provided by Claimant 2, 3, or 4.

Nor did Claimant 2, 3, or 4 provide information that significantly contributed to the success of the Covered Action. In the Covered Action, Enforcement staff charged [Redacted].

Claimant 2 told Enforcement staff that [Redacted].

Claimant 3 contends that [Redacted] provided information to the Commission regarding [Redacted].

Claimant 4 contends that [Redacted].

[Redacted] Enforcement staff learned about [Redacted] from [Redacted] and not from a whistleblower tip. Enforcement staff was unable to substantiate other allegations [Redacted] and these other allegations did not lead to charges in the OIP and did not contribute significantly to the success of the Covered Action. [Redacted].

Nor did allegations concerning [Redacted] contribute significantly to the success of the Covered Action. Enforcement staff already was aware of [Redacted].

Claimant 3’s application for an award is also untimely. [Redacted]. Claimant 3 does not offer any explanation or point to any extenuating circumstances for the late-filed application.

By: Claims Review Staff.

[5] Exchange Act Rule 21F-4(c)(1).

[6] Exchange Act Rule 21F-4(c)(2).

[7] Order Determining Whistleblower Award Claim, Release No. 34-85412 (Mar. 26, 2019).

[8] Claimant 3 contends in [Redacted] WB-APP that [Redacted] provided the Commission with information about unspecified “unethical business practices.” [Redacted]. Regardless, the OIP did not charge the Company with securities law violation based on any information Claimant 3 provided about the Company’s business practices.

[9] Claimant 4 claims to have directed Enforcement staff to [Redacted] whom Claimant 4 believed could provide useful details [Redacted]. However, neither Claimant 4 nor [Redacted] provided any substantive information that actually formed the basis of the charges in the Covered Action.

CFTC

04/30/2021

The Commodity Futures Trading Commission (“Commission”) received a whistleblower
award application from one claimant in response to [Redacted] (the “Covered Action”). The Claims Review Staff (“CRS”) issued a
Preliminary Determination recommending that Claimant receive a whistleblower award in the
amount of [Redacted] of the monetary sanctions collected, or to be collected, in
the Covered Action. This recommended percentage would yield an award payment of [Redacted]
based on the funds collected in the Covered Action to date.
The recommendation of the CRS with respect to Claimant is adopted. We find that the
record demonstrates that Claimant voluntarily provided original information to the Commission
that led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the
Commodity Exchange Act (“CEA” or “Act”). 7 U.S.C. § 26(b)(1) (2018). Claimant initially
made contact with another regulator, which forwarded to the Commission Claimant’s
information and documents, including [Redacted] issued by the defendants.
After making contact with the Commission, Claimant provided additional assistance directly to
Division of Enforcement (“Division”) staff. Division staff incorporated Claimant’s information
directly into its investigation and later relied upon Claimant’s information as factual support in
Enforcement documents, including the Commission’s Complaint. Claimant significantly
contributed to the success of the Covered Action by providing critical evidence, such as the
[Redacted], that was used by Division staff in its investigation and subsequent
litigation against the defendants. Claimant has also met all eligibility requirements for an award.
See 17 C.F.R. §§ 165.5(b), 165.6 (2020). Finally, Claimant does not fall into any of the
categories of individuals ineligible for an award, as set forth in Rule 165.6(a), 17 C.F.R.
§ 165.6(a).
It is hereby ORDERED that Claimant shall receive an award of [Redacted]
of the monetary sanctions collected, or to be collected, in the Covered Action. By the Commission.

CFTC

04/30/2021

The Commodity Futures Trading Commission (“Commission”) received a whistleblower
award application from one claimant in response to the above-referenced Notice of Covered
Action regarding [Redacted] (“Covered Action”). The Claims Review Staff (“CRS”) issued a
Preliminary Determination recommending that Claimant receive a whistleblower award in the
amount of [Redacted] of the monetary sanctions collected, or to be collected, in the
Covered Action. This recommended percentage would yield an award payment of [Redacted],
based on the funds collected in the Covered Action to date.[fn1]
The recommendation of the CRS with respect to Claimant is adopted. We find that the
record demonstrates that he/she voluntarily provided original information to the Commission that
led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the
Commodity Exchange Act, 7 U.S.C. § 26(b)(1) (2018). In the underlying matter, Claimant
voluntarily provided original information to a self-regulatory organization, which later provided
the Commission with the same information in a written referral. The information Claimant
provided was sufficiently specific, credible, and timely to cause the Commission to open an
investigation. The Commission then brought a successful covered action based in part on
conduct that was the subject of the original information provided by Claimant. Claimant has also
met all eligibility requirements for an award, including filing a Form TCR with the Commission.
See 17 C.F.R. §§ 165.S(b), 165.6 (2020). Finally, Claimant does not fall into any of the
categories of individuals ineligible for an award, as set forth in 17 C.F.R. § 165.6(a).
It is hereby ORDERED that Claimant shall receive an award of [Redacted] of
the monetary sanctions collected, or to be collected, in the Covered Action. By the Commission.

[1] If the Commission were to collect the full amount of [Redacted] ordered in the Covered Action, Claimant’s award would result in total payment of [Redacted].

CFTC

04/30/2021

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from two claimants in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted] (“Covered Action”). The Claims Review Staff (“CRS”) has evaluated the award applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected in the Covered Action. This proposed award would yield [Redacted] based on the funds recovered in the Covered Action to date. The Preliminary Determination further recommended that the award application submitted by Claimant 2 be denied. For the reasons set forth below, we agree with the CRS’s determination. Accordingly, Claimant 1’s claim is approved in the amount of [Redacted], and Claimant 2’s claim is denied.

I. LEGAL ANALYSIS.

Section 23(b)(1) of the CEA requires the Commission to pay an award to an individual who voluntarily provides the Commission with original information that led to the successful enforcement of a covered judicial or administrative action. 7 U.S.C. § 26(b)(1). The CRS has determined that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Claimant 1 provided the information voluntarily, as [Redacted] not under any legal obligation to report to the Commission. The information, which was previously unknown to the Commission and derived from Claimant 1’s personal experience and observations, was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based, in part, on conduct that was the subject of the original information that Claimant 1 provided. Claimant 1 also provided Commission staff with assistance throughout the course of the investigation, including by engaging in telephone conversations and e-mail correspondence, answering questions about the fraudulent scheme employed by [Redacted], and providing to the Commission documentation substantiating [Redacted] misconduct and continued efforts to defraud victims.

The CRS recommended an award amount of [Redacted] of the monetary sanctions collected in the Covered Action, which would result in [Redacted] at this time. We agree with this determination. In arriving at this award amount, the CRS considered the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to Claimant 1’s award application and the facts and circumstances of the investigation. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in order of importance and are not assigned relative importance. The Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. The absence of any one of the positive factors in Rule 165.9(b) does not mean that the award percentage will be lower than 30%, nor does the absence of negative factors in Rule 165.9(c) mean the award percentage will be higher than 10%. Not all factors may be relevant to a particular decision.

Claimant 1’s contributions to this case were substantial. Claimant 1 submitted a Form TCR to the U.S. Securities and Exchange Commission (“SEC Form TCR”) that was referred to the Commission shortly thereafter. The information contained on Claimant 1’s SEC Form TCR was specific, credible, and timely. The Division opened its investigation into [Redacted], in part, as a result of Claimant 1’s SEC Form TCR. Claimant 1 later filed a Form TCR with the Commission.

In addition, Claimant 1 provided significant, ongoing assistance to Division staff throughout the course of the investigation by engaging in telephone conversations and e-mail correspondence, answering questions about [Redacted] fraudulent scheme, and providing the Commission documentation to substantiate [Redacted] misconduct and continued efforts to defraud victims. Given the importance of Claimant 1’s information both to the opening and ultimate success of the Covered Action, an award of [Redacted] is appropriate.

The CRS further recommended that the Commission deny the award application of Claimant 2 because it failed to meet the requirements of Section 23 of the Act and the Rules. Claimant 2 did not file a Form TCR with the Commission, so is not a “whistleblower,” as defined by the Rules. See Rules 165.2(p)(1), 165.3(a), 17 C.F.R. §§ 165.2(p)(1), 165.3(a). Furthermore, Claimant 2 did not provide original information to the Commission that led to the successful enforcement of this Covered Action.

II. RESPONSE TO PRELIMINARY DETERMINATION.

Neither Claimant 1 nor Claimant 2 submitted a request for reconsideration of the Preliminary Determination. Accordingly, pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff with respect to Claimant 1, and the Final Order of the Commission with respect to Claimant 2. Claimant 2’s failure to submit a timely response contesting the Preliminary Determination constituted a failure to exhaust administrative remedies. Consequently, Claimant 2 is prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13.

III. CONCLUSION.

It is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] of the monetary sanctions collected, or to be collected, in the Covered Action. It is further ORDERED that Claimant 2’s award claim shall be, and is, denied. By the Commission.

SEC

04/26/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[1] To the extent Claimant has applied for an award in a related action, because Claimant is not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 2 1F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Claimant provided information only after the staff had already opened the investigation that resulted in the Covered Action. In addition, the staff was already aware of the information provided by Claimant that is relevant to the Covered Action, and the information did not cause the staff to inquire into different conduct and did not contribute to the success of the resulting enforcement action. Also, while not the basis for our determination, we note that the information provided by Claimant was likely not original given the amount of information previously developed by staff from other sources.

SEC

91651

04/23/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award equal to thirty percent (30%) of the monetary sanctions collected or to be collected in the above-referenced Covered Action, and in the related [Redacted] (the “Related Actions”).[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission and to [Redacted] and that this information led to the successful enforcement of the Covered Action and the Related Actions.[fn2]

Claimant, [Redacted] promptly provided information that caused Enforcement staff to open an investigation into [Redacted]. Claimant also provided assistance through ongoing discussions with Enforcement staff by meeting in person and providing key evidence that assisted the Commission in bringing charges against the defendants.

Finally, we find that the contributions made by Claimant to the Covered Action are similar to Claimant’s contributions to the success of the Related Actions, and, therefore, it is appropriate that the Claimant receive the same award percentage for the Related Actions.

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action and the Related Actions.
By the Commission.

[1] The [Redacted] constitute “related actions” to the Covered Action within the meaning of § 21F(a)(5) of the Exchange Act, 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as judicial actions that were brought by the [Redacted] and are based on the same original information that the whistleblower voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $1,000,000. In the Related Actions, Defendant [Redacted] was ordered to pay [Redacted] and Defendant [Redacted] was ordered to pay [Redacted], which amounts were deemed to satisfy the monetary sanctions ordered in the Covered Action. Only amounts actually obtained from the defendants in satisfaction of the defendants’ obligations in the Related Actions, and not the entire amount ordered, are included in the Commission’s calculation of any award payments. See Order Determining Whistleblower Award Claim, Release No. 34-72301 , at n.1 (June 3, 2014) (providing for the payment of an award when monetary sanctions ordered in a Covered Action are deemed satisfied by payment of an amount in an action by another governmental authority). Further, amounts collected from the defendants in the Related Actions will not be double counted for purposes of calculating any award payment. See Order Determining Whistleblower Award Claim, Release No. 34-77530 , at n. 2 (April 5, 2016) (providing that monetary sanctions collected in the Covered Action or in the related criminal action that are either deemed to satisfy or are in fact used to satisfy any payment obligations of the defendants in the other action shall not be double counted for purposes of paying an award); See also Order Determining Whistleblower Award Claim, Release No. 34-88015 (Jan. 22, 2020) (same).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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). See also In the Matter of Claim for Award, Release No. 34-84046 (Sept. 6, 2018) (for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”) (citing Exchange Act Rule 21F-11(c); 17 C.F.R. § 240.21F-11(c)).
[3] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[4] Rule 21F-6(c)(1)(iv), 17 C.F.R. § 240.21F-6(c)(1)(iv).
[5] Id.

SEC

91650

04/23/2021

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original info1mation to the Commission and that this info1mation significantly contributed to the success of the Covered Action.[fn1]

[Redacted].

In reaching that determination, we considered that (i) Claimant’s tip assisted the Commission’s investigation and was one of the underlying sources that formed the basis for the charges in the Covered Action; (ii) Claimant provided helpful assistance related to the Covered Action; (iii) there was substantial law enforcement interest in the information provided, as it related to detecting an ongoing fraud that was harming investors; and (iv) Claimant suffered personal and professional hardships.

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.

[1] See Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

SEC

91649

04/23/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of approximately $3.2 million, which equals [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice stating that Claimant will not contest the Preliminary Determination.

Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30% where (1) the statutory maximum award would be $5 million or less; (2) none of the negative award factors under Rule 21F-6(b)—i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system—are present; and (3) the award claim does not trigger Rule 21F-16.[fn2] The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn3]

The presumption, however, does not apply here because one negative factor – unreasonable reporting delay – under Rule 21F-6(b) is present.[fn4] Based on the facts and circumstances of this matter, we find that Claimant unreasonably delayed in reporting to the Commission. In particular, Claimant’s information was submitted approximately four years from the date on which Claimant first noticed that [Redacted], and 17 months from the date *** first understood that there could possibly be a securities law violation occurring. While Claimant may not have fully understood the significance of the misconduct, investors continued to suffer harm during the period of delay. The CRS also concluded that this criterion under Rule 21F-6(c)(1)(iii) should not be waived.[fn5]

We find the % award determination to be appropriate. In coming to this determination, we considered that (i) Enforcement staff was unaware of the misconduct until Claimant submitted the tip, (ii) Claimant provided a “roadmap” for staff to focus on key issues, (iii) Claimant provided staff with subject matter expertise on a [Redacted], which helped staff interpret and understand information received in document productions and testimony, (iv) Claimant’s documents and assistance allowed the staff to conserve considerable resources, (v) the charges brought by the Commission were based in significant part on conduct that was the subject of the information provided by Claimant and (vi) Claimant unreasonably delayed reporting to the Commission while investors continued to be harmed.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( ***%) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[3] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).
[4] Rule 21F-6(b) provides that in determining whether to decrease the amount of an award, the Commission will consider the following negative factors – culpability, unreasonable reporting delay, and interference with an internal compliance and reporting system.
[5] Rule 21F-6(c)(1)(iii) provides that the Commission, in its sole discretion, “may in certain limited circumstances determine to waive this criterion if the claimant can demonstrate that doing so based on the facts and circumstances of the matter is consistent with the public interest, the promotion of investor protection, and the objectives of the whistleblower program.” 17 C.F.R. § 240.21F-6(c)(1)(iii).

CFTC

04/22/2021

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1, Claimant 2, and Claimant 3 (referred to collectively as “Claimants”) in response to Notice of Covered Action No. [Redacted]. The corresponding enforcement is [Redacted]. The Claims Review Staff (“CRS”) evaluated the award applications in accordance with the Commission’s Whistleblower Regulations (“Regulations” or “Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018).

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** of monetary sanctions collected in [Redacted]. The Preliminary Determination also recommended denying the award claims from Claimant 2 and Claimant 3. This determination has been adopted.

I. BACKGROUND.

[Redacted] arose out of an investigation opened in response to information that Claimant 1 [Redacted] submitted to the Commission regarding [Redacted].

Claimant 1, Claimant 2, and Claimant 3 subsequently submitted whistleblower award applications in response to [Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** of sanctions collected in the [Redacted] because Claimant 1 provided original information that led to the successful enforcement of a covered action. The Preliminary Determination also recommended denying the remaining award claims. Since no Claimant contested the Preliminary Determination, it became the Proposed Final Determination for Claimant 1 and the Final Order for Claimant 2 and Claimant 3 under Rule 165.7(h), 17 C.F.R. § 165.7(h). As a result, Claimants are prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13, due to their failure to exhaust administrative remedies.

III. LEGAL ANALYSIS.

Section 23(b)(1) of the CEA mandates the Commission to grant an award to individuals who voluntarily provide original information that leads to the successful enforcement of a covered or related action. 7 U.S.C. § 26(b)(1) (2018). The CRS determined that Claimant 1 voluntarily provided the Commission with original information that led to the successful enforcement of a covered action. Claimant 1 is a whistleblower because Claimant 1 submitted information on a Form TCR regarding potential violations of the CEA. Claimant 1 provided the information voluntarily, as Claimant 1 was not under any legal obligation to report to the Commission. In addition, Claimant 1’s information was original. The information was previously unknown to the Commission and derived from [Redacted]. Lastly, Claimant 1’s information led the Commission to open an investigation.

The CRS recommended the award amount to be *** of the amount of monetary sanctions collected in the covered action, which would result in a payment [Redacted].

This recommendation is adopted. In arriving at this award amount, the CRS applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others.

The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. Rule 165.9(b) provides a list of factors that may increase the award amount, and Rule 165.9(c) provides a list of factors that may decrease the award amount. However, the Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing documents containing direct evidence of violations could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

As applied, Claimant 1 [Redacted]. Accordingly, an award of *** of the amount of sanctions collected is appropriate.

IV. CONCLUSION.

It is hereby ORDERED that Claimant 1 shall receive *** of monetary sanctions collected in [Redacted].

By the Commission.

SEC

04/19/2021

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[2] Staff responsible for the Covered Action never received any information from Claimant before or during its investigation. Additionally, staff did receive an email from Claimant after the Covered Action was filed, but that email did not contain substantive information.

CFTC

04/16/2021

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from two claimants in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted] (“Covered Action”). The Claims Review Staff (“CRS”) has evaluated the award applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected in the Covered Action. This proposed award would yield a payment of [Redacted] based on the funds recovered in the Covered Action to date. The Preliminary Determination further recommended that the award application submitted by Claimant 2 be denied. For the reasons set forth below, we agree with the CRS’s determination. Accordingly, Claimant 1’s claim is approved in the amount of [Redacted], and Claimant 2’s claim is denied.

I. LEGAL ANALYSIS.

Section 23(b)(1) of the CEA requires the Commission to pay an award to an individual who voluntarily provides the Commission with original information that led to the successful enforcement of a covered judicial or administrative action. 7 U.S.C. § 26(b)(1). The CRS has determined that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action. Claimant 1 provided the information voluntarily, as ***, was not under any legal obligation to report to the Commission. The information, which was previously unknown to the Commission and derived from Claimant 1’s personal experience and observations, was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based, in part, on conduct that was the subject of the original information that Claimant 1 provided. Claimant 1 also provided Commission staff with assistance throughout the course of the investigation, including by engaging in telephone conversations, answering questions about [Redacted] fraudulent scheme, and providing the Commission documentation to substantiate [Redacted] misconduct and continued efforts to defraud victims.

The CRS recommended an award amount of *** of the monetary sanctions collected in the Covered Action, which would result in a payment of [Redacted] at this time. We agree with this determination. In arriving at this award amount, the CRS considered the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to Claimant 1’s award application and the facts and circumstances of the investigation. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in order of importance and are not assigned relative importance. The Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. The absence of any one of the positive factors in Rule 165.9(b) does not mean that the award percentage will be lower than 30%, nor does the absence of negative factors in Rule 165.9(c) mean the award percentage will be higher than 10%. Not all factors may be relevant to a particular decision.

Claimant 1’s contributions to this case were substantial. Claimant 1 submitted a Form TCR that was specific, credible, and timely, and that caused the Division to open its investigation into [Redacted]. In addition, Claimant 1 provided significant, ongoing assistance to Division staff throughout the course of the investigation by engaging in telephone conversations, answering questions about [Redacted] fraudulent scheme, and providing the Commission documentation to substantiate [Redacted] misconduct and continued efforts to defraud victims. Given the importance of Claimant 1’s information to both the opening and ultimate success of the Covered Action, an award of *** is appropriate.

The CRS further recommended that the Commission deny the award application of Claimant 2 because it failed to meet the requirements of Section 23 of the Act and the Rules. Claimant 2 did not provide any information of use in the Commission’s investigation and therefore, did not lead to the successful enforcement of the Covered Action.

II. RESPONSE TO PRELIMINARY DETERMINATION.

III. CONCLUSION.

SEC

91584

04/16/2021

On [Redacted], the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-captioned covered action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

On [Redacted], the Commission filed a complaint in federal court against [Redacted] (“Company”) [Redacted]. In [Redacted], Claimant published a report on an investor website [Redacted], the Commission obtained final judgments against the Company [Redacted] on [Redacted].[fn1]

[Redacted], the Commission’s Office of the Whistleblower (“OWB”) posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimant filed a timely whistleblower award application.

II. The Preliminary Determination and Response.

On [Redacted], the CRS issued a Preliminary Determination[fn3] recommending that Claimant’s award claim be denied because (1) Claimant did not qualify as a whistleblower under Exchange Act Rules 21F-2(a)(1)-(2) since Claimant did not submit information about a possible securities law violation in the form and manner required by Exchange Act Rules 21F-9(a)-(b);[fn4] and (2) the information that Claimant later submitted to the Commission did not lead to the successful enforcement of the Covered Action under Exchange Act Rule 21F-4(c)(1)-(2).[fn5]

On [Redacted], Claimant submitted a timely written request contesting the Preliminary Determination.[fn6] In the reconsideration request, Claimant contends that the article and report *** authored concerning [Redacted], was the cause, in part, for the Commission’s decision to open its investigation of the Company [Redacted]. Claimant argues that it is of no legal consequence that Claimant filed *** tip with the Commission after the Commission filed its complaint in the Covered Action. The whistleblower rules only require, Claimant states, that a tip must be filed in one of the methods set forth under the applicable rule; the rule, however, is silent about when a tip must be filed, as long as it is filed prior to the filing of a whistleblower application. Claimant maintains that *** met those requirements. In addition, Claimant asserts, the information from *** article and from a more detailed report *** also published and later provided to the Commission constitutes “original information” because Claimant was the “original source” of this information, and that it is immaterial under the whistleblower rules that it was not new information to the Commission when Claimant filed *** tip in [Redacted]. Finally, Claimant asserts that given Claimant’s role in uncovering the Company’s *** and opening of the investigation, it would be inequitable to deny Claimant’s award claim.

III. Analysis.

A. Claimant did not provide information to the Commission.

The Commission’s investigation that led to the Covered Action originated from the Division of Enforcement’s review of online news reports and a [Redacted] referral from the Division of Corporation Finance to the Division of Enforcement based upon an evaluation of certain [Redacted] publicly-filed notices by the [Redacted] Company. [Redacted]. Prior to the referral from the Division of Corporation Finance, the Commission had received a [Redacted] tip from an individual, who was not Claimant, alleging that a company [Redacted]. The allegation was based, in part, on several articles posted on an investing website from [Redacted], including an anonymous [Redacted] report, titled [Redacted] published online, and authored by Claimant, which raised doubt as to whether [Redacted].[fn8] Around the time the investigative staff received the Division of Corporation Finance referral, it also learned of certain additional events concerning the Company, including that on a [Redacted] investor call, [Redacted] had publically confessed to [Redacted], and on [Redacted]. Enforcement staff then opened a formal investigation in [Redacted].

Section 21F of the Exchange Act directed that, in any covered action, “the Commission, under regulations prescribed by the Commission and subject to subsection (c), shall pay an award or awards to 1 or more whistleblowers who voluntarily provided original information to the Commission that led to the successful enforcement of the covered action.”[fn9] The statute defines the term “whistleblower” to include “any individual who provides…information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.”[fn10] It also directs that “[n]o award under subsection (b) shall be made…to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule, require.”[fn11] Further, Rule 21F-2(b) states that “[t]o be eligible for an award under Section 21F(b) of the Exchange Act (15 U.S.C. 78u-6(b)) based on any information you provide that relates to a possible violation of the federal securities laws, you must comply with the procedures and the conditions described in §§ 240.21F-4, 240.21F-8, and 21F-9.” Rule 21F-9 generally requires that information be submitted either online through a portal on the Commission’s website or by mailing or faxing a Form Tips, Complaints, and Referrals (“TCR”) to the Commission.[fn12] Further, the whistleblower “must declare under penalty of perjury at the time [he or she] submits [the] information . . . that [the] information is true and correct to the best of [the whistleblower’s] knowledge and belief.”[fn13] While Claimant authored a published report that raised legitimate concerns as to [Redacted], Claimant did not provide this information to the Commission in the form and manner required under the whistleblower rules.

B. Claimant’s information did not lead to the success of the Covered Action.

On [Redacted], three days after the Commission filed its complaint against the Company [Redacted], Claimant submitted a tip through the Commission’s online TCR System. The tip claimed authorship of the [Redacted] report that appeared on the investing website and included the report and the Commission’s complaint as attachments. According to the investigative staff, when it reviewed Claimant’s tip soon after its submission, this was the first time the investigative staff became aware of Claimant’s name in connection with the investigation and the Covered Action and the first time that staff learned that Claimant was the author of the report. The staff further noted that, by the time Claimant submitted *** tip, it had already completed its investigative work and had filed the Commission’s complaint for the Covered Action. Finally, the staff stated that Claimant’s tip did not provide the staff with any new or useful information that could assist the Commission in obtaining judgments against the defendants in the Covered Action and that, consequently, the staff had no communications with Claimant during the course of the investigation or the Covered Action.

As we previously noted, “[t]he plain language of Section 21F . . . requires that information be ‘provided’ directly to the Commission in order to support an award–and makes no allowance for the online publication of information that, by happenstance, indirectly makes its way into the hands of Commission staff.”[fn14] Indeed, “[i]f individuals were motivated only to post information online–and not to provide that information directly to the Commission–then this core purpose of the whistleblower awards program [incentivizing individuals to come forward to assist the Government] would be undermined.”[fn15] Claimant did not submit *** tip to the Commission until [Redacted] after the Commission filed its complaint in the Covered Action, and more than two years after the Enforcement staff opened its investigation of the Company [Redacted]. Indeed, by the time Claimant filed *** tip on [Redacted], the staff had already completed its investigative work, and the tip did not provide the staff with any new or useful information that assisted the Commission in obtaining judgments in the Covered Action. Claimant does not dispute that Claimant’s [Redacted] tip was not new information to the staff. Accordingly, Claimant did not provide information to the Commission that led to the success of the Covered Action and, therefore, Claimant is not eligible to receive a whistleblower award.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] [Redacted].

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Sections 21F(a)(6) and 21F(b)(1), 15 U.S.C. §§ 78u-6(a)(6) and 78u-(b)(1); Exchange Act Rules 21F-2(a)(1)-(2) & 8(a), 17 C.F.R. §§ 240.21F-3(a)(1)-(2) & 8(a).

[5] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3(a) & 4(c), 17 C.F.R. §§ 240.21F-3(a) & 4(c).

[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[7] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[8] The article did not list an author but does indicate that it was written by the [Redacted] [Redacted] Claimant states in Claimant’s tip that *** was the author and that it was disseminated on Claimant’s website, [Redacted] and there is no evidence in the record contradicting Claimant’s assertion of authorship.

[9] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1) (emphasis added).

[10] Exchange Act Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6) (emphasis added).

[11] Exchange Act Section 21F(c)(2)(D), 15 U.S.C. § 78u-6(c)(2)(A).

[12] Id. § 240.21F-9(a).

[13] Id. § 240.21F-9(b).

[14] In the Matter of the Claim for an Award in connection [Redacted], Exchange Act Rel. 82955 at *5 (March 27, 2018).

[15] Id. See also Digital Realty Trust, Inc. v. Somers, 138 S. Ct. 767, 773 (2018) (The Dodd-Frank Act “established ‘a new, robust whistleblower program designed to motivate people who know of securities law violations to tell the SEC.’”) (quoting S. Rep. No. 111-176, at 38 (2010)).

SEC

91568

04/15/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that claimants [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) jointly[fn1] receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action (“Covered Action”) for a payout of over $50 million, and that the award application submitted by [Redacted] (“Claimant 3”) be denied.[fn2] Claimant 1 and Claimant 2 provided written notice of their decision not to contest the Preliminary Determination and Claimant 3 submitted a timely notice contesting the preliminary denial of Claimant 3’s award claim. For the reasons discussed below, the CRS’s recommendations are adopted.[fn3]

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted a settled administrative and cease-and-desist proceeding, [Redacted].

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn5] recommending that (1) Claimant 1 and Claimant 2 jointly receive an award of *** % of the monetary sanctions collected in the Covered Action; and (2) the award claim of Claimant 3 be denied because Claimant 3 did not provide original information that “led to” the success of the Covered Action as required under Exchange Act Rule 21F-4(c). Specifically, Enforcement staff responsible for the Covered Action received no information from, nor had any communication with, Claimant 3 prior to the filing of the Covered Action.

C. Claimant 3’s Response to the Preliminary Determination.

Claimant 3 submitted a timely written response contesting the Preliminary Determination (“Response”).[fn6] In the Response, Claimant 3 makes the following primary principle arguments and assertions. First, Claimant 3 claims that Claimant 3 began submitting relevant information to the Commission beginning in [Redacted] including information received by Commission staff in the [Redacted] (“Other Regional Office”), and that the information was submitted close in time to when the investigation opened. Second, Claimant 3 asserts that Claimant 3 submitted information to various federal agencies and other authorities which the Commission received. Third, Claimant 3 surmises that if the responsible investigative staff did not receive Claimant 3’s information, it must have been lost, in violation of agency policies.

II. Analysis.

A. Claimant 1 and Claimant 2.

The record demonstrates that Claimant 1 and Claimant 2 voluntarily provided original information to the Commission that led to the success of the Covered Action.[fn7] The record reflects that (1) Claimant 1 and Claimant 2 alerted Commission staff to the potential violations, prompting Commission staff to open an investigation; (2) Claimant 1 and Claimant 2 met with Commission staff on numerous occasions, provided voluminous detailed documents, and provided ongoing assistance throughout the investigation; (3) Claimant 1 and Claimant 2’s information and assistance was critical to staff’s ability to identify and investigate the unlawful securities violations and resulting Covered Action; (4) the unlawful conduct identified by Claimant 1 and Claimant 2 involved highly complex transactions and would have been difficult to detect in the absence of their information; and (5) the information provided by Claimant 1 and Claimant 2 resulted in the return of tens of millions of dollars to harmed investors.

B. Claimant 3.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action.[fn8] As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.[fn9]

Not withstanding Claimant 3’s assertion that Claimant 3’s information should have led to an investigation, the record in this matter conclusively demonstrates that none of the tips that Claimant 3 submitted to the Commission were provided to the investigative staff responsible for the Covered Action. Investigative staff provided a supplemental declaration, which we credit, addressing the principal arguments in Claimant’s response. First, the record clearly shows that the investigation was opened in [Redacted] based on information provided by Claimants 1 and 2. As such, Claimant 3’s claim that the investigation was opened in [Redacted] based on a self-report by the Company and close in time to Claimant 3’s tips, submitted in late [Redacted] and early [Redacted] is factually incorrect. Second, the tips that Claimant 3 cites to in Claimant 3’s award application were reviewed by staff in the Other Regional Office and were each closed with a disposition of “No Further Action,” (“NFA”), and were not forwarded to Enforcement staff in connection with any Commission investigation.[fn10] As such, contrary to Claimant 3’s speculation, Claimant’s information was not “lost” or otherwise ignored. Third, Enforcement staff responsible for the Covered Action investigation confirmed that they did not receive or otherwise learn of any information that Claimant 3 may have provided to other federal agencies or authorities. Finally, the information that Claimant 3 submitted to the Commission did not relate to the Company’s [Redacted] the subject of the Covered Action.

As a result, Claimant 3 does not satisfy Rule 21F-4(c)(1), because Enforcement staff opened the Covered Action investigation based on the information provided by Claimant 1 and Claimant 2, and not Claimant 3. Nor does Claimant 3 satisfy Rule 21F-4(c)(2) because Enforcement staff responsible for the Covered Action received no information from Claimant 3, nor had any communications with Claimant 3 prior to the filing of the Covered Action. In short, Claimant 3 provided no information that contributed to the success of the Covered Action.[fn11]

III. Conclusion.

Accordingly, it is ORDERED that Claimant 1 and Claimant 2 shall receive a joint award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action and that Claimant 3’s award application should be denied.

By the Commission.

[1] We have determined to treat Claimants 1 and 2 jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their tip through the same counsel and provided substantively identical whistleblower award applications. See Exchange Act Section 21F(a)(6) (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 1 and 2. Unless Claimants 1 and 2, 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

[2] The CRS also preliminarily determined to recommend that Claimant 1 and Claimant 2’s related action award claims be denied. Because Claimant 1 and Claimant 2 did not contest the preliminary denial of the related action award claims, that preliminary denial is now deemed to be the Final Order of the Commission pursuant to Exchange Act Rule 21F-11(f), 17 C.F.R. § 240.21F-11(f).

[3] The CRS also preliminarily determined to recommend denying the award claim of an additional claimant, who did not file a written response. Accordingly, the preliminary denial of that award claim has become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[5] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[7] See Exchange Act Section 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).

[8] 15 U.S.C. § 78u-6(b)(1).

[9] Exchange Act Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

[10] In addition to the TCRs cited in Claimant 3’s award application, Claimant 3 has submitted other TCRs to the Commission, as well as supplemental information and documents uploaded as additional information to Claimant 3’s TCRs. All of Claimant 3’s TCRs were closed with an NFA disposition and not forwarded to Covered Action investigative staff. Nor did any of the supplemental submissions uploaded as additional information under Claimant 3’s TCRs alter the original NFA disposition.

[11] Because Claimant 3 is not eligible for an award in an SEC Covered Action, Claimant 3 also would not be eligible for an award in any related action. See Order Determining Whistleblower Award Claims, Release No. 34-84506 , at *8 n.5 (Oct. 30, 2018).

SEC

91525

04/09/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award equal to thirty percent (30%) of the amounts collected or to be collected in the above-referenced Covered Action (“Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

Rule 21F-6(c) establishes a presumption of a statutory maximum award of 30 percent where the maximum award would be $5 million or less and none of the negative award factors under Rule 21F-6(b)— i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system, are present and the award claim does not trigger Rule 21F-16 (concerning whistleblowers who engage in culpable conduct). The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn2]

The presumption applies here because a statutory maximum award would not exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to Claimant’s award application, and the award claim does not trigger Rule 21F-16. In addition, the Commission finds that application of the presumption is not inappropriate, as Claimant provided more than limited assistance and it would not be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program to do so.

Claimant provided new, detailed and firsthand information that significantly contributed to the Commission’s ongoing investigation, including critical documents. Claimant also provided continuing assistance to Commission staff, which helped the Commission shut down an ongoing offering fraud preying on retail investors. There also have been no collections to date.

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] The CRS also preliminarily determined to recommend that a second claimant’s award claim be denied. The second claimant did not request reconsideration, and as such, the preliminary denial is now deemed to be the Final Order of the Commission by operation of law.
[2] Rule 21F-6(c)(1)(iv).

SEC

91520

04/09/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of approximately $2.5 million, which equals *** percent (***%) of the monetary sanctions collected, or to be collected, in [Redacted].[fn1] Claimant provided written notice stating that Claimant will not contest the Preliminary Determination.[fn2]

[Redacted].

In reaching this determination, the Commission considered that: (i) Claimant provided significant ongoing assistance to Enforcement staff, including by meeting with and providing [Redacted] key [Redacted] to Enforcement staff in support of the case; (ii) there is substantial law enforcement interest here as Claimant’s information allowed the Commission to bring an action against [Redacted] engaging in an ongoing violation of the federal securities laws relating to the breach of fiduciary duty owed to investors; and (iii) Claimant reported internally to the company.

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.

SEC

04/07/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received a joint whistleblower award claim from [Redacted] (collectively “Claimant 1”), and whistleblower award claims from [Redacted] (“Claimant 3”), and [Redacted] (collectively “Claimants”) for the above referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award applications for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

The information provided by Claimants was never provided to or used by staff handling the Covered Action or underlying investigation (or examination), and those staff members otherwise had no contact with Claimants. Therefore, Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Office of the Whistleblower.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See IS U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

SEC

04/05/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a joint whistleblower award claim from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1]

The basis for this determination is marked below as follows:

Claimants 1 and 2 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] Claimants 1 and 2’s information did not cause the opening of the investigation that led to the Covered Action. Rather, the investigative staff responsible for the Covered Action opened the investigation prior to receiving information from Claimants 1 and 2, based on information from other sources, including information learned during a prior investigation. Furthermore, none of Claimants 1 and 2’s information significantly contributed to the success of the Covered Action because it consisted of information that was already known to the staff, was largely in the public domain, or was otherwise general and non-specific.

SEC

04/02/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1 and 2 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action opened the investigation based on information from a source other than Claimants 1 or 2. Certain investigative staff responsible for the Covered Action received information from Claimant 1 related to different alleged conduct that went to a separate, unrelated investigation that was subsequently closed without enforcement action. Further, investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimant 2. As such, neither Claimant 1 nor Claimant 2 provided information that was used in or that contributed to the success of the Covered Action.

SEC

91426

03/29/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $500,000, which is equal to *** percent ( *** %) of the amounts collected, or to be collected, in the above-referenced Covered Action (“Covered Action”) and *** percent (*** %) of the monetary sanctions collected, or to be collected, in a related [Redacted] action, (“Related Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determinations.

The recommendations of the CRS are adopted. The record demonstrates that Claimant voluntarily provided the same original information to the Commission and to the [Redacted] and that this information led to the successful enforcement of both the Covered Action and the Related Action.[fn1]

In reaching this determination, we have relied upon Exchange Act Rule 21F-4(b)(7). That rule provides in relevant part that:

If you provide information to … an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law, and you, within 120 days, submit the same information to the Commission pursuant to § 240.21F-9 of this chapter, as you must do in order for you to be eligible to be considered for an award, then, for purposes of evaluating your claim to an award …, the Commission will consider that you provided [the] information as of the date of your original disclosure, report or submission to one of these other authorities or persons.

Thus, if an individual submits his/her tip through an entity’s internal whistleblower, legal, or compliance procedures, the Commission, in considering an award application from that individual, will treat the information as though it had been submitted to the Commission directly from the individual at the same time that it was submitted internally, provided that the individual submitted that same information to the Commission no later than 120 days after the individual first reported internally. In this way, Rule 21F-4(b)(7) operates as a 120-day safe harbor, assuring individuals who voluntarily report misconduct internally (or to another agency) first that they will be treated for award purposes as though they had reported directly to the Commission.

Claimant reported the alleged securities violations internally to his/her employer’s [Redacted] which in turn, [Redacted] who reported the information to [Redacted]. The [Redacted] then made a referral to Commission staff, prompting the opening of the Commission’s investigation. Within 120 days of reporting the violations internally, Claimant submitted a tip via fax to the Commission. As such, Claimant satisfies the Rule 21F-4(b)(7) safe-harbor provision and, thus, in making awards to the Claimant for the Covered Action and the Related Action, we have treated the Claimant’s submission to the Commission as though it had been made on the date that the Claimant provided that same information to his/her employer’s [Redacted].[fn2]

[Redacted].

In coming to this conclusion, the Commission considered that Claimant provided significant information that prompted the opening of the investigations by the [Redacted] and Commission staff, met with them in-person, and continued to provide helpful documents. Because of Claimant’s information and assistance, the Commission and [Redacted] were able to quickly file actions, shutting down an ongoing fraudulent scheme.

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 and in the Related Action, including any monetary sanctions collected after the date of this Order.[fn5]
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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). See also In the Matter of Claim for Award, Release No. 34-84046 (Sept. 6, 2018) (for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”) (citing Exchange Act Rule 21F-11(c); 17 C.F.R. § 240.21F-11(c)).
[2] In reaching this determination, we have also relied upon Rule 21F- 4(c)(3), which provides that original information will be deemed to have led to the successful enforcement of a judicial or administrative action if: (1) the whistleblower reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time you reported them to the Commission; (2) the entity later provided the information to the Commission or provided results of an audit or investigation initiated in whole or in part in response to information the whistleblower reported to the entity; (3) the information the entity provided to the Commission satisfied either paragraph (c)(1) or (c)(2) of [Rule 21F-4]; and (4) the whistleblower submitted the same information to the Commission in accordance with the procedures set forth in Rule 21F-9 within 120 days of providing it to the entity.
[5] The amounts ordered in the Covered Action were deemed satisfied by [Redacted] in the Related Action. Monetary sanctions collected by the Commission in the Covered Action or by the [Redacted] in the Related Action, including those that are either deemed to satisfy or are in fact used to satisfy any payment obligations of the defendants in the other action, shall not be double counted for purposes of paying an award. See Order Determining Whistleblower Award Claim, Rel. No. 34-88015 , at n.3 (Jan. 22, 2020).

SEC

91427

03/29/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of twenty percent (20%) of any monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”), and that [Redacted] (“Claimant 2”) receive a whistleblower award of ten percent (10%) of any monetary sanctions collected, or to be collected, in the Covered Action. Neither Claimant 1 nor Claimant 2 contested the Preliminary Determinations.[fn1]

The recommendations of the CRS are adopted. The record demonstrates that both Claimant 1 and Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.

Exchange Act Rule 21F-6(c) creates a presumption for a maximum award where, as here, an award would be less than $5 million, the claimant has no negative factors— i.e., culpability, unreasonable reporting delay, or interference with an internal compliance and reporting system, and Rule 21F-16 regarding culpable whistleblowers does not apply. The Commission may depart from the presumption if (1) the assistance provided by the whistleblower was, “under the relevant facts and circumstances, limited,” or (2) a maximum award “would be inconsistent with the public interest, the promotion of investor protection, or the objectives of the whistleblower program.”[fn2] Further, where at least one of the multiple meritorious whistleblowers would qualify for the presumption if that individual were the sole meritorious whistleblower, the new rule will operate to ensure that the total aggregate award paid to all meritorious whistleblowers is the statutory maximum.[fn3] However, in allocating the award amount among meritorious claimants, the Commission will consider all relevant facts. The 30% presumption applies here because the award will be less than $5 million as there are no collections to date in this matter and none are anticipated, and neither claimant has any negative factors. Further, both claimants provided more than limited assistance, and application of the presumption would not be inconsistent with the public interest, protection of investors, or the interests of the whistleblower program.

Further, in determining that Claimant 1 should receive the higher award allocation, we considered that Claimant 1’s information was submitted earlier in time, prompting a significant expansion of a then ongoing examination. Claimant 1, a harmed investor, identified multiple fraudulent schemes that were charged in the Commission’s action. Claimant 2, also a harmed investor, submitted information approximately eight months after Claimant 1, and certain of Claimant 2’s information was duplicative of the information previously provided by Claimant 1. We further observe that both Claimant 1 and Claimant 2 provided substantial, ongoing assistance that helped the Commission halt an ongoing fraudulent scheme.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of twenty percent (20%) of any monetary sanctions collected or to be collected in the Covered Action, and Claimant 2 shall receive an award of ten percent (10%) of any monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

[2] Rule 21F-6(c)(1)(iv).

[3] Whistleblower Rule Amendments, Adopting Release (Sept. 23, 2020).

SEC

03/17/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities
and Exchange Commission received a whistleblower award claim from [Redacted]
(“Claimant 1”) and [Redacted] for the above-referenced
matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange
Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated
the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1 [Redacted] did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 1’s whistleblower submission(s), upon which Claimant 1 bases the claim for an award, were not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3, 21F-4(a)(1) and 21F-4(a)(3) because Claimant made the submission(s) after a request, inquiry, or demand that relates to same subject matter as the submission(s) was directed to Claimant or anyone representing Claimant (such as an attorney) by (i) the Commission, (ii) another regulatory or law enforcement agency or self-regulatory organization (such as FINRA), or (iii) Congress or any other authority of the federal government, and/or Claimant was required to report information to the Commission as a result of a preexisting legal duty.[fn3]

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Information provided by Claimants [Redacted] was provided only after the staff had already opened the two investigations which resulted in the Covered Actions. In addition, the staff was already aware of the information provided by Claimants 1 [Redacted], and the information did not cause the staff to inquire into different conduct and did not contribute to the success of the resulting enforcement actions. Also while not the basis for our determination, we note that the information provided by Claimants 1 [Redacted] was likely not original given the amount of information previously developed by staff from other sources.

SEC

91332

03/16/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately [Redacted] which represents thirty percent (30%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). 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 contributed to the opening of the investigation and significantly contributed to the successful enforcement of the Covered Action.[fn1]

In reaching this determination, the Commission considered that Claimant provided significant ongoing assistance, including answering the investigative staff’s questions, providing numerous documents to the staff, and [Redacted].

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

03/10/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively “Claimants”) for the above referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-18 promulgated thereunder, the Office of the Whistleblower has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18 and has designated your award application for resolution through the summary disposition process.

The Office of the Whistleblower has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants’ applications do not raise any novel or important legal or policy questions and are denied on the basis marked below:

Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn3]

By: Office of the Whistleblower.

[2] Investigative staff responsible for the Covered Action never received any information from or had any communications with Claimants. Claimants’ submissions were not provided to the investigative staff on the Covered Action.

[3] Investigative staff did not receive any information from Claimants, and as such, neither Claimant 1, nor Claimant 2, provided any information that was used in, or otherwise had any impact on, the investigation or resulting Covered Action.

SEC

91280

03/09/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $1.5 million, equal to [Redacted] percent (***%) of the monetary sanctions collected in the above-referenced Covered Action.[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determinations.

[Redacted].

Claimant reported concerns internally to Claimant’s employer. Claimant provided information that caused Enforcement staff to open an investigation, including multiple written submissions detailing Claimant’s tips and identifying potential witnesses to Enforcement staff. Claimant also provided assistance through ongoing discussions with Enforcement staff by meeting multiple times to explain Claimant’s information. [Redacted].

Accordingly, it is hereby ORDERED that Claimant shall receive an award equal to [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] Additionally, the CRS recommended that Claimant’s claim for an award in connection with a [Redacted] entered into by [Redacted] be denied. Because Claimant provided written notice of Claimant’s decision not to contest the preliminary denial, the CRS’s preliminary determination as to the denial of the [Redacted] became the final order of the Commission pursuant to Exchange Act Rule 21F-11(f); 17 C.F.R. § 240.21F-11(f).
[2] See Exchange Act Section 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).

SEC

91253

03/04/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that claimants [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) receive a joint whistleblower award of over $5 million, equal to [Redacted] percent (***%) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).[fn1] The CRS further preliminarily determined to recommend the denial of the award applications submitted by [Redacted] (“Claimant 11”) and [Redacted] (“Claimant 12”). Claimants 1 and 2 provided written notice of their decision not to contest the Preliminary Determinations, and Claimants 11 and 12 submitted timely notices contesting the preliminary denial of their award claims. For the reasons discussed below, and based on the Commission’s independent review of the materials before us, we adopt the CRS’s recommendations with respect to Claimant 1, Claimant 2, Claimant 11, and Claimant 12.

I. Background.
A. The Covered Action.
On [Redacted], the Commission filed a settled administrative proceeding against [Redacted] (“the Company”) for violations of [Redacted]. The Commission found that [Redacted]. The Commission further found that [Redacted]. The Company agreed [Redacted]. On [Redacted], the Office of the Whistleblower posted the above-referenced Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimants 1, 2, 11, and 12 all filed timely whistleblower award claims.

B. The Preliminary Determinations.
The Claims Review Staff issued Preliminary Determinations[fn3] recommending that: (1) Claimants 1 and 2 receive a joint award of ***% of the monetary sanctions collected in the Covered Action, and (2) the award claims of Claimants 11 and 12 in the Covered Action be denied.[fn4] The CRS preliminarily determined to recommend that Claimant 11’s and Claimant 12’s award claims be denied because their information did not lead to the success of the Covered Action as required under Exchange Act Rule 21F-4(c).[fn5]
Claimants 11 and 12 had submitted tips to the Commission that alleged [Redacted] by competitors of the Company. Claimants 11 and 12 had also stated that they provided their information to the news media, which resulted in news articles that may have at least prompted the Company to initiate an internal review that ultimately uncovered violations at the Company. The CRS, however, preliminarily determined that even if Claimants 11 and 12 provided information to the news media about the Company’s competitors and that information influenced the Company to conduct an internal review of its own conduct, Claimants 11 and 12 still did not satisfy the “led to” standard. Because neither of the tips caused the opening of the Covered Action investigation under Rule 21F-4(c)(1), which Enforcement staff confirmed was based on the tip submitted by Claimants 1 and 2, their claims could only succeed if they satisfied the “led to” standard under either Rule 21F-4(c)(2) or (3). The CRS preliminarily determined that Claimants 11 and 12 did not satisfy either rule. First, Rule 21F-4(c)(2) requires that the claimant give the Commission original information about conduct that was already under examination or investigation and that the claimant’s submission significantly contributed to the success of the action. To the extent Claimants 11 and 12 submitted any information after the investigation was opened,[fn6] they did not provide the Commission information about conduct that was already under examination or investigation, as their tips related to conduct by entirely different companies, and not the Company. Additionally, the allegations made by Claimants 11 and 12 were not used in the Covered Action, which concerned conduct by the Company [Redacted] only. Thus, their submissions had no impact on the Covered Action. Further, the CRS preliminarily determined that the connection that Claimants 11 and 12 attempted to establish between information they provided to the news media about entirely different companies and the charges in the Covered Action, which do not relate to those companies, does not show that their information significantly contributed to the success of the Covered Action. Second, Rule 21F-4(c)(3) provides that claimants may receive credit for information the entity provides to the Commission resulting from an investigation initiated in whole or in part in response to information the claimant reported to the entity.[fn7] Here, Claimants 11 and 12 provided information about the Company’s competitors to the news media, not to the Company. Therefore, the CRS preliminarily determined that they did not satisfy the requirements of the rule. Because Claimants 11 and 12 did not submit information that led to the successful enforcement of the Covered Action, the CRS preliminarily determined that their claims for award should be denied.

C. Claimant 11’s and Claimant 12’s Responses to the Preliminary Determination.
Claimant 11 and Claimant 12 submitted timely written responses contesting the Preliminary Determinations.[fn8] Claimants 11 and 12 make substantially similar arguments contending that their information satisfies the “led to” requirement of Rule 21F-4(c). Claimant 11 states that he/she provided information regarding [Redacted] (“Competitor 1”), a competitor of the Company, to [Redacted] (“Newspaper”), which resulted in two news articles published in [Redacted] about Competitor 1’s conduct [Redacted] relating to alleged [Redacted]. Claimant 12 states that he/she provided information about another competitor of the Company, [Redacted] (“Competitor 2”), to the Newspaper, which published articles concerning Competitor 2 in [Redacted]. Claimant 12 also states that the news articles published in [Redacted] by the Newspaper “flowed from” his/her information. Claimants 11 and 12 both claim that according to [Redacted], the information published by the Newspaper in [Redacted] caused the Company [Redacted] that uncovered additional [Redacted] violations that were ultimately incorporated into the enforcement action.

Claimants 11 and 12 assert that the CRS erred in concluding as a matter of law that the three fact patterns set forth in Rule 21F-4(c) constitute the only fact patterns that satisfy the “led to” standard. Claimants 11 and 12 disagree with the SEC’s position in Order Determining Whistleblower Award Claim, Release No. 89551 (Aug. 13, 2020) (“August 13, 2020, Commission Order”), which stated that Rule 21F-4(c) provides the only mechanisms by which a claimant can satisfy the “led to” requirement, as consistent with the Commission’s interpretation since the enactment of Dodd-Frank.[fn9] Claimants 11 and 12 also disagree with language in the June 13, 2011, Adopting Release that states that a whistleblower is only entitled to an award if one of three general standards – spelled out in Rule 21F-4(c) – is satisfied.[fn10] Instead, Claimants 11 and 12 claim that the “led to” requirement can be satisfied in “some limited circumstances” by alternative circumstances not specified in Rule 21F-4(c) and that the circumstances in this instance support a finding that Claimants 11 and 12 satisfied that requirement. Claimants 11 and 12 believe that their submissions satisfy the “led to” requirement because their information was, in part, responsible for the Company’s internal review that and ultimately discovered numerous [Redacted] violations at the Company.

Further, Claimants 11 and 12 argue that the facts of this matter are much stronger than the facts considered in the August 13, 2020, Commission Order because Claimants 11 and 12 allege facts that are “undisputed.” Claimant 11 states that he/she declared under penalty of perjury that he/she caused and was a source of the [Redacted] news articles [Redacted]. According to Claimant 11, the initial [Redacted] news article mentions him/her by stating that Competitor 1 disclosed [Redacted] about Competitor’s conduct. Claimant 11 also believes that it is undisputed that the “media reports” referenced in [Redacted] refer to the [Redacted] news articles and that the “competitor” referenced was Competitor 1. Claimant 12, in turn, states that he/she declared under the penalty of perjury that he/she not only caused and was a source of the [Redacted] news articles, but also that the [Redacted] news articles referenced in [Redacted] “flowed from” his/her information. Claimant 12, in contradiction to Claimant 11, claims that the competitor referenced in [Redacted] was actually Competitor 2.

Claimants 11 and 12 further state that it is undisputed that the Company learned of the [Redacted] news articles and initiated [Redacted] review of its conduct in response to the media reports and that review materially impacted the enforcement action. Based on these facts, Claimants 11 and 12 claim that their information more than satisfies the “led to” standard by alternative circumstances not specified in Rule 21F-4(c).

II. Analysis.
A. Joint Claimants 1 and 2.
The record demonstrates that Claimants 1 and 2 voluntarily provided original information to the Commission that caused Enforcement staff to open an investigation that led to the successful enforcement of the Covered Action. As relevant here, information leads to the success of an enforcement action if it: (1) was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation… or to inquire concerning different conduct as part of a current… investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information” or (2) significantly contributed to the success of a Commission judicial or [Redacted] administrative enforcement action.[fn11] Claimants 1 and 2 voluntarily submitted a joint tip to the Commission in [Redacted] that alleged that the Company had [Redacted]. The tip caused Enforcement staff to open the investigation in the Covered Action, and the charges brought by the Commission in the Covered Action were based, in part, on the conduct alleged by Claimants 1 and 2. Accordingly, Claimants 1 and 2 qualify for a joint whistleblower award.

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.[fn12] In reaching that determination, we positively assessed the following facts: (1) Claimants 1 and 2 provided significant information that caused Commission staff to open an investigation and they provided assistance during the investigation; (2) Claimant 1’s and Claimant 2’s information directly supported certain allegations in the Commission’s enforcement action; and (3) there are significant law enforcement interests in this matter, which involved misconduct abroad that would have been difficult to detect without the information reported by Claimants 1 and 2. The determination also reflects that certain of the Commission’s charges related to misconduct by the Company that was more extensive than that reported by Claimants 1 and 2.

B. Claimants 11 and 12.
Contrary to the assertions in the Responses of Claimants 11 and 12, which appear to concede that they have not satisfied the three fact patterns set forth in Rule 21F-4(c),[fn13] there are no alternative circumstances not specified in Rule 21F-4(c) in which a claimant can satisfy the “led to” requirement. The Commission previously rejected this very argument and has unambiguously stated that Rule 21F-4(c) “provides the only mechanisms by which a claimant can satisfy the ‘led to’ requirement” and therefore, if a claimant “does not fall within any of the three circumstances identified in the rule, then he or she is not entitled to an award.”[fn14] In fact, when the Commission adopted the “led to” requirement under Rule 21F-4(c), the Commission explained that a whistleblower is “only entitled to an award if one of three general standards is satisfied.”[fn15] Further, as a policy matter, the Commission has previously concluded that expanding the “led to” definition beyond the three circumstances set forth in Rule 21F-4(c) “would risk introducing speculative and complex causal chains that would be difficult and impracticable in many instances for the Commission to investigate and evaluate.”[fn16] Accordingly, Claimants 11 and 12 cannot satisfy the “led to” requirement by any alternative circumstances. Claimant 11’s and Claimant 12’s award applications are denied.

III. Conclusion.
Accordingly, it is hereby ORDERED that Claimants 1 and 2 shall receive a joint award equal to [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action. It is further ORDERED that Claimant 11’s and Claimant 12’s whistleblower award applications in the Covered Action be, and hereby are, denied. By the Commission.

[1] A joint award is appropriate as Claimants 1 and 2 jointly submitted their tip and Forms WB-APP. See Securities
Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining “whistleblower” to mean, as relevant here, “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 1 and 2.
Unless Claimants 1 and 2, 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 two of them, the Office of the Whistleblower is directed
to pay each of them individually 50% of their joint award.

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21 F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] The CRS also recommended that the award claims of Claimant 3, Claimant 4, Claimant 5, Claimant 6, Claimant 7,
Claimant 8, Claimant 9, and Claimant 10 be denied. These individuals did not contest the preliminary denial of their
claims. Accordingly, the Preliminary Determinations with respect to their award claims became the Final Order of
the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[5] Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412, 2019 SEC LEXIS 615, at *16 (Mar.
26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897, 2018 SEC LEXIS 750, at
*16 (Mar. 19, 2018).

[6] Claimant 11’s tip was submitted over a year after the opening of the investigation. Claimant 12 submitted some
information prior to the opening of the investigation and some subsequent tips after the opening of the investigation.
[7] Rule 21F-4(c)(3) also requires that a claimant submit the same information to the SEC within 120 days.

[8] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[9] Order Determining Whistleblower Award Claim, Rel. No. 89551, at 6 (Aug. 13, 2020) (“Although Rule 21F-4(c)
does not expressly state that the three components are the only way to establish ‘led to,’ it has been the
Commission’s consistent practice for almost a decade now to apply the rule in this manner.”).

[10] See 76 Fed. Reg. 34,300, 34,357, n.438 (June 13, 2011).

[11] See Exchange Act Rule 21F-4(c)(1), (2), 17 C.F.R. § 240.21F-4(c)(1), (2). See also Order Determining
Whistleblower Award Claims, Exch. Act Rel. No. 85412, 2019 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order
Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897, 2018 SEC LEXIS 750, at *16 (Mar. 19,
2018).
[12] In assessing the appropriate award amount, Exchange Act 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.

[13] Exchange Act Rule 21F-4(c) provides that information will be deemed to have “led to the successful enforcement
of” an action where a person provides: (1) “sufficiently specific, credible, and timely [original information to the
Commission] to cause the staff to commence an examination, open an investigation, reopen an investigation [that
has been closed] …, or to inquire concerning different conduct as part of a current examination or investigation,”
and the action is “based in whole or in part on conduct that was the subject of your original information”; (2)
original information in connection with misconduct that is already under investigation or examination and that
“submission significantly contributed to the success of the action”; and (3) information to specified reporting
authorities within an entity, and the entity subsequently provides that information to the Commission (along with
additional information the entity may have uncovered as a result of the tip) and the information the entity reports
otherwise satisfies (1) or (2) above.

[14] See Order Determining Whistleblower Award Claim, Rel. No. 89551, at 6 (Aug. 13, 2020).

[15] See id. (citing 76 Fed. Reg. 34300, 34357 (June 13, 2011)). See also 75 Fed. Reg. 70487, 70497 (Nov. 17, 2010)
(“Proposed Rule 21F-4(c) defines when original information ‘led to successful enforcement.’”). Furthermore, “[a]t
no point during the rulemaking did the Commission suggest that there would be residual or catch-all authority for
the Commission to consider information to have ‘led to’ the success of an action beyond the three prongs of the ‘led
to’ definition set forth in Rule 21F-4(c).” Order Determining Whistleblower Award Claim, Rel. No. 89551, at 6,
n.11.

[16] See Order Determining Whistleblower Award Claim, Rel. No. 89551, at 6.

SEC

91225

03/01/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively “Claimants”) each receive a whistleblower award in the amount of *** percent (***%) of the monetary sanctions collected and to be collected in [Redacted] (collectively, the “Covered Action”)[fn1] and in a related [Redacted] action, [Redacted] (the “Related Action”),[fn2] which will presently result in an aggregate award of over $500,000.[fn3] Claimants provided written notice of their decisions not to contest the Preliminary Determinations.

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 and Claimant 2 each voluntarily provided original information to the Commission and to the [Redacted] (the “Other Agency”), and that each Claimant’s original information led to the successful enforcement of both the Covered Action and the Related Action.[fn4]

[Redacted].

In reaching this determination, we considered that (1) the Claimants’ tips both caused the swift opening of the Commission’s and the Other Agency’s investigations and were the underlying source that formed the basis for the Covered Action and Related Action; (2) both Claimants provided substantial, ongoing assistance that focused the investigation and conserved significant Commission and Other Agency time and resources; and (3) there was substantial law enforcement interest in the information provided, as it related to detecting an ongoing fraud involving [Redacted].

Further, we find that an equal split of the award is appropriate based on similar contributions Claimant 1 and Claimant 2 made to the Covered Action and the Related Action.

Accordingly, it is hereby ORDERED that Claimant 1 and Claimant 2 shall each receive an award of *** percent (***%) of the monetary sanctions collected in the Covered Action, and *** percent (***%) of the monetary sanctions collected in the Related Action, as well as any monetary sanctions collected in either action after the date of this Order.
By the Commission.

[1] For the purposes of making an award, we determined to treat the judicial and administrative actions in this matter as a single Covered Action because they arose out the same nucleus of operative facts. See Securities Exchange Act of 1934 Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).
[2] The disgorgement and prejudgment interest ordered to be paid in the [Redacted] was “deemed satisfied” by the order of [Redacted] related [Redacted] action. [Redacted] Only amounts actually obtained from the defendant in satisfaction of the defendant’s obligation in the [Redacted] action, and not the entire amount ordered, are included in the Commission’s calculation of any award payments. See Order Determining Whistleblower Award Claim, Release No. 34-72301 , at n.1 (June 3, 2014) (providing for the payment of an award when monetary sanctions ordered in a Covered Action are deemed satisfied by payment of an amount in an action by another governmental authority). Further, amounts collected from the defendant in the [Redacted]action will not be double counted for purposes of calculating any award payment. See Order Determining Whistleblower Award Claim, Release No. 34-77530 , at n. 2 (April 5, 2016) (providing that monetary sanctions collected in the Covered Action or in the related criminal action that are either deemed to satisfy or are in fact used to satisfy any payment obligations of the defendants in the other action shall not be double counted for purposes of paying an award); See also Order Determining Whistleblower Award Claim, Release No. 34-88015 (January 22, 2020) (same).
[3] The [Redacted] action constitutes a “related action” to the Covered Action within the meaning of Section 21F(a)(5) of the Exchange Act, 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as a [Redacted] action that was brought by [Redacted] and is based on the same original information that the whistleblower voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.
[4] See Exchange Act Section 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).

SEC

91207

02/25/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $800,000, which represents *** percent (*** %) of the monetary sanctions collected or to be collected in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Exchange Act Rule 21F-9 sets forth certain procedural requirements that claimants must comply with including, among other things, filing a tip on a Form TCR within 30 days of supplying the information to the Commission, in order to be eligible for a whistleblower award. Exchange Act Rule 21F-9(e) provides for a waiver of this procedural requirement in certain circumstances where: (1) a claimant can demonstrate to the satisfaction of the Commission that he or she complied with the Form TCR requirements within 30 days of first obtaining actual or constructive notice about these requirements (or 30 days from the date a claimant retains counsel to represent him or her in connection with the submission of original information to the Commission, whichever occurs first); and (2) the Commission can readily develop an administrative record that unambiguously demonstrates that claimant would otherwise qualify for an award. Here, although Claimant did not file a Form TCR within 30 days of first contacting the Commission, Claimant satisfies Exchange Act Rule 21F-9(e) and is entitled to a waiver of this procedural requirement because the record reflects that Claimant submitted a Form TCR within 30 days of learning of the TCR filing requirement and Claimant otherwise unambiguously qualifies for an award.

[Redacted].

Claimant participated in an interview with Commission staff and provided documents that provided important evidence of false and misleading statements made to investors. Claimant’s information helped the agency return millions of dollars to harmed investors.

[Redacted].

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

SEC

91206

02/25/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $900,000, which is equal to percent (%) of the amounts collected, or to be collected, in both the above-referenced Covered Action (“Covered Action”), and in the related [Redacted] (“Related Actions”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determinations.

The recommendations of the CRS are adopted. The record demonstrates that Claimant voluntarily provided the same original information to the Commission and to [Redacted] and that this information led to the successful enforcement of both the Covered Action and the Related Actions.[fn1] Further, under newly adopted Rule 21F-9(e), a claimant must file a TCR within 30 days of providing the Commission with the original information to be relied upon as a basis for claiming an award. However, the Commission shall waive noncompliance with Rules 21F-9(a) and (b)[fn2] if the claimant demonstrates to the satisfaction of the Commission that he/she complied with the requirements of Rules 21F-9(a) and (b) within 30 days of first obtaining actual or constructive notice about those requirements or 30 days from the date he/she retains counsel to represent him/her in connection with his/her submission of original information, whichever comes first. Here, Claimant satisfies Rule 21F-9(e) because Claimant submitted a Form TCR within days of learning of the TCR filing requirement.

[Redacted].

Claimant provided significant information and documents during the course of an ongoing investigation that helped expedite the investigation and contributed to several of the charges in the Covered Action and provided substantial, ongoing assistance to the Enforcement staff by communicating with them on multiple occasions and providing a critical declaration. Because of Claimant’s information and cooperation, the Commission was able to shut down an ongoing [Redacted] scheme preying on retail investors and obtain emergency relief in the action.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent ( ***%) of the monetary sanctions collected, or to be collected, in both the Covered Action and the Related Actions.
By the Commission.

SEC

91183

02/23/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive whistleblower awards in the amount of more than $9.2 million, equal to *** percent (*** %) of the monetary sanctions collected in the above-referenced related actions (“Related Actions”). Claimant previously received a whistleblower award [Redacted] in connection with Covered Action [Redacted].[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determinations for the Related Actions.

The recommendation of the CRS for the Related Actions is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission, that the Commission provided the information to the United States Department of Justice (“DOJ”), and that the information led to the successful enforcement of the Related Actions.[fn2] One of the Related Actions for which Claimant is receiving an award is a [Redacted] Agreement (“***PA”) between DOJ and a company. The recent amendments to the Whistleblower Rules, which became effective December 7, 2020, deem a DOJ PA entered into after July 21, 2010 to be an administrative action that may be a “related action” that is eligible for a whistleblower award, and Claimant satisfies the requirements for such an award.[fn3]

Accordingly, it is hereby ORDERED that Claimant shall receive an award of more than $9.2 million, or *** percent (*** %) of the monetary sanctions collected or to be collected in the Related Actions.
By the Commission.

[1] Rule 21F-11(a) of the Securities Exchange Act of 1934 (“Exchange Act”) provides that, “If you are eligible to receive an award following a Commission action that results in monetary sanctions totaling more than $ 1,000,000, you also may be eligible to receive an award based on the monetary sanctions that are collected from a related action.” 17 C.F.R. § 240.21F-11(a). If, as here, “a final order imposing monetary sanctions in a related action has not been entered at the time you submit your claim for an award in connection with a Commission action, you must submit your claim on Form WB-APP [ ] within ninety (90) days of the issuance of a final order imposing sanctions in the related action.” 17 C.F.R. § 240.21F-11(b)(2).
[2] See Exchange Act Section 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).
[3] See Rule 21F-4(d)(3)(i); 17 C.F.R. § 240.21F-4(d)(3)(i); Adopting Release for Whistleblower Rule Amendments, Rel. No. 34-89963 (Sept. 23, 2020) at 11-20.
[4] In assessing the appropriate award amount, Exchange Act 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.

SEC

02/22/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant 1”) and [Redacted] and [Redacted] for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows: Claimants 1, [Redacted] did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 1 failed to submit the claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice for the Covered Action, as required under Rule 21F-10(b) of the Exchange Act.[fn4]

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimant 1. The information submitted by [Redacted] was submitted almost two years into the staff’s investigation and was either duplicative of information that the staff already knew or was not relevant to the charges brought by the Commission in the Covered Action.

[3] To the staff’s knowledge, Claimant 1 did not submit information on Form TCR or online, through the Commission’s website.

[4] Claimant 1’s Form WB-APP was signed and dated [Redacted], after the [Redacted] deadline to file an application for award pursuant to the Notice of Covered Action.

SEC

91164

02/19/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of almost $700,000, which is equal to *** percent (%) of the amounts collected or to be collected in the above-referenced Covered Action (“Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

[Redacted]

Claimant alerted Commission staff to a fraudulent reporting scheme in the Covered Action, which prompted the opening of the investigation. Claimant provided additional critical documents and information to Commission staff and helped to identify key documents and witnesses and helped conserve Commission time and resources. Finally, Claimant internally raised concerns about the perceived misconduct in an effort to remedy the violations.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of almost $700,000, which is equal to *** percent (***%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

SEC

91163

02/19/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending [Redacted] (“Claimant”) receive a whistleblower award of approximately $2.2 million, which represents [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

[Redacted].

The information in Claimant’s submission was of such high quality that staff was able to draft document requests based on Claimant’s information without speaking with Claimant.

In addition, Claimant took personal and professional risks by raising concerns internally in an effort to remedy the misconduct, and Claimant’s information helped cause the return of millions of dollars to harmed clients. [Redacted].

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] The CRS also preliminarily recommended denying the award applications of two other claimants, who did not seek reconsideration. Accordingly, the Preliminary Determinations have become the Final Order of the Commission with respect to Claimants 2 and 3 pursuant to Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[3] [Redacted].
[4] [Redacted].

SEC

91165

02/19/2021

Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules thereunder, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that the claim submitted by [Redacted] (“Claimant”) on [Redacted], in connection with the above-referenced whistleblower award application, be denied. Claimant filed a timely written response contesting the denial. For the reasons discussed below, we deny Claimant’s award claim.

I. Background.

A. The Tips and Award Application.

[Redacted] submitted two tips to the Commission. The first tip was submitted on *** [Redacted], and assigned the number “[Redacted].” The second tip was submitted on [Redacted], and assigned the number “[Redacted].”

Claimant submitted applications for an award from the Commission three times, starting in ***. First, Claimant initially applied for an award on [Redacted], identifying the purported covered judicial or administrative action brought by the Commission (“Covered Action”) as a settlement [Redacted]. Claimant supplemented that application on [Redacted], providing additional information about [Redacted]. On [Redacted], Claimant submitted an amended whistleblower application, which identified the purported Covered Action as a *** purportedly brought by the [Redacted]. In this second application, Claimant referred to a subpoena issued to Claimant as part of an “investigation by [Redacted] to determine whether there has been a violation of one or more of the provisions of [Redacted] concerning the [Redacted].” On [Redacted], Claimant submitted a revised application for a whistleblower award that is the basis for the claim now before the Commission. This time, Claimant identified the purported Covered Action as a [Redacted] settlement agreement entered into by [Redacted]. In this third application, Claimant included [Redacted] to which [Redacted], application referred.

The Office of the Whistleblower (“OWB”) informed Claimant each time that Claimant had not submitted a properly filed whistleblower award application because the matters Claimant had identified were not Covered Actions as defined by Section 21F(a)(1) of the Exchange Act. Section D of Form WB-APP requires whistleblowers to identify 1) the “Date of Notice of Covered Action to which claim relates,” 2) the “Notice Number,” 3) “Case Name,” and 4) “Case Number.” The Claimant provided a “Date of Notice of Covered Action” of [Redacted] and the “Case Name” [Redacted] Settlement,” while leaving the “Notice Number” and “Case Number” sections blank. The Claimant listed similar information in Section E of the Form WB-APP for a Related Action award. OWB staff searched the Commission’s records of posted Covered Actions using both the case name and Covered Action date provided by Claimant. OWB staff were unable to identify any Covered Action brought by the Commission related to [Redacted].

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination in connection with [Redacted] Claimant’s award application submitted on [Redacted], recommending that the Commission deny Claimant’s claim. The CRS preliminarily found that Claimant was ineligible for an award under Section 21F(b)(1) of the Exchange Act and Rule 21F-10 thereunder because Claimant’s award application failed to identify any Covered Action brought by the Commission as the basis of an award. The CRS further preliminarily found that Claimant was ineligible for an award for a Related Action under Section 21F(b)(1) and Rule 21F-11 because Claimant had not demonstrated eligibility for an award for a Commission Covered Action. Such eligibility is a necessary precondition for eligibility for a Related Action award. Claimant subsequently filed a request for reconsideration of the Preliminary Determination on [Redacted].

II. Analysis.

Claimant argues that Claimant is eligible for an award because Claimant provided detailed, original information to the Commission regarding ***, which the Commission shared with the [Redacted] and which led to settlements between [Redacted] on the one hand and *** on the other. Claimant does not argue that Claimant provided original information that led to the successful enforcement of an action brought by the Commission.

But to qualify for any award, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action brought by the Commission. To explain, Section 21F(b)(1) of the Exchange Act states that Commission may pay a whistleblower an award in two types of actions: a “covered judicial or administrative action, or related action,” 15 U.S.C. § 78u-6(b)(1). The Commission may only pay on a related action if the whistleblower is eligible for an award on a predicate “covered judicial or administrative action.”

This predicate requirement for an award on a related action is made clear in the definitions for a covered action and related action. “The term ‘covered judicial or administrative action’ means any judicial or administrative action brought by the Commission under the securities laws that results in monetary sanctions exceeding $1,000,000.” Exchange Act Section 2IF(a)(1); 15 U.S.C. § 78u-6(a)(1) (emphasis added). Whenever the Commission brings an action that qualifies as a Covered Action under this definition, OWB publishes on the Commission’s website a “Notice of Covered Action” inviting claimants to submit whistleblower award applications on Form WB-APP within 90 days. 17 C.F.R. § 240.21F-10(a).[fn1]

In turn, Section 21F(a)(5) explicitly defines “Related Action” in relation to a Covered Action:

The term “related action”, when used with respect to any judicial or administrative action brought by the Commission under the securities laws, means any judicial or administrative action brought by an entity described in subclauses (I) through (IV) of subsection (h)(2)(D)(i) that is based upon the original information provided by a whistleblower pursuant to subsection (a) that led to the successful enforcement of the Commission action.

15 U.S.C. § 78u-6(a)(5). A whistleblower may receive an award based on a Related Action only when there is a judicial or administrative action by the Commission that results in monetary sanctions of more than $1 million — a Covered Action — and the whistleblower is eligible for an award for the Covered Action.[fn2]

Claimant identified in Claimant’s whistleblower applications, Request for, Reconsideration, and the [Redacted] two general matters that Claimant claims were Covered Actions or Related Actions entitling Claimant to an award: a settlement by [Redacted]; and a settlement by [Redacted] Settlement ***.

The problem for Claimant is that Claimant has not identified a Covered Action brought by the Commission. Claimant has only identified settlements by other federal agencies [Redacted]. Moreover, the staff declaration from OWB makes clear that OWB has not failed to post a Notice of Covered Action for a Commission action involving ***. In fact, searches of Commission records failed to identify any action brought by the Commission that corresponds to the same nucleus of facts as described in the information provided by Claimant.

Claimant advances in Claimant’s Request for Reconsideration and [Redacted], which Claimant incorporated by reference into Claimant’s Request for Reconsideration (p. 4), four interrelated theories as to why Claimant is nevertheless entitled to a whistleblower award from the Commission.[fn3]

First, Claimant argues that the [Redacted] Settlement or settlement in [Redacted] constitute Covered Actions or Related Actions that entitle Claimant to an award.[fn4] However, the plain language of Section 21F disproves Claimant’s argument.[fn5] Claimant ignores the definitions of and critical distinction between Covered Actions and Related Actions. A Covered Action is a judicial or administrative action brought by the Commission (15 U.S.C. § 78u-6(a)(1)), and Claimant has not identified one and cannot identify one. A Related Action cannot be a basis for an award absent a Covered Action. The definition of a Related Action clearly and specifically presumes the existence of a Covered Action; moreover, the whistleblower’s original information must have led to the successful enforcement of that action.[fn6] The relevant definitions in Section 21F and the Commission’s rules do not permit the Commission to make a whistleblower award unless there is a judicial or administrative action brought by the Commission regardless of the success of actions brought by other agencies.

Second, Claimant also makes a more general appeal for an award, arguing that Claimant provided “troves” of original information precisely as Congress had intended, and denying Claimant an award would violate the Congressional intent and spirit of the whistleblower program.[fn7] However, Section 21F, as explained above, clearly requires a judicial or administrative action brought by the Commission for a claimant to be eligible for an award. Notwithstanding Claimant’s appeal that Claimant is the sort of person Congress intended to incentivize, the Commission is bound by the clear language of the statute.[fn8]

Third, Claimant asserts that there is no requirement that the Commission commence a formal judicial or administrative proceeding for there to be a Covered Action for which Claimant is entitled to an award. But the definition of a Covered Action in Section 21F(a)(1) squarely contradicts Claimant’s argument. Moreover, to the extent there was any ambiguity, Exchange Act Rule 21F-4 clearly explains that “[a]n action generally means a single captioned judicial or administrative proceeding brought by the Commission.” 17 C.F.R. § 240.21F-4(d) (emphasis added). Claimant has not identified an error in the Commission’s interpretation of Section 21F. Rather, Claimant asserts that the Commission’s 2018 proposed rulemaking demonstrates that a rigid interpretation of “action” as requiring a proceeding is contrary to the language and intent of Congress in the whistleblower provisions.[fn9] However, the Commission’s comments in that rulemaking release do not support Claimant’s argument. The proposed rule amendment at issue would have clarified that an “administrative action” could include a deferred-prosecution agreement (“DPA”) or non-prosecution agreement (“NPA”) entered into by DOJ or a state attorney general in a criminal case, which are often entered outside the context of a judicial proceeding, or a settlement agreement entered into by the Commission outside of the context of a judicial or administrative proceeding to address violations of the securities laws. Id. at 34705.[fn10] Neither this limited proposed amendment and its explanation, nor the final versions as adopted, alter the clause “brought by the Commission” in the definition of a Covered Action. Moreover, Claimant’s proposed definition of an action would ignore the clause “judicial or administrative” in the definition. While acknowledging that an “action” may be broader than formal adjudicatory proceedings ( id. at 34706), the revision as is even apparently recognized by Claimant [Redacted])—is limited to specific types of agreements that should be considered successful enforcement of administrative actions under Section 21F. The revision does not more broadly expand the meaning of an administrative action to include within the definition of Covered Actions activities like referrals, evidence-sharing, and coordination with other federal law enforcement agencies by the Commission, as suggested by Claimant.[fn11]

It should also be emphasized that ultimately, regardless of how broadly the term “action” may be applied, it cannot be interpreted so as to eliminate the statutory requirement that a Covered Action be brought by the Commission.

Fourth, Claimant asserts that the Commission cannot avoid Section 21F’s mandatory award provisions by the Commission referring Claimant’s whistleblower tips and evidence to other agencies, which then use those tips and evidence to obtain monetary sanctions. Claimant argues that the Commission and those agencies with whom it shares information cannot elect a form of enforcement in which the Commission does not bring an action, thereby precluding an award to Claimant.[fn12] As recognized by Claimant, the Commission shares information consistent with its confidentiality obligations and its authority to refer possible violations of law to other law enforcement authorities.[fn13] As a preliminary matter, Claimant also acknowledges the separate, pre-existing, ongoing investigations by the [Redacted].[fn14]

To the extent Claimant argues that the Commission should have brought an action under its own authority based on the information Claimant provided, we would note that a decision not to bring an enforcement action is squarely in the Commission’s discretion and is not reviewable by a court.[fn15]

Similarly, the Commission’s decision to share information with other agencies is authorized by the statute and in the Commission’s discretion. Section 21F authorizes the Commission, in its discretion, to make information submitted by a whistleblower available to the *** and agencies like the [Redacted]. 15 U.S.C. § 78u-6(h)(2)(D).[fn16] And Exchange Act Rule 21F-7 specifically contemplates conveying information to the DOJ and other agencies.[fn17] Claimants providing information to the Commission cannot dictate how the Commission allocates its resources, such as by bringing an action, particularly when other federal agencies have already begun investigations of the subject matter and may have particular expertise regarding the subject.

Accordingly, we conclude that the Claimant has not shown that there is a Covered Action or Related Action for which Claimant is eligible for an award.

Claimant is also incorrect that the CRS had an inadequate evidentiary basis for its Preliminary Determination with respect to Claimant’s whistleblower award claim. Exchange Act Rule 21F-12 identifies the materials that form the basis of an award determination,[fn18] but does not entitle a claimant to obtain any materials other than those listed in Rule 21F-12(a).[fn19] And the rules permit an award claimant to request and to receive a copy of the materials that form the basis of the Preliminary Determination. 17 C.F.R. § 240.21F-10(e)(1)(i). Claimant made such a request and received a copy of these materials from OWB. But Claimant is not entitled to more general discovery of the Commission’s law enforcement files.[fn20]

Claimant argues, however, that the record on which the CRS rested its Preliminary Determination improperly excluded certain relevant documents.[fn21] Claimant asserts, in particular, that the Commission should consider “all documents and information concerning the Commission’s processing of and referral to other agencies, of Claimants TCR [Redacted].”[fn22] Claimant’s description of the materials Claimant seeks to have considered[fn23] and the documents attached to Claimant’s [Redacted][fn24] may demonstrate the scope and substance of Claimant’s cooperation, particularly Claimant’s assistance to [Redacted] attorneys and agents. And those materials may be relevant to the underlying investigations, referrals, and settlements by those other agencies. However, the additional materials are not relevant to the basis for the determination with respect to Claimant’s award application, which is that Claimant has not demonstrated eligibility for an award because Claimant has not identified an action brought by the Commission within the statutory definition of a Covered Action. The decision about whether there is a Covered Action for which Claimant may apply for an award is readily determined on the record that was before the CRS and does not need further factual development. Thus, we deny Claimant’s request for inclusion and consideration of additional information in the record.

III. CONCLUSION.

For the foregoing reasons, it is ORDERED that the whistleblower award claim from Claimant be, and hereby is, denied.

By the Commission.

[1] See also 17 C.F.R. § 240.21F-4(d) (“An action generally means a single captioned judicial or administrative proceeding brought by the Commission.”).

[2] See 15 U.S.C. § 78u-6(a)(5); 17 C.F.R. § 240.21F-11(a); Matter of the Claims for Award in Connection with [Redacted] Notice of Covered Action [Redacted], Release No. 34-87662 , 2019 WL 6609459, at *9 (Dec. 5, 2019) (related action awards may be made only if claimant first satisfies eligibility criteria for an award for the Commission covered action).

[3] Claimant also asserts that Claimant was improperly denied an award in the Preliminary Determination because the Commission had not posted a notice of Covered Action. Claimant argues that the Commission cannot deny Claimant an award by failing to post a notice of what should otherwise be recognized as a Covered Action because the act of posting a notice is neither necessary nor consistent with the statute. Request for Reconsideration at 8. However, the denial of an award to Claimant was not based on the act of not posting a Covered Action but based on the fact that no Covered Action was ever identified by Claimant — to the contrary, as mentioned above, after a search of Commission records, we found no action that corresponded to the same nucleus of facts as described in the information provided by Claimant.

[4] See Request for Reconsideration at 6 (“The [Redacted] is a ‘Covered Action’ or ‘Related Action.’”); Request for Reconsideration at 7 (“These efforts ultimately culminated in ‘successful enforcement’ of ‘judicial or administrative action brought by the Commission,’ within the meaning of the Dodd-Frank Wall Street Reform and Consumer Protection Act (‘Dodd-Frank’), under section 21F of the Securities Exchange Act of 1934, 15 U.S.C. § 778u-6, and the Commission’s regulations, 17 CFR § 240.21F-4(c), through the [Redacted] *** Settlement [Redacted] Settlement [Redacted]

[5] See In the Matter of Salvatore F. Sodano, Release No. 34-59141 , 2008 WL 5328801 (SEC Dec. 22, 2008) (“The Supreme Court has made clear that, in interpreting the applicability of any statute, we should look first to the language of the statute.”), citing Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 253-54 (1992).

[6] 15 U.S.C. § 78u-6(a)(5) (“The term ‘related action’, when used with respect to any judicial or administrative action brought by the Commission under the securities laws, means any judicial or administrative action brought by an entity . . . that is based upon the original information provided by a whistleblower pursuant to subsection (a) that led to the successful enforcement of the Commission action.”) (emphasis added); see also 17 C.F.R. § 240.21F-11(a) (“If you are eligible to receive an award following a Commission action that results in monetary sanctions totaling more than $ 1,000,000, you also may be eligible to receive an award based on the monetary sanctions that are collected from a related action (as defined in § 240.21F-3 of this chapter).”).

[7] See Request for Reconsideration at 7, [Redacted] Settlement [Redacted] Settlement***

[8] Salvatore F. Sodano, Release No. 34-59141 , 2008 WL 5328801, at * 1 n.6 (order reversing and remanding for additional proceedings) (“where statutory language is clear and unambiguous, even ‘contradictory indications in the statute’s legislative history will not be allowed to alter the plain meaning of the text.’”), quoting Ratzlaf v. U.S., 510 U.S. 135, 147-48 (1994).

[9] Request for Reconsideration, at 8-9, citing 83 Fed. Reg. 34702 (July 20, 2018).

[10] The final rule, which includes revisions making DPAs and NPAs entered into by the DOJ and similar settlement agreements entered into by the Commission “administrative action[s]”, was adopted on September 23, 2020. SEC Release 34-89963, 2020 WL 5763381 at *8-9. 85 Fed. Reg. 70898 (Nov. 5, 2020). The final rule did not extend to DPAs and NPAs entered into by state attorneys general in criminal cases. Id.

[11] See [Redacted].

[12] Request for Reconsideration at 12; [Redacted].

[13] See [Redacted].

[14] See Request for Reconsideration at 10 (“[T]he [Redacted] had already commenced investigations into securities law violations at [Redacted], and other securitized products. when Claimant came forward to the Commission and supplied original information that significantly contributed to the success of the enforcement action.”).

[15] See, e.g., Heckler v. Chaney, 470 U.S. 821, 828 (1985); Leighton v. SEC, 1995 WL 364084. at *1 (D.C. Cir. May 16, 1995) (“a Commission decision not to institute a proceeding under section 8(d) of the Securities Act, 15 U.S.C. § 77h(d), is discretionary and therefore unreviewable by the court”); SEC v. AmTrust Fin. Servs., Inc, 2020 WL 4390745, *4 (S.D.N.Y. July 31, 2020) (rejecting whistleblower’s motion to intervene in SEC action, noting that SEC has discretion as to whom and what to charge and that its “decision not to bring an enforcement action against a person or entity is ‘presumed immune from judicial review.’”).

[16] 15 U.S.C. § 78u-6(h)(2)(D) (“[A]ll information referred to in subparagraph (A) may, in the discretion of the Commission, when determined by the Commission to be necessary to accomplish the purposes of this chapter and to protect investors, be made available to” certain other agencies.).

[17] 17 C.F.R. § 240.21F-7(a)(2) (“When the Commission determines that it is necessary to accomplish the purposes of the Exchange Act (15 U.S.C. 78a) and to protect investors it may provide your information to the Department of Justice, [or] an appropriate regulatory authority . . . .”).

[18] See 17 C.F.R. § 240.21F-12(a), In the Matter of the Claims for Award in Connection with [Redacted] Notice of Covered Action [Redacted], Release No. 87662 , 2019 WL 6609459 (Dec. 5, 2019).

[19] 17 C.F.R. § 240.21F-12(b) (“These rules do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section. . . .”).

[20] See In the Matter of the Claims for Ai card in Connection with [Redacted] Notice of Covered Action [Redacted], Release No. 87662 , 2019 WL 6609459 (Dec. 5, 2019). “[T]he whistleblower rules do not authorize a claimant to go on a fishing expedition to depose staff and to obtain copies of the SEC’s entire investigative file.” In the Matter of the Claim for an Award in Connection with [Redacted] Notice of Covered Action [Redacted], Release No. 88973 , 2020 WL 2847054 (May 29, 2020).

[21] Request for Reconsideration at 5-6.

[22] Id.; see also [Redacted] Claimant specifically argues that the Commission should consider: all communications between the Commission, [Redacted] and any other government agencies regarding ***; all interagency communications regarding ***; all communications with Claimant; all documents and information supplied by Claimant to any agency; all documents related to the [Redacted] settlement; and all documents related to the settlement [Redacted]. Request for Reconsideration at 5; [Redacted].

[23] See Request for Reconsideration at 7-8; [Redacted].

[24] See, e.g., [Redacted].

SEC

02/12/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the ”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[2] The Covered Action was not opened based on information from Claimant. Further, investigative staff responsible for the Covered Action never received any information from Claimant or had any communications with Claimant.

SEC

02/12/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from (“Claimant”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimant is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9(a), which Claimant did not do.[fn3]

By: Claims Review Staff.

[2] Claimant’s information provided to investigative staff did not cause the opening of the investigation. Rather, the investigation was opened, and pursued, primarily as a result of a review of [Redacted]. Further, Claimant’s information did not significantly contribute to the success of the Covered Action because it primarily consisted of information already known to the staff or publicly-available, not relevant to the investigation, or in general was otherwise vague and unsubstantiated. In addition, while not a basis for denial, the record reflects that certain information provided by Claimant primarily consisted of publicly-available information without any additional evaluation, and as such, would likely not qualify as “independent knowledge” or “independent analysis,” a constituent element of “original information.”

[3] Claimant did not submit information on Form TCR or online, through the Commission’s website, concerning the investigation that led to the Covered Action. In addition, Claimant did not sign the required whistleblower declaration as required under Exchange Act Rule 21F-9(b) with respect to the investigation that led to the Covered Action. Although Claimant attempts to rely upon submissions that Claimant made to Commission staff in the form of emails, none of these emails were accompanied by a completed Form TCR.

SEC

02/12/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the ”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-18.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is marked below as follows:

Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly cont1ibute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant failed to submit the claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice for the Covered Action, as required under Rule 21F-10(b) of the Exchange Act.[fn3]

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action opened the investigation in [Redacted] in response to information provided by [Redacted] (the “Company”). Claimant did not provide information to the SEC until [Redacted] and Claimant did not provide any further information afterwards. The information provided in the Claimant’s [Redacted] submission did not contribute to the success of the Covered Action because it was already known by the Commission.

[3] Claimant’s Form WB-APP was signed and dated [Redacted] approximately one month after the [Redacted] deadline to file an application for award pursuant to the Notice of Covered Action.

[4] Claimant submitted information to the Commission in [Redacted]. The Commission had already received the same information from the Company in [Redacted]. Because Claimant did not provide the information to the Commission within 120 days of [Redacted] reporting it to the Company in [Redacted], Claimant does not fall within the safe harbor of Rule 21F-4(b)(7). Accordingly, because the Commission already knew of Claimant’s information from other sources when [Redacted] provided it in [Redacted] and Claimant does not fall within the safe harbor, it cannot be considered “original information” pursuant to the Exchange Act.

SEC

01/22/2021

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimant 1 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 2’s whistleblower submission(s), upon which Claimant bases the claim for an award, was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1) because Claimant made the submission(s) after a request, inquiry, or demand that relates to same subject matter as the submission(s) was directed to Claimant or anyone representing Claimant (such as an attorney) by (i) the Commission, (ii) another regulatory or law enforcement agency or self-regulatory organization (such as FINRA), or (iii) Congress or any other authority of the federal government.

By: Claims Review Staff.

[2] The information provided to the staff by Claimant 1 did not cause the staff to open the investigation of [Redacted] or inquire into different conduct as part of the investigation and the action file was not based whole or in part on conduct that was the subject of the information provided by Claimant 1. Enforcement staff opened the investigation based on [Redacted] Claimant 1 also did not significantly contribute to the success of the Covered Action, as Claimant 1’s information was submitted approximately three years after the investigation was opened and shortly before the Commission filed the action. Claimant 1’s information was duplicative of information staff had already learned or obtained during the course of the investigation.

[3] Claimant 1 did not submit information on Form TCR or online, through the Commission’s website. In addition, Claimant 1 did not sign the required whistleblower declaration as required under Exchange Act Rule 21F-9(b).

[4] [Redacted], the Commission sent an [Redacted] questionnaire to [Redacted] Claimant 2. Claimant 2’s submissions, which related to the same subject matter as the [Redacted] questionnaire requested from Claimant 2, were not made until [Redacted] after the Commission sought information from Claimant 2.

SEC

90922

01/14/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations in connection with the above-referenced Covered Action (the “Covered Action”) recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of nearly $600,000, equal to [Redacted] percent (***) of the monetary sanctions collected, and that the whistleblower award application submitted by [Redacted] (“Claimant 2”) be denied. Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determination and Claimant 2 filed a timely response contesting the Preliminary Determination. For the reasons discussed below, the CRS’s recommendation is adopted with respect to both Claimant 1 and Claimant 2. I. Background A. The Covered Action. On [Redacted], the Commission instituted administrative and cease-and-desist proceedings alleging that [Redacted] or “the Company”) had made [Redacted]. [Redacted]. The Respondents were ordered by the Commission to pay civil penalties totaling [Redacted] B. The Preliminary Determinations. The CRS issued Preliminary Determinations[fn1] recommending that Claimant 1 receive a whistleblower award in the amount of [Redacted] percent (***) of the monetary sanctions collected and that Claimant 2’s claim be denied. The Preliminary Determination explained that Claimant 2 is ineligible for an award because Claimant 2 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information Claimant 2 provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. Enforcement staff responsible for the Covered Action confirmed that they did not receive any information from Claimant 2, nor did they have any communications with Claimant 2, before or during the investigation. C. Claimants’ Responses to the Preliminary Determinations. Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determination. After receiving a copy of the record, Claimant 2 submitted a timely written response contesting the Preliminary Determination.[fn2] Specifically, Claimant 2 argues in response to the Preliminary Determination that Enforcement staff responsible for the Covered Action do not have to directly receive information from a claimant for that claimant’s information to have played a role in that particular enforcement action. Claimant 2 argues that Claimant 2’s tip was in the “pool of operative facts” that the Commission would use to commence future investigations and help bring successful enforcement actions addressing the particular forms of “novel conduct” detailed in Claimant 2’s tip. III. Analysis. A. Claimant 1. The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn3] [Redacted][fn4,5]. [Redacted] Claimant 1 [Redacted] provided new, detailed, and highly valuable information and substantial assistance during the course of an open investigation that significantly contributed to the success of the Covered Action. Claimant 1 met with staff multiple times, provided critical investigative leads, and there is a close nexus between Claimant 1’s information and certain of the Commission’s charges in the Covered Action. [Redacted] B. Claimant 2. To qualify for an award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[6] As relevant here, information will be deemed to have led to a successful enforcement action if it was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation . . . or to inquire concerning different conduct as part of a current . . . investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information.”[fn7] Alternatively, information will be deemed to have led to a successful enforcement action where the information was “about conduct that was already under examination or investigation by the Commission” and the “submission significantly contributed to the success of the action.”[fn8] In determining whether the information “significantly contributed” to the success of the action, the Commission will consider whether the information was “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn9] Claimant 2’s information did not cause the Covered Action investigation to be opened under Exchange Act Rule 21F-4(c)(1). Rather, the record reflects that the Covered Action investigation was opened in [Redacted] based on the Company’s [Redacted]. Claimant 2’s information also did not significantly contribute to the success of the Covered Action under Exchange Act Rule 21F-4(c)(2). Claimant 2 bases the award claim on a tip Claimant 2 submitted to the Commission in [Redacted] alleging that [Redacted] (“Unrelated Company”) and its executives violated the securities laws by [Redacted] concerning the Unrelated Company’s operations. Claimant 2’s tip was assigned to Enforcement staff in the [Redacted] (“Regional Office Staff”) in connection with their investigation of the Unrelated Company (“Unrelated Investigation”). The Regional Office Staff was not able to substantiate the allegations, and closed the Unrelated Investigation without recommending an enforcement action. A member of the Regional Office Staff affirmed in a declaration, which we credit, that they did not provide Claimant 2’s information to the Enforcement staff responsible for the Covered Action (who were located in a different Commission office) or have any communications with them concerning Claimant 2’s information. There is no nexus between Claimant 2’s information and the Covered Action. Claimant 2’s tip contains no allegations about the Respondents charged in the Covered Action, and the record is clear that the Enforcement staff responsible for the Covered Action did not receive Claimant 2’s information directly or indirectly through other Enforcement staff. That Claimant 2 made allegations about [Redacted] with respect to the Unrelated Company does not mean that Claimant 2 is then eligible for every future enforcement action involving similar securities law violations.[fn10] Accordingly, Claimant 2’s information did not lead to the success of the Covered Action. IV. Conclusion. Accordingly, it is ORDERED that Claimant 1 shall receive an award of [Redacted] percent (***) of the monetary sanctions collected or to be collected in the Covered Action and that Claimant 2’s whistleblower award application be, and hereby is, denied. By the Commission.

[1] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[2] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[3] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F3(a).

[4] [Redacted]

[5] [Redacted]

[6] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[7] Exchange Act Rule 21F-4(c)(1).

[8] Exchange Act Rule 21F-4(c)(2).

[9] See Order Determining Whistleblower Award, Whistleblower File No. 2019-4, at 9, 2019 SEC LEXIS 615 at *16 (Mar. 26, 2019); see also Securities Whistleblower Incentives & Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011) (in determining whether information significantly contributed to an enforcement action, the Commission will consider whether the information allowed the agency to bring the action in significantly less time or with significantly fewer resources, additional successful claims, or successful claims against additional individuals or entities).

[10] Claimant 2 also appears to argue that Claimant 2 is entitled to an award under a “common nucleus of operative facts” theory. Under Exchange Act Rule 21F-4(d), for purposes of making an award under Rule 21F-10 the Commission may treat as a Commission action two or more administrative or judicial proceedings brought by the Commission if these proceedings arise out of the same nucleus of operative facts. However, this rule is not applicable here as Claimant 2 is not eligible for an award in connection with the Unrelated Investigation, which did not result in an enforcement action. Furthermore, the record reflects that the Unrelated Investigation and Covered Action investigation were conducted separately and involve unrelated parties, and as such, do not arise out of the same nucleus of operative facts.

SEC

90867

01/07/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $100,000, which represents *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”).[fn1] 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 led to the successful enforcement of the Covered Action.[fn2] Claimant satisfied the original information requirement by providing independent analysis based on publicly available information about [Redacted] (the “Company”).[fn3] Claimant used information from various publicly available documents to calculate an estimate of an important metric for the Company. Claimant then compared the calculation with information Claimant found in Claimant’s own research and showed that the Company’s disclosures regarding that metric were implausible.[fn4] Claimant also undertook additional activities, including [Redacted], which added to Claimant’s evaluation that the Company was engaging in misconduct. Claimant’s analysis revealed important new information to the Commission that was not apparent from the face of the publicly available materials.

The presumption applies here because a maximum award would not exceed $5 million, no negative factors under Rule 21F-6(b) are present with respect to the award application, and the award claim does not trigger Rule 21F-16. However, the Commission finds that the presumption has been overcome because of the limited assistance that Claimant provided. Although Claimant’s information caused the investigation that gave rise to the Covered Action to be opened, the charges did not have a strong nexus with Claimant’s tip, and were largely based on evidence developed through the efforts of Enforcement staff in reviewing certain documents and not through any assistance Claimant provided. The Covered Action also involved charges against other parties for which Claimant provided no assistance. The Commission therefore finds that a departure from a maximum award is appropriate here.

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.

[1] The Commission finds that the above-referenced enforcement actions arose out of the same nucleus of operative facts under Exchange Act Rule 21F-4(d), and should be treated together as a single Covered Action for the purpose of making this whistleblower award.
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[3] 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.
[4] Id. (“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”).
[5] Rule 21F-16 concerns whistleblowers who engage in culpable conduct. See 17 C.F.R. § 240.21F-16.
[6] Rule 21F-6(c)(1)(iv); 17 C.F.R. § 240.21F-6(c)(1)(iv).

SEC

90866

01/07/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of nearly $600,000, equal to *** percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

[Redacted].

Claimant provided information prompting the opening of the investigation, met in-person with the Enforcement staff and provided significant documents and information and identified key witnesses, which helped conserve Commission time and resources. Claimant also repeatedly reported Claimant’s concerns internally in an effort to correct the problems at the company. *** [Redacted].

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] [Redacted].
[3] [Redacted].

SEC

90864

01/07/2021

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that the Commission award [Redacted] (“Claimant 1”) over $170,000, equal to [Redacted] percent (*** %) of monetary sanctions collected in Notice of Covered Action [Redacted] relating to [Redacted] (“First Covered Action”); award [Redacted] (“Claimant 2”) over $170,000, equal to [Redacted] percent (*** %) in the First Covered Action; and to deny an award to [Redacted] (“Claimant 3”) in the First Covered Action. Claimants 1, 2, and 3 provided written notice that they would not contest the Preliminary Determinations issued in the First Covered Action.

The CRS also issued Preliminary Determinations recommending that the Commission award Claimant 1 nearly $70,000, equal to [Redacted] percent ( *** %) of monetary sanctions currently collected in Notice of Covered Action [Redacted] relating to [Redacted] (“Second Covered Action”); award Claimant 2 nearly $70,000, equal to [Redacted] percent (*** %) of monetary sanctions currently collected in the Second Covered Action; and to award Claimant 3 almost $10,000, equal *** to percent ( * %) of monetary sanctions currently collected in the Second Covered Action.[fn1] Claimants 1 and 3 provided written notice that they would not contest the Preliminary Determinations issued in the Second Covered Action. However, Claimant 2 provided a timely request for reconsideration, arguing that Claimant 2 should receive a higher award allocation in the Second Covered Action as compared to Claimant 1. For the reasons discussed below, the recommendations of the CRS are adopted.

I. First Covered Action.

In the First Covered Action, the Commission alleged that from [Redacted] through [Redacted] (collectively, “Respondents”) [Redacted] by entities related to [Redacted] (“the Company”). Respondents, who were not [Redacted].

The record demonstrates that Claimant 1 and Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the First Covered Action.[fn2] Specifically, Claimant 1, an outsider, expeditiously submitted a detailed tip alerting staff in the Division of Enforcement (“Enforcement”) that the Company and its *** representatives [Redacted]. Claimant 1 also identified the Respondents as being involved in the [Redacted]. Claimant 1’s information prompted the opening of the investigation. Claimant 2, a former employee of the Company, submitted information and supporting documentation that significantly contributed[fn3] to the success of the First Covered Action, including additional and specific information regarding Respondents’ [Redacted].

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find that the proposed award amounts in the First Covered Action are appropriate.[fn4] In reaching that determination, we positively assessed the following facts: (1) Claimant 1 quickly provided significant information alerting Enforcement staff of the [Redacted] violations and prompting the opening of the investigation; (2) while Claimant 1 identified the [Redacted] violations to Enforcement staff, including the identification of certain relevant individuals, Claimant 2 provided additional information and supporting documentation that bolstered the alleged [Redacted] violations; (3) both Claimant 1 and Claimant 2 provided additional assistance to the Enforcement staff, including by meeting with them in-person; and (4) the amounts collected are relatively low.

II. Second Covered Action.

In the Second Covered Action, the Commission filed a civil injunctive action against the Company and others (collectively, “Defendants”) alleging that from [Redacted] the Defendants engaged in [Redacted]. The complaint alleged, in part, that the Defendants [Redacted]. But in reality, the Defendants knew that [Redacted].

The record demonstrates that Claimant 1, Claimant 2, and Claimant 3 voluntarily provided original information to the Commission that led to the successful enforcement of the Second Covered Action. As noted above, Claimant 1 submitted a detailed tip alleging that the Company was [Redacted] prompting the opening of the investigation. Claimant 2 provided new, important information concerning the Company’s [Redacted] and also provided information and supporting documentation concerning the Company’s alleged [Redacted] which significantly contributed to the success of the Second Covered Action. Two years after the opening of the investigation, Claimant 3, also a former Company employee, submitted a tip alleging violations by the Company. While most of the information Claimant 3 submitted was duplicative of information Enforcement staff had already learned or obtained during the course of the investigation, Claimant 3 did provide new information, namely the identification of an important witness, who in turn provided helpful supporting evidence, which significantly contributed to the success of the Second Covered Action.

The CRS recommended that Claimant 1 and Claimant 2 should receive an equal award amount in the Second Covered Action — [Redacted] percent (*** %) each, and that Claimant 3, whose new information was much more limited than that provided by Claimant 1 and Claimant 2, should receive an award of *** percent (* %). Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find that the proposed award amounts in the Second Covered Action are appropriate.

While Claimant 2 submitted a timely request for reconsideration arguing that Claimant 2 should receive a higher award allocation as compared to Claimant 1, we find the CRS’s recommended award allocation to be appropriate. Claimant 2 argues that Claimant 2 provided a greater degree of assistance to the Enforcement staff relative to the assistance provided by Claimant 1. While Claimant 2 may have provided more assistance, including meeting with staff and providing numerous documents, it was Claimant 1 who expeditiously submitted the tip alerting Enforcement staff to the ongoing securities violations. Additionally, Claimant 2 submitted a tip in [Redacted] and began working with Enforcement staff on the matter in ***, approximately eight to nine months after the Enforcement staff received information from Claimant 1.[fn5] Not only did Claimant 1 submit the tip that caused the opening of the investigation, but Claimant 1 also provided assistance to Enforcement staff by meeting with them in-person once and providing certain, albeit more limited, supporting documentation. Both Claimant 1 and Claimant 2 provided new information that formed the basis for certain of the charges in the Covered Action. We believe that Claimant 1’s information, which was submitted earlier in time and caused the opening of the investigation, was more significant vis-à-vis Claimant 2’s information. As such, we find that the level of contribution provided by Claimant 1 and Claimant 2 to the success of the Second Covered Action was similar and that they should receive an equal award allocation.

Finally, we find the CRS’s recommendation that Claimant 3 receive a significantly lower award amount than Claimant 1 and Claimant 2 also is appropriate in light of the limited nature of the information provided by Claimant 3.

III. Conclusion.

Accordingly, it is hereby ORDERED that: (1) Claimant 1 and Claimant 2 shall each receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in the First Covered Action; (2) Claimant 1 and Claimant 2 shall each receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in the Second Covered Action; and (3) Claimant 3 shall receive an award of *** percent (* %) of the monetary sanctions collected, or to be collected, in the Second Covered Action.
By the Commission.

[1] Because the First Covered Action and Second Covered Action arose out of the same investigation, and involve overlapping factual and legal issues, and the same claimants, we address the award claims in a single Final Order.
[2] See Exchange Act Section 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). Because Claimant 3 did not contest the preliminary denial of Claimant 3’s award claim in the First Covered Action, that preliminary denial is deemed to be the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), and as such, is not before us.
[3] In determining whether information significantly contributed to an enforcement action, the Commission considers whether the information allowed the agency to bring: “(1) [the] successful action in significantly less time or with significantly fewer resources; (2) additional successful claims; or (3) successful claims against additional individuals or entities.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011). In other words, “[t]he individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.” Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 , 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).
[4] In assessing the appropriate award amount, Exchange Act 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.
[5] While Claimant 2 had submitted a tip in [Redacted] the Enforcement staff responsible for the First and Second Covered Actions did not review that tip because of concerns that the tip may have contained information protected by the attorney-client privilege. Claimant 2 submitted a revised tip in [Redacted] that did not contain privileged information and on which Claimant 2’s award claim is based.

SEC

90872

01/07/2021

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the joint whistleblower award claim submitted by [Redacted] (“Claimant 1”)[fn1] and *** [Redacted] (“Claimant 2”) (together, “Claimants”) in connection with the captioned covered action (the “Covered Action”). Claimants filed a timely response contesting the preliminary denial.[fn2] For the reasons discussed below, Claimants’ joint award claim is denied.

I. Background.

A. The Covered Action.

On, [Redacted] the Commission instituted contested administrative and cease-and-desist proceedings against [Redacted]. On [Redacted], the Commission issued separate settled administrative orders finding that [Redacted] violated the [Redacted] by [Redacted] and that [Redacted] caused these violations. [Redacted] was ordered to pay a civil penalty of approximately [Redacted], and [Redacted] were ordered to pay a combined total of approximately [Redacted] in monetary sanctions.

On, [Redacted] the Commission’s Office of the Whistleblower (“OWB”) posted a Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn4] Claimants filed a timely joint whistleblower award application.

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination[fn5] recommending that Claimants’ joint award claim be denied because the information provided by Claimants did not lead to the successful enforcement of the Covered Action under Exchange Act Rule 21F-4(c)(1)-(2).[fn6] The record supporting the Preliminary Determination included the declaration (the “First Declaration”) of one of the attorneys in the [Redacted] in the Commission’s Division of Enforcement who was responsible for the Covered Action. The First Declaration stated under penalty of perjury that the staff responsible for the Covered Action reviewed Claimants’ [Redacted] tip on Form TCR (the *** [Redacted]”Tip”) in [Redacted] and determined that the tip did not concern, or even mention, [Redacted]. By [Redacted] the First Declaration continued, the investigation with regard to [Redacted] was already complete and the staff was primarily concerned with preparing for the administrative proceeding and conducting settlement discussions. The First Declaration further attested that the staff responsible for the Covered Action did not meet with Claimants, did not request any information from them or otherwise communicate with them, and did not use any of the information received from them.

C. Claimants’ Response to the Preliminary Determination.

On [Redacted], Claimants submitted a timely written request contesting the Preliminary Determination.[fn7] Specifically, Claimants emphasize that they submitted information to the Commission *** times between *** and ***, at times directly to the then-head of the ***, and that they also met with the then-head and other staff of the *** in [Redacted]. On this basis, Claimants argue that the Commission’s staff improperly ignored the information they had submitted and failed to distribute it properly to the appropriate investigative staff.[fn8] To further substantiate this argument, Claimants request declarations from certain persons in the ***, documents from the Commission’s investigative files, and explanations from the staff as to why Claimants’ information was not handled differently.

II. Analysis.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn9] As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action.[fn10]

We find that none of the information that Claimants submitted led to the successful enforcement of the Covered Action. First, the First Declaration states that Enforcement staff opened the investigation concerning [Redacted]’s [Redacted] practices in [Redacted] based on information developed from a separate investigation into certain [Redacted]. Claimants do not dispute this statement. We therefore credit the First Declaration and find that Claimants’ information did not cause the staff to open the investigation that culminated in the Covered Action.

Second, the First Declaration states that the staff responsible for the Covered Action reviewed the *** Tip and dismissed it as irrelevant and that they never met or communicated with Claimants or used their information. Claimants argue that this tip should have prompted the staff to dig deeper and review Claimants’ other submissions. However, we need not consider what the staff should or should not have done after reviewing the *** Tip, since Claimants do not dispute that the tip was not used in any way in the Covered Action. Nor do Claimants offer any evidence that their other submissions of information were used by the staff responsible for the Covered Action.

Claimants argue that their [Redacted] meeting with certain *** staff contradicts the the First Declaration’s statement that the staff responsible for the Covered Action never met with Claimants. One of the *** attorneys who attended the [Redacted] meeting declared that a separate investigation unrelated to the matters investigated in the Covered Action had been opened in *** as a result of a series of analyses and allegations of wrongdoing submitted by the Claimants and that this led the staff of that investigation to schedule the [Redacted] meeting with the Claimants to discuss their allegations. According to the *** attorney, in [Redacted] ***, *** shared certain of Claimants’ submissions with staff in other Divisions of the Commission and, after consultation with the staff in those Divisions, the *** staff determined to close the investigation because it could not substantiate Claimants’ allegations. The *** attorney further declared that the investigative team did not share the information it received from Claimants with the Enforcement staff responsible for the Covered Action, other than a [Redacted] email from the head of the *** to certain *** staff mentioning that others in *** were looking at [Redacted] allegations by the Claimants that touched on and another email it had received from one of the Claimants in [Redacted], in which Claimant 1 commented on the Commission’s filing a few days earlier of the Covered Action.

In response to Claimants’ letter contesting the Preliminary Determination, the *** attorney who wrote the First Declaration wrote a supplemental declaration (the “Second Declaration”). The Second Declaration stated under penalty of perjury that, during the course of the investigation that culminated in the Covered Action, the investigation team did not receive or review any of the emails and documents Claimants sent to the Commission between [Redacted] ***, other than the *** Tip, which did not concern or even mention [Redacted], and the [Redacted] and [Redacted] emails noted above. The Second Declaration also states that the [Redacted] investigation team was unaware of the [Redacted] meeting between Claimants and certain members of the *** and that it did not receive any information about the meeting from the staff who attended it. This is consistent with and supports the statement of the *** attorney who attended the meeting. Thus, the fact that this meeting took place does not contradict the statement in the First Declaration that the staff responsible for the Covered Action never met with Claimants. And in any event, Claimants present no reason to believe that any information submitted or discussed at the [Redacted] meeting was used by the staff responsible for the Covered Action. We therefore credit the three staff declarations and find that Claimants’ information did not significantly contribute to the success of the Covered Action.

As noted above, Claimants also argue that the staff mishandled their information and that they should be entitled to discovery to ascertain why it was not handled differently. In essence, Claimants argue that their information would have led to the success of the Covered Action had it been handled differently. But the standard for award eligibility is not what the staff would have, or could have done in hypothetical circumstances but, rather, what impact the whistleblower’s information actually had on the investigation.[fn11] Here, the First and Second Declarations are clear that Claimants’ information neither caused the staff to open its investigation nor significantly contributed to the success of the Covered Action, and thus we need not consider Claimants’ request for discovery of additional information.[fn12] We therefore conclude that Claimants’ information did not lead to the successful enforcement of the Covered Action and that, as a result, Claimants are ineligible for an award with respect to the Covered Action.

III. Conclusion.

Accordingly, it is ORDERED that Claimants’ joint whistleblower award claim be, and hereby is, denied

By the Commission.

[1] [Redacted].

[2] The Preliminary Determination also recommended denying an award to [Redacted] (“Claimant 3”). On [Redacted], Claimant 3 informed the Commission that *** would not contest the Preliminary Determination. Accordingly, the Preliminary Determination has become the Final Order of the Commission with respect to Claimant 3 pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[3] Exchange Act Rule 15c3-5, 17 C.F.R. § 240.15c3-5.

[4] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[5] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[6] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3(a) & 4(c), 17 C.F.R. §§ 240.21F-3(a) & 4(c).

[7] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[8] Because of these perceived errors, Claimants requested in their response “an extension on the appeal period . . . until the SEC provides responses to our questions, document [] requests and reasoning for withholding this information.” The whistleblower rules do not provide for such an extension. See Exchange Act Rule 21F-10(e)(2) (providing that a decision to contest a Preliminary Determination must be submitted “within sixty (60) calendar days of the date of the Preliminary Determination, or if a request to review materials is made pursuant to paragraph (e)(1) of this section, then within sixty (60) calendar days of the Office of the Whistleblower making those materials available for your review.” Moreover, this Order addresses Claimants’ questions and requests.

[9] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[10] Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

[11] See Order Determining Whistleblower Award Claim, Release No. 34-79294 (Nov. 14, 2016) (denying whistleblower award to claimant who argued that staff errors resulted in improper processing of submission, because information submitted did not actually lead to successful enforcement of covered action), pet. rev. denied sub nom. Doe v. SEC, 729 F. App’x 1 (D.C. Cir. 2018).

[12] See Doe v. SEC, 729 F. App’x at 3 (concluding that the Commission did not err by rejecting a claimant’s request to include additional materials in the administrative record, where the Commission’s determination was reviewable on the basis of materials already in the record).

SEC

90767

12/22/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of over ***, which equals *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice stating that Claimant will not contest the Preliminary Determination.[fn1]

The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2] However, upon review of the record, we choose to depart from the Preliminary Determination and award Claimant *** percent (*** %) of the monetary sanctions collected in the Covered Action for a payout of over $1.6 million.

[Redacted].

Claimant provided ongoing assistance to Enforcement staff by participating in meetings and providing original information that solidified their suspicions about certain defendants’ fraudulent [Redacted], despite Claimant’s fears for Claimant’s personal safety. In particular, Claimant provided the staff with new information about certain defendants’ involvement in [Redacted].

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.

[1] An additional claimant on the matter did not seek reconsideration of their denial and, as such, the Preliminary Determination with respect to their claim became the Final Order of the Commission, pursuant to Exchange Act Rule 21F-10.
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[3] [Redacted].
[4] [Redacted].
[5] [Redacted].

SEC

90721

12/18/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $500,000, which is equal to *** percent (*** %) of collected monetary sanctions in the above-referenced Covered Action (“Covered Action”).[fn1] In recommending that Claimant be found eligible for an award, the CRS recommended that the Commission exercise its general exemptive authority to waive the TCR filing requirements under Exchange Act Rules 21F-9(a) and (b). Claimant submitted a timely request for reconsideration seeking a larger award amount.

Further, we find the proposed award amount is appropriate and we reject Claimant’s contention that a higher award amount is warranted. While Claimant provided significant, helpful information and ongoing assistance to the Enforcement staff during the investigation, Claimant unreasonably delayed reporting the misconduct for several years while investors were being harmed.[fn5] Furthermore, during the period of delay, Claimant participated in a plan to *** [Redacted]. In Claimant’s request for reconsideration, Claimant argues that Claimant chose this course because Claimant believed it would result in [Redacted] which ultimately would have resulted in the protection of all of the investors. Claimant also says *** [Redacted] this course allowed Claimant to preserve Claimant’s anonymity. Whatever Claimant’s actual motivation was for attempting to [Redacted] the record is clear that Claimant knew of the fraudulent scheme by *** at the latest, and chose to wait approximately two years before reporting the information to the Commission or another agency.[fn6]

Claimant further argues that even if the Commission determines that Claimant unreasonably delayed in reporting, the reduction for delay is too harsh and not consistent with prior award determinations. We disagree. First, Claimant’s reliance on Order Determining Whistleblower Award Claims, Rel. No. 34-88658 (Apr. 16, 2020) is misplaced. There, we determined no reduction for delay was warranted due to the strength of the positive factors and the fact that the claimant “repeatedly and tenaciously objected to and escalated” claimant’s concerns within claimant’s organization. By contrast, Claimant did not “repeatedly and tenaciously” object by reporting internally or to a government authority; rather, Claimant attempted to [Redacted]. Likewise, the Commission’s award determination in Order Determining Whistleblower Award Claim, Rel. No. 34-80115 (Feb. 28, 2017), which Claimant points to, is not factually similar. Importantly, here, the record reflects that Claimant unambiguously knew that the conduct was fraudulent by no later than ***, and yet waited approximately two years to report the information to the Commission, during which period investors were continuing to be harmed. As such, we find Claimant’s arguments that Claimant should receive a higher award amount unpersuasive.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of over $500,000,[fn7] equal to *** percent (*** %) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] The CRS also preliminarily determined to recommend that Claimant’s related action award claim be denied. Claimant did not contest the preliminary denial of the related action award claim, which is now deemed to be the final order of the Commission through operation of law. The CRS also preliminarily determined to deny an award claim of a second individual, who did not submit a request for reconsideration, which is deemed to be the final order of the Commission through operation of law.
[2] See Exchange Act Section 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).
[3] Rule 21F-9(a) provides that to be considered for a whistleblower award, “you must submit your information to the Commission . . . online, through the Commission’s website . . . or by mailing or faxing a Form TCR.” 17 C.F.R. § 240.21F-9(a). Rule 21F-9(b) provides that “to be eligible for an award, you must declare under penalty of perjury at the time you submit your information . . . that your information is true and correct to the best of your knowledge and belief.” § 240.21F-9(b). Claimant filed a Form TCR nearly two years after first providing information to the Commission. Section 36(a) of the Exchange Act provides the Commission with broad authority to exempt any person from any provision of the Exchange Act or any rule or regulation thereunder to the extent that such exemption is (i) “necessary or appropriate in the public interest” and (ii) “is consistent with the protection of investors.”
[4] On September 23, 2020, the Commission adopted amendments to the whistleblower rules, which became effective on December 7, 2020. Among other things, the amendments will allow an otherwise meritorious whistleblower to receive an award despite failing to comply with the Form TCR filing requirements if he/she submits the Form TCR within 30 days of learning of the requirements. While claimants who have counsel are deemed to have constructive notice of the TCR filing requirements, and as such, are not entitled to the automatic waiver allowed by new Rule 21F-9(e), we noted that we will continue to review and assess the appropriateness of using our discretionary Section 36(a) exemptive authority where a claimant is represented by counsel but fails to meet the Form TCR filing requirements. For the reasons discussed herein, we find that the present facts and circumstances warrant the exercise of our Section 36(a) exemptive authority so as to find Claimant eligible for an award.
[5] The whistleblower rule amendments create a presumption that, where an award will be $ 5 million or less, the whistleblower will generally receive a maximum 30% award, if there are no negative factors. That presumption does not apply here as Claimant unreasonably delayed, for a substantial period of time, in reporting the information to the Commission.
[6] In [Redacted], Claimant reported the allegations to the [Redacted] (“Other Agency”). According to Claimant, the Other Agency did not seem interested in the fraud and could not guarantee Claimant’s anonymity. When the Other Agency contacted Claimant about a month later, Claimant did not cooperate. Claimant further contends that Claimant became physically ill as a result of the stress from reporting to the Other Agency.
[7] We have determined to treat as collected sanctions under Section 21F(b)(1) of the Exchange Act those amounts distributed to investors by the court-appointed receiver in the Covered Action. See Exchange Act Rule 21F-4(e): ” Monetary sanctions means: (1) An order to pay money that results from a Commission or related action and which is either: (i) Expressly designated as penalty, disgorgement, or interest; or (ii) Otherwise ordered as relief for the violations that are the subject of the covered action or related action . . .” (emphasis added).

SEC

90720

12/18/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination and a Proposed Final Determination recommending the denial of the whistleblower award application submitted by [Redacted] (“Claimant”) in connection with Covered Action [Redacted] (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. Upon review of the record, we choose to depart from the CRS’s recommendation and instead conclude that Claimant’s application should be granted and that Claimant should receive a whistleblower award of more than $1.2 million, equal to *** percent ( *** %) of the monetary sanctions collected in the Covered Action.

The recommendation of the CRS rested on its preliminary conclusion that the monetary sanctions against [Redacted] (the “Company”) in the Covered Action should not be counted toward the $1 million threshold because the Company’s liability in the Covered Action was “based substantially on conduct that [Claimant] . . . planned[] or initiated” under Rule 21F-16 of the Securities Exchange Act of 1934 (“Exchange Act”).[fn1] Our review of the record indicates that Claimant should not be held responsible for having planned or initiated the Company’s misconduct under Rule 21F-16, under the facts and circumstances presented here. Moreover, the record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]

We have further determined that Claimant should receive a whistleblower award of more than $1.2 million ( *** percent ( *** %)) of the monetary sanctions collected in the Covered Action. In making this award determination, we applied the award criteria in Exchange Act Rule 21F-6 to the specific facts and circumstances here.[fn3] In reaching that determination, we negatively assessed that Claimant was culpable for actively participating in and financially benefitting from the fraudulent scheme at the Company and that Claimant unreasonably delayed reporting to the Commission even as Claimant became more fully aware of the scheme’s illegality.

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.

[1] Exchange Act Rule 21F-16, 17 C.F.R. § 240.21F-16. That rule states, in relevant part, “In determining whether the required $ 1,000,000 threshold has been satisfied (this threshold is further explained in § 240.21F-10 of this chapter) for purposes of making any award, the Commission will not take into account any monetary sanctions that the whistleblower is ordered to pay, or that are ordered against any entity whose liability is based substantially on conduct that the whistleblower directed, planned, or initiated.” Id.
[2] See Securities Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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 in 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.

SEC

90718

12/18/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $1,800,000, equal to *** percent ( *** %) of the monetary sanctions collected in [Redacted] (“Covered Action”).[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn3] In reaching that determination, we positively assessed the following facts as to Claimant: (1) Claimant’s information was significant in that Claimant expeditiously alerted government authorities of an alleged fraudulent scheme and provided key details that were used by the staff as a framework for the investigation; (2) Claimant provided additional assistance throughout the investigation, including testimony, and by submitting key documents and other information that saved Commission time and resources; (3) Claimant’s information bears a close nexus to the charges brought by the Commission; (4) Claimant took immediate steps to mitigate the harm to investors and suffered hardships for doing so; and (5) there are high law enforcement interests in this matter as Claimant’s information revealed a hard to detect fraudulent scheme and resulted in the agency returning millions of dollars to harmed investors.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent ( *** %) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] Additionally, the CRS recommended that Claimant’s claim for an award in connection with an action brought by [Redacted] be denied. Because Claimant provided written notice of Claimant’s decision not to contest the preliminary denial of the related action claim, the CRS’s preliminary determination as to the denial of the related action award claim became the final order of the Commission pursuant to Exchange Act Rule 21F-11(f); 17 C.F.R. § 240.21F-11(f).
[2] See Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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. Exchange Act Rule 21F-6; 17 C.F.R. § 240.21F-6.

SEC

12/15/2020

[Redacted].

Claimants 2 and 3.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny awards to Claimants 2 and 3. Claimants 2 and 3 did not provide original information that led to a successful enforcement action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, because the information Claimants 2 and 3 provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 2’s or Claimant 3’s information, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The Covered Action arose out of an examination by the Commission’s Office of Compliance Inspections and Examinations, and information provided by Claimants 2 and 3 had no bearing on the timing of or conduct of that examination. Neither the examination team nor Division of Enforcement staff who subsequently investigated the matter received or used Claimant 2’s or Claimant 3’s information, which did not relate to the firm being examined and investigated.

By: Claims Review Staff.

[1] Claimants 2 and 3 are being treated as joint claimants herein because they submitted their tips jointly and their WB-Apps are functionally identical.

SEC

90656

12/14/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $300,000, which represents *** percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

In reaching this determination, we have considered the application of Exchange Act Rule 21F-4(b)(4)(iii)(B), which excludes information from being credited as the whistleblower’s “independent knowledge” or “independent analysis”—and hence original information[fn2] —if the whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities. . . .”[fn3] Here, the record reflects that Claimant became aware of the potential securities law violations in connection with Claimant’s audit-related responsibilities [Redacted]. However, such claimants may learn original information and be eligible for whistleblower awards if they had “a reasonable basis to believe that the relevant entity is engaging in conduct that will impede an investigation of the misconduct.”[fn4] Here, the record shows that Claimant had a reasonable basis at the time Claimant provided the information[fn5] to believe that [Redacted] would impede the Commission’s investigation because [Redacted] had [Redacted].

Claimant [Redacted] met with Enforcement staff more than a dozen times, and identified potential witnesses. Further, Claimant aggressively attempted to remedy the misconduct and suffered a unique hardship, [Redacted].

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] Under Exchange Act Rule 21F-4(b)(1), “[i]n order for [a] whistleblower submission to be considered original information, it must,” among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1).
[3] 17 C.F.R. § 240.21F-4(b)(4)(iii)(B).
[4] 17 C.F.R. § 240.21F-4(b)(4)(v)(B).
[5] Claimant satisfies the voluntariness requirement because Claimant provided information about the securities law violation to a federal agency before Commission staff contacted Claimant. See 17 C.F.R. § 240.21F-4(a)(1)(ii) (a “submission of information to the Commission will be considered voluntary if [a claimant] voluntarily provided the same information to” inter alia, any authority of the federal government “prior to receiving a request, inquiry, or demand from the Commission”).
[6] [Redacted].
[7] [Redacted].
[8] [Redacted].

SEC

90578

12/07/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of nearly $1.8 million, equal to *** percent (*** %) of the monetary sanctions collected in the above-referenced Covered Action, relating to [Redacted] (the “Covered Action”).[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn2]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn4] In reaching that determination, we positively assessed the following facts: Claimant, a company insider, provided a detailed whistleblower tip that alerted Commission staff to the alleged wrongdoing, which would have been difficult to detect in the absence of Claimant’s information; Claimant provided extraordinary assistance to the Commission staff; Claimant raised Claimant’s concerns internally in an effort to remedy the conduct; and the law enforcement interests are high as Claimant’s information and assistance helped return money to harmed investors.

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.

[1] We are treating [Redacted] as part of a single Covered Action under Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(d)(1) because they arise out of the same nucleus of operative facts.
[2] The Preliminary Determination of the CRS also recommended denying an award to a second claimant, who did not request reconsideration. As such, the preliminary denial of that award claim is now deemed to be the Final Order of the Commission.
[3] See Exchange Act Section 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] In assessing the appropriate award amount, Exchange Act 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.

SEC

90582

12/07/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] and [Redacted] (“Claimants”) jointly[fn1] receive a whistleblower award of nearly $400,000, equal to *** percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). Claimants provided written notice of Claimants’ decision not to contest the Preliminary Determination.[fn2]

The recommendation of the CRS is adopted. The record demonstrates that Claimants jointly and voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn3]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed amount is appropriate.[fn4] In reaching that determination, we positively assessed the following facts: (i) Claimants’ information was significant in that it alerted Commission staff to the alleged securities violations, prompting the opening of the investigation; (ii) Claimants provided substantial and continuing assistance to Enforcement staff during the course of the investigation; (iii) the charges in the Covered Action closely related to and stemmed from Claimants’ information; and (iv) the award serves an important law enforcement interest.

Accordingly, it is hereby ORDERED that Claimants shall receive a joint award of [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action.

By the Commission.

[1] We have determined to treat the Claimants jointly as a “whistleblower” for purposes of the award determination given that a Form TCR was submitted on behalf of both of them and they submitted their Forms WB-APP together via the same counsel. See Securities and Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining a “whistleblower” to include two 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 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).

[3] The Preliminary Determination of the CRS also recommended denying an award to a second claimant, who did not request reconsideration. As such, the preliminary denial of that award claim is now deemed to be the Final Order of the Commission by operation of law. Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[4] In assessing the appropriate award amount, Exchange Act 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 in 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.

SEC

90580

12/07/2020

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of approximately $500,000, which is equal to [Redacted] percent ( *** %) of collected monetary sanctions, and that [Redacted] (“Claimant 2”) receive a whistleblower award of approximately $250,000, which is equal to *** percent ( *** %) of the collected monetary sanctions, in connection with the above-referenced Covered Action (“Covered Action”). In recommending that Claimant 1 be found eligible for an award, the CRS recommended that the Commission exercise its general exemptive authority to waive the TCR filing requirements under Exchange Act Rules 21F-9(a) and (b). Claimant 1 and Claimant 2 provided written notice of their decisions not to contest the Preliminary Determinations.

The recommendations of the CRS are adopted. The record demonstrates that Claimant 1 and Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn1]

Moreover, we have determined that it would be in the public interest and consistent with the protection of investors for the Commission to exercise our discretionary authority under Section 36(a) of the Exchange Act to waive the TCR filing requirements of Rules 21F-9(a) and (b)[fn2] as to Claimant 1 in light of the specific facts and circumstances present here. Specifically: (1) Claimant 1 provided information in writing directly to staff in the Division of Enforcement (“Enforcement”) per the Enforcement attorney’s request; (2) Claimant 1’s initial written tip unambiguously indicated that Claimant 1 intended to submit the information pursuant to the SEC’s whistleblower program; (3) Claimant 1’s information was credible and of high quality and caused Enforcement staff to open an investigation that ultimately resulted in the successful Covered Action; (4) Enforcement staff viewed Claimant 1 as a whistleblower throughout the investigation; (5) Claimant 1’s counsel may have misunderstood communications from Commission staff regarding whether Claimant 1 had properly met all the procedural requirements for participating in the whistleblower program; (6) Claimant 1’s [Redacted] after refusing to participate in the misconduct; (7) the record clearly and convincingly supports that Claimant 1 would otherwise be entitled to an award; and (8) denial of an award here would result in undue hardship, unfairness, or inequity.[fn3]

Further, applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amounts are appropriate. 4 In reaching that determination, we positively assessed the following facts: (1) Claimant 1’s tip was the initial source of the underlying investigation and led to the majority of the allegations in the Covered Action; (2) Claimant 1 submitted information and documents, participated in two interviews with Enforcement staff, helped staff identify all of the key participants in the scheme and several additional witnesses, and explained complex issues that saved the staff time and resources in conducting its investigation; (3) Claimant 1 [Redacted] after objecting to participating in the alleged misconduct; (4) Claimant 2 submitted new information, albeit when the investigation was nearly complete, that resulted in the inclusion of additional allegations in the Covered Action; (5) Claimant 2 provided information and documents, participated in two interviews, and provided explanation and clarity to the staff regarding the issues that Claimant 2 brought to the staff’s attention; (6) Claimant 2 internally reported concerns [Redacted]; and (7) while Claimant 2 was a helpful whistleblower, Claimant 1 was the main source of information.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of approximately $500,000, [Redacted] percent ( *** %) of the monetary sanctions collected in the Covered Action, and Claimant 2 shall receive an award of approximately $250,000, *** percent ( *** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] See Exchange Act Section 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).

[2] Rule 21F-9(a) provides that “[t]o be considered a whistleblower . . . you must submit your information . . . online, through the Commission’s website . . . or by mailing or faxing a Form TCR.” 17 C.F.R. § 240.21F-9(a). Rule 21F-9(b) provides that “to be eligible for an award, you must declare under penalty of perjury at the time you submit your information . . . that your information is true and correct to the best of your knowledge and belief.” § 240.21F-9(b). Claimant 1, through counsel, filed a Form TCR two and a half years after first providing information to the Commission, when the investigation was nearly complete. Section 36(a) of the Exchange Act provides the Commission with broad authority to exempt any person from any provision of the Exchange Act or any rule or regulation thereunder to the extent that such exemption is (i) “necessary or appropriate in the public interest” and (ii) “is consistent with the protection of investors.”

[3] On September 23, 2020, the Commission adopted amendments to the whistleblower rules, which will become effective 30 days after publication in the Federal Register. Among other things, the amendments will allow an otherwise meritorious whistleblower to receive an award despite failing to comply with the Form TCR filing requirements if he/she submits the Form TCR within 30 days of learning of the requirements. While claimants who have counsel are deemed to have constructive notice of the TCR filing requirements, and as such, are not entitled to the automatic waiver allowed by new Rule 21F-9(e), we noted that we will continue to review and assess the appropriateness of using our discretionary Section 36(a) exemptive authority where a claimant is represented by counsel but fails to meet the Form TCR filing requirements. For the reasons discussed herein, we find that the present facts and circumstances warrant the exercise of our Section 36(a) exemptive authority so as to find Claimant 1 eligible for an award.

[4] In assessing the appropriate award amounts, Exchange Act 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.

SEC

90537

12/01/2020

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively “Claimants”) receive a whistleblower award jointly[fn1] in the amount of over $6 million, which equals [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in [Redacted] (collectively the “Covered Action”)[fn2] and [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in a related [Redacted] action, [Redacted] (the “Related Action”).[fn3] Claimants provided written notice of their decisions not to contest the Preliminary Determinations.

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 and Claimant 2 voluntarily provided the same original information to the Commission and to [Redacted] (the “Other Agency”), and that this information led to the successful enforcement of both the Covered Action and the Related Action.[fn4]

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award percentages for both the Covered Action and the Related Action are appropriate.[fn5] In reaching that determination, we considered that (i) Claimants submitted a joint whistleblower tip providing information that significantly contributed to the Commission’s investigation and led to an investigation initiated by the Other Agency; (ii) Claimants’ information led to [Redacted] actions related to a complex [Redacted] scheme involving multiple individuals and tens of millions of dollars in ill-gotten gains; and (iii) Claimants substantially assisted the Commission and the Other Agency by, among other things, submitting information and documents, participating in interviews, and identifying key individuals involved in the misconduct. Based on the facts and circumstances of this matter, we believe a *** % joint whistleblower award would recognize the significance of Claimants’ information and the high law enforcement interest involved in this matter.

Finally, we find that the contributions made by Claimants to the Covered Action are similar to Claimants’ contributions to the success of the Related Action, and, therefore, it is appropriate that Claimants receive the same award percentage for both actions.

Accordingly, it is hereby ORDERED that Claimants shall receive an award jointly of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Action, and [Redacted] percent (*** %) of the monetary sanctions collected in the Related Action, as well as any monetary sanctions collected in either action after the date of this Order.
By the Commission.

[1] A joint award is appropriate as Claimants jointly submitted their tip and Forms WB-APP via the same counsel. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.
[2] For the purposes of making an award, we are treating [Redacted] as a single Covered Action as the proceedings arose out the same nucleus of operative facts. See Exchange Act Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).
[3] The Related Action constitutes a “related action” to the Covered Action within the meaning of Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as a [Redacted] and is based on the same original information that the whistleblower voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.
[4] See Exchange Act Section 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).
[5] In assessing the appropriate award amount, Exchange Act 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.

SEC

11/30/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] and [Redacted] (“Claimant 2”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

[Redacted] and Claimant 2 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a)commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; 0r (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[1] To the extent claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action. they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1): Rule 21F-4(g) and (f): Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Exam and investigative staff responsible for the Covered Action never received any information from, or had any communications with, [Redacted] information did not cause the underlying exam to open and did not contribute to it. Similarly, [Redacted] information did not cause the investigation to open and did not contribute to it. Investigative staff responsible for the Covered Action received no information from nor had communications with, Claimant 2, whose information does not on its face, relate to the conduct charged in the Covered Action. Neither [Redacted] nor Claimant 2 assisted or contributed in any way to the Covered Action.

SEC

90506

11/24/2020

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount to be appropriate.[fn3] In reaching that determination, we considered that (i) Claimant expeditiously submitted a tip providing information to the Commission, which caused the Commission to open an examination; (ii) a combination of the Commission’s examination findings and Claimant’s information then led the Commission to open an enforcement investigation; (iii) although the Commission’s enforcement investigation ultimately revealed misconduct that was not initially reported by Claimant, Claimant’s information was a factor in the Commission opening its investigation and successfully bringing an enforcement action; and (iv) there was a minimal amount of monetary sanctions collected.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] [Redacted].
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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.

SEC

90468

11/20/2020

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award is appropriate.[fn2] In reaching that determination, we positively assessed the following facts: (1) Claimant’s information was significant as it helped alert Enforcement staff to an ongoing Ponzi scheme that was preying on retail investors; (2) Claimant’s information, in combination with information from other individuals, caused Enforcement staff to open the investigation; and (3) there have been no funds collected to date in this matter, and no collections are anticipated.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Exchange Act Section 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).
[2] In assessing the appropriate award amount, Exchange Act 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.

SEC

90460

11/19/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $900,000, equal to *** percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

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.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 24021F-3(a).
[2] In assessing the appropriate award amount, Exchange Act 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 in 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.

SEC

90412

11/13/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $1.1 million, equal to *** percent ( %) of the monetary sanctions collected in the above referenced Covered Action (the “Covered Action”).[fn1]

The recommendation of the CRS is adopted. The record demonstrates that Claimant, an outsider, voluntarily provided original information[fn2] to the Commission that led to the successful enforcement of the Covered Action.[fn3]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award is appropriate.[fn4] In reaching that determination, we positively assessed the following facts: (1) Claimant’s information was significant as it caused staff to re-focus an ongoing investigation and inquire into different conduct; (2) Claimant provided exemplary and continuing assistance to the staff which saved significant Commission time and resources; and (3) Claimant’s information and assistance were critical to the Commission’s ability to successfully bring an emergency action before assets could be dissipated.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of ( *** %) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying an award to three other claimants who did not seek reconsideration. Accordingly, the Preliminary Determination has become the Final Order of the Commission with respect to Claimants 2, 3, and 4 pursuant to Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] Claimant’s information was based on Claimant’s “independent analysis,” a constituent element of “original information.” Specifically, Claimant examined and evaluated publicly available materials that provided important insight into possible securities violations that were not apparent from the face of the public materials themselves.
[3] See Exchange Act Section 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] In assessing the appropriate award amount, Exchange Act 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.

SEC

11/13/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3′) and [Redacted] (“Claimant 4”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The bases for these determinations are marked below as follows:

Claimants 1, 2, 3 and 4 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimants 1 and 2 are not “whistleblowers” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9, which Claimants 1 and 2 did not do.[fn3]

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants 2 and 4. Claimant 1 provided information to the Commission approximately 2 weeks before the Commission flied the Covered Action and did not provide any information that was not already known to investigative staff. Claimant 3’s submissions contained privileged material and were segregated from investigative staff responsible for the investigation leading to the Covered Action. Investigative staff did not use any information provided by Claimant 3 or otherwise communicate with Claimant 3. Also, while not a basis for denial, Claimant 3 may not have provided original information under Rule 21F-4(b)(4)(i) because Claimant 3 obtained the information through a “communication that was subject to the attorney-client privilege” and disclosure of the information may not have been otherwise permitted. Further, it does not appear that Claimant 3’s submissions were made voluntarily as Commission staff contacted Claimant 3 before Claimant 3 submitted any information to the Commission.

[3] Claimant 1 did not submit information on Form TCR. Claimant 2 did not submit information as a whistleblower tip.

[4] Claimant 1 did not provide any information that was not already known to the investigative staff responsible for the Covered Action.

SEC

11/13/2020

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received five whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Dete1mination for each award claimant as follows.

[Redacted].

[Redacted] (Claimant 3) and [Redacted] (Claimant #4).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claims of Claimant #3 and Claimant #4. Neither Claimant #3 nor Claimant #4 provided information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information they provided did not, under Rule 21F4(c)(1) of the Exchange Act:

(1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of either Claimant #3’s or Claimant #4’s information; or

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[Redacted] (Claimant #5).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claim of Claimant #5. Claimant #5 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not, under Rule 21F-4(c)(1) of the Exchange Act:

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that led to the Covered Action was not opened based on information provided by Claimant #5. In addition, staff responsible for the investigation and Covered Action did not have any communications with Claimant #5, and Claimant #5 did not provide any information that had any impact on the staffs investigation or the Covered Action.

Finally, Claimant #5 failed to submit Claimant 5’s claim for an award on Form WB-APP within ninety (90) days of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act in order to be considered for an award. Further, Claimant #5 has not demonstrated that the Commission should waive, in its discretion, the filing deadline based on “extraordinary circumstances,” as provided under Rule 21F-8(a) of the Exchange Act.

By: Claims Review Staff.

SEC

11/13/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[2] Claimant’s submissions contained privileged material and were segregated from investigative staff responsible for the investigation leading to the Covered Action. Investigative staff did not use any information provided by Claimant or otherwise communicate with Claimant. Also, while not a basis for denial, Claimant may not have provided original information under Rule 21F-4(b)(4)(i) because Claimant obtained the information through a “communication that was subject to the attorney-client privilege” and disclosure of the information may not have been otherwise permitted. Further, it does not appear that Claimant’s submissions were made voluntarily as Commission staff contacted Claimant before Claimant submitted any information to the Commission.

SEC

90351

11/05/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of about $750,000, equal to [Redacted] percent ( *** %) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”). 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 led to the successful enforcement of the Covered Action.[fn1] Although the investigation that gave rise to the Covered Action was already open at the time Claimant provided original information, Claimant provided information that caused Enforcement staff “to inquire concerning different conduct” that ultimately formed the basis for the Covered Action.[fn2]

Accordingly, it is hereby ORDERED that Claimant shall receive an award of about $750,000, or [Redacted] percent ( *** %) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Exchange Act Section 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).
[2] Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-3(c)(1).
[3] In assessing the appropriate award amount, Exchange Act 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.

SEC

90350

11/05/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”). Claimant contested the award percentage amount recommended in the Preliminary Determination under Exchange Act Rule 21F-10(e).[fn1] After reviewing Claimant’s arguments and additional evidence in support of the contest, the CRS increased its award percentage recommendation for Claimant, which would yield an award of approximately $3.6 million, equal to [Redacted] percent ([Redacted]) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”).

The recommendation of the CRS is adopted. The record demonstrates that Claimant is eligible for an award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]

Applying the award criteria in Rule 21F-6 to the specific facts and circumstances here, we find the proposed award amount is appropriate. In reaching that determination, we positively assessed the following facts: (1) Claimant’s information was significant in that it alerted Enforcement Staff to the violative conduct, and there is a close nexus between Claimant’s tip and the resulting charges; (2) Claimant provided substantial and ongoing assistance to Enforcement Staff, which included traveling to another country at Claimant’s own expense to meet with staff in person and providing an extensive supporting documentation; (3) the law-enforcement interests are high where, as here, the whistleblower provided critical information about violative conduct that occurred abroad and that otherwise would have been difficult to detect; and (4) the Claimant suffered hardships due to Claimant’s whistleblowing.

While we considered Claimant’s ministerial role in the underlying misconduct, the Commission declines to reduce the award for culpability as Claimant took exceptional steps to report the misconduct from abroad and provided extraordinary assistance.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of approximately $3.6 million, or [Redacted] percent ([Redacted]) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] 17 C.F.R. § 240.21F-10(e).
[2] See Exchange Act Section 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).

SEC

90317

11/03/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over $28,000,000, equal to *** percent ( *** %) of the monetary sanctions collected in [Redacted] (“Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn2] In reaching that determination, we positively assessed the following facts as to Claimant: (1) Claimant reported significant information to the Commission which caused the company to initiate an internal investigation and factored into the staff’s decision to open an investigation into the company’s [Redacted] ; (2) the information reported by Claimant saved Commission time and resources; (3) Claimant provided assistance to staff in the form of an interview, testimony and identification of a key witness; and (4) there are important law enforcement interests here, as Claimant’s information supported certain [Redacted] charges against a publicly traded company and its executives; and (5) Claimant’s information bears a close nexus to certain charges brought by the Commission. In determining the appropriate award percentage, we also considered that while Claimant’s information was significant, the Covered Action included charges that accounted for the majority of the [Redacted] reported by the company, which was not attributable to information provided by the Claimant, but rather related to other alleged misconduct by the company.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of percent ( *** %) of the monetary sanctions collected in the Covered Action.
By the Commission.

SEC

10/30/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimant 2 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimant 1 did not provide “original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information was not derived from Claimant’s: (1) “independent knowledge,” as defined under Rule 21F-4(b)(2), but instead was derived entirely from “publicly available sources;” or (2) “independent analysis,” as defined under Rule 21F-4(b)(3), because the information did not include an examination and evaluation of information that “reveals information that is not generally known or available to the public.”[fn3]

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related action, because Clain1ants are not eligible
for awards in an SEC Covered Action, he/she is not eligible for an award in connection with any related
action. See 15 U.S.C. § 78u-6(b): Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f): Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] The investigation was opened based on a source other than Claimant 2. Investigative staff responsible for the Covered Action did not receive any information from, or had any communications with, Claimant 2. Claimant 2’s tip was not provided to investigative staff and the information submitted by Claimant 2 did not assist or contribute in any way to the Covered Action.

[3] The record reflects that Claimant 1’s information was derived from publicly available sources, such as Commission filings, chat rooms, stock tip sheets or newsletters, news articles and other online sources. Claimant 1’s information did not appear to contain any additional assessment or evaluation of the information that was not apparent from the face of the publicly available materials. Furthermore, information derived exclusively from the news media does not constitute “original information.” Exchange Act Rule 21F-4(b)(iii).

SEC

10/30/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”); [Redacted] (collectively, “Claimants”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[2] The Covered Action investigation was opened as a result of by Division of Enforcement staff, which included the Covered Action Respondent. Enforcement staff began investigating the company prior to receiving information from the Claimants. While Enforcement staff received information provided by the Claimants during the course of the investigation, the information was already known to the Enforcement staff or did not otherwise become part of the charges brought by the Commission in the Covered Action. None of the information provided by Claimants helped advance the investigation. Further, none of Claimants’ information was used in, or had any impact on, the charges brought by the Commission in the Covered Action.

[3] Because Claimants’ info1mation was submitted after the [Redacted] had opened and/or after the Covered Action investigation had opened, much of it was duplicative of information already received and identified by the Enforcement staff in the investigation.

SEC

34-90284

10/29/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that
[Redacted] (“Claimant 1”) receive a whistleblower award of over $10,000,000, equal to *** percent (*** %) of the monetary sanctions collected in the above referenced Covered Action
(“the Covered Acton”), and that the award applications submitted by [Redacted]
(“Claimant 2”) and [Redacted] (“Claimant 3”) be denied. Claimant 1 provided written notice
of Claimant 1’s decision not to contest the Preliminary Determination, and Claimants 2 and 3
submitted timely notices contesting the preliminary denial of their award claims. For the reasons
discussed below, the recommendations of the CRS are adopted. I. Background.
A. The Covered Action.
On [Redacted], the Commission instituted and simultaneously settled
administrative and cease-and-desist proceedings (“OIP”) against [Redacted]
(“the Company”), pursuant to which the Company consented to the entry of an Order [Redacted].
In addition, the Company was ordered to pay [Redacted], which has been fully collected.

According to the OIP, from [Redacted], the Company committed
violations of the federal securities laws and regulations arising from [Redacted].
The Company also [Redacted].
On [Redacted], the Office of the Whistleblower posted the above-referenced
Notice of Covered Action on the Commission’s public website inviting claimants to submit
whistleblower award applications within 90 days.[fn1] Claimants 1, 2, and 3 all filed timely
whistleblower award claims.

B. The [Redacted] Action.
On [Redacted] (“Other Agency”) filed a state civil
complaint against the Company alleging, among other things, that the Company [Redacted].[fn2] The Other Agency filed
[Redacted]. In [Redacted], the Company entered into a settlement to
resolve the Other Agency’s action. The allegations contained in the Other Agency’s settlement
with the Company are substantially identical to the Commission’s charges in the Covered
Action. According to staff of the Division of Enforcement responsible for the Covered Action
(“Responsible Investigative Staff”), prior to the Other Agency’s complaint being filed in ***, they were aware of the conduct underlying every charge subsequently brought by the
Commission against the Company in the Commission’s OIP.

C. The Preliminary Determinations.
The Claims Review Staff (“CRS”)[fn3] issued Preliminary Determinations[fn4] recommending
that: (1) Claimant 1 receive an award of more than $10 million, equal to *** % of the monetary
sanctions collected in the Covered Action; (2) the award claims of Claimant 2 and Claimant 3 in
the Covered Action be denied; and (3) the related action award claims of Claimant 2 and
Claimant 3 in connection with the Other Action brought by the Other Agency be denied.[fn5] The
CRS recommended that Claimant 2’s and Claimant 3’s award claims in the Covered Action be
denied because their information did not lead to the success of the Covered Action as required
under Exchange Act Rule 21F-4(c).[fn6] Claimant 2 submitted a tip more than fourteen months after
the Responsible Investigative Staff opened the Covered Action investigation (“Investigation”).
While Responsible Investigative Staff received and reviewed Claimant 2’s information during
the Investigation, the information was generally unrelated to the Investigation. Furthermore,
Responsible Investigative Staff was not able to corroborate Claimant 2’s allegations, and
Claimant 2’s information was not used in and had no impact on the Covered Action.
Responsible Investigative Staff had no communications with, and received no information from,
Claimant 3.
The CRS also found that Claimants 2 and 3 were not eligible for an award in the Other
Action, because: (1) they are not eligible for an award in the Covered Action; and (2) the Other Action was a state civil action and therefore does not qualify as a related action under the
Commission’s whistleblower rules.[fn7]

D. Claimant 2’s Response to the Preliminary Determination.
Claimant 2 submitted a timely written response contesting the Preliminary
Determination.[fn8] Claimant 2’s request does not dispute that Claimant’s tip was submitted more
than fourteen months after the Responsible Investigative Staff opened its Investigation. Rather,
Claimant 2 contends that his/her information helped exert pressure on the Company to enter into
a global settlement with the Commission and the Other Agency. Claimant 2 states that in ***, after learning of the Other Agency’s [Redacted] complaint, Claimant 2
contacted the Other Agency with significant information that [Redacted]
the Other Action. Claimant 2 adds that after providing information to the
Other Agency, the Other Agency then filed [Redacted] against the
Company and later confirmed to Claimant 2 that the information he/she provided was helpful.
Specifically, Claimant 2 states that Claimant 2’s information rebutted the Company’s [Redacted].
In addition, Claimant 2 asserts that Claimant 2’s evidence was purportedly important in
proving that the Company was [Redacted]. As a result, Claimant
2 asserts, the Company could not risk litigating with either the Other Agency or the Commission
without exposing its falsehoods. In short, Claimant 2 maintains Claimant 2 should receive an
award for Claimant 2’s role in “bringing [the Company] to the table in the Commission’s
Covered Action.” In addition, Claimant 2 argues that the scope of the conduct charged in the
Covered Action does not lessen the impact of Claimant 2’s evidence in significantly contributing
to the global settlement that the Company entered into with the Other Agency and the
Commission. Specifically, Claimant 2 argues that this “cause and effect” is not “undone” simply
because the Commission ultimately brought charges that were narrower than those in the Other
Agency’s [Redacted].

E. Claimant 3’s Response to the Preliminary Determination.
Claimant 3 submitted a timely written response contesting the Preliminary
Determination. Claimant 3 argues that Claimant 3 shared specific and detailed information with
Commission staff members regarding [Redacted]
and showed the Commission that [Redacted].
Claimant 3 acknowledges having not communicated directly with the Responsible
Investigative Staff. Nevertheless, Claimant 3 identifies various Commission staff in the Home Office and [Redacted] Regional Office (collectively, “Other Enforcement Staff”) with whom
he/she spoke and believes that the Other Enforcement Staff may have relayed his/her information
to the Responsible Investigative Staff. Claimant 3 also surmises that the Responsible
Investigative Staff learned of certain terms used in the Covered Action, such as
[Redacted]
from information provided by Claimant 3.

II. Analysis.
A. Claimant 1.
The record demonstrates that Claimant 1, a whistleblower, voluntarily provided
original information to the Commission that caused the Responsible Investigative Staff to
open the Investigation and led to the successful enforcement of the Covered Action.[fn9]
Accordingly, Claimant 1 qualifies for a whistleblower award.
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.[fn10] In reaching
that determination, we positively assessed the following facts: (1) Claimant 1’s information
caused the Responsible Investigative Staff to open the Investigation; (2) it was Claimant 1’s
information and ongoing assistance that led directly to almost every factual finding and charge
against the Company; (3) Claimant 1 provided substantial assistance to the Responsible
Investigative Staff, providing them with key evidence, communicating over a dozen times with
the Responsible Investigative Staff, helping to decipher communications and distill complex
issues, and saving significant Commission time and resources; (4) Claimant 1 raised concerns
about the Company’s conduct internally, and, after determining the Company would not remedy
the problem, reported Claimant 1’s concerns to the Commission; and (5) the law enforcement
interests are very high. B. Claimant 2.
Claimant 2’s information does not satisfy Rule 21F-4(c)(1) as the Investigation was
opened based on Claimant 1’s information, and not Claimant 2’s information, which was
submitted fourteen months after the Investigation was opened. Claimant 2’s information also
does not satisfy Rule 21F-4(c)(2) because, as explained below, his/her information did not
significantly contribute to the success of the Covered Action.
First, according to the Responsible Investigative Staff, several months prior to receiving
information from Claimant 2 or Claimant 2 providing information to the Other Agency, Responsible Investigative Staff was aware of the conduct underlying every charge subsequently
brought by the Commission against the Company in the Commission’s OIP. Second, none of
Claimant 2’s information was used in the Commission’s case against the Company. Responsible
Investigative Staff confirmed that Claimant 2’s information was not directly relevant to what
they were investigating. Moreover, Responsible Investigative Staff looked into Claimant 2’s
allegations and was not able to substantiate his/her allegations. Third, even assuming, for the
sake of argument, that Claimant 2’s information contributed to the Other Agency’s [Redacted], that would not show that his/her information significantly contributed to the success
of the Covered Action. This is because a claimant’s information must meaningfully advance the
Commission’s investigation and resulting enforcement action, not another government agency’s
investigation. Furthermore, Claimant 2’s information did not influence the Commission’s
settlement with the Company. A primary member of the Responsible Investigative Staff
confirmed in a supplemental declaration (“Supplemental Declaration”), which we credit, that
Claimant 2’s information did not help settle the charges on more favorable terms. This is
because Claimant 2’s information did not relate to the issues the Responsible Investigative Staff
was investigating in the Investigation; nor could they substantiate Claimant 2’s allegations. In
sum, the lack of any nexus between Claimant 2’s information and the Commission’s charges in
the Covered Action is fatal to Claimant 2’s award claim.

C. Claimant 3.
Claimant 3’s information does not satisfy Rule 21F-4(c)(1) as the Investigation was
opened based on Claimant 1’s information, and not Claimant 3’s. Claimant 3’s information also
does not satisfy Rule 21F-4(c)(2) because his/her information did not significantly contribute to
the success of the Covered Action. Responsible Investigative Staff received no information
from, nor had any communications with, Claimant 3.
In response to Claimant 3’s reconsideration request, a primary member of the
Responsible Investigative Staff confirmed in a Supplemental Declaration, which we credit, that
while he spoke with the Other Enforcement Staff identified by Claimant 3 in his/her request for
reconsideration, the Other Enforcement Staff did not provide him with any information that they
may have received from Claimant 3. One of the attorneys in the [Redacted] Regional Office
identified by Claimant 3 in his/her request for reconsideration also provided a declaration
affirming that she did not provide any information that she received from Claimant 3, which
related to entities other than the Covered Action Company, to the Responsible Investigative
Staff.[fn11]
Finally, other than pointing to general terms or concepts in his/her reconsideration
request, Claimant 3 fails to identify any information that he/she provided that relates specifically
to possible violations by the Company. Claimant 3’s award application and reconsideration
request make clear that Claimant 3’s information related to alleged securities violations at other entities (such as [Redacted]). Furthermore, with respect to the general
terms and concepts identified by Claimant 3 in his/her request for reconsideration, a primary
member of the Responsible Investigative Staff affirmed that he developed his knowledge and
understanding of these terms (e.g., [Redacted])
through his past investigative work and not because of any information from Claimant 3. In
sum, Claimant 3 fails to identify any new information that he/she provided that meaningfully
advanced the Investigation or resulting Covered Action.[fn12]

III. Conclusion.
Accordingly, it is hereby ORDERED that: (1) Claimant 1 shall receive an award of over
$10 million, which is equal to *** percent ( *** %) of the monetary sanctions collected, or to be
collected, in the Covered Action; (2) Claimant 2’s and 3’s whistleblower award applications in
the Covered Action are denied; and (3) Claimant 2’s and 3’s whistleblower award applications
in the Other Action are denied.
By the Commission.

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] [Redacted] (“Other Action”).

[3] Rule 21F-10(d) under the Exchange Act provides that the CRS will “evaluate all timely whistleblower award
claims submitted on Form WB-APP in accordance with the criteria set forth in the rules.”
[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[5] The CRS also recommended that the award claims of four other individuals be denied. Because they did not
request reconsideration, the preliminary denial of their claims is now deemed to be the Final Order of the
Commission pursuant to Exchange Act Rule 21F-10(h).
[6] As relevant here, information will be deemed to have led to a successful enforcement action if it was (1)
“sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation . . .
or to inquire concerning different conduct as part of a current . . . investigation, and the Commission brought a
successful judicial or administrative action based in whole or in part on conduct that was the subject of [this]
information;” or (2) the information “significantly contributes” to the success of the enforcement action. Exchange
Act Rules 21F-4(c)(1) & (2). In determining whether information significantly contributed to an enforcement
action, we consider “whether the information allowed us to bring: (1) Our successful action in significantly less
time or with significantly fewer resources; (2) additional successful claims; or (3) successful claims against
additional individuals or entities.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34325
(June 13, 2011). In other words, “[t]he individual’s information must have been ‘meaningful’ in that it ‘made a
substantial and important contribution’ to the success of the covered action.’” Order Determining Whistleblower
Award Claims, Exch. Act Rel. No. 85412, 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining
Whistleblower Award Claims, Exch. Act Rel. No. 82897, 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).

[7] Rules 21F-3(b)(1) and 21F-11(a). See, e.g., Order Determining Whistleblower Award Claims, Exchange Act
Release No. 34-86902 (Sept. 9, 2019).
[8] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[9] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[10] In assessing the appropriate award amount, Exchange Act 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.

[11] Additionally, in connection with a prior, separate award claim by Claimant 3 for Covered Action [Redacted], the
Home Office Enforcement staff responsible for that matter affirmed that while they received Claimant 3’s
information, after meeting with Claimant 3, they determined that Claimant 3’s information did not relate to their
investigation and referred Claimant 3 to staff in the [Redacted] Regional Office.

[12] Claimant 2’s and Claimant 3’s related action award claims are also denied. This is because (1) they are not
eligible for an award in the Commission’s Covered Action and (2) the Other Action was a state civil action and
therefore does not qualify as a related action under the Commission’s whistleblower rules. Rules 21F-3(b)(1) and
21F-11(a). See, e.g., Order Determining Whistleblower Award Claims, Exchange Act Release No. 86902 (Sept. 9,
2019).

SEC

90247

10/22/2020

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1″) receive an aggregate whistleblower award of over $114 million. The CRS preliminarily determined to recommend a nearly $52 million award to Claimant 1, equal to [Redacted] percent ( ***%) of the monetary sanctions collected, in the above referenced Covered Action (” the Covered Acton”). The CRS also preliminarily determined to recommend that *** related [Redacted] constitute “related actions” to the Covered Action and to grant Claimant 1 a whistleblower award of over $62 million, equal to [Redacted] percent (***%) of the monetary sanctions collected in the Related Actions.[fn1] The CRS further preliminarily determined to recommend the denial of the award applications submitted by [Redacted] (“Claimant 2”) and joint claimants [Redacted] (“Claimant 3”) and [Redacted] (“Claimant 4”). Claimant 1 provided written notice of Claimant 1’s decision not to contest the Preliminary Determinations, and Claimants 2, 3 and 4 submitted timely notices contesting the preliminary denial of their award claims. For the reasons discussed below, and based on the Commission’s independent review of the materials before us, we adopt the CRS’s recommendations with respect to Claimant 1, Claimant 2, Claimant 3, and Claimant 4.

I. Background.

A. The Covered Action.

On [Redacted] the Commission filed a complaint alleging that [Redacted] or “Company”) [Redacted]. The complaint also alleged that [Redacted]. In addition, the Commission alleged that [Redacted]. The complaint further alleged that [Redacted]. Under the settlement, [Redacted].

On [Redacted] the Office of the Whistleblower posted the above-referenced Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimants 1, 2, 3, and 4 all filed timely whistleblower award claims.

B. The Related Actions.

On [Redacted] (“Other Agency”) [Redacted] which alleged similar misconduct as the Covered Action. The Other Agency charged [Redacted].

C. The Preliminary Determinations.

The Claims Review Staff (“CRS”)[fn3] issued Preliminary Determinations[fn4] recommending that: (1) Claimant 1 receive an award of ***% of the monetary sanctions collected in the Covered Action; (2) Claimant 1 receive an award of ***% of the monetary sanctions collected in the Related Actions; (3) the award claims of Claimants 2, 3, and 4 in the Covered Action be denied; and (4) the award claims of Claimants 2, 3, and 4 in connection with the Related Actions be denied.[fn5] The CRS preliminarily determined to recommend that Claimant 2’s, Claimant 3’s and Claimant 4’s award claims in the Covered Action be denied because their information did not lead to the success of the Covered Action as required under Exchange Act Rule 21F-4(c).[fn6] Claimant 2’s information did not cause the opening of the staffs investigation, which was opened based on information provided by Claimant 1. While Enforcement staff responsible for the Covered Action received Claimant 2’s information several years after the opening of the investigation, Claimant 2 ‘s information involved conduct that was not related to the Commission’s charges. Furthermore, Claimant 2’s information was not used in and had no impact on the Covered Action. The information from joint claimants 3 and 4 also involved conduct that was not related to the Commission’s charges and was not used by the staff in the Covered Action.[fn7]

D. Claimant 2’s Response to the Preliminary Determination.

Claimant 2 submitted a timely written response contesting the Preliminary Determination.[fn8] Claimant 2 contends that his/her information, which was submitted prior to Claimant 1’s information, may have laid the groundwork for the staff’s decision to open the investigation in the Covered Action. Specifically, Claimant 2 contends that staff in the Commission’s [Redacted] Office’s (“[Redacted] Office”) decision to open the Covered Action investigation and that his/her information may have influenced that decision. Additionally, Claimant 2 contends that issues he/she raised may have contributed to the [Redacted] Office staff’s formulation of the first document request to the Company in [Redacted].

E. Response of Joint Claimants 3 and 4 to the Preliminary Determination.

Claimants 3 and 4 submitted a timely written response contesting the Preliminary Determination. Claimants 3 and 4 argue in response to the Preliminary Determination that their information, which related to alleged misconduct by the Company [Redacted], was material to the overall settlement in the Covered Action because, in light of the [Redacted], they believe the Company would never have settled with the Commission and the Other Agency unless there was no risk of an additional investigation into their allegations. Claimants 3 and 4 make the following arguments. First, Claimants 3 and 4 contend that *** must have asked for assurances from SEC staff that they would not pursue a [Redacted] investigation if the Company entered into a settlement. Second, Claimants 3 and 4 contend that hose assurances were material to the Company and its decision to enter into the settlement because the Company would not have settled if there was a risk that [Redacted]. Third, Claimants 3 and 4 contend that the materiality of the purported assurances is evidenced by the fact that the Company “presumably” communicated to the SEC about the requested assurances before agreeing to sign off on the settlement. Finally, Claimants 3 and 4 contend that the Company must have sought these assurances following a [Redacted] (“News Article”) [Redacted].

II. Analysis. A. Claimant 1.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that caused [Redacted] Office staff to open an investigation that led to the successful enforcement of the Covered Action. As relevant here, information leads to the success of an enforcement action if it: (1) was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation… or to inquire concerning different conduct as part of a current… investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information” or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action.[fn9] Claimant 1 voluntarily submitted a tip to the Commission in [Redacted] that alleged [Redacted] violations at the Company and *** violations at certain of the Company’s [Redacted]. The tip caused [Redacted] Office staff to open the investigation in the Covered Action, and the charges brought by the Commission in the Covered Action were based, in part, on the conduct alleged by Claimant 1 in the [Redacted] tip. Accordingly, Claimant 1 qualifies for a whistleblower award. The record further demonstrates that Claimant 1 also voluntarily provided the original information that led to the successful enforcement of the Covered Action to the Other Agency, and that this information led to the successful enforcement of the Related Actions.[fn10] 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.[fn11] In reaching that determination, we positively assessed the following facts: (1) Claimant 1’s information was significant in that it caused Commission staff and Other Agency staff to open investigations and alerted the staff to wrongdoing [Redacted] (2) there is a close nexus between Claimant 1’s information and the charges brought in the Covered Action concerning [Redacted] (3) Claimant 1 provided substantial and ongoing assistance to the [Redacted] Office staff throughout the investigation, which saved a considerable amount of time and resources; (4) Claimant 1 suffered serious personal and professional hardships as a result of Claimant 1’s whistleblowing activities; and (5) Claimant 1 internally reported the concerns. The determination also reflects that a significant portion of the conduct charged in the Commission and Related Actions related to [Redacted] about which Claimant 1 provided limited information.

B. Claimant 2.

The record, which includes a supplemental declaration from the supervisory attorney in the [Redacted] Office responsible for the Covered Action investigation (“Supplemental Declaration”) and a declaration from the [Redacted] Office attorney who initially reviewed Claimant 2’s tip (“[Redacted] Office Declaration”), which we credit, demonstrates that Claimant 2’s information does not satisfy Rule 21F-4(c)(1) as the investigation was opened based on Claimant 1’s information, not Claimant 2’s information. Claimant 2’s information also does not satisfy Rule 21F-4(c)(2) because his/her information did not significantly contribute to the success of the Covered Action.

Although Claimant 2’s information was submitted to the Commission nearly a year before the opening of the Covered Action investigation, [Redacted] Office staff determined that Claimant 2’s tip and supplemental submissions were not compelling enough to open an investigation. The [Redacted] Office staff did not share Claimant 2’s tip or supplemental submissions with [Redacted] Office staff. Claimant 2’s information did not cause the opening of the Covered Action investigation, which was opened based on information submitted to [Redacted] Office staff in [Redacted] by Claimant 1, who provided much more detailed allegations concerning [Redacted] all of which were supported by compelling [Redacted] documentation. The Supplemental Declaration confirms that Claimant 2’s information was not used in the decision to open the investigation, and the [Redacted] Office Declaration confirms that the [Redacted] Office staff had no involvement in the decision to open the Covered Action investigation. Claimant 2’s information also did not significantly contribute to the success of the Covered Action. [Redacted] Office staff did not learn of Claimant 2’s allegations until [Redacted] approximately three years after the opening of the investigation. Although [Redacted] Office staff spoke with Claimant 2’s counsel, they had already learned of the details concerning [Redacted] from other sources. The staff ultimately did not recommend charging the [Redacted] conduct. The [Redacted] Office staff confirmed that, as a result, none of the information provided by Claimant 2 was used in, or had any impact on, the charges brought by the Commission against the Company. Similarly, although the Other Agency reviewed Claimant 2’s information after it opened its investigations, the Other Agency determined not to include any charges related to [Redacted] in the [Redacted] actions. Finally, the Supplemental Declaration and [Redacted] Office Declaration confirms that Claimant 2’s information was not used in formulating the [Redacted] Office staff’s first request letter to the Company in [Redacted]. The letter was drafted exclusively by [Redacted] Office staff and was based on information provided by Claimant 1. At the time the letter was drafted, [Redacted] Office staff had no knowledge of Claimant 2’s information. Accordingly, because Claimant 2’s information was not used in and had no impact on the Covered Action, the information did not lead to the success of the Covered Action.[fn12]

C. Joint Claimants 3 and 4.

The record demonstrates that Claimant 3’s and Claimant 4’s information does not satisfy Exchange Act Rule 21F-4(c)(1) as the investigation was opened based on Claimant 1’s information, not the information submitted by Claimants 3 and 4. The information submitted by Claimants 3 and 4 also did not significantly contribute to the success of the Covered Action pursuant to Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2). Claimant 3 and 4’s information, which was received by [Redacted] Office staff several years after the investigation was opened, related to alleged violations in [Redacted] conduct which was not charged in the Covered Action. In response to Claimant 3’s and Claimant 4’s reconsideration request, [Redacted] Office staff confirmed in the Supplemental Declaration that the information provided by Claimants 3 and 4 did not impact (i) the investigation; (ii) the charges brought in the Covered Action; (iii) the settlement negotiations; or (iv) the relief ultimately obtained in the matter. The arguments set forth by Claimants 3 and 4 that their information was material to settlement negotiations are premised on unsupported speculation about communications between the Company and [Redacted] Office staff. Claimants 3 and 4 appear to concede that their information did not actually advance the investigation, which was focused on the Company’s conduct [Redacted]. Rather, they contend that their information caused the Company to seek assurances from the [Redacted] Office staff that staff would not investigate alleged misconduct [Redacted] as a condition of settlement, because they assume the Company would not want to face any lingering [Redacted] after settling. The [Redacted] Office staff, however, do not recall any communications with the Company in which the Company sought assurances from the [Redacted] Office staff that staff would not pursue and investigation into conduct [Redacted]. Claimants 3 and 4 further contend that Company must have sought these assurances following the News Article concerning [Redacted]. This speculation is entirely unsupported by the record. Rather, the record reflects that over a year before Claimants 3 and 4 submitted their tip to the Commission, [Redacted]. The [Redacted] Office staff also confirmed that by the time Claimants 3 and 4 submitted their tips, the investigation was substantially complete and the [Redacted] Office staff had made a determination not to pursue an investigation into [Redacted]. Further, the settlement negotiations between the [Redacted] Office staff and the Company were completed by the time the News Article was published. Because Claimant 3’s and Claimant 4’s information had no impact on the investigation, settlement negotiations, or resulting charges, their information did not “lead to” the success of the Covered Action.[fn13]

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an aggregate award of over $114 million, which is equal to [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action and in the Related Actions. It is further ORDERED that Claimant 2’s, Claimant 3’s, and Claimant 4’s whistleblower award applications in the Covered Action be, and hereby are, denied. It is further ORDERED that Claimant 2’s, Claimant 3’s and Claimant 4’s whistleblower award applications for a related action award be, and hereby are, denied. By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5),
and Rule 21F-3(b), 17 C.F.R § 240.21F-3(b).

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] Rule 21F-10(d) under the Exchange Act provides that the CRS will “evaluate all timely whistleblower award
claims submitted on Form WB-APP in accordance with the criteria set forth in the rules.” 17 C.F.R § 240.21F-10(d).
[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[5] The CRS also recommended that the award claims of Claimant 5 and Claimant 6 be denied. These individuals did
not contest the preliminary denial of their claims. Accordingly, the Preliminary Determinations with respect to their
award claims became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17
C.F.R. §240.21F-10(f).
[6] Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412, 2018 SEC LEXIS 615, at *16 (Mar.
26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897, 2018 SEC LEXIS 750, at
*16 (Mar. 19, 2018).
[7] The Preliminary Determinations determined that, because Claimants 2, 3, and 4 are not eligible for an award in the
Covered Action, they do not qualify for an award in any related action. A related action award may be made only if,
among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the
first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a).
[8] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[9] See Exchange Act Rule 21F-4(c)(1), (2), 17 C.F.R. § 240.21F-4(c)(1), (2). See also Order Determining
Whistleblower Award Claims, Exch. Act Rel. No. 85412, 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order
Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897, 2018 SEC LEXIS 750, at *16 (Mar. 19,
2018).

[10] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a) and (b), 17 C.F.R. §
240.21F-3(a), (b). See also In the Matter of Claim for Award, Rel. No. 34-84046 (Sept. 6, 2018) (for a
whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate
[that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory
authority or self-regulatory organization the same original information that led to the Commission’s successful
covered action, and that this information led to the successful enforcement of the related action.”) (citing Exchange
Act Rule 21F-11(c)).

[11] In assessing the appropriate award amount, Exchange Act 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.

[12] Claimant 2’s related action award claim is also denied because he/she is not eligible for an award in the
Commission’s Covered Action.

[13] Claimant 3’s and Claimant 4’s related action award claims are also denied because they are not eligible for an
award in the Commission’s Covered Action.

SEC

90189

10/15/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with Covered Action [Redacted] (the “Covered Action”) on the ground that Claimant was not a “whistleblower.” Claimant filed a timely response contesting the preliminary denial.

Upon review of the record, including Claimant’s request for reconsideration, we have determined that Claimant satisfied the requirements for being considered a whistleblower and we further find that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]

We have further determined that Claimant should receive a whistleblower award of more than $800,000 ( *** percent ( *** )) of the monetary sanctions collected in the Covered Action). In making this award determination, we applied the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here.[fn3] In reaching that determination, we positively assessed that Claimant authored information containing a detailed analysis that alerted Commission staff to the underlying securities violations. However, beyond the initial tips, Claimant did not provide further assistance to the staff during the course of the investigation.

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.

[1] As discussed in infra note 2, [Redacted] is deemed to be part of the Covered Action because it arose from the same nucleus of operative facts as the Covered Action.
[2] See Exchange Act Section 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). For the purposes of payment on the award in this matter, we have determined to treat a separate enforcement action, [Redacted], together with the above-referenced action, as a single Covered Action, as the proceedings arise out of the same nucleus of operative facts. See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(d), 17 C.F.R. § 240.21F-4(d)(2). We also determine that the [Redacted] should be treated as part of the Covered Action because, while it does not qualify as a Covered Action in its own right because the monetary sanctions ordered were less than $1,000,000, it arises from the same nucleus of operative facts as the Covered Action. The [Redacted] resulted from the same investigation that produced the Covered Action, and related to [Redacted]. See Exchange Act Rule 21F-4(d)(2) (“[f]or purposes of determining the payment on an award under § 240.21F-14 of this chapter, the Commission will deem as part of the Commission action upon which the award was based [i.e., the covered action] any subsequent Commission proceeding that, individually, results in a monetary sanction of $1,000,000 or less, and that arises out of the same nucleus of operative facts.”).
[3] In assessing the appropriate award amount, Exchange Act 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.

SEC

10/09/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 3”) and [Redacted] (“Claimant 4”) (collectively, “Claimants”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1, [Redacted] 3 and 4 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimants 1, [Redacted] 3 and 4 did not provide “original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information provided by Claimants was already known to the Commission.[fn3]

By: Claims Review Staff.

[2] None of the Claimants provided information that caused the Covered Action investigation to open. Staff opened the investigation based on a source other than Claimants prior to receiving any information from Claimants. None of the Claimants provided information that significantly contributed to the success of the Covered Action. While Enforcement staff responsible for the Covered Action received information from the Claimants, their information was submitted after the investigation had opened and was duplicative of information staff was already aware of through their investigative efforts. None of the Claimants’ information was used in or had any impact on the Commission’s charges in the Covered Action.

[3] Claimant 1, [Redacted] 3 and 4’s information was submitted after the Covered Action investigation had opened and was duplicative of information Enforcement staff had already learned during the course of the investigation prior to receiving Claimants’ tips. Although not a basis for the denial, we also note that Claimant 1’s tips, which were submitted years after Enforcement staff opened the Covered Action investigation, appear to be derived from publicly available sources and did not include any additional analysis, evaluation or insight and did not reveal information that was not apparent from the face of the publicly available materials.

SEC

10/09/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2″) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the ”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimant 1 and Claimant 2 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant’s information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Art.[fn2]

By: Claims Review Staff.

[1] To the extent Claimant has applied for an award in a related action. because Claimant is not eligible for an award in an SEC Covered Action. he/she is not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b): Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a): see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9. 2019).

[2] Enforcement staff opened the investigation that gave rise to the Covered Action in [Redacted] prior to receiving any information from Claimant 1 or Claimant 2. While Enforcement staff responsible for the Covered Action received Claimant 1’s and Claimant 2’s TCRs and had subsequent communications with them, Claimant 1’s and Claimant 2’s information was unrelated to the conduct that gave rise to the charges in the Covered Action and none of the information provided by Claimant 1 or Claimant 2 helped advance or otherwise contributed to the success of this Covered Action.

SEC

90057

09/30/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of [Redacted], which is equal to [Redacted] percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”).[fn1] Claimant provided timely notice contesting the Preliminary Determination.[fn2] After considering the administrative record, we choose to depart from the Preliminary Determination and award Claimant [Redacted] percent *** %) of the monetary sanctions collected in the Covered Action for a payout of over $1.7 million.

I. Background.

A. The Covered Action.

On [Redacted], the Commission [Redacted] finding [Redacted] (the “Company”) and [Redacted] (“Company Employee”) [Redacted]. This practice resulted in the Company [Redacted]. The Commission also found that [Redacted].

The Office of the Whistleblower posted the above-referenced Notice of Covered Action on the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days.[fn3] Claimant timely filed a whistleblower award claim.

B. Preliminary Determination.

The CRS issued a Preliminary Determination[fn4] recommending that Claimant receive an award of [Redacted], which is equal to *** % of the monetary sanctions collected in the Covered Action. In reaching its determination, the CRS noted the following key facts: (i) Claimant’s information was significant and implicated strong law enforcement interests, which prompted the Enforcement staff to open an investigation, resulting in a successful action; and (ii) Claimant provided ongoing and extensive assistance to the Enforcement staff, which conserved the Commission’s time and resources. The CRS also considered the Claimant’s almost four-year delay in reporting the violations which, under the circumstances, was found to be unreasonable. While Claimant first learned of the misconduct in [Redacted], Claimant waited until [Redacted] to report to the Commission. Therefore, all but thirteen (13) months of Claimant’s forty five (45) month delay occurred after the creation of the Commission’s whistleblower program under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”).[fn5] Further, during the period of delay, the violations continued and the respondents in the Covered Action obtained additional ill-gotten gains, with a resulting increase in the monetary sanctions upon which the Claimant’s award is based.

C. Claimant’s Response to the Preliminary Determination.

On [Redacted], Claimant submitted a timely response contesting the Preliminary Determination.[fn6] First, Claimant asserts that the Commission should excuse Claimant’s delay because some of it occurred before the creation of the Commission’s whistleblower program. Second, Claimant argues that the Commission should measure Claimant’s delay from no earlier than August 2011, when the Commission first identified unreasonable delay as a ground to reduce a whistleblower award. Third, Claimant maintains that Claimant had legitimate reasons to delay reporting the violations – namely, that Claimant (and, for some portion of the time, Claimant and Claimant’s counsel) was documenting allegations against the Company, and Claimant feared retaliation by the Company and Company Employee. Lastly, Claimant states that Claimant worked to stop investor harm after leaving the Company and before reporting to the Commission.

II. Analysis.

The record demonstrates that Claimant, a whistleblower, is eligible for an award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn7] Applying the award criteria specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, Claimant’s delay in submitting information to the Commission led the CRS to recommend a reduction in Claimant’s award amount. We agree with the CRS that this period of delay is unreasonable, but we believe an *** % reduction is more appropriate under the specific facts and circumstances here. In particular, we acknowledge that Claimant took some steps during the period of delay to alert investors to the conduct and mitigate the harm. In addition we acknowledge that Claimant feared retaliation for reporting the violations while employed at the Company. Accordingly, we conclude that a reduction of *** % for this delay is more appropriate.[fn8]

We are not persuaded by Claimant’s arguments for increasing the award further.

First, Claimant’s delay resulted in continuing harm [Redacted]. This delay resulted in the Company and the Company Employee [Redacted].

Second, while we recognize Claimant’s efforts to document the Company’s and the Company Employee’s wrongdoing, we find that Claimant’s decision to delay reporting information to the Commission for approximately three years after the adoption of the Dodd-Frank Act to be unreasonable. Moreover, we find it difficult to reconcile Claimant’s contention that Claimant waited to report because of efforts to document wrongdoing and fear of retaliation when Claimant delayed reporting to the Commission an additional seven months after resigning from the Company.

Third, while we find Claimant’s efforts to stop investor harm to be laudable, such efforts occurred after Claimant resigned from the Company and were significantly delayed from the time Claimant first learned of the underlying conduct. Only after Claimant resigned – approximately three years after first learning of the conduct – did Claimant finally disclose the Company’s misconduct to [Redacted]. As a result of this delay, [Redacted] suffered continuing financial harm, minimizing the weight and our consideration of this argument. However, because Claimant took these steps to mitigate the harm, albeit late in the delay period, we have determined to slightly increase Claimant’s award.

Finally, we have emphasized that the whistleblower rules “should incentivize the prompt and early submission of high quality tips.”[fn9] Section 21F provided whistleblowers with confidentiality protections, including the right of whistleblowers to report to the Commission anonymously. In fact, Claimant took advantage of these provisions and submitted the Form TCR anonymously through counsel. As such we believe that Claimant’s delay was unreasonable in light of the protections available to whistleblowers under the whistleblower program.[fn10]

III. Conclusion.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of over $1.7 million, which is equal to [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] For the purposes of making an award, we consider the administrative actions in this matter as a single Covered Action because they arose out of the same nucleus of operative facts. See Exchange Act Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).
[2] Two additional claimants on the matter did not seek reconsideration of their denials and, as such, the Preliminary Determination with respect to their claims became the Final Order of the Commission, pursuant to Exchange Act Rule 21F-10.
[3] See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).
[4] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[5] See Pub. L. No. 111-203, § 922, 124 Stat 1841 (2010).
[6] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).
[7] See Exchange Act Section 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).
[8] In assessing the appropriate award amount, Exchange Act 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.
[9] Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545, at 217 (Aug. 12, 2011).
[10] See Order Determining Whistleblower Claim, Exchange Act Release No. 76338, at 2 (Nov. 4, 2015).

SEC

90054

09/30/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively, “Claimants”) receive a whistleblower award jointly[fn1] of nearly $400,000, which is equal to [Redacted] of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”). Claimants provided written notice of their decisions not to contest the Preliminary Determination.

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 and Claimant 2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2] Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn3] In reaching that determination, we positively assessed the following facts: (i) Claimants’ tip alerted staff to the underlying conduct, prompting the opening of an examination by the Office of Compliance Inspections and Examinations (“OCIE”) and an Enforcement investigation that resulted in the Covered Action, which involved [Redacted]; (ii) Claimants provided specific and detailed information that helped staff understand key documents, identify witnesses, draft subpoenas and information requests, and assisted staff in utilizing efficient search terms in the document review process; (iii) Claimants provided continuing cooperation and assistance, including having numerous meetings and discussions with staff, and (iv) Claimants reported internally to their supervisor before reporting to the Commission and suffered personal hardships as a result of their reporting.

Accordingly, it is hereby ORDERED that Claimants shall receive an award jointly of [Redacted] of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] A joint award is appropriate as Claimants jointly submitted their tip and Forms WB-APP. See Exchange Act Section 21F(a)(6) (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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.
[2] See Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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.

SEC

90049

09/30/2020

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant 1”) receive a whistleblower award of over $22,000,000.00, which is equal to [Redacted] percent ([Redacted]) and [Redacted] (“Claimant 2”) receive a whistleblower award of almost $7,000,000.00, which is equal to [Redacted] percent ([Redacted]) of the amounts collected in [Redacted] (“Covered Action”).[fn1] Claimant 1 and Claimant 2 provided written notice of their decisions not to contest the Preliminary Determinations.

The record further demonstrates that while Claimant 2 provided certain new, valuable information to the Commission that, together with Claimant 1’s information, prompted the opening of the investigation, much of Claimant 2’s information was duplicative of Claimant 1’s information. Further, Claimant 2 provided more limited assistance as compared to Claimant 1. As to both Claimant 1 and Claimant 2, there are high law enforcement interests here as tens of millions of dollars were returned to harmed retail investors.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of over $22,000,000.00, [Redacted] percent ([Redacted]) of the monetary sanctions collected in the Covered Action, and Claimant 2 shall receive almost $7,000,000.00, [Redacted] percent ([Redacted]) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] For the purposes of making an award in this matter, we are treating the enforcement action against the individual respondents together with the action against the company as a single Covered Action, as the proceedings arise out of the same nucleus of operative facts. See Rule 21F-4(d).
[2] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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.

SEC

90059

09/30/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination in connection with Covered Action [Redacted] (the “Covered Action”) recommending that [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of approximately [Redacted], which is equal to *** of the amounts collected in the Covered Action. The CRS also preliminarily determined to deny Claimant 1’s related action award claim in connection with an action brought by the Company”), [Redacted] against [Redacted]. (“the Company”, [Redacted], dated [Redacted] (“Other Action”). Claimant 1 filed a timely response contesting the preliminary denial of Claimant 1’s award claim for the Other Action. The CRS also preliminarily determined to deny the award claims of [Redacted] (“Claimant 2”) and [Redacted] (“Claimant 3”) for the Covered Action. Claimants 2 and 3 submitted timely responses contesting the preliminary denial of their award claims.[fn1] For the reasons discussed below, and based on the Commission’s independent review of the materials before us, we choose to depart from the CRS’s award amount recommendation with respect to Claimant 1 in the Covered Action, and instead have determined to award Claimant 1 *** percent ( *** ) of the monetary sanctions collected or to be collected in the Covered Action, for a payout of nearly $2.9 million. We also have determined to deny Claimant 1’s award claim for the Other Action, and to deny the award claims of Claimant 2 and Claimant 3.

I. Background.

A. The Covered Action.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings against [Redacted]. The Commission’s order found that [Redacted]. Among other relief, the Commission ordered [Redacted] which has been collected.

On [Redacted] the Commission instituted settled administrative and cease-and-desist proceedings against the Company. [Redacted]. The Commission’s order against the Company found the following: [Redacted]. Among other relief, the Commission ordered the Company to pay [Redacted] which has been collected.[fn3]

On [Redacted] the Office of the Whistleblower posted Notice of Covered Action [Redacted] on the Commission’s public website inviting claimants to submit whistleblower award applications. Because award applications must be filed within 90 days of the posting of a Notice of Covered Action,[fn4] the Commission’s invitation gave claimants until [Redacted] to file applications. Claimants 1 and 2 each filed a timely whistleblower award claim. Claimant 3 submitted an application in [Redacted] well after the 90-day deadline had expired.

B. The Other Action.

On [Redacted] determined that the Company violated [Redacted]. The Company consented to [Redacted]. The Other Action did not relate to [Redacted].

C. The Preliminary Determinations.

The CRS issued Preliminary Determinations[fn5] recommending that Claimant 1 receive a whistleblower award in the amount of ***, and that Claimant 1’s award claim for the Other Action be denied. The CRS preliminarily determined that Claimant 1 was not eligible for a related action award because the Other Action was not based on the same original information that led to the successful enforcement of the Covered Action. While Claimant 1 provided information to the staff in the Division of Enforcement responsible for the Covered Action during an August *** meeting concerning the [Redacted], the underlying conduct that formed the basis for the Other Action, Enforcement staff were already investigating issues surrounding the [Redacted] before receiving such information from Claimant 1. The CRS preliminarily determined that none of the information Claimant 1 provided during the August *** meeting concerning the [Redacted] substantially advanced the investigation or meaningfully contributed to the success of the enforcement action. Nor did it cause Enforcement staff to develop any new investigative leads as a result of Claimant 1’s information.

The CRS also preliminarily determined to recommend that Claimant 2’s claim and Claimant 3’s claim be denied. The record reflects that Enforcement staff responsible for the Covered Action received no information from, nor had any communications with, Claimant 2 or Claimant 3. Nothing in Claimant 2’s or Claimant 3’s award application indicates any connection to the Covered Action or that either claimant submitted any information to the Commission concerning the subject of the Covered Action. The CRS also preliminarily determined to deny Claimant 3’s award claim on the alternative ground that it was submitted after the 90-day deadline for submitting claims for the Covered Action.

C. Claimants’ Responses to the Preliminary Determinations.

Claimant 1 submitted a timely written response contesting the Preliminary Determination with respect to the denial of Claimant 1’s award claim for the Other Action.[fn6] Claimant 1 argued that Claimant 1 submitted two tips to the Commission in [Redacted] (“Earlier Tips”) alleging the same violations at issue in the Other Action, including the Company’s use of [Redacted] and speculates that Enforcement staff responsible for the Covered Action may have learned of those issues from Claimant 1’s Earlier Tips.

Claimant 2 submitted a timely written response contesting the Preliminary Determination denying Claimant 2’s award claim for the Covered Action. Claimant 2 submitted what appears to be two documents that relate to the payment of taxes and/or mortgages, which on their face have no relation to, or connection with, the Covered Action.

Claimant 3 submitted a timely written response to the Preliminary Determination. Claimant 3 appears to argue that the posting of the Covered Action was premature because at that point the Commission had not collected all the funds in the Covered Action, excusing Claimant 3’s failure to file an award application within 90 days of the date of the Notice. Claimant 3 also argues that the application was timely because the Commission was put on notice when Claimant 3 submitted a tip to the Commission that Claimant 3 wished to be considered for an award. Finally, Claimant 3 appears to argue that the Covered Action could not have been brought until Claimant 3 provided “certain evidence,” but does not identify the evidence and does not point to any information or other communication Claimant 3 had with Enforcement staff regarding the Covered Action.

III. Analysis.

A. Claimant 1.

1. The Covered Action.

The record demonstrates that Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn7] As relevant here, information leads to the success of an enforcement action if it: (1) was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation … or to inquire concerning different conduct as part of a current… investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of [this] information” or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action.[fn8] Claimant 1 voluntarily submitted a tip to the Commission in [Redacted] that alleged [Redacted]. This tip caused staff in the Division of Enforcement to open the Covered Action investigation, and the charges brought by the Commission in the Covered Action were based, in part, on the conduct alleged by Claimant 1 in the [Redacted] tip.

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we have determined to increase the proposed award amount.[fn9] In reaching that determination, we assessed the following facts: Claimant 1’s information alerted Commission staff to the alleged wrongdoing, which would have been difficult to detect in the absence of Claimant 1’s tip. Claimant 1 provided critical information and supporting evidence early in the investigation that conserved Commission time and resources. And Claimant 1 met with Enforcement staff during the investigation. We have determined to award Claimant 1 nearly $2.9 million, which is equal to *** percent ( *** ) of amounts collected in the Covered Action.

2. The Other Action.

We find that Claimant 1 is not eligible for a related action award based on the Other Action. Under the whistleblower rules, the Commission will pay an award based on amounts collected in “related actions” brought by certain other authorities, which includes actions brought by [Redacted]. To constitute a “related action” under the Exchange Act, the action by the other authority must be “based upon the original information provided by a whistleblower [to the Commission] that led to the successful enforcement of the Commission action.”[fn10] The record reflects that Claimant 1 is not eligible for a related action award because the Other Action was not based on the same original information that led to the successful enforcement of the Covered Action.

Here, as noted, Claimant 1 [Redacted] tip that caused the opening of the Covered Action investigation related to [Redacted] and did not touch upon [Redacted]. Further, Enforcement staff responsible for the Covered Action provided a detailed declaration affirming that, while Claimant 1 made allegations about the Company’s [Redacted] *** to the staff during an August *** meeting, staff was already investigating potential wrongdoing in connection with the [Redacted] months before this meeting through their own investigative efforts. For example, by June *** staff had already received documents from the Company addressing policies relating to [Redacted] and had taken testimony from a witness which related, in part, to the Company’s use of [Redacted]. As a supplemental declaration obtained by the Commission’s Office of the Whistleblower confirms, by the time Claimant 1 met with Enforcement staff responsible for the Covered Action in August *** Claimant 1 did not provide important new facts staff was not previously aware of, did not identify key witnesses or important documents, and did not suggest additional lines of inquiry that staff pursued. Thus, information that Claimant 1 provided about [Redacted] at the August *** meeting did not significantly contribute to the success of the Covered Action.

Claimant 1 contends that, even if Enforcement staff responsible for the Covered Action already knew the information Claimant 1 provided at the August *** meeting, it is possible that Enforcement staff’s knowledge derived from information Claimant 1 had earlier provided to the Commission. Specifically, Claimant 1 contends that the Earlier Tips, submitted to the Commission in [Redacted] included the same original information that was later used by [Redacted] in the Other Action and might also have assisted the Commission in its Covered Action investigation. But the record conclusively demonstrates that Claimant 1’s Earlier Tips played no role whatsoever in the successful enforcement of the Covered Action.

Enforcement staff declarations unambiguously demonstrate that Claimant 1’s Earlier Tips did not assist the successful enforcement of the Covered Action and were not directly or indirectly provided to, or used by, Enforcement staff responsible for the Covered Action. Claimant 1’s Earlier Tips were received by the Commission in [Redacted] and were assigned to staff in the [Redacted] (“Regional Office Staff”) for review. In early [Redacted] two Regional Office Staff interviewed Claimant 1 on the phone. Based on how Claimant 1 described the alleged misconduct, Regional Office Staff determined that the allegations did not appear to allege a violation of applicable rules or regulations, and recommended that the Earlier Tips be closed with a disposition of No Further Action (or “NFA”).[fn11] The recommendation was reviewed and approved by a supervisor, and the Earlier Tips were closed with an NFA disposition in [Redacted]. The Regional Office Staff did not forward the Earlier Tips to any other investigative staff, including Enforcement staff responsible for the Covered Action. Further, Enforcement staff responsible for the Covered Action did not learn of the information in the Earlier Tips from Regional Office Staff or from any other internal Commission sources. Indeed, Enforcement staff responsible for the Covered Action did not become aware of the Earlier Tips until reviewing Claimant 1’s award application. Finally, Enforcement staff responsible for the Covered Action confirmed that during the investigation they did not receive from the Company any internal complaints that Claimant 1 may have made about [Redacted].

The Regional Office Staff likewise did not forward the Earlier Tips to any other government entity, including [Redacted]. As a result, [Redacted] action was not related in any way to the Earlier Tips Claimant 1 submitted to the Commission. And, as the supplemental declaration confirms, none of the information at issue in the Commission’s action relating to [Redacted] or other issues raised in Claimant 1’s Earlier Tips was learned from [Redacted].

Based on our review of the record, including declarations from Commission staff, we conclude that Enforcement staff did not obtain, directly or indirectly, any information related to [Redacted] or other issues in the Earlier Tips from Regional Office Staff, and that Claimant 1’s Earlier Tips had no effect on the Commission’s successful enforcement of the Covered Action. Put simply, if Claimant 1 had never submitted the Earlier Tips or mentioned [Redacted] *** or any related issues at the August *** meeting with Enforcement staff, the Covered Action investigation and the resulting enforcement action would not have been different in any way. Claimant 1 offers no reason to call into question the veracity or accuracy of any of the staff declarations. Nor has the Commission found any reason to doubt the contents of the declarations. We therefore find that Claimant 1 is not eligible for a related action award because the information Claimant 1 provided to the Commission concerning the conduct at issue in the Other Action was not used in any way by the Enforcement staff responsible for the Covered Action. Accordingly, the Other Action was not based on any information that Claimant 1 provided to the Commission that also led to the successful enforcement of the Covered Action.

B. Claimant 2.

Claimant 2 did not provide information that caused the investigation to open. It was Claimant 1’s [Redacted] tip that caused Enforcement staff to open the Covered Action investigation. Claimant 2’s information also did not significantly contribute to the success of the Covered Action. Enforcement staff responsible for the Covered Action affirmed that they received no information from, and did not have any communications with, Claimant 2 before or during the course of the investigation.

Claimant 2 has submitted two additional documents in support of the claim: (1) a letter addressed to Claimant 2 concerning certain property-related tax deficiencies; and (2) a link to a publicly available website containing what appears to be a tax opinion from 2005 on a certain mortgage-related agreement.[fn12] Neither of these documents has any apparent bearing on or relation to the conduct at issue in the Covered Action. Because Claimant 2 did not provide any information that led to the successful enforcement of the Covered Action, Claimant 2’s award claim is denied.

C. Claimant 3.

Like Claimant 2, Claimant 3 did not provide information that caused the investigation to open, as it was opened based on information provided by Claimant 1.

Nor did Claimant 3 provide information that significantly contributed to the success of the Covered Action. Enforcement staff affirmed that they received no information from, and did not have any communications with, Claimant 3 before or during the course of the investigation.

Claimant 3 does not identify any specific information Claimant 3 provided to Enforcement staff responsible for the Covered Action. Rather, Claimant 3 states that “it was not until certain evidence filed by” Claimant 3 “that sufficient evidence could allow for what became the ‘Covered Action’ in this case.” Claimant 3 does not explain what “certain evidence” Claimant 3 is referring to. We credit Enforcement staff’s declaration that unambiguously states that staff responsible for the Covered Action received no information from nor had any communication with Claimant 3.

Claimant 3 also contends that Claimant 3’s failure to comply with the 90-day deadline to file an award application by five months should be excused. Under Exchange Act Rule 21F-8(a), “the Commission may, in its sole discretion, waive” certain procedural requirements, including the ninety-day filing deadline, “upon a showing of extraordinary circumstances.”[fn13] An extraordinary circumstance is one “where the reason for the failure to timely file was beyond the control of the applicant.”[fn14] Further, “[e]ven when circumstances beyond the applicant’s control give rise to the delay, . . . an applicant must also demonstrate that he or she promptly arranged for the filing . . . as soon as reasonably practical thereafter.”[fn15]

We conclude that Claimant 3 did not comply with the deadline and we decline to excuse that failure to comply. Claimant 3 contends that Claimant 3’s submission was not untimely filed because the Commission’s collection efforts have supposedly not been completed in the Covered Action, and because, in any event, Claimant 3’s tip put the Commission on notice of Claimant 3’s interest in an award.[fn16] But a Notice of Covered Action is posted when a Commission action results, through entry of a final judgment or order, in monetary sanctions totaling more than $1 million, independent of the status of any collections in the action.[fn17] Moreover, a claimant must file a timely award claim on a Form WB-APP to qualify for an award; the filing of a tip does not suffice.[fn18] Finally, Claimant 3 has not offered any extraordinary circumstance that would justify the 90-day deadline to be excused.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 shall receive an award of *** percent ( *** ) of amounts collected, or to be collected, in the Covered Action. It is further ORDERED that Claimant 1’s whistleblower award application for a related action award for the Other Action be, and hereby is, denied.

It is further ORDERED that Claimant 2’s and Claimant 3’s whistleblower award applications be, and hereby are, denied.

By the Commission.

[1] Two other individuals also submitted award applications in connection with the Covered Action. These individuals did not contest the preliminary denial of their claims. The Preliminary Determinations with respect to their award claims accordingly became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] [Redacted].

[3] Exchange Act Rule 21F-4(d)(1) provides that, “[f]or purposes of making an award . . . the Commission will treat as a Commission action two or more administrative or judicial proceedings brought by the Commission if these proceedings arise out of the same nucleus of operative facts.” We find that an action brought against an individual, [Redacted] arises out of the same nucleus of operative facts as the action brought against the Company, [Redacted]. For purposes of making an award in this matter, we will treat both actions as part of the Covered Action.

[4] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[5] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[6] See Exchange Act Rule 21F-11(e), 17 C.F.R. § 240.21F-11(e).

[7] See Exchange Act Section 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).

[8] See Exchange Act Rule 21F-4(c)(1), (2), 17 C.F.R. § 240.21F-4(c)(1), (2).

[9] In assessing the appropriate award amount, Exchange Act 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.

[10] 15 U.S.C. § 78u-5(a)(5) see also Exchange Act Rule 21F-3(b)(2), 17 C.F.R. § 240.21F-3(b)(2) (To make an award in connection with a related action, “the Commission must determine that the same original information that the whistleblower gave to the Commission also led to the successful enforcement of the related action under the same criteria described in these rules for awards made in connection with Commission actions.”) (emphasis added).

[11] An NFA disposition generally means that the Commission will take no additional action based on that particular tip, unless subsequent information leads Enforcement staff to reopen or reexamine the tip.

[12] A link to a publicly-available website, standing alone, would not qualify as “original information.”

[13] 17 C.F.R. § 240.21F-8(a).

[14] See Order Determining Whistleblower Award Claim, Release No. 34-85273 (Mar. 8, 2019).

[15] Id.

[16] Claimant 3 made these same arguments in a previous whistleblower award matter, and we previously rejected those contentions as a basis for waiving the filing deadline. See Order Determining Whistleblower Award Claim, Release No. 34-85273 (Mar. 8, 2019).

[17] See 17 C.F.R. § 240.21F-10(a).

[18] See id. (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred.”).

SEC

90021

09/28/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately [Redacted] equal to [Redacted] percent ( *** ) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

After considering the administrative record, we choose to depart from the Preliminary Determination and award Claimant [Redacted] percent ( *** ) of the monetary sanctions collected in the Covered Action for a payout of over $1,800,000. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we have chosen to increase the award to Claimant.[fn3] In reaching this determination, we positively assessed the following facts: (i) Claimant, an unaffiliated outsider of the company, was expeditious in reporting the information to the Commission; (ii) Claimant’s information was significant as it alerted the staff to the ongoing securities violations, and; (iii) the charges brought by the Commission bear a close nexus to the information provided by Claimant. We also recognize that Claimant was not in a position to provide continuing helpful information and assistance during the investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of over $1,800,000 ([Redacted] percent ( *** ) of the monetary sanctions collected or to be collected in the Covered Action).
By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying a joint award claim submitted by two other individuals, who did not submit a request for reconsideration of the preliminary denial. As such, the Preliminary Determination as to the joint award claim has become the Final Order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F 3(a), 17 C.F.R. § 240.21F3(a).
[3] In assessing the appropriate award amount, Exchange Act 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.

CFTC

09/28/2020

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application from Claimant 1 in response to Notice of Covered Action No. [Redacted]. The corresponding enforcement actions are [Redacted] (collectively, the “Covered Action”). The Claims Review Staff (“CRS”) evaluated the application in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** of monetary sanctions collected in the Covered Action. For the reasons set forth below, the CRS’s determination is adopted.

I. BACKGROUND.

The Covered Action arose out of an investigation opened in response to information that Claimant 1 submitted to the Commission regarding [Redacted]. Claimant 1, alleged that [Redacted]. The CFTC’s Division of Enforcement (“Division”) staff found Claimant 1’s information to be specific and credible and opened an investigation. The investigation resulted in [Redacted] actions that arose out of the same nucleus of operative facts. The Division brought the [Redacted] Actions on [Redacted]. After the actions concluded, Claimant 1 submitted a whistleblower award application for the matter. To date, the CFTC has collected a total of [Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** of monetary sanctions collected in the Covered Action because Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of a covered action. Claimant 1 responded by informing the WBO staff in writing that *** would not contest the Preliminary Determination. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination.

III. LEGAL ANALYSIS.

Section 23(b)(l) of the CEA requires the Commission to pay an award to an individual who voluntarily provides the Commission with original information that leads to the successful enforcement of a covered or related action. 7 U.S.C. § 26(b)(1) (2018). The CRS determined that Claimant 1 voluntarily provided the Commission with original information that led to the successful enforcement of a covered action. Claimant 1 is a whistleblower because Claimant 1 submitted information on a Form TCR regarding potential violations of the CEA. Claimant 1 provided the information voluntarily, as Claimant 1 was not under any legal obligation to report to the Commission. In addition, Claimant 1’s information was original. The information was previously unknown to the Commission and derived from Claimant 1’s [Redacted]. Lastly, Claimant 1’s information led the Commission to open an investigation.

The CRS recommended the award amount to be *** of the amount of monetary sanctions collected in the Covered Action, which would result in a payment of [Redacted]. This recommendation is adopted. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. The Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing documents containing direct evidence of violations could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

In arriving at this award amount, the CRS applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application. Many of the factors that would increase an award apply to Claimant 1, but one factor that would decrease an award also applies. Claimant 1 provided significant information that formed the basis of the Division’s investigation. When the Commission brought the Covered Action, the Commission made numerous findings that were directly based on information Claimant 1 provided. Further, Claimant 1 provided ongoing assistance throughout the investigation. After causing the Division to open an investigation, Claimant 1 provided additional information and produced documents that were direct evidence of some of the reported violations. Claimant 1 also met with Division staff both in person and over the phone multiple times. In addition, not only did Claimant 1 report the violations to the Commission, Claimant 1 also reported the violations to another authority and a compliance officer, facts supporting increasing the award amount. However, the award will be reduced because Claimant 1 had delayed reporting the violations. Claimant 1 had remained silent instead of approaching [Redacted]. The Commission encourages all whistleblowers with knowledge of violations of the CEA or the Commission’s regulations to come forward promptly and not turn a blind eye, as delayed reporting could lead to more victims and losses. Nevertheless, in this case, but for Claimant 1’s ultimate decision to come forward, the Division would not have learned of the violations. The totality of the facts and circumstances justifies an award of ***.

IV. CONCLUSION.

It is hereby ORDERED that Claimant 1 shall receive *** of monetary sanctions collected in the Covered Action. By the Commission.

SEC

89996

09/25/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (the “Claimant”) receive a whistleblower award of over [Redacted] which is equal to [Redacted] percent ( *** ) of the monetary sanctions collected in [Redacted] (the “Covered Action”).[fn1] Claimant subsequently provided written notice of Claimant’s decision not to contest the Preliminary Determination.

After considering the administrative record, we choose to depart from the Preliminary Determination and award Claimant [Redacted] percent ([Redacted] of the monetary sanctions collected in the Covered Action, for a payout of over $1,800,000. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2] In reaching this determination, we have relied on Exchange Act Rule 21F-4(b)(7) and Exchange Act Rule 21F-4(c)(3). Exchange Act Rule 21F-4(b)(7) states in relevant part that if a claimant provides information to an entity’s internal whistleblower, legal or compliance procedures for reporting allegations of possible violations of law, and then, within 120 days, submits the same information to the Commission, then for purposes of evaluating a claim for award, the Commission will consider that claimant provided the information as of the date of the original disclosure, report or submission. Further, Exchange Act Rule 21F-4(c)(3) provides that a claimant’s original information will be deemed to have led to a successful enforcement action if:

(3) You reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time you reported them to the Commission; the entity later provided your information to the Commission, or provided results of an audit or investigation initiated in whole or in part in response to information you reported to the entity; and the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of this section. Under this paragraph (c)(3), you must also submit the same information to the Commission in accordance with the procedures set forth in §240.21F-9 within 120 days of providing it to the entity.

Here, Claimant reported original information through the internal compliance system at [Redacted] (the “Company”), and provided the same information in a Form TCR to the Commission within 120 days. Therefore, Claimant is deemed to have reported the information to the Commission as of the date of Claimant’s report to the Company. Initiated in part in response to Claimant’s tip, the Company, in turn, launched an internal investigation into the alleged misconduct and subsequently reported the findings to the Commission. Further, the Company’s report of the findings of its internal investigation caused the Commission to open an investigation, and the resulting Covered Action was based in part on the conduct alleged by Claimant and reported by the Company, in satisfaction of Exchange Act Rule 21F-4(c)(1).

Applying the award criteria in Exchange Act Rule 21F-6 to the specific facts and circumstances here, we have chosen to increase the award to Claimant.[fn3] In reaching this determination, we positively assessed the following facts: (i) Claimant’s tip was significant in that it was a key source that formed the underlying basis of the Company’s internal investigation; (ii) Claimant timely reported the securities violations to the Company and ultimately, the Company’s findings focused the Commission’s investigation, revealed misconduct overseas that is difficult to detect and investigate, and conserved significant Commission staff time and resources; (iii) the law enforcement interest is substantial here because the Company had previously been sanctioned for similar misconduct; and (iv) the Claimant took both personal and professional risks in reporting this information. In considering the appropriate award percentage, we have also determined to credit Claimant for the results of the Company’s internal investigation that were provided to the Commission and that ultimately formed the basis for the Covered Action.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of over $1,800,000 ( *** of the monetary sanctions collected in the Covered Action).
By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying an award claim submitted by two joint claimants. On July 23, 2020, the joint claimants, through their attorney, provided written notice of their decision not to contest the Preliminary Determination. As such, the Preliminary Determination has become the Final Order of the Commission in accordance with Exchange Act Rule 21F-10(f).
[2] See Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act Rule 21F-6 provides that the Commission consider: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Actions; (3) the 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.

SEC

89995

09/25/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of $750,000, equal to [Redacted] of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed amount is appropriate.[fn2] In reaching that determination, we positively assessed the following facts: (i) Claimant’s information prompted staff in the Commission’s Division of Enforcement to open an investigation into the alleged violations; (ii) Claimant met with Enforcement staff to provide additional information; (iii) there are important law enforcement interests here in that Claimant identified alleged violations of the U.S. securities laws that were occurring in foreign jurisdictions, which are hard to detect; and (iv) Claimant internally reported Claimant’s concerns. We also considered, however, that the Commission’s charges focused on violations occurring at a different subsidiary than the one identified by Claimant in Claimant’s initial tip to the Commission, and that the case was largely built through information obtained from other sources. On balance, we believe that a $750,000 award [Redacted] appropriately recognizes Claimant’s level of contribution to the Covered Action.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of Redacted of
the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(b)(1), 15 U.S.C. §78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. §24021F-3(a).
[2] In assessing the appropriate award amount, Exchange Act 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 in 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.

SEC

89929

09/21/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of $2,400,000, which is equal to *** percent ( *** %) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”).[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn2]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn4] In reaching that determination, we positively assessed the following facts: (i) Claimant timely submitted information that prompted Enforcement staff to open an investigation into a [Redacted] (ii) Claimant’s information helped the Commission detect [Redacted] (iii) Claimant’s information helped staff identify key witnesses and parties and draft targeted subpoenas, which saved the staff time and resources in conducting the investigation; and (iv) Claimant’s assistance throughout the investigation contributed to all of the charges of the Covered Action.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] The Preliminary Determination of the CRS also recommended that the Covered Action include a second proceeding, [Redacted] which arose out of the same nucleus of operative facts as the proceeding in [Redacted]. See 17 C.F.R. § 240.21F-4(d). For purposes of making an award in this matter, the Commission will treat both actions as part of the Covered Action.
[2] The Preliminary Determination of the CRS also recommended denying awards to Claimants 2 and 3, who did not submit requests for reconsideration. As such, the Preliminary Determination has become the Final Order of the Commission with respect to Claimants 2 and 3 pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[3] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F3(a), 17 C.F.R. § 240.21F-3(a).
[4] In assessing the appropriate award amount, Exchange Act 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.

SEC

89912

09/17/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that joint claimants [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (Claimant 1 and Claimant 2 are collectively referred to herein as “Claimants”) jointly[fn1] receive a whistleblower award of almost $250,000, which is equal to [Redacted] percent [Redacted] of the amounts collected in [Redacted] (“Covered Action”). Claimants provided written notice of Claimants’ decision not to contest the Preliminary Determination.[fn2]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn4] In reaching that determination, we positively assessed the following facts: (1) Claimants alerted Commission staff to the potential violations, prompting staff in the Division of Enforcement to open an investigation; (2) Claimants communicated with Enforcement staff early in the investigation; (3) there are high law enforcement interests here; and (4) one of the Claimants internally reported his/her concerns. In determining the appropriate award percentage, we also considered that while Claimants’ initial information identified the specific parties and transactions that were ultimately the subjects of the Covered Action, the Covered Action charged different violations, many of their allegations did not directly relate to the Commission’s charges in the Covered Action, and the case was largely built through the investigative efforts of Commission staff.

Accordingly, it is hereby ORDERED that Claimants shall jointly receive an award of almost $250,000, [Redacted] percent [Redacted] of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] We have determined to treat Claimants 1 and 2 jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their Form TCR and provided substantively identical whistleblower award applications. See Exchange Act Section 21F(a)(6) (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 1 and 2. Unless Claimants 1 and 2, 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.
[2] The CRS also preliminarily denied the award claims of two other individuals. Because they did not contest the preliminary denial of their claims, the Preliminary Determination with respect to their claims became the Final Order of the Commission through operation of Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-10(f), 17 C.F.R. § 240.21F-10 (f).
[3] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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] In assessing the appropriate award amount, Exchange Act 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.

SEC

09/15/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] and jointly, [Redacted] (“Claimant 3”), [Redacted] (“Claimant 4”), [Redacted] for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1-7 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an Action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement Action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

Claimants [Redacted] and Claimant 4 are not a “whistleblowers” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9(a), which Claimant did not do.[fn3]

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related Action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related Action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] The investigation that resulted in the Covered Action was not opened based on any information provided by the Claimants. The enforcement staff responsible for the Covered Action investigation did not receive any information from Claimants [Redacted] 3-7 before or during the investigation. [Redacted].

[3] Claimant [Redacted] and Claimant 4 did not submit information through the Commission’s website, or by mailing or faxing a Form TCR to the Office of the Whistleblower. Claimant [Redacted] and Claimant 4 did not declare under penalty of pe1jury that the information provided to the Commission was true and correct to the best of their knowledge, nor did attorneys for either Claimant [Redacted] or Claimant 4 provide a certification that their respective clients had completed such a declaration.

SEC

09/14/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 5”) [Redacted] for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the c1iteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

[Redacted] are not a “whistleblowers” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9(a), which Claimant did not do.[fn3]

By: Claims Review Staff.

[2] The investigation that resulted in the Covered Action was not opened based on any information
provided by the Claimants. The Enforcement staff responsible for the Covered Action
investigation did not receive any information from Claimants [Redacted], 3-7 before or during the investigation. [Redacted].

[3] [Redacted].

SEC

09/14/2020

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received twelve whistleblower award claims, two of which were submitted jointly, for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the award claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determinations as to each claimant as follows:

[Redacted].

[Redacted] (Claimant 3) [Redacted] (Claimant 4) [Redacted] (Claimant 5) [Redacted] (Claimant 6) [Redacted] (Claimant 7) [Redacted] (Claimant 8) [Redacted] (Claimant 9) [Redacted].

No information provided by Claimant 3, Claimant 4, Claimant 5, Claimant 6, Claimant 7, Claimant 8, Claimant 9, [Redacted] led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that these claimants submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In making this preliminary recommendation, we note that the record demonstrates that Enforcement staff responsible for the Covered Action opened the investigation based on information provided by Claimant 1 and Claimant 2, and not because of information provided by Claimants 3, 4,[fn3] 5, 6, 7, 8, 9, [Redacted].

In addition, the information provided by Claimants 3, 4, 5, 6, 7, 8, 9, and [Redacted] related to alleged misconduct by [Redacted] occurring in countries other than [Redacted], and none of the charges brought by the Commission in the Covered Action related to alleged misconduct by [Redacted] outside of [Redacted]. The record demonstrates that the information submitted by these claimants had no role in any settlement negotiations or in determining the monetary sanctions in the Covered Action, which were exclusively based on misconduct by [Redacted] in [Redacted]. Therefore, Claimants 3, 4, 5, 6, 7, 8, 9, and [Redacted] did not significantly contribute to the success of the Covered Action under Rule 21F-4(c)(2).[fn4]

[Redacted].

By: Claims Review Staff.

[3] Claimant 4 submitted his/her tip to the Commission one day prior to the filing of the Covered Action. Claimant 4 acknowledges in Claimant 4’s claim application that the information could not have formed the basis of the Covered Action.

[4] Claimants 3, 5, 6, 7, 8, and 9 also state that they internally reported allegations of [Redacted] directly to [Redacted] either prior to or after reporting to the Commission. These claimants, however, do not satisfy Rule 21F-4(c)(3), which requires the following: (1) a claimant provided original information through an entity’s internal compliance system before or at the same time the claimant reported to the Commission; (2) the entity later provided the information to the Commission or provided the results of an investigation initiated in whole or in part in response to information the claimant reported; (3) the information satisfies (c)(1) or (c)(2) of Rule 21F-4; and (4) the claimant submitted the same information to the SEC within 120 days. Here, the claimants’ allegations did not cause the opening of the investigation as required under Exchange Act Rule 21F-4(c)(1). These claimants’ information also did not significantly contribute to the success of the Covered Action under Exchange Act Rule 21F-4(c)(2) as their information was not “meaningful” in that it did not make “a substantial and important contribution” to the success of the Covered Action, for the reasons stated above. As such, these claimants’ information do not satisfy Rule 21F-4(c)(1) or (c)(2), and therefore do not satisfy Rule 21F-4(c)(3) either. Further, Rule 21F-4(c)(3) requires that the claimant provide his/her information to the entity before or at the same time the claimant submits his/her tip to the Commission, and certain of these claimants contend that they submitted their information to [Redacted] after submitting their tip to the Commission.

SEC

09/14/2020

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related Action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related Action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-l l(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] The investigation that resulted in the Covered Action was not opened based on any information provided by the Claimants. The Enforcement staff responsible for the Covered Action investigation did not receive any information from Claimants [Redacted], 3-7 before or during the investigation. [Redacted].

[3] [Redacted].

SEC

09/14/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is marked below as follows:

Claimant did not provide information that led to the successful enforcement
of the above-referenced Covered Action within the meaning of Section
21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder
because any information provided did not, under Rule 21F-4(c)(1) of the
Exchange Act: (1) cause the Commission to (a) commence an examination,
open or reopen an investigation, or inquire into different conduct as part of a
current Commission examination or investigation, and (b) thereafter bring an
action based, in whole or in part, on conduct that was the subject of claimant’s
information; or (2) significantly contribute to the success of a Commission
judicial or administrative enforcement action under Rule 21F-4(c)(2) of the
Exchange Act.[fn2]

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action opened the Covered Action investigation based on information provided [Redacted], and not because of information provided by Claimant. Although investigative staff responsible for the Covered Action received Claimant’s information and interviewed Claimant, none of Claimant’s information significantly contributed to the success of the Covered Action. Certain of the information from Claimant was unrelated to the conduct being investigated or did not appear to violate the federal securities laws. [Redacted]. These allegations were not germane to the investigative staff’s [Redacted] investigation. Although investigative staff responsible for the Covered Action received some information from Claimant related to the [Redacted] focus of the investigative staff’s enforcement investigation, but Claimant’s information was vague, nonspecific, or largely duplicative of the information already in the staff’s possession when received.

SEC

89850

09/14/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of more than $10 million, which represents *** percent ( *** ) of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn3] In reaching that determination, we positively assessed the following facts: Claimant’s tip exposed abuses in [Redacted]. Claimant provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and Claimant made persistent efforts to remedy the issues, while suffering hardships.

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.

[1] The CRS also preliminarily determined to recommend that the award applications of two other claimants be denied. Neither of these claimants submitted a request for reconsideration and, as such, the Preliminary Determinations with respect to their award claims became the Final Order of the Commission, pursuant to Rule 21F-10(f).
[2] See Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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.

SEC

09/13/2020

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received two whistleblower award claims from the following claimants: [Redacted] and [Redacted] (“Claimant 2”) (collectively, “Claimants”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 2.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2.

Specifically, Claimant 2’s information was submitted over [Redacted] after the investigation was opened and approximately [Redacted] after the Covered Action was filed. By this time, investigative staff was already aware of the information submitted by Claimant 2. Accordingly, none of the information provided by Claimant 2 helped advance the [Redacted] investigation or the [Redacted] action. None of Claimant 2’s information was used in, or had any impact on, the charges brought by the Commission in the Covered Action.

By: Claims Review Staff.

SEC

89780

09/08/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of almost $30,000, which is *** of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”). Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn3] In reaching that determination, we positively assessed the following facts: (1) The information provided by the Claimant was significant as it alerted Enforcement staff to the violations, which would have been difficult to detect in the absence of Claimant’s information and bore a close nexus to the Commission’s charges; (2) Claimant provided exemplary assistance to the Enforcement staff, saving Commission resources and accelerating the pace of the investigation; (3) The underlying Enforcement action was programmatically significant; and (4) The amounts available for collection in the matter were limited.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of almost $30,000, which is *** of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying an award to a second claimant (“Claimant 2”), who did not seek reconsideration. Accordingly, the Preliminary Determination has become the Final Order of the Commission with respect to Claimant 2 pursuant to Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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.

CFTC

09/04/2020

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 4”) in response to Notice of Covered Action No. [Redacted] regarding [Redacted] (“Covered Action”). The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2019), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018).

On January 22, 2020, the CRS issued a Preliminary Determination recommending that Claimant 1 receive *** percent (***%) and Claimant 4 receive *** percent (***%) of the monetary sanctions collected in the Covered Action.[fn1] The award percentage recommended for Claimant 1 would yield a payment of ***, and the award percentage recommended for Claimant 4 would yield a payment of *** based on the amount recovered in the Covered Action to date.[fn2]

For the reasons set forth below, we agree with the CRS’s determination. Accordingly, Claimant 1’s claim is approved in the amount of *** percent (***%), and Claimant 4’s claim is approved in the amount of *** percent (***%).

I. BACKGROUND.

The Covered Action arose out of an investigation opened in response to information that Claimant 1 submitted to the Commission regarding [Redacted]. Specifically, Claimant 1 alleged that [Redacted]. Claimant 1 further alleged that [Redacted]. The Commission received the information as a Form TCR from [Redacted]. Division of Enforcement (“Division”) staff forwarded Claimant 1’s Form TCR to the Commission’s Chicago office for review, at which point the Division opened an investigation into [Redacted]. [Redacted]. The Court found that [Redacted]. Claimant 1 and Claimant 4 subsequently submitted Form-WB-APP whistleblower award applications in response to Notice of Covered Action No. [Redacted] regarding the Covered Action.

II. PRELIMINARY DETERMINATION.

On January 22, 2020, the CRS issued a Preliminary Determination recommending that Claimant 1 and Claimant 4 receive whistleblower awards in the amounts of *** percent (***%) and *** percent (***%), respectively, of any monetary sanctions collected because Claimant 1 and Claimant 4 voluntarily provided original information that led to the successful enforcement of a covered action.

III. LEGAL ANALYSIS.

The recommendation of the CRS with respect to Claimant 1 and Claimant 4 is adopted. We find that the record demonstrates that both claimants voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the CEA. 7 U.S.C. § 26(b)(1) (2018). The information provided by Claimant 1 was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based in part on conduct that was the subject of the original information provided by Claimant 1 and Claimant 4.

Claimant 1 and Claimant 4 alleged several potential violations of the CEA, and the Commission’s investigation corroborated those allegations, in some instances to a high degree of specificity. The information provided by Claimant 1 and Claimant 4 was significant to the success of the Commission’s action. See 17 C.F.R. § 165.9(a)(1), (b)(1). In addition, the Commission has a law enforcement interest in preserving the integrity and reliability of [Redacted]. See 17 C.F.R. § 165.9(a)(3), (4), (b)(3). The aforementioned facts and circumstances support granting Claimant 1 and Claimant 4 a high award percentage.

Accordingly, we agree with the CRS that the award percentage should be *** percent (***%) for Claimant 1 and *** percent (***%) for Claimant 4.

IV. CONCLUSION.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of *** percent (***%) and Claimant 4 an award of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

By the Commission.

[1] The Preliminary Determination further recommended that the award applications submitted by the remaining claimants, [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), and [Redacted] (“Claimant 5”), be denied. Claimant 2, Claimant 3, and Claimant 5 failed to submit a request for reconsideration of the Preliminary Determination, and, therefore, the Preliminary Determination denying the claims of Claimant 2, Claimant 3, and Claimant 5 for an award has become the Final Order of the Commission. 17 C.F.R. § 165.7(h) (2019).

[2] [Redacted] has fully paid the *** civil monetary penalty ordered in connection with the Covered Action. [Redacted] has paid [Redacted] in restitution [Redacted] in civil monetary penalties ordered in connection with the Covered Action. If the CFTC [Redacted], a proportional distribution of ***% and ***% of the funds will be awarded to Claimant l and Claimant 4, respectively. [Redacted]. See 17 C.F.R § 165.2(j).

SEC

89721

09/01/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“claimant 1”) and [Redacted] (“claimant 2”) jointly[fn1] receive a whistleblower award in the amount of over $2,500,000 ( *** % of the monetary sanctions collected in [Redacted]).[fn2] Claimant 1 and claimant 2 subsequently 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 Covered Action.[fn3] In particular, claimants, both unaffiliated outsiders to the company that was the subject of the Covered Action, provided highly-probative independent analysis based upon publicly available information that revealed possible accounting violations at the subject company and caused the staff to open the investigation that resulted in the Covered Action.

Applying the award criteria in Exchange Act Rule 21F-6 to the specific facts and circumstances here, we find that the proposed award amount is appropriate.[fn4] In reaching that determination, we positively assessed the following facts: (i) that claimants’ tip caused the opening of the investigation and was the underlying source that formed the basis for the Covered Action; (ii) that the violations charged in the Covered Action related to the detailed analysis submitted by claimants, as well as information uncovered by claimants based on [Redacted]; and (iii) that claimants provided substantial, ongoing assistance which focused the investigation and conserved significant Commission staff time and resources.

Accordingly, it is hereby ORDERED that claimants shall jointly receive an award of over $2,500,000 ( *** % of the monetary sanctions collected in the Covered Action).
By the Commission.

[1] We have determined to treat claimant 1 and claimant 2 jointly as a “whistleblower” for purposes of the award determination given that a Form TCR was submitted on behalf of both of them and they submitted their Forms WB-APP together via the same counsel. See Securities Exchange Act of 1934 (“Exchange Act”) Section 21F(a)(6) (defining a “whistleblower” to include two 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 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.
[2] For the purposes of making an award, we consider the administrative actions in this matter as a single Covered Action because they arose out the same nucleus of operative facts. See Exchange Act Rule 21F-4(d)(1), 17 C.F.R. § 240.21F-4(d)(1).
[3] See Exchange Act Section 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] In assessing the appropriate award amount, Exchange Act Rule 21F-6 provides that the Commission consider: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the 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.

SEC

89712

08/31/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of over [Redacted] which is equal to [Redacted] of the amounts collected in [Redacted] and [Redacted] (“Covered Action”).[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn2]

After considering the administrative record, we choose to depart from the Preliminary Determination’s recommendation and award Claimant [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, for a payout of over $1,250,000.

The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn3]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn4] In reaching that determination, we positively assessed the following facts: (1) Claimant expeditiously alerted Commission staff to the potential wrongdoing, prompting staff to initiate a cause examination and open an investigation; and (2) there are high law enforcement interests here as Claimant’s information helped the agency bring the successful enforcement actions that resulted in the return of millions of dollars to harmed investors. In determining the appropriate award percentage, we also considered that while Claimant’s initial information was significant, Claimant was only in the position to provide limited ongoing assistance.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of over $1,250,000, [Redacted] of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] For the purposes of making an award in this matter, we are treating the enforcement action against the individual respondent together with the action against the company as a single Covered Action, as the proceedings arise out of the same nucleus of operative facts. See Rule21F-4(d).
[2] Another individual also submitted an award application in connection with the Notice of Covered Action. However, this individual did not contest the preliminary denial of their claim and, as such, the Preliminary Determination with respect to their claim became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10 (f).
[3] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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] In assessing the appropriate award amount, Exchange Act 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.

CFTC

08/28/2020

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1 and Claimant 2 in response to Notice of Covered Action No. [Redacted] regarding [Redacted]. The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2019) (as amended by 82 Fed. Reg. 24,487. 24,496-521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018).

On August 21, 2019, the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of ***% of the monetary sanctions collected in the [Redacted]. The Preliminary Determination also recommended denying Claimant 2’s award claim because his/her claim did not meet the requirements of the CEA and the Rules.

The recommendation of the CRS with respect to Claimant 1 is adopted by the Commission. We find that the record demonstrates that Claimant 1 voluntarily provided the Commission with original information that led to the successful enforcement of a covered action. Claimant 1’s information was sufficiently specific, credible, and timely to cause Division of Enforcement (“Division”) staff to open an investigation. The Commission then brought a successful covered action based in part on the conduct that was the subject of Claimant 1’s original information.

Claimant 1 also satisfied the eligibility requirements for an award. See 17 C.F.R. §§ 165.5(b), 165.6. Claimant 1 provided original information on a Tip Complaint or Referral Form (“Form TCR”),[fn1] submitted a claim in response to a Notice of Covered Action, and provided explanations and assistance to Division staff. Further, Claimant 1 does not fall into any of the categories of individuals ineligible for an award, as set forth in Rule 165.6(a), 17 C.F.R. § 165.6(a).

The Rules justify awarding Claimant 1 ***% of the total monetary sanctions collected in the [Redacted].[fn2] In arriving at this award amount, the CRS applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application. To this end, the Commission considered the significance of Claimant 1’s information, the degree of assistance Claimant 1 provided to the Division staff during the course of the investigation, and the Commission’s programmatic and law enforcement interests. The award amount appropriately recognizes the significance of the information Claimant 1 provided to the Commission and will incentivize future whistleblowers to come forth with high-quality information.

Claimant 1’s information caused the Division to open its investigation. The Commission had not been aware of the violations before Claimant 1 provided the information.

Claimant 1’s information was essential to the success of the [Redacted] and formed the basis of the investigation. Had Claimant 1 not contacted the Commission, it may not have opened an investigation and brought a successful enforcement action resulting in the [Redacted].

During the investigation, Claimant 1 provided assistance, was forthcoming with this assistance, and provided ongoing, extensive, and timely cooperation.

The detailed information Claimant 1 provided in his/her TCR and in subsequent documents and communications caused Division staff to request many of the documents ultimately produced by Respondents. This enabled Division staff to obtain signed declarations and to take testimony from a limited number of targeted witnesses, conserving Commission resources.

With regard to Claimant 1’s related action claims, [Redacted], resulting in no sanctions. The [Redacted] did not impose any monetary sanctions.

The CRS recommendation to deny the application of Claimant 2 is adopted. We find that the record demonstrates that Claimant 2 failed to meet the requirements of Section 23 of the Act and the Rules. Claimant 2 played no role in the Commission’s successful enforcement action and no information he/she provided was used in the investigation. Division Staff had not heard of Claimant 2 until the WBO informed them of his/her award claim.

Both Claimants did not respond to the Preliminary Determination. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination becomes final because Claimant 2 failed to submit a timely response contesting the Preliminary Determination, which constitutes a failure to exhaust administrative remedies. Accordingly, Claimant 2 is prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13.

It is hereby ORDERED that Claimant 1 shall receive ***% of the monetary sanctions collected in the [Redacted]; and it is further ORDERED that the award claim of Claimant 2 be, and hereby is, denied.

By the Commission.

[1] Claimant 1 submitted his/her TCR [Redacted]. The WBO is under the impression that Claimant 1’s application is on behalf of both of them as joint whistleblowers. The analysis will hereinafter refer to the information provided and award claim as belonging to “Claimant 1.”

[2] The Commission ordered [Redacted] (“Respondents”) to jointly and severally pay restitution in the amount of [Redacted] in civil monetary penalties, and [Redacted] in disgorgement. The [Redacted].

SEC

08/27/2020

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received whistleblower award claims from four individuals, two of whom submitted their award claim jointly. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determinations for each award claimant as follows:

[Redacted].

Covered Action.

[Redacted].

[Redacted] (“Claimant 4”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimants [Redacted] and 4.

[Redacted] and Claimant 4 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information [Redacted] and Claimant 4 provided did not: (1) cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary determination, we note that the record reflects Enforcement staff responsible for the Covered Action did not receive information from, or communicate with, [Redacted] or Claimant 4.

In addition, Claimant 4’s award claim is time-barred under Rule 21F-10 as it was dated more than five months after the deadline for submitting award claims for the Covered Action.

By: Claims Review Staff.

SEC

08/17/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), and [Redacted] (“Claimant 4”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination as follows.

[Redacted].

Claimant 2 and Claimant 3.

Neither Claimant 2 nor Claimant 3 provided information that led to the successful enforcement of the above referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a (3) and 21F-4(c) thereunder because the information provided did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c) (2) of the Exchange Act.

In making this preliminary recommendation, we note that the record reflects that the Enforcement staff responsible for the Covered Action received no information from, nor had communications with, Claimant 2 or Claimant 3 before or during the Covered Action.

Claimant 4.

Claimant 4 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not:

a. cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as pa1t of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c) (2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record shows that Enforcement staff received Claimant 4’s Form TCR after the Commission had filed its complaint in the Covered Action in [Redacted], and just one day prior to the court’s entry of final judgment in the Covered Action. Additionally, while Claimant 4 and Claimant 4’s counsel spoke with Enforcement staff responsible for the Covered Action prior to Claimant 4’s filing of the Form TCR about the possibility of submitting a tip to the Commission, and Enforcement staff also spoke to Claimant 4 shortly after the final judgment was entered in this matter, none of the information provided by Claimant 4 was used in the Covered Action because it was received too late and was duplicative of information Enforcement staff had already received during the investigation, and as such, was not used in, and did not contribute in any way to the success of the Covered Action.

Additionally, Claimant 4 did not provide “original information” that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information provided by Claimant regarding the Covered Action [Redacted] was already known to the Commission.

Furthermore, the Commission will not consider information to be derived from one’s independent knowledge or independent analysis if it is obtained “in connection with the legal representation of a client on whose behalf [claimant] or [claimant’s] employer or firm [was] providing service.” [Redacted].

By: Claims Review Staff.

SEC

89551

08/13/2020

Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules thereunder, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that the claims submitted by [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (together, “Claimants”) in connection with the above-referenced Notice of Covered Action (“Covered Action”) be denied. Claimants filed timely written responses contesting the preliminary denials. For the reasons discussed below, we deny Claimants’ award claims.

I. Background.

A. The Covered Action and Underlying Investigation.

[Redacted] (the “Company”) — a [Redacted]. During that same period, through its [Redacted] subsidiary, the Company [Redacted].

In approximately [Redacted], the Company self-reported to the Commission potential [Redacted] violations [Redacted]. The Company also advised the Commission that it was initiating a review of its [Redacted]. In response to the Company’s self reporting, Enforcement staff opened an investigation on [Redacted]. On [Redacted], the Company requested a meeting with the staff regarding the Company’s discovery of potential [Redacted]. During that meeting, which occurred on [Redacted], the Company disclosed (among other things) that as part of its internal investigation and [Redacted], the company had provided [Redacted].[fn1]

After the [Redacted] meeting, the events detailed below occurred.

On [Redacted], the commission received via email from Claimant 2 a tip about potential [Redacted] by the Company [Redacted].[fn2]

On [Redacted], the Company provided the staff an extensive production of documents specifically relating to the [Redacted] that the Company had disclosed days earlier.

On [Redacted], Claimant 2’s information was received by the lead attorney handling the [Redacted] investigation. The submission included:

allegations surrounding the Company’s operations [Redacted] that were similar to the information the Company disclosed to the Enforcement staff during the [Redacted] meeting; and allegations related to [Redacted] involving [Redacted]; notably, unlike the information related to ***, the information involving [Redacted] did not relate to the [Redacted] that the Company had offered (and that would ultimately be the focus of the Commission’s charges against the Company involving [Redacted]).

On [Redacted], in a status meeting with Enforcement staff, the Company disclosed that it was looking at [Redacted]. Some of the specific information that the Company provided was similar to the information that the Enforcement team had learned the day before in the submission from Claimant 2 (but which did not become part of the Covered Action).

In [Redacted], after several months of back and forth discussion with Claimant 2’s counsel about a potential interview and other matters, the Enforcement team interviewed Claimant 2.[fn3] According to the primary Enforcement attorney leading the investigation, “none of the information that [the staff] learned from [Claimant 2] appreciably advanced [the staff’s] understanding of the potential [Company] misconduct that [the staff] w[as] investigating—i.e., [Redacted] by [the Company’s] [Redacted] subsidiaries, and [Redacted] by [the Company’s] [Redacted] subsidiary.” Further, although Claimant 2 “did corroborate certain facts,” because the Company “itself had already disclosed most of these facts, [Claimant 2’s] corroboration was not useful to [the] investigation.” The record does not reveal any additional meaningful contacts with Claimant 2 after the interview, nor does Claimant 2 identify any.[fn4]

Although Claimant 2’s information generally proved unhelpful, the investigation itself continued to make headway. This is because, as had been the situation since the Company first self-reported, the Company continued to provide (often on a weekly basis) status updates and information to the Enforcement team through on-site presentations, phone calls, and document productions. Indeed, according to the primary enforcement attorney who led the investigation, the Company’s “assistance and cooperation with the Commission’s staff was robust and it demonstrated good []faith on the [C]ompany’s part” and thus the Enforcement staff had “the view that [they] could credit and rely upon the [C]ompany’s internal investigation to uncover relevant factual information and to report this to [them].” That official also explained that, “[a]s a result, the Enforcement staff relied almost exclusively on documents and information that [the Company] self-reported or produced in response to staff requests and or interviews of [the Company’s] employees in conducting the investigation and in reaching a settlement of the [Covered Action].”

In [Redacted], Claimant 1 submitted information alleging that a competitor of the Company (“Competitor”) had engaged in misconduct *** that was potentially similar to the Company’s own misconduct that it had been internally investigating and self-reporting since [Redacted]. Given that the submissions did not involve the Company, the submissions were not provided to the Enforcement staff investigating the Company; this is undisputed.[fn5] Further, by the time that Claimant 1 made the [Redacted] submission, “the investigative stage of the matter was substantially concluded” and “[s]ettlement negotiations” with the Company were commencing.

On [Redacted] (“the Newspaper”) published an article regarding potential violations *** by Competitor similar to those the Company had investigated and reported to the Commission. Claimant 1 contends that the Newspaper article was based (at least in part) on information that Claimant 1 had provided to the Newspaper and that the article caused “such a stir” that the Company would have learned of it and potentially responded by continuing its own internal investigation (and perhaps even expanding it). In fact, however, by [Redacted] the Company’s internal investigation had concluded and the “Staff’s efforts were mainly directed towards finalizing details related to the concluded investigation, and arriving at a settlement with [the Company].” Further, the primary Enforcement attorney handling the matter has stated that he is aware of nothing that might indicate the Newspaper article had any influence on the Company’s concluded internal investigation, nor did he learn about the article during “the investigation, prosecution, or settlement” of the Covered Action.

On [Redacted], the Commission settled with the Company for violations of ***. The Company was charged with [Redacted]. During that same period, [Redacted], the Company was charged with [Redacted]. The Company was ordered to pay [Redacted].[fn6]

B. The Whistleblower Award Proceedings.

On [Redacted], the Office of the Whistleblower posted the Notice of Covered Action on the Commission’s public website inviting interested individuals to submit whistleblower award applications within 90 days. Both Claimants filed timely whistleblower award claims.

On [Redacted], the CRS issued Preliminary Determinations[fn7] recommending that both Claimants’ award claims be denied. The Preliminary Determinations explained that the Claimants’ information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The Preliminary Determinations stated that Claimants’ information neither caused the Enforcement staff to open the investigation nor significantly contributed to the success of the Covered Action. Both Claimants timely submitted responses challenging the Preliminary Determinations.

II. Analysis.

A. Claimant 1’s award application is denied because information provided by Claimant 1 did not “lead to” the success of the Covered Action.

Although Claimant 1 claims to have provided information that “led to” the success of the Covered Action, Claimant 1 does not contend that Claimant 1’s submissions satisfied any of the three components of the “led to” definition in Exchange Act Rule 21F-4(c).8 Instead, Claimant 1 contends that information from Claimant 1 still “led to” the success of the action if—as a result of the purported “stir” that followed the [Redacted] Newspaper article based on information provided by Claimant 1—either the Company, the Commission, [Redacted] “inquire[d] into different transactions, conduct, or areas as part of the existing investigation resulting in an SEC proceeding based in part on the information gathered or explored during that inquiry.”[fn9]

We disagree with Claimant 1’s contention that the “led to” requirement is satisfied here. First, Exchange Act Rule 21F-4(c) provides the only mechanisms by which a claimant can satisfy the “led to” requirement. If (as is the case here) a claimant does not fall within any of the three circumstances identified in the rule, then he or she is not entitled to an award. Claimant 1 disagrees, arguing that the language in Rule 21F-4(c)—unlike the language in another whistleblower rule—does not unambiguously state that the three components of the definition are the only mechanisms by which a claimant can establish the “led to” requirement. Although Rule 21F-4(c) does not expressly state that the three components are the only way to establish “led to,” it has been the Commission’s consistent practice for almost a decade now to apply the rule in this manner.[fn10] When the Commission has considered whether a claimant provided information that “led to” a successful covered action, the Commission has looked only to the definition in Rule 21F-4(c). Moreover, when the Commission adopted the Exchange Act 21F-4(c)’s “led to” requirement, the Commission explained that Rule 21F-4(c) defines “‘Information that Leads to Successful Enforcement’ such that a whistleblower is only entitled to an award if one of three general standards is satisfied.”[fn11] Further, we conclude as a policy matter that expanding the definition of what it means to provide “information that led to the successful enforcement of a judicial or administrative action” beyond the three circumstances listed in Rule 21F-4(c) would risk introducing speculative and complex causal chains that would be difficult and impracticable in many instances for the Commission to investigate and evaluate.[fn12] We also believe that limiting the “led to” requirement to the three standards specified in Rule 21F-4(c) sends a clear signal to all potential whistleblowers of what is expected of them in order to potentially qualify for an award, and after 10 years of experience with the program we do not find it necessary in order to produce quality tips from whistleblowers to go beyond these three standards to allow ad-hoc reporting pathways (especially given the attendant burdens discussed above that could be placed on the program).

Second, even if the “led to” requirement could be satisfied in some limited instances by alternative circumstances not specified in Rule 21F-4(c), the pathway that Claimant 1 posits would not qualify. The fact that the Newspaper article and Claimant 1’s alleged contributions did not involve any of the misconduct by the Company alone would be fatal. Moreover, the purported causal chain underlying Claimant 1’s “led to” theory would require us to determine, among other things, the degree to which Claimant 1 contributed to the Newspaper article relative to other sources upon which the article may have been based; whether responsible officials at the Company handling the internal investigation in fact learned of the article, and, if so, what action they took; and whether any such action might have resulted in information that materially impacted the resolution of the Covered Action.[fn13] As the three circumstances specified in Rule 21F-4(c) reveal, a much closer connection is required between the allegations a claimant may advance and the misconduct that the Commission establishes in a covered action.[fn14]

Accordingly, Claimant 1’s award application is denied.[fn15]

B. Claimant 2’s award application is also denied because Claimant 2 did not “lead to” the success of the Covered Action.

Like Claimant 1, Claimant 2 did not provide information that “led to” the success of the Covered Action as defined in Exchange Act Rule 21F-4(c). In reaching this conclusion, we credit the explanation of the primary Enforcement attorney handling the matter as we find the attorney’s explanation logical, coherent, and consistent with the Commission’s experience in other *** matters. *** has declared under penalty of perjury that “the Enforcement staff relied almost exclusively on documents and information that [the Company] self-reported or produced in response to staff requests and or interviews of [the Company’s] employees in conducting the investigation and in reaching a settlement of the [Covered Action].” This staff attorney’s declaration also explained that “the information provided by [Claimant 2] was not used either to advance the investigation or to shape the settlement, and [Claimant 2’s] information did not otherwise contribute to the successful conclusion of the [Covered Action].”[fn16]

Claimant 2 raises an assortment of arguments in an effort to demonstrate that Claimant 2 provided information that “led to” the success of the Covered Action, none of which is persuasive. Because the Company was making nearly weekly “robust” disclosures to the staff, we credit the staff declarations that the investigative team relied almost entirely on the Company’s self reporting and we reject Claimant 2’s arguments that it was necessary for the staff to detail what information provided by Claimant 2 was or was not redundant, and to detail exactly when specific information was disclosed. We do not need to engage in close consideration of whether any information provided by Claimant 2 significantly contributed to the Covered Action or otherwise “led to” its success because Claimant 2’s information was not used at all to advance the investigation.[fn17]

For the same reason, contrary to Claimant 2’s argument, it is unnecessary to consider whether Claimant 2 might have been the “original source” (as that term is defined in Exchange Act Rule 21F-(b)(6)) of information that either the Company had not already provided or that materially added to information the staff had previously received from the Company. Because the record is clear that the staff did not actually use any of Claimant 2’s information, even if Claimant 2 provided some information before or in addition to the information received from the Company, Claimant 2’s whistleblower tips could not have led to the success of the enforcement action.[fn18]

Claimant 2’s assertion that neither the statute nor the regulations disqualify an individual from obtaining an award merely because a defendant self reports is correct but irrelevant. The relevant issue is whether the whistleblower provided information that “led to” the success of the covered action, and here the record convincingly demonstrates that Claimant 2 did not do so because the Enforcement staff relied almost entirely upon the Company’s self disclosures both during the investigation and the settlement phases of the matter.[fn19] So while a whistleblower could provide information that the Commission uses to open or significantly advance an investigation (and for which a whistleblower might subsequently receive an award)—even where the company itself is behaving in good faith and making robust and timely disclosures to the Commission about the wrongdoing that it is uncovering during an internal investigation—that is not the situation here.[fn20]

Claimant 2 erroneously asserts that an award is being denied because Claimant 2 failed to “provide information that would not otherwise have been obtained” from the Company. That standard was proposed but not adopted by the Commission as part of the 2011 whistleblower program rules.[fn21] In any case, Claimant 2’s application is being denied not because the agency relied on Claimant 2’s information yet determined that it would have otherwise uncovered that information; rather, Claimant 2’s application is being denied because the agency (as a factual matter) did not rely upon Claimant 2’s information to open or significantly advance the investigation and instead relied almost exclusively upon the Company’s regular disclosures to the Enforcement staff.[fn22]

And contrary to Claimant 2’s final argument, we do not find that Claimant 2’s ability to corroborate certain facts during the [Redacted] staff interview “led to” the success of the investigation.[fn23] The Enforcement staff declaration that was provided to Claimant 2 in connection with Claimant 2’s challenge to the Preliminary Determination explains that the Claimant 2’s information at the [Redacted] interview did not appreciably advance the staff’s understanding of the misconduct under investigation because the Company itself had already disclosed most of these facts.[fn24] In addition, the staff determined not to pursue certain other information that Claimant 2 provided at this meeting (which the Company had also disclosed) because there was no apparent “illegal conduct” involved. (Emphasis in original). Claimant 2’s response does not seriously attempt to challenge these factual assertions and, in any event, we credit the Enforcement staff declaration on this point given that the Enforcement staff has explained both (i) that settlement discussions were already underway when the interview occurred and (ii) the investigative stage of the matter was substantially concluded by [Redacted].

Accordingly, Claimant 2’s award application is denied.

III. CONCLUSION.

For the foregoing reasons, it is ORDERED that the whistleblower award claims from Claimant 1 and Claimant 2 be, and hereby are, denied.
By the Commission.

[1] We adopt and incorporate herein the description of the [Redacted] meeting—including the disclosures made in it—in paragraph 14 of the supplemental declaration provided by the lead enforcement attorney on this matter.
[2] When such tips are received, it is the Commission’s routine procedure that they are forwarded to and initially reviewed by the agency’s Office of Market Intelligence for a determination as to whether further action should be taken on the tip and, if so, whether the tip should be referred to Enforcement staff for investigation or whether another action is appropriate.
[3] Additionally, Claimant 2 made a supplemental submission that was received in [Redacted] by the Enforcement team investigating the Company.
[4] Claimant 2’s response to the Preliminary Determination suggests that Claimant 2’s information must have been used by the Commission in the investigation and settlement because, Claimant 2 contends, the violations that Claimant 2 purportedly identified “overlap with specific information reflected in the SEC’s complaint against” the Company. Under the circumstances and based on our review of the record, we believe (contrary to Claimant 2’s view) that any overlap is due to the fact that the Company was undertaking a thorough internal investigation that revealed the violations and operated in good faith to report that information to the Enforcement staff.
[5] In Claimant 1’s written response to the Preliminary Determination, Claimant 1 states: “We do not take issue with the finding in the PD that no one from the SEC’s [Enforcement team investigating the Company] received the written tips that [Claimant 1] filed” with the agency.
[6] [Redacted] Because as explained herein the Claimants are not eligible for a recovery on the Covered Action, the Claimants are likewise not entitled to an award from the Commission on the [Redacted], see Exchange Act Rule 21F-3(b) and 11(a); Order Determining Whistleblower Award Claims, Release No, 34-87662 (Dec. 5, 2019).
[7] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).
[8] Generally speaking, Exchange Act Rule 21F-4(c) provides that information will be deemed to have “led to the successful enforcement of” an action where a person provides: (1) “sufficiently specific, credible, and timely [original information to the Commission] to cause the staff to commence an examination, open an investigation, reopen an investigation [that has been closed] …, or to inquire concerning different conduct as part of a current examination or investigation,” and the action is “based in whole or in part on conduct that was the subject of your original information”; (2) original information in connection with misconduct that is already under investigation or examination and that “submission significantly contributed to the success of the action”; and (3) information to specified reporting authorities within an entity, and the entity subsequently provides that information to the Commission (along with additional information the entity may have uncovered as a result of the tip) and the information the entity reports otherwise satisfies (1) or (2) above. Claimant 1’s response to the Preliminary Determination concedes that Claimant 1’s submissions to the Commission did not lead to the success of the Covered Action.
[9] Claimant 1 objects that the complete WB-APP, including Claimant 1’s TCR submissions and the Newspaper article, were not included in the materials submitted to the CRS at the preliminary determinations stage. We find this point moot, however, as the entire WB-APP, including the Newspaper article and all other materials submitted in the WB-APP by Claimant 1 were provided to the CRS as part of the reconsideration. Further, in any matter where the Commission determines to consider a proposed award recommendation, see Exchange Act Rule 21F10(h), the full record that was provided to the CRS is available to the Commission.
[10] In the Matter of the Claims for Award, 2018 WL 1378788, at *4 (March 19, 2018) (declining to adopt a “more flexible” understanding of “led to” than is provided for in Rule 21F-4(c) and explaining that “the ‘led to’ requirement was carefully tailored as part of the Commission’s promulgation of the whistleblower program rules to provide a uniform standard that would apply to all claimants and thus we do not believe that adopting a more relaxed standard for this matter would be appropriate.”).
[11] 76 Fed. Reg. 34300, 34357 (June 13, 2011). See also 75 Fed. Reg. 70487, 70497 (Nov. 17, 2010) (“Proposed Rule 21F-4(c) defines when original information ‘led to successful enforcement.’”). At no point during the rulemaking did the Commission suggest that there would be residual or catch-all authority for the Commission to consider information to have “led to” the success of an action beyond the three prongs of the “led to” definition set forth in Rule 21F-4(c).
[12] Claimant 1 appears to suggest that Congress would have wanted to include Claimant 1’s “led to” theory within the scope of the whistleblower program. But Claimant 1 identifies nothing to support this. Further, Congress left it to the Commission to define “led to” (or any other terms the agency determined to define) by granting the agency broad rulemaking power, the Commission used that authority in promulgating Rule 21F-4(c), and nothing inthe adopting release that accompanied the rules or in the text of the provision suggests that there could be scenarios not specified in Rule 21F-4(c) that might satisfy the “led to” requirement.
[13] This chain of uncertainties demonstrates why, in our view, Rule 21F-4(c)’s provisions require a tighter causal connection between the actions of a claimant and the success of a covered action, and why it is appropriate as a policy and programmatic matter to treat Rule 21F-4(c)’s provisions as the exclusive mechanisms for establishing the “led to” requirement.
[14] A critical common thread linking the three mechanisms set forth in Rule 21F-4(c) is that they turn on the Commission’s receipt and use of the information at issue, thereby avoiding the kind of speculation involving outside actors that Claimant 1 would have us undertake. And this common thread is consistent with the whistleblower program’s “core objective,’ which as the Supreme Court has explained is “to motivate people who know of securities law violations to tell the SEC[.]” Digital Realty Trust, Inc. v. Somers, 138 S.Ct. 767, 777 (2018).
[15] It should be noted that even if we were to accept Claimant 1’s novel “led to” theory, we would still deny Claimant 1 an award given facts as revealed in the record (including the supplemental declaration by the primary Enforcement attorney leading the investigation). As the record demonstrates, the investigation of the Company was essentially concluded by the time the Newspaper article appeared in [Redacted]. The Company had been self-reporting on an almost weekly basis since [Redacted] and by [Redacted] settlement discussions were already underway. Further, there is no indication that the Company, the Commission’s staff, or any other agency took additional or new investigatory steps in response to the Newspaper article, or that new misconduct that was relevant to the settlement of the Covered Action was uncovered.
[16] The primary Enforcement attorney has prepared a supplemental declaration that provides additional detail regarding the timing of events between Claimant 2’s first submission at the end of [Redacted] and the staff’s interview of Claimant 2 in [Redacted]. This supplemental declaration further supports our determination that Claimant 2 did not “lead to” the success of the Covered Action.
[17] Claimant 2 contends that in [Redacted], the Commission staff requested that Claimant 2 share Claimant 2’s submission with *** and that the Enforcement staff would not have made this request if the Commission already had the information independently from the Company. Although we find it unnecessary that the staff declaration catalogue what information provided by Claimant 2 was redundant, we do think it appropriate to address this limited factual issue. In light of Exhibit M to Claimant 2’s written response to the Preliminary Determination, we find that the staff did not request that Claimant 2 disclose information *** and find persuasive the explanation of events connected with the provision of information *** as explained in the supplemental staff declaration of the primary Enforcement attorney handling the investigation.
[18] Claimant 2’s argument misunderstands the “original source” rule. Under the provision of the Exchange Act that governs the whistleblower program, as well as our rules thereunder, a claimant’s status as the “original source” of information only establishes (assuming other requirements are satisfied) that the claimant may be credited with having provided “original information,” which is itself only one of the criteria that must be satisfied in order to be entitled to a whistleblower award. See 15 U.S.C. § 78u-6(a)((3)(B); 17 C.F.R. § 240.21F-4(b)(1)(ii) and 4(b)(5)-(6). Other award requirements—including that the information led to the success of the covered action, which is the requirement at issue here—must independently be satisfied. See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300, 34,321 n.187 (June 13, 2011) (original source of information “must still satisfy all of the other requirements of Section 21F and of [the whistleblower] rules, including that the information was submitted voluntarily, it led to a successful Commission enforcement action or related action, and [the claimant] is not ineligible for an award”).
[19] See, e.g., Order Determining Whistleblower Award Claim, Release No. 34-84503 (Oct. 30, 2018) (denying award where, given the extensive information the staff had already received through self-reporting disclosures, the staff determined that the Claimant’s information did not warrant additional investigation).
[20] Claimant 2 contends that that delays within the Commission prevented Claimant 2’s tip (and certain supplemental attachments) from expeditiously reaching the appropriate Enforcement staff, and argues that Claimant 2 should not be deprived of an award because of the delay. As an initial matter, the delays at issue were relatively short and not unreasonable under the circumstances. That said, we find no evidence that the delays are relevant to the award determination because (1) Enforcement staff was already relying on the Company’s routine disclosures when Claimant 2 came forward and it appears unlikely that any delays would have altered this reality, and (2) to the extent that Claimant 2 is arguing that the Commission should make an award to Claimant 2 because of any delays, that is not permitted by or consistent with our whistleblower program rules, and Claimant 2 has not demonstrated the type of compelling situation that might warrant consideration of any type of waiver under the circumstances.
[21] See 76 Fed. Reg. 34,300, 34,325 (June 13, 2011).
[22] Claimant 2 did not argue that Claimant 2’s information led to successful enforcement under Exchange Act Rule 21F-4(c)(3) and at this juncture any such argument is waived. Additionally, we find that Claimant 2’s claim would fail even if we were to apply Rule 21F-4(c)(3). Two of the internal reports that Claimant 2 claims to have made *** occurred more than 120 days before Claimant 2’s first submission to the Commission. A third report *** was not made to an individual covered by Rule 21F-4(c)(3) and the information that the company later provided to the Commission about the conduct in question did not lead to successful enforcement because that conduct was not included as part of the Covered Action.
[23] Claimant 2 contends that the Enforcement staff declaration erroneously states that the Enforcement staff interviewed Claimant 2 because of counsel’s overtures. Regardless of who initiated Claimant 2’s interview, we find that the record as a whole supports the conclusion that Claimant 2’s information did not “lead to” the success of the action. Further, we note that merely because staff may determine to interview a witness, this in our experience by no means indicates that the information the individual has already provided leading up to the interview, or provides during the interview, will lead to the success of the matter. Indeed, as the supplemental Enforcement staff declaration explains, “[s]taff routinely interview witnesses who do not provide relevant, salient or new information that advance our investigations.”
[24] Information from a whistleblower that merely corroborates information already known to the Commission ordinarily does not qualify for an award for the independent reason that it fails the requirement of being “original” information. 15 U.S.C. § 21F(a)(3)(B). To be sure, there may be occasions where a whistleblower provides significant additional original information that assists the Commission in successfully pursuing a covered action by strengthening the case against a defendant or respondent. But in particular when the defendant or respondent itself has come forward with complete information about the wrongdoing, the receipt of essentially the same or generally similar information from a whistleblower is less likely to be useful because the defendant or respondent has essentially admitted the wrongdoing. That said, if a whistleblower comes forward with original information that reveals wrongdoing beyond or different than what the defendant or respondent has disclosed, this information may well serve as the basis for an award if it leads to the success of a covered action.

CFTC

08/12/2020

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application on Form WB-APP from Claimant in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted] (“Covered Action”). The Claims Review Staff (“CRS”) has evaluated this application in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (the “Act”), 7 U.S.C. § 26 (2018). The CRS sets forth its Preliminary Determination for Claimant as follows:

1. The CRS recommends that the Commission deny Claimant’s award application because it does not meet the requirements of Section 23 of the Act and the Rules. Claimant did not provide original information to the Commission that led to the successful enforcement of the Covered Action. See 17 C.F.R. § 165.2(i). Claimant’s information did not cause the Commission to commence an examination of [Redacted], open or reopen the [Redacted] investigation, or inquire concerning different conduct as part of the [Redacted] investigation. Nor did Claimant’s information significantly contribute to the success of the Covered Action. Indeed, Division staff assigned to the [Redacted] investigation did not communicate with Claimant in regard to this investigation, and in fact had not heard of Claimant prior to the submission of Claimant’s award application. Accordingly, Claimant’s information did not lead to the successful enforcement of the Covered Action.[fn1] See 17 C.F.R. § 165.2(i).

In Claimant’s Form WB-APP, Claimant asks that the Commission also consider this award application in connection with the Commission’s settlement of the matter [Redacted], which was announced in the same press release as the Covered Action. Monetary sanctions of $1,000,000 were imposed in the [Redacted] settlement. [Redacted] However, the [Redacted] settlement does not qualify as a “covered judicial or administrative action” under the Rules because a “covered judicial or administrative action” means any judicial or administrative action brought by the Commission under the Act whose successful resolution results in monetary sanctions exceeding $1,000,000. See 17 C.F.R. § 165.2(e) (italics added); cf. 28 U.S.C. § 1332(a) (2018) (requiring that the amount in controversy for the exercise of diversity jurisdiction “exceed[] the sum or value of $75,000”); Smoot v. Mazda Motors of Am., Inc., 469 F.3d 675, 676 (7th Cir. 2006) (“diversity jurisdiction depends on the jurisdictional amount’s exceeding $75,000”) (Posner, J.). Given that the $1,000,000 threshold was not met, no whistleblower award may be paid for the [Redacted] matter, even if an award would otherwise be merited. See 17 C.F.R. § 165.5(a)(3).

CFTC

08/12/2020

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1 and Claimant 2 on the above-listed Forms WB-APP regarding [Redacted] (the “Order” or “Covered Action”). The Claims Review Staff (“CRS”) has evaluated the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2020), promulgated pursuant to Section 23 of the Commodity Exchange Act (“Act”), 7 U.S.C. § 26 (2018).[fn1] The CRS sets forth its Preliminary Determination for Claimant 1 and Claimant 2 as follows:

In or about [Redacted], the Commission opened its investigation leading to the Order based on the information Commission staff learned from staff of another authority, who did not provide information from Claimant 1 or Claimant 2. Accordingly, the Commission did not commence its investigation as a direct or indirect result of any of Claimant 1’s or Claimant 2’s information. See 17 C.F.R. § 165.2(i)(1) (2020). In particular, Claimant 1 first contacted the Commission only in [Redacted], after the Commission started the investigation.

None of Claimant 1’s or Claimant 2’s information was used in connection with the Order or the investigation leading to the Order. Accordingly, neither Claimant 1’s nor Claimant 2’s information significantly contributed to the Covered Action. See 17 C.F.R. § 165.2(i)(2) (2020).

Claimant 1’s information also did not lead to the successful enforcement of a related action.[fn2] Because Claimant 1’s information did not lead to the Commission’s successful enforcement action against the defendant in the [Redacted] Order, Claimant 1’s information also did not lead to the successful enforcement of a related action.

[1] The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9(b) does not mean that the presence of negative factors will result in an award percentage lower than 30%, nor does the absence of negative factors in Rule 165.9(c) mean the award percentage will be higher than 10%. Not all factors may be relevant to a particular decision.

[2] Under the Rules, a related action is a judicial or administrative action brought by any of the following non-Commission entities: Department of Justice; an agency or department of the U.S. government; a registered entity, registered futures association, or self-regulatory organization; or a State criminal or civil agency. See 17 C.F.R. § 165.11 (2020). A related action must be “based on the original information that the whistleblower voluntarily submitted to the Commission and led to a successful resolution of the Commission judicial or administrative action.” Id. (emphasis added); see 17 C.F.R. § 165.11(a)(2) (2020); see also 17 C.F.R. § 165.2(m) (2020). In other words, for an action to qualify as a related action under the Act and the Rules, there must be a corresponding successful enforcement of a Commission action based on the same original information voluntarily submitted by the whistleblower to the Commission. Here, as referenced above, Claimant 1’s information did not provide any meaningful assistance to Commission staff assigned to the investigation that led to the [Redacted].

SEC

07/31/2020

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received six whistleblower award claims, two of which were submitted jointly, for the above-referenced SEC enforcement action (“Covered Action”) and the referenced actions brought by the Department of Justice (“DOJ”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each claimant as follows.

[Redacted].

[Redacted] (Claimant 5) and [Redacted] (Claimant 6).

Claimants 5 and 6 did not voluntarily provide original information to the Commission as defined by Rule 21F-4(a) of the Exchange Act. The record reflects that Commission staff directed a request for information to Claimant 5 prior to Claimant 5 providing information to the Commission. The record further reflects that staff of the [Redacted] directed a request for information to Claimant 6 prior to Claimant 6 providing information to the Commission.[fn5]

Additionally, Claimant 6’s award claim was untimely, as it was submitted after the 90-day deadline for submitting award claims for the Covered Action. See Rule 21F-10(b).[fn6]

By: Claims Review Staff.

[5] Although not a basis for our preliminary denial, we note that there are other grounds upon which Claimant 5’s and Claimant 6’s award claims may be denied. First, Claimant 5 and Claimant 6 are not “whistleblowers” because they did not submit information to the Commission pursuant to the procedures set forth in Rule 21F-9(a) under the Exchange Act, as required by Rule 21F-2, and are not eligible for an award because they did not sign the whistleblower declaration, as required under Rule 21F-9(b). Second, both Claimant 5 and Claimant 6 may be excluded from award consideration under Rule 21F-4(b)(4)(iii)(B) and do not appear to fall within an exception to the rule. Finally, Claimant 5 and Claimant 6 also applied for a related action award in connection with the DOJ Actions. Because Claimant 5 and Claimant 6 do not qualify for an award in the Covered Action, their requests for a related action award are denied. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a); Order Determining Whistleblower Award Claims, Release No. 34-84506 (Oct. 30, 2018); Order Determining Whistleblower Award Claims, Release No. 34-84503 (Oct. 30, 2018).

[6] We have also preliminarily determined that the 90-day filing requirement should not be waived because of “extraordinary circumstances” under Rule 21F-8(a). Claimant 6 contends that the application was late because Claimant 6 was not aware of the posting of the Notice of Covered Action and did not learn about it informed Claimant 6 of the posting. However, the “extraordinary circumstances” exception is to be “narrowly construed,” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.” See Order Determining Whistleblower Award Claim, Rel. No. 34-77368, at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018). Lack of awareness of the whistleblower program or of a NoCA posting, however, is not an “extraordinary circumstance.” See Order Determining Whistleblower Award, Rel. No. 34-85412 (Mar. 26, 2019). Moreover, even if “extraordinary circumstances” existed, Claimant 6 would not qualify for an award for the other reasons set forth above.

CFTC

07/24/2020

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application from Claimant 1 in response to Notice of Covered Action No. [Redacted]. The corresponding enforcement action is [Redacted]. The Claims Review Staff (“CRS”) has evaluated the award application in accordance with the Commission’s Whistleblower Regulations (“Regulations” or “Rules”), 17 C.F.R. pt. 165 (2019), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** of monetary sanctions collected in [Redacted]. For the reasons set forth below, the CRS’s determination is adopted.

I. BACKGROUND.

[Redacted] arose out of an investigation opened in response to information that Claimant 1 [Redacted] submitted to the Commission regarding [Redacted]. On [Redacted], the Commission [Redacted]. Claimant 1 subsequently submitted a whistleblower award application [Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** of sanctions collected in the [Redacted] because Claimant 1 voluntarily provided original information that led to the successful enforcement of a covered action. Claimant 1 did not respond to the Preliminary Determination. Thus, under Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination. Claimant 1 is prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13, because Claimant 1 did not exhaust administrative remedies.

III. LEGAL ANALYSIS.

The CRS recommended the award amount to be *** of the amount of monetary sanctions collected in the covered action, which would result in a payment [Redacted]. This recommendation is adopted. In arriving at this award amount, the CRS applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. Rule 165.9(b) provides a list of factors that may increase the award amount, and Rule 165.9(c) provides a list of factors that may decrease the award amount. However, the Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing documents containing direct evidence of violations could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

As applied, Claimant 1 [Redacted]. Accordingly, an award of *** of the amount of sanctions collected is appropriate.

IV. CONCLUSION.

It is hereby ORDERED that Claimant 1 shall receive *** of monetary sanctions collected in [Redacted]. By the Commission.

SEC

07/23/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 3”) and [Redacted] (“Claimant 4”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1, [Redacted] 3 and 4 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Investigative staff responsible for the Covered Action did not receive any information from Claimants 1, or [Redacted] or 4 at any time, and did not receive any information relating to the Covered Action from Claimant 3 until after the Covered Action was filed. Further, this information did not contribute to the Covered Action.

SEC

89355

07/21/2020

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount to be appropriate.[fn2] In reaching that determination, we considered that (i) Claimant expeditiously submitted a detailed tip concerning an ongoing fraud that the Commission was not aware of at the time; (ii) Claimant’s tip was specific and detailed and included significant corroborating documents, which prompted Enforcement staff to open the investigation; (iii) Claimant continued to provide information that was helpful to the investigation; and (iv) there are currently no collections in this matter.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

SEC

89354

07/21/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of twenty percent (20%) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action (the “Covered Action”). Claimant’s estate provided written notice that it will not contest the Preliminary Determination.[fn1]

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount to be appropriate.[fn3] In reaching that determination, we considered that (i) Claimant expeditiously submitted a tip with previously unknown details concerning an ongoing fraud; (ii) Claimant’s tip was specific and detailed and included significant corroborating documents, which prompted Enforcement staff to open the investigation; (iii) Claimant’s tip helped the Commission stop an ongoing fraud and resulted in the return of money to harmed investors; (iv) there are low collections in this matter; and (v) Claimant was not in a position to continue providing on-going, helpful information to the Enforcement staff during the investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of twenty percent (20%) of the monetary sanctions collected, or to be collected, in the Covered Action.
By the Commission.

[1] The CRS also preliminarily denied an award in connection with [Redacted] (“Other Authority”) because none of Claimant’s information led to the successful enforcement of those actions. See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-3(b)(2), 17 C.F.R.§ 240.21F-3(b)(2). Claimant’s estate did not contest that determination, and as such, the CRS’s preliminary determination as to the Other Authority’s actions became the final determination of the Commission. See Exchange Act Rule 21 F-11(f), 17 C.F.R.§ 240.21F-11(f).
[2] See Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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.

CFTC

07/20/2020

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications on Form WB-APP from Claimant 1, Claimant 2, Claimant 3, and Claimant 4 in response to the Commission’s Notice of Covered Action No. [Redacted] (the “Covered Action”). The Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action No. [Redacted], recommending that Claimant 1 receive ***% and Claimant 2 receive ***% of the monetary sanctions collected in the Covered Action, which would result in a total award of ***%, or $[Redacted]: $[Redacted] to Claimant 1 and $[Redacted] to Claimant 2.[fn1]

The Preliminary Determination also recommended that the award applications submitted by Claimant 3 and Claimant 4 be denied. Claimant 1 requested reconsideration of the Preliminary Determination.

For the reasons set forth below, we make the following determinations: Claimant 1’s claim is approved [Redacted] of the monetary sanctions collected in the Covered Action; Claimant 2’s claim is approved [Redacted] of the monetary sanctions collected in the Covered Action.[fn2]

I. BACKGROUND.

A. The Award Program.

B. Relevant Facts.

The Covered Action arose out of an investigation opened in response to information that Claimant 1 submitted to the Commission. Claimant 2, a company insider, participated in some of the CEA violations resolved by the Covered Action, but he/she provided information to the Division of Enforcement (“Division”) that significantly contributed to the successful outcome of the Covered Action. Claimant 1 requested reconsideration of Claimant 2’s eligibility for an award because Claimant 2 submitted his/her information after the Division sought information from his/her employer. Claimant 1 argued in his/her [Redacted] Request for Reconsideration (“Reconsideration Request”) that Claimant 2’s subsequent submission of information should not be considered “voluntarily provided” under the Rules if the information the Division sought from Claimant 2’s employer was within the scope of the information that Claimant 2 provided—which would, according to Claimant 1, make Claimant 2 ineligible to receive a whistleblower award. Claimant 2 did not seek reconsideration of the Preliminary Determination.

II. DISCUSSION.

A. Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 and Claimant 2 receive whistleblower awards, finding that Claimant 2 significantly contributed to the Covered Action. In making its award recommendation, the CRS balanced the fact that Claimant 2 had some limited participation in the underlying misconduct with the importance of the information Claimant 2 provided. The CRS relied on a declaration provided by Division staff who worked on the Covered Action (“Declaration”). The Declaration described the information the Division requested from Claimant 2’s employer prior to Claimant 2’s providing information to both the Commission and [Redacted] (“Regulator”).

B. Claimant 1’s Reconsideration Request.

Claimant 1’s Reconsideration Request made four main points. First, Claimant 1 questioned whether Claimant 2 is eligible for an award, arguing that he/she failed to voluntarily provide information pursuant to the Rules because his/her employer received a request for information (“November Request”) from the Division prior to Claimant 2’s submitting a Form TCR, and the information Claimant 2 provided may have been “within the scope” of that November Request. Second, Claimant 1 argued the CRS failed to follow agency regulations and failed to consider relevant evidence by not examining the text of the November Request. Third, Claimant 1 argued that the CRS impermissibly relied on what Claimant 1 deemed to be Division staff’s own determination that Claimant 2’s submission was voluntary. Finally, Claimant 1 sought to increase his/her award percentage because, in his/her view, both Claimant 1’s assistance deserved a higher award percentage, and Claimant 2 should be deemed ineligible for a whistleblower award and therefore not count against the total award percentage allowed by the CEA.[fn4]

C. The Division’s November Request and Claimant 2’s Submission.

We have reviewed the text of the Division’s November Request, which sought information from [Redacted] (“Company X”) related to [Redacted] that were, as [Redacted], maintained by Company X’s [Redacted].[fn5] Specifically, the November Request asked for the following information for certain [Redacted] “data and/or reports reflecting [Company X’s] *** [Redacted].” In contrast, the information Claimant 2 provided on his/her Form TCR included evidence regarding Company X’s intent [Redacted] November Request, as well as (2) estimated [Redacted]. The Regulator then provided this information to the Division.[fn6]

D. Analysis.

1. Claimant 1’s Award Is Appropriate.

Claimant 1 seeks to increase his/her award percentage, both because he/she thinks he/she deserves a higher percentage and because he/she thinks Claimant 2 should be deemed ineligible for an award. Claimant 1’s Reconsideration Request reiterated why he/she thought he/she was entitled to an award at the top of the 10 to 30 percent range:

As described in the award application, our client’s submission was timely, and [his/her] contributions were reliable and complete. [He/she] directed the Commission to the key individuals and information necessary to bring a successful enforcement action. On the other hand, [he/she] did not participate in nor financially benefit from the [Redacted] and, in fact, placed [himself/herself] at risk by disclosing [his/her] identity to the CFTC and [the Regulator].

Although Claimant 2 aided the investigation by adding details [he/she] learned while participating in the scheme, [he/she] came forward long after Claimant 1 had alerted the CFTC to [Redacted]. The Commission had already begun investigating [Redacted], and Claimant 1 had identified Claimant 2 as a potential witness and culpable participant. It was inevitable that the Commission would interview [him/her]. Claimant 2 must have been aware that the CFTC was investigating [Redacted] [he/she] submitted [his/her] tip and, with the Commission’s participation assured, the likelihood of a successful outcome was high. [His/her] decision to join presented far fewer risks than those faced by Claimant 1, who had no assurance that the CFTC would pursue the matter in the first instance.

We have carefully reviewed Claimant 1’s arguments as to why he/she should receive an award at the top of the 10 to 30 percent share range. We determine that Claimant 1’s award of ***% is appropriate. Claimant 1’s arguments fail, and he/she provides no new argument why ***% is insufficient without regard to Claimant 2’s award and the statutory limit on a total award of 30% of the monetary sanctions collected. In arriving at this award amount, we applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application. Although Claimant 1’s information caused the Commission to open its investigation, and he/she provided some additional information, Claimant 1 provided limited assistance because he/she did not have direct knowledge of the CEA violations. Accordingly, we determine that an award of ***% to Claimant 1 is appropriate.

2. Claimant 2 Provided Information Voluntarily, Notwithstanding the November Request.

The Commission considered whether Claimant 2 provided information to the Commission voluntarily. The Division’s November Request to Claimant 2’s employer sought some of the same [Redacted] that Claimant 2 provided to the Division via the other Regulator. Rule 165.2(0) provides that information is not “voluntarily submitted” if the whistleblower or his/her employer has received a request for “documents or information from the whistleblower” or the “whistleblower’s documents.” With one exception not relevant here, this applies only to documents or information “within the scope of a request, inquiry, or demand that the whistleblower’s employer receives.”[fn7]

This language is somewhat ambiguous as to the meaning of the term “documents or information from the whistleblower” or the “whistleblower’s documents.” However, we determine that the Commission intended the phrase “documents or information from the whistleblower” to apply only to “employees who possess the documents or other information that is necessary for the employer to respond.”[fn8]

Claimant 2 provided information voluntarily, despite the overlap in the information Claimant 2 provided to the other Regulator and the information requested by the CFTC in its November Request. Instead of being in Claimant 2’s custody, this [Redacted] was maintained and available from another unit within Claimant 2’s employer. Additionally, the record reflects that the Division did not request documents in the personal possession of Claimant 2 prior to his/her provision of information to the Regulator and the Commission. The Division also did not seek to interview Claimant 2 prior to his/her provision of information to the Division. Therefore, we determine that Claimant 2’s submission was voluntary under the Rules.

III. CONCLUSION.

Accordingly, it is ORDERED that Claimant 1 shall receive an award of ***% of the monetary sanctions collected in the Covered Action; and it is further ORDERED that Claimant 2 shall receive an award of ***% of the monetary sanctions collected in the Covered Action.[fn9] By the Commission.

[1] Respondents have fully paid the amount ordered in connection with the Covered Action.

[2] Claimant 2 did not contest the Preliminary Determination and, therefore, the Preliminary Determination granting Claimant 2’s award has become the Proposed Final Determination of the Commission. 17 C.F.R. § 165.7(h). Claimant 3 and Claimant 4 failed to submit a response contesting the Preliminary Determination and, therefore, the Preliminary Determination denying their claims for awards has become the Final Order of the Commission with respect to their award applications. Id.

[3] See 17 C.F.R. § 165.5(a).

[4] On [Redacted], Claimant 1’s counsel sent a supplemental request for reconsideration arguing that Claimant 2 should be barred from getting an award because whistleblower awards cannot be given to “any whistleblower who submits information to the Commission that is based on the facts underlying the covered action submitted previously by another whistleblower.” As discussed above, Rule 165.7(g)(2) does not permit Claimant 1 to make this argument and his/her argument is time-barred. See 17 C.F.R. § 165.7(g)(2). Substantively, this argument must also fail because the Rules contemplate a whistleblower providing additional information that “significantly contributes” to a matter already under investigation. See id. § 165.2(i)(2). The Rules do require a whistleblower to provide original information; however, Claimant 1 and Claimant 2 each provided different information, and Claimant 2’s information stemmed from his/her observations and actions while [Redacted]. See id. § 165.5(a)(2). Additionally, on [Redacted], Claimant 1’s counsel sent a second untimely request for reconsideration subsequent to receiving copies of the November Request [Redacted] to Claimant 2’s employer pursuant to a Freedom of Information Act Request. This second untimely request again argued that Claimant 2’s information was not voluntarily provided because the CFTC had already requested information from the whistleblower’s employer that was relevant to Claimant 2’s submission.

[5] We also reviewed the language of a later request the Division made to Claimant 2’s employer about a specific *** (other than Claimant 2) after Claimant 2 provided information to the Regulator, but before Claimant 2 submitted his/her Form TCR. Claimant 2 filed his/her Form TCR within 120 days of contacting the Regulator, and is therefore entitled to the safe harbor provision that deems information to have been simultaneously submitted to the Commission as of the date of submission to the other regulator. See 17 C.F.R. § 165.2(l)(2) (2016). Therefore, the contents of the later request are irrelevant. Even if the safe harbor rules were not in effect, the later request did not seek information that Claimant 2’s employer would have had to obtain from Claimant 2, which is the key issue.

[6] On [Redacted], staff from the Regulator forwarded to Division staff the [Redacted] data Claimant 2 had provided.

[7] 17 C.F.R. § 165.2(o).

[8] See 17 C.F.R § 165.2(o); Implementing the Whistleblower Provisions of Section 23 of the Commodity Exchange Act, 75 Fed. Reg. 75,728, 75,734 (proposed Dec. 6, 2010). The text of Rule 165.2(o) provides two possible readings of “documents or information from the whistleblower” or “whistleblower’s documents.” 17 C.F.R § 165.2(o). The first reading is that Rule 165.2(o) would apply to documents or information needed to be obtained from the whistleblower’s personal possession, and the second reading would be that Rule 165.2(o) applies to anything the whistleblower provided to the Division that the Division had previously requested from the whistleblower’s employer. An adoption of the second reading would make Claimant 2’s submission not voluntarily provided because there was an overlap in [Redacted] requested by the Division in the November Request and [Redacted] that Claimant 2 provided the other Regulator (which the other Regulator provided to the Division). After a careful reading of the adopting releases for the Proposed and Final Whistleblower Rules, as well as an examination of the underlying purpose of the Whistleblower Program, we determine that Rule 165.2(o) applies to documents or information needed to be obtained from the whistleblower’s personal possession. See Implementing the Whistleblower Provisions of Section 23 of the Commodity Exchange Act, 75 Fed. Reg. 75,728, 75,734 (proposed Dec. 6, 2010); Whistleblower Incentives and Protection, 76 Fed. Reg. 53,172, 53,181 & n.62 (Aug. 25, 2011).

[9] If the Commission’s Order were to negatively impact a Claimant who was preliminarily granted an award by the Claims Review Staff, but who did not request reconsideration, that Claimant would have the opportunity to appeal the Order. See 7 U.S.C. § 26(f).

SEC

07/20/2020

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received three whistleblower award claims from the following claimants: [Redacted], [Redacted] (“Claimant 2”), and [Redacted] (“Claimant 3”) [Redacted].[fn1] Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determinations for the award claimants as follows.

[Redacted].

Claimant 2.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2.

Claimant 2 did not provide original information that led to a successful enforcement action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, because the information Claimant 2 provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 2’s information, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

Claimant 3.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 3.

Claimant 3 did not provide original information that led to a successful enforcement action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, because the information Claimant 3 provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of Claimant 3’s information, or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

[1] We are treating Claimant 2 and Claimant 3 as joint claimants as their whistleblower award applications are functionally identical and were submitted together, and the tip on which they base their award claim was jointly submitted.

SEC

07/18/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants 1 or 2. In addition, while not the basis for our determination, it does not appear that Claimant 2 submitted information on a Form TCR as required under Exchange Act 21F-9(a).

SEC

07/18/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from (“Claimant 1”) and (“Claimant 2”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants 1 and 2. In addition, while not the basis for our determination, it does not appear that Claimant 2 submitted information on a Form TCR as required under Exchange Act 21F-9(a).

SEC

07/18/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from (“Claimant 1”) and (“Claimant 2”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] The [Redacted] Investigation was opened based on information derived from another source, and investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants 1 and 2.

SEC

07/18/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

By: Claims Review Staff.

[1] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b): Exchange Act Rule 21F-3(b), (b)(1): Rule 21F-4(g) and (f): Rule 21F-11(a): see also Order Determining Whistleblower Award Claim. Release No. 34-86902 (Sept. 9, 2019).

[2] Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants 1 and 2.

SEC

07/17/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set fo1th in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimant 1 and Claimant 2 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter b1ing an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[1] To the extent Claimant 1 or Claimant 2 applied for an award in a related action, because they are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[2] Investigative staff responsible for the Covered Action never received any information from, or had any communications with Claimant 1 or Claimant 2.

SEC

89311

07/14/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of approximately $3.8 million, which represents *** percent (*** %) of the monetary sanctions collected, or to be collected, in connection with the above-referenced Covered Action.[fn1] 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 led to the successful enforcement of the above-referenced Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)[fn2] and Rule 21F-3(a) thereunder.[fn3]

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.[fn4] In reaching that determination, we considered that during the course of an ongoing investigation into a fraudulent scheme, Claimant provided new information that helped the Commission halt an ongoing fraud and return millions of dollars to harmed investors. However, while Claimant’s information was important to the case, it was discrete and narrow in scope. After Claimant provided original information to the Commission, Claimant was not able to render further assistance because of a lack of first-hand knowledge. An award of *** % appropriately acknowledges the level of Claimant’s contribution to the overall success of the enforcement action, given the limited nature of Claimant’s information and assistance.

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.[fn5]
By the Commission.

[1] The CRS also preliminarily determined to recommend that the award application of a second claimant be denied. The second claimant did not submit a request for reconsideration and, as such, the Preliminary Determination with respect to that award claim became the Final Order of the Commission, pursuant to Exchange Act Rule 21F-10(f).
[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.
[5] Because the court in the Covered Action ordered that the entire amount recovered by the court-appointed receiver (approximately Redacted) was deemed to satisfy the disgorgement and prejudgment interest obligations of the defendants placed into receivership, we treat the full amount recovered as collected monetary sanctions for purposes of determining the payout to Claimant. Further, amounts paid by other defendants or relief defendants into the receivership in satisfaction of court-ordered sanctions against those defendants, and included in the Redacted collected by the receiver, shall not be separately counted as collected sanctions. See Order Determining Whistleblower Award Claim, Release No. 34-88803 (May 4, 2020) (no double-counting, for award purposes, of the same amounts paid into receivership and later distributed to investors).

SEC

89124

06/23/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected, or to be collected, in [Redacted] (“Covered Action”) and [Redacted] of the monetary sanctions collected, or to be collected, in a related enforcement action, [Redacted] *** (“Related Action”).[fn1] These proposed awards would yield a likely payout to the Claimant of approximately $125,000.[fn2] Claimant subsequently 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 the same original information to the Commission and to [Redacted] (“Other Agency”), and that this information led to the successful enforcement of both the Covered Action and the Related Action.[fn3] Applying the award criteria specified in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find that the proposed award percentages for both the Covered Action and the Related Action are appropriate.[fn4] In reaching that determination, we positively assessed the facts that (i) Claimant’s information was highly significant because Claimant’s tip caused the opening of both the Commission’s and the Other Agency’s investigations and provided both staffs with important information about the company’s fraudulent securities offering; (ii) Claimant reported information that resulted in the Commission and the Other Agency discovering a fraudulent scheme that preyed on a vulnerable investor community; (iii) Claimant provided assistance to both the SEC and the Other Agency during the investigation; and (iv) collections from the defendants of the monetary sanctions ordered in both the Covered Action and the Related Action were low.

Finally, we find that the contributions made by Claimant to the Covered Action are similar to Claimant’s contributions to the success of the Related Action, and, therefore, it is appropriate that Claimant receive the same award percentage for both actions.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] of the monetary sanctions collected in the Covered Action, and *** [Redacted] of the monetary sanctions collected in the Related Action, as well as any monetary sanctions collected in either action after the date of this Order.
By the Commission.

[1] The Related Action constitutes a “related action” to the Covered Action within the meaning of Section 21F(a)(5) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78u-6(a)(5), and Rule 21F-3(b) promulgated thereunder, 17 C.F.R. § 240.21F-3(b), as a [Redacted] and is based on the same original information that the whistleblower voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.
[2] [Redacted]. Applying Section 21F(b)(1) of the Exchange Act, 15 U.S.C. 78u-6(b)(1), which provides for payment of awards based on “what has been collected of the monetary sanctions imposed” in a Commission covered action or a related action, amounts obtained from the defendant in satisfaction of monetary sanctions ordered in the Related Action (not the entire amount ordered) shall be included in the calculation of any award payment. See In the Matter of Claims for Award, Release No. 72301 , at n.1 (June 3, 2014) (providing for the payment of an award when monetary sanctions ordered in a covered action are deemed satisfied by payment of an amount in an action by another governmental authority). Further, amounts paid by the defendant will not be double-counted in both the Covered Action and the Related Action for purposes of calculating any award payment. See Order Determining Whistleblower Award Claim, Release No. 34-77530 , at 2, note 1 (April 5, 2016) (ordering that monetary sanctions collected in the covered action or in the related criminal action that are either deemed to satisfy or are in fact used to satisfy any payment obligations of the defendants in the other action shall not be double counted for purposes of paying an award); Order Determining Whistleblower Award Claim, Release No. 34-88015 (Jan. 22, 2020) (same).
[3] See Exchange Act Section 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] 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 Covered Action; (3) the 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.

SEC

06/23/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), and [Redacted] for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21-F10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn2] The basis for this determination is marked below as follows:

Claimants 1, 2, 3, and [Redacted] did not provide information that led to the successful
enforcement of the above-referenced Covered Actions within the meaning of
Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c)
thereunder because any information provided did not, under Rule 21F-4(c)(1)
of the Exchange Act: (1) cause the Commission to (a) commence an
examination, open or reopen an investigation, or inquire into different conduct
as part of a current Commission examination or investigation, and (b)
thereafter bring an action based, in whole or in part, on conduct that was the
subject of claimants’ information; or (2) significantly contribute to the success
of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn3]

By: Claims Review Staff.

[2] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[3] The investigation that resulted in the Covered Action was opened in [Redacted] and was not opened based on information provided by any of the claimants. None of the claimants provided information that significantly contributed to the success of the Covered Action. Specifically, Claimant 1’s submission [Redacted] was not provided until nearly two months after the Commission’s settlement of the Covered Action, and thus, had no bearing on the investigation or settlement. Claimant 2 submitted information approximately five years after the investigation had opened. Claimant 2’s submission [Redacted] and related submissions of additional information) alleged misconduct by subsidiaries of [Redacted] that was similar in character to the illicit conduct by the same subsidiaries in [Redacted] that the investigative staff had previously discovered during the course of the investigation. Claimant 2 ‘s allegations were imprecise and insubstantial, and did not advance the staffs investigation in any manner. Claimant 3 and [Redacted] submitted information approximately four years after the investigation had opened. Further, Claimants 3 [Redacted] made vague and conclusory allegations of misconduct without any supporting documentation. The investigative staff did not find that these two submissions warranted any additional investigative efforts and had no communications with either Claimant 3, [Redacted] or their respective counsel regarding their allegations. The investigative staff also did not utilize any information from these two submissions in the investigation.

SEC

06/23/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted], [Redacted] (“Claimant 2”), and [Redacted] (“Claimant 3”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants [Redacted] 2 and 3 did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimant. [Redacted]. Claimant 3 provided information approximately three years after the investigation had opened and the information was already known to the staff. Further, investigative staff could not substantiate Claimant 3’s allegations and the allegations did not become part. of the Covered Action.

SEC

06/23/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received three whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

[Redacted] (“Claimant 2”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2. The basis for this determination is that Claimant 2’s whistleblower submission did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Claimant 2’s information did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn3]

[Redacted] (“Claimant 3”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 3. The basis for this determination is that Claimant 3’s whistleblower submission did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Claimant 3’s information did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn4]

By: Claims Review Staff.

[3] In preliminarily finding that the information Claimant 2 provided to the Commission did not lead to the success of the action, we have relied on the following facts that are identified in a declaration provided by one of the principal attorneys involved with the Covered Action: Enforcement staff had already opened the investigation based on information provided by [Redacted] approximately 14 months before receiving any information from Claimant 2. Further, Claimant 2 provided information that was either already known to Enforcement staff or unrelated to the Commission’s charges.

[4] In preliminarily finding that the information Claimant 3 provided to the Commission did not lead to the success of the action, we have relied on the following facts that are identified in a declaration provided by one of the principal attorneys involved with the Covered Action: Enforcement staff had already opened the investigation based on information provided by [Redacted] approximately 19 months before receiving any information from Claimant 3. Further, Claimant 3 provided information that was unrelated to the Commission’s charges.

SEC

06/23/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), and [Redacted] (collectively, “Claimants”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1, 2, [Redacted] did not provide information that led to the successful enforcement of the above-referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] The investigation was opened in [Redacted] based on a source other than Claimants, and prior to receiving any tips from the Claimants. None of the information provided by Claimants 1, 2, [Redacted] was used in or contributed to the success of the Covered Action. While Enforcement staff responsible for the Covered Action received Claimants’ information and communicated with them, staff was not able to substantiate those allegations and/or their allegations did not become part of the Commission’s charges in the Covered Action.

[3] See Order Determining Whistleblower Award Claim, Release No. 34-77368 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. Sept. 7, 2017), cert. denied, 138 S.Ct. 2005 (2018). The deadline to file award claims for the Covered Action was [Redacted]. Claimant 1’s award application was dated [Redacted].

SEC

89102

06/19/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award of almost $700,000, based on amounts currently collected in the above referenced Covered Action (“Covered Action”), which is equal to a [Redacted] award. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn2] In reaching that determination, we positively assessed the following facts: (1) Claimant alerted Enforcement staff to the potential wrongdoing, prompting Enforcement staff to open the investigation; (2) Claimant provided significant ongoing assistance to Enforcement staff during the investigation that saved Commission time and resources; (3) Claimant internally reported Claimant’s concerns in an effort to remedy the conduct; (4) Claimant suffered undue hardship as a result of Claimant’s whistleblowing activities; and (5) there are high law enforcement interests here as money was returned to harmed investors.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] of the monetary sanctions collected or to be collected in the Covered Action.[fn3]
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] In assessing the appropriate award amount, Exchange Act 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.
[3] A portion of disgorgement and prejudgment interest ordered against one of the respondents in the Covered Action was offset by the respondent’s [Redacted]. We treat the amounts subject to such offset [Redacted] along with other monetary sanctions paid by the respondents, as “collected” for purposes of payment on the Claimant’s award. See Exchange Act § 21F(b)(1)(A)-(B), 15 U.S.C. § 78u-6(b)(1)(A)-(B).

CFTC

06/12/2020

The recommendation of the CRS with respect to Claimant 1 is adopted. We find that the record demonstrates that he/she voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26(b)(1) (2018). The information Claimant 1 provided was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based in part on conduct that was the subject of the original information provided by Claimant 1. Claimant 1 also provided Commission staff with assistance throughout the course of the Commission’s investigation.

In addition, the Preliminary Determination recommended that the award application submitted by Claimant 2 be denied. The Preliminary Determination found that the information provided by Claimant 2 was not useful to the Commission’s investigation and did not lead to the successful enforcement of the Covered Action. Further, Claimant 2’s information was not submitted voluntarily. Claimant 2 failed to submit a request for reconsideration of the Preliminary Determination; therefore, the Preliminary Determination denying his/her claim for an award has become the Final Order of the Commission. 17 C.F.R. § 165.7(h) (2019).

It is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

By the Commission.

[1] If the Commission were to collect [Redacted] award would result in a total payment of [Redacted] to Claimant 1.

CFTC

06/05/2020

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1, Claimant 2, Claimant 3, Claimant 4, and Claimant 5 (collectively, “Claimants”) in response to Notice of Covered Action No. [Redacted]. The underlying enforcement action is [Redacted]. The Claims Review Staff (“CRS”) evaluated the award applications according to the Commission’s Whistleblower Regulations (“Regulations” or “Rules”), promulgated pursuant on Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award of *** of monetary sanctions collected in [Redacted]. The Preliminary Determination also recommended denying the award claims from Claimant 2, Claimant 3, Claimant 4, and Claimant 5. For the reasons set forth below, the CRS’s determination is adopted.

I. BACKGROUND.

[Redacted] arose out of an investigation opened in response to information that Claimant 1 [Redacted] submitted to the Commission regarding [Redacted]. Claimant 1, Claimant 2, Claimant 3, Claimant 4, and Claimant 5 subsequently submitted whistleblower award applications in response to Notice of Covered Action No. [Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** of sanctions collected in *** [Redacted] because claimant 1 voluntarily provided original information that led to the successful enforcement of a covered action. The Preliminary Determination also recommended denying the remaining award claims because Claimant 2, Claimant 3, Claimant 4, and Claimant 5 did not contribute to [Redacted].

Claimant 2, Claimant 3, and Claimant 4 did not respond to the Preliminary Determination. Thus, pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Final Order of the Commission with respect to Claimant 2, Claimant 3, and Claimant 4. Their failure to contest the Preliminary Determination constituted failure to exhaust administrative remedies. Accordingly, Claimant 2, Claimant 3, and Claimant 4 are prohibited from appealing the Final Order pursuant to Rule 165.13, 17 C.F.R. § 165.13.

Claimant 1 and Claimant 5, on the other hand, requested and obtained the record supporting the Preliminary Determination. Claimant 1 did not contest the Preliminary Determination after obtaining the record. Thus, under Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination with respect to Claimant 1. Claimant 1 is prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13, because Claimant 1 did not exhaust administrative remedies. [Redacted].

III. LEGAL ANALYSIS.

A. Claimant 1.

The CRS recommended the award amount to be *** of the monetary sanctions collected in the covered action, which would result in a payment of ***. This recommendation is adopted. In arriving at this award amount, the CRS applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application.

The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance.

Rule 165.9(b) provides a list of factors that may increase the award amount, and Rule 165.9(c) provides a list of factors that may decrease the award amount. However, the Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing documents containing direct evidence of violations could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

As applied, Claimant 1 [Redacted].

B. Claimant 5.

Claimant 5 objected to the CRS’s denial of *** award claim. Claimant 5 claimed that [Redacted]. The arguments are baseless. [Redacted]. Division staff did not use or need Claimant 5’s information at any point in time. As such, Division staff did not contact or attempt to contact Claimant 5 to seek assistance. Thus, Claimant 5’s award claim is denied.

IV. CONCLUSION.

It is hereby ORDERED that Claimant 1 shall receive *** of monetary sanctions collected in [Redacted]. It is further ORDERED that Claimant 5’s whistleblower award claim be, and hereby is, denied. By the Commission.

SEC

89002

06/04/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of *** (***) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”) for a payout of nearly $50 million, and that the award application submitted by [Redacted] (“Claimant 2”) be denied. Claimant 1 provided written notice of Claimant’s decision not to contest the Preliminary Determination, and Claimant 2 submitted a timely notice contesting the preliminary denial of Claimant 2’s award claim. For the reasons discussed below, the recommendations of the CRS are adopted.

I. Background.

A. The Covered Action.

[Redacted]. On [Redacted], the Office of the Whistleblower posted the above-referenced Notice of Covered Action of the Commission’s public website inviting claimants to submit whistleblower award applications within 90 days, by [Redacted].[fn1] Claimant 1 filed a timely whistleblower award claim. Claimant 2 filed an award claim on [Redacted] – nearly 10 months after the posted deadline.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that (1) Claimant 1 receive an award of *** of the monetary sanctions collected in the Covered Action,[fn3] and (2) the award claim of Claimant 2 be denied. The CRS recommended that Claimant 2’s claim be denied for two reasons – first, because Claimant 2 was not a “whistleblower,” within the meaning of Section 21F(a)(6) of the Exchange Act and Rule 21F-2(a) thereunder, since there was no evidence showing that Claimant 2 provided information to the Commission relating to the above-referenced Covered Action, as required by Rule 21F-9(a) or (d); and second, because Claimant 2 failed to submit Claimant 2’s claim for award on Form WB-APP within ninety (90) days of the Notice of Covered Action in this matter, as required under Rule 21F-10(b) of the Exchange Act in order to be considered for an award and, further, did not demonstrate that the Commission should waive, in its discretion, the filing deadline based on “extraordinary circumstances,” as provided under Rule 21F-8(a) of the Exchange Act.[fn4]

C. Claimant 2’s Response to the Preliminary Determination.

On [Redacted], Claimant 2 submitted a timely written response contesting the Preliminary Determination.[fn5] Claimant 2 argues in response to the Preliminary Determination that Claimant 2 was, in fact, a whistleblower because Claimant 2 had “jointly” provided the information that Claimant 1 provided in Claimant 1’s tip to the Commission. Claimant 2 also argues that Claimant 1 filed the application for award on Form WB-APP for both of them, as there was no space for them to both sign. Finally, Claimant 2 asserts that there were “extraordinary circumstances” excusing Claimant 2’s failure to file the award application before the posted deadline; namely that Claimant 2 does not have the resources, such as a computer or internet access, to monitor the SEC’s website for the postings of Notices of Covered Action. Claimant 2 further notes that [Redacted].

II. Analysis.

A. Claimant 1.

The record demonstrates that Claimant 1, a whistleblower, voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn6] Accordingly, Claimant 1 qualifies for a whistleblower award. Applying the award criteria specified in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn7] In reaching that determination, we positively assessed the following facts: (i) Claimant 1’s information was highly significant and Claimant 1 provided first-hand observations of misconduct by the Company that was previously unknown to the staff; (ii) Claimant 1 laid out in detail substantial aspects of the scheme and provided a roadmap for the investigation; and (iii) Claimant 1’s information helped the Commission further significant law enforcement interests as Claimant 1’s information allowed the Commission to bring an enforcement action that, [Redacted], returned a significant amount of money to those harmed by the Company’s misconduct.

B. Claimant 2.

1. Claimant 2 was not a whistleblower under the applicable rules.

The Commission is authorized to pay an award or awards to “1 or more whistleblowers who voluntarily provided original information to the Commission that led to the successful enforcement of the covered judicial or administrative action, or related action.”[fn8] The Commission’s whistleblower rules define a whistleblower as a person who “alone or jointly with others, . . . provide[s] the Commission with information pursuant to the procedures set forth in § 240.21F-9(a) of this chapter, and the information relates to a possible violation of the federal securities laws (including any rules or regulations thereunder) that has occurred, is ongoing, or is about to occur.”[fn9] There is no evidence in the record that Claimant 2 submitted any information to the Commission relating to the Covered Action pursuant to the required procedures or otherwise, and Claimant 2 has not identified any submissions that Claimant 2 made. Instead, Claimant 2 argues that Claimant 2 should be credited as a “joint” whistleblower with Claimant 1 on the theory that [Redacted]. However, there is no evidence in the record to support a finding that Claimant 2 was a participant in any manner in Claimant 1’s tip. Accordingly, Claimant 2 does not qualify as a whistleblower and is thus not eligible to receive an award.

2. Claimant 2 did not show “extraordinary circumstances” excusing the late-filing of Claimant 2’s award application.

Exchange Act Rule 21F-10(a) states that “[a] claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred.”[fn11] Claimant 2’s award application was filed nearly 10 months after the deadline. The requirement that claimants file whistleblower award claims within ninety days of the posting of a Notice of Covered Action serves important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that the Commission can make timely awards to meritorious whistleblowers.[fn12]

Under Exchange Act Rule 21F-8(a), “the Commission may, in its sole discretion, waive” certain procedural requirements, including the ninety-day filing deadline, “upon a showing of extraordinary circumstances.”[fn13] In determining whether a claimant has demonstrated extraordinary circumstances that would trigger the Commission’s discretion to waive the ninety-day filing deadline, we have previously looked to our decision in In the Matter of the Application of PennMont Securities.[fn14] There, in determining whether applicants had demonstrated extraordinary circumstances that would trigger the Commission’s discretion to waive the thirty-day filing deadline under Commission Rule of Practice 420(b), [fn15]we explained that “the ‘extraordinary circumstances’ exception is to be narrowly construed and applied only in limited circumstances.”[fn16] An extraordinary circumstance is one “where the reason for the failure timely to file was beyond the control of the applicant….”[fn17] Further, “[e]ven when circumstances beyond the applicant’s control give rise to the delay,….an applicant must also demonstrate that he or she promptly arranged for the filing….as soon as reasonably practical thereafter.”[fn18] We have declined requests to waive the ninety-day filing deadline for whistleblower award claims because of claimants’ failures to meet the PennMont standard.[fn19]

While Claimant 2 may have been limited by Claimant 2’s lack of a home computer and internet connection and Claimant 2’s [Redacted], Claimant 2 has not shown that the failure to timely file was beyond the control of Claimant 2. Access to the Commission’s website can be obtained at any computer or electronic device that has an Internet connection. For example, nearly every U.S. public library offers free access to computers and the Internet.[fn20] Moreover, we note that Claimant 2 filed an online tip with the Commission in [Redacted] – eight months before Claimant 2’s award application was filed. Thus, even assuming for the sake of argument that circumstances beyond Claimant 2’s control gave rise to an initial delay between [Redacted], Claimant 2 has not demonstrated that “he or she promptly arranged for the filing….as soon as reasonably practical thereafter.”[fn21]

For these reasons, we conclude that Claimant 2 has not met the heavy burden of demonstrating that extraordinary circumstances prevented Claimant 2 from timely submitting an award application for the Covered Action.[fn22]

IV. Conclusion.

Accordingly, it is hereby ORDERED that: (1) Claimant 1 shall receive an award of *** (***) of the monetary sanctions collected, or to be collected, in the Covered Action; and (2) Claimant 2’s whistleblower award application is denied. By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[2] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[3] The CRS also preliminarily determined to recommend that the Commission deny Claimant 1’s award claims for [Redacted] by other federal agencies on the grounds that these actions did not constitute “related actions.” See Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5); Exchange Act Rule 21F-3(b)(1), 17 C.F.R. § 240.21F-3(b)(1)10(d). Claimant 1 has not contested these preliminary denials. As a result, the CRS’s Preliminary Determination of the related action claims became the final determination of the Commission pursuant to Exchange Act Rule 21F-11(f).

[4] The Preliminary Determination noted that, because Claimant 2 should not be found eligible for an award in the Covered Action, Claimant 2 would not qualify for an award in any related action. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u–6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a).

[5] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[6] See Exchange Act Section 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).

[8] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1) (emphasis added).

[9] Exchange Act Rule 21F-2(a), 17 C.F.R. § 240.21F-2(a).

[10] Claimant 2 acknowledges that Claimant 2 “does not remember if [Claimant 2] filed a whistleblower complaint with the SEC.” A search of the Commission’s records reveals only that, after the date of the Covered Action, Claimant 2 submitted a whistleblower tip regarding unrelated issues.

[11] 17 C.F.R. § 240.21F-10(a).

[12] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545, at 172 (Effective Aug. 12, 2011) (available at http://www.sec.gov/rules/final/2011/34-64545.pdf); Order Determining Whistleblower Award Claims, Release No. 34-85412 (Mar. 26, 2019).

[13] 17 C.F.R. § 240.21F-8(a).

[14] PennMontSec., Release No. 34-61967 (Apr. 23, 2010), pet. for rev. denied sub nom. PennMont Sec. v. SEC, 414 F. App’x465 (3rd Cir. 2011).

[15] 17 C.F.R. § 201.420(b).

[16] PennMontSec. at 8-9.

[17] Id. at 9.

[18] Id.

[19] See Order Determining Whistleblower Award Claim, Release No. 34-77368 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018), reh’g denied, 138S. Ct. 2715 (2018) (“Release No. 34-77368”); see also Order Determining Whistleblower Award Claim, Release No. 34-85273 (Mar. 8, 2019); Order Determining Whistleblower Award Claim, Release No. 34-82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 34-72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 34-72178 (May 16, 2014).

[20] See 2005 study commissioned by the American Library Association and the Bill and Melinda Gates Foundation, available at http://www.ala.org/news/news/pressreleases2005/june2005/librariescomputeraccess. See also Quotable Facts About America’s Libraries – January 2019, American Library Association (noting that “[n]early 100% of public libraries provide Wi-Fi and have no-fee access to computers”), available at http://www.ala.org/advocacy/sites/ala.org.advocacy/files/content/Quotable%20Facts..Jan.19.FINAL.ANNOTATED.pdf.

[21] We also reject Claimant 2’s argument that Claimant 1 filed Claimant 1’s application for award on Form WB-APP for both of them. There is no evidence in the record supporting Claimant 2’s contention. Moreover, Claimant 1’s attorney has advised the Commission’s staff that Claimant 1’s attorney only represented Claimant 1 in this matter and that Claimant 1 is the sole whistleblower.

[22] Claimant 2 also argues that Claimant 2 assisted another agency on a purported related action and, because of Claimant 2’s experience and background, provided that agency with more credible evidence and information than Claimant 1 had provided. This argument has no merit because, in order to be eligible for an award, a whistleblower is required to have provided information to the Commission. See 15 U.S.C. § 78u-6 and 17 C.F.R. § 240.21F-3(a)(1).

SEC

88973

05/29/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award application submitted by [Redacted] (“Claimant”) in connection with the above-referenced Covered Action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

A. The Covered Action.

On [Redacted].

The Office of the Whistleblower posted the above-referenced Notice of Covered Action on the Commission’s public website, inviting claimants to submit whistleblower award applications within 90 days.[fn2] Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination[fn3] recommending that Claimant’s claim be denied. In reaching this preliminary recommendation, the CRS noted that the record reflected that the Commission received an anonymous complaint which prompted staff in the Commission’s Office of Compliance Inspections and Examinations (“OCIE”) to initiate a cause examination of [Redacted]. Based upon OCIE’s referral, staff in the Division of Enforcement then opened the investigation [Redacted] which led to the bringing of the Covered Action. Claimant’s tip was not received by the Commission until more than a year after the anonymous complaint had been received, after the OCIE cause examination had been completed, and five months after staff in the Division of Enforcement had opened its investigation. By the time Claimant’s tip was submitted to the Commission, the investigative staff was already aware of the issues raised by Claimant as a result of the anonymous tip, the OCIE examination and the staff’s own investigative efforts. In addition, the information in Claimant’s tip and that Claimant provided in a subsequent meeting with the staff did not significantly contribute to the success of the Covered Action.

C. Claimant’s Response to the Preliminary Determination.

On [Redacted], Claimant submitted a timely written response contesting the Preliminary Determination.[fn4] Specifically, Claimant argues in response to the Preliminary Determination that, since the staff acknowledges that Claimant’s tip was promptly forwarded to the SEC’s Enforcement Division, expeditiously reviewed by the staff, contained allegations and analysis relevant to the SEC’s investigation, and prompted the staff to ask the Claimant to meet with the Enforcement Division staff, it is unreasonable to believe that Claimant’s information did not contribute to the investigation.[fn5] To further substantiate this argument, Claimant requests to be allowed to depose certain members of the investigative staff who attended the meeting and to review all emails, correspondence and other material regarding Claimant’s tip, as well as the administrative file for the investigation.[fn6]

III. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn7] Claimant argues that Claimant is eligible for an award under this standard because Claimant provided specific and detailed original information, including documents, to the Commission directly relevant to the issues underlying the Covered Action, that this information was promptly forwarded to staff in the Division of Enforcement, and that the staff found the information to be sufficiently credible and relevant to invite Claimant to meet with it and to answer staff questions about the information.

Under the whistleblower rules, an individual’s original information leads to the success of an action where it causes staff to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or alternatively, where in the context of an existing investigation, the individual’s original information significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. In determining whether an individual’s information significantly contributed to an action, we consider factors such as whether the information allowed us to bring: the action in significantly less time or with significantly fewer resources; additional successful claims; or successful claims against additional individuals or entities.[fn8] The individual’s information must have been “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn9]

The record reflects that the Commission received an anonymous complaint [Redacted] *** which prompted OCIE staff to initiate a cause examination. The anonymous complainant alleged that [Redacted]. In addition, the anonymous complainant made other allegations, including that [Redacted] after examining the anonymous complainants’ allegations, OCIE referred the matter to the Division of Enforcement. OCIE’s report accompanying the referral stated that OCIE had found evidence [Redacted].

Following receipt of OCIE’s referral, staff in the Division of Enforcement opened the investigation that resulted in the Covered Action. By the time Claimant submitted Claimant’s tip [Redacted] the Division of Enforcement staff had already begun reviewing certain documents received from [Redacted] during the OCIE examination and had sent subpoenas for documents to third parties, including [Redacted]. As such, neither the examination, nor the investigation, was opened based on information provided by Claimant, and the investigation was already well along.

The Claimant’s tip alleged that [Redacted], Claimant and Claimant’s attorney met with the Division of Enforcement staff. During this meeting, Claimant discussed Claimant’s theory as to why [Redacted]. However, by the time the staff received Claimant’s tip [Redacted], the staff was already aware of [Redacted] as a result of the anonymous tipster, the OCIE examination and Enforcement’s investigative efforts. Because the staff was aware of the [Redacted] issue prior to Claimant’s submission, Claimant’s information did not allow the staff to conserve a significant amount of time or resources in the investigation, nor did it allow staff to bring additional charges or charges against additional defendants. Moreover, Claimant did not provide the staff with any information concerning the other key elements of the case, including [Redacted]. We accordingly conclude that the information provided by Claimant [Redacted] and a subsequent meeting with Enforcement staff in [Redacted] did not significantly contribute to the success of the Covered Action.

Claimant argues that the record is deficient of information justifying denial, and requests that, to ensure a complete record for review, Claimant be permitted to depose Commission staff, including the staff who attended the [Redacted] meeting, and review all documentation that the CRS had made available for its review, as well as all emails, correspondence and other material regarding his filing as well as the administrative file for the investigation that led to the Covered Action. Claimant asserts that this information is necessary to explore purported gaps in the Preliminary Determination, to determine whether the Commission had previously received the documents that Claimant provided, and to prove that Claimant’s information did, in fact, significantly contribute to the investigation. The whistleblower rules permit an award claimant to request and to receive a copy of the materials that form the basis of the Preliminary Determination.[fn10] Claimant made such a request and received a copy of these materials. But the whistleblower rules do not authorize a claimant to go on a fishing expedition to depose staff and to obtain copies of the SEC’s entire investigative file.[fn11] Moreover, the declaration of the Division of Enforcement staff is clear that Claimant’s information was received and reviewed by the staff and that Claimant’s information neither caused the staff to open its investigation nor significantly contributed to the success of the Covered Action. Thus we deny Claimant’s request for discovery of additional information.[fn12]

We therefore conclude that Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Securities Exchange Act of 1934 and Rules 21F-3(a)(3) and 21F-4(c) thereunder. As a result, Claimant is ineligible for an award with respect to the Covered Action.

IV. Conclusion.

Accordingly, it is hereby ORDERED that Claimant’s whistleblower award application be, and hereby is, denied.

By the Commission.

[1] [Redacted].

[2] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] In support of this contention, Claimant notes that the Office of the Whistleblower (“OWB”) wrote to Claimant’s counsel soon after OWB posted the notice for the Covered Action on its website informing counsel of the posting and the deadline for submitting a whistleblower award application for this matter. Claimant acknowledges that OWB stated that its communication to counsel should not be taken as an indication that Claimant would be found to have met the criteria for receiving an award. In any event, the burden is on a claimant to establish entitlement to an award. It is not the Commission’s obligation or duty to inquire as to whether Claimant may have been the anonymous tipster, particularly when Claimant had not asserted this in Claimant’s earlier submissions to the Commission.

[6] Claimant also faults the Commission for not inquiring as to whether Claimant was the anonymous tipster. Conversely, Claimant faults the staff’s reliance on information provided by an anonymous tipster, whose credibility, Claimant contends, “is likely to be highly suspect.” Since Claimant does not maintain that Claimant was, in fact, the anonymous tipster and did not provide any evidence in support of such a contention, we find this argument to be without merit.

[7] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[8] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,000, 34,325 (June 13, 2011).

[9] Whistleblower Award Proceeding File No. 2018-6, Rel. No. 34-82897 (Mar. 19, 2018); Whistleblower Award Proceeding File No. 2016-9, Rel No. 34-77833 (May 13, 2016).

[10] See Exchange Act Rule 21F-10(e)(1)(i), 17 C.F.R. § 240.21F-10(e)(1)(i).

[11] Id. See also Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b) (noting that the whistleblower rules “do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in paragraph (a) of this section”).

[12] See Doe v. SEC, 729 F. App’x 1, 3 (D.C. Cir. 2018) (concluding that the Commission did not err by rejecting a claimant’s request to include additional materials in the administrative record, where the Commission’s determination was reviewable on the basis of materials already in the record); Order Determining Whistleblower Award Claim, Release No. 34-79294 (Nov. 14, 2016) (denying whistleblower award to claimant who argued that staff errors resulted in improper processing of submission, because information submitted did not actually lead to successful enforcement of covered action), pet. rev. denied sub nom. Doe v. SEC, supra.

SEC

05/24/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (Claimant 3), [Redacted]. Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

[Redacted].

Claimant 3, [Redacted].

The Claims Review Staff has also preliminarily determined to recommend that the Commission deny the award claims of Claimants 3, [Redacted]. The basis for this determination is as follows:

Claimants 3, [Redacted] did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not, under Rule 21F-4(c)(1) of the Exchange Act:

(2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

As to Claimant 3, the record shows that Enforcement staff met with Claimant 3 to discuss information Claimant 3 had provided. However, during Enforcement staffs interview and also in subsequent communications, Claimant 3 was unable to provide documents or other verifiable evidence supporting Claimant 3’s assertions to Enforcement staff. In addition, we note that the record shows other information Claimant 3 provided to Enforcement staff was previously known to Enforcement staff, was not helpful to Enforcement staff’s investigation, and was not used in the Covered Action. We also note that the record shows that on or about [Redacted] provided Enforcement staff with information provided by Claimant 3. However, none of that information was helpful to Enforcement staffs investigation, it was already known, and/or it was not used in the Covered Action. In addition, the records reflect that Claimant 3 did not provide any substantiated information unknown to the staff that was relevant to the Covered Action.

Moreover, we note that the record shows that Claimant 3’s information was provided approximately five months after the investigation began, by which time Enforcement staff [Redacted] had already taken the testimony of several witnesses who testified concerning the conduct charged. The record shows that [Redacted] did not take the testimony of Claimant 3 or use Claimant 3’s information in [Redacted].

[Redacted].

By: Claims Review Staff.

[6] Claimant 3 also applied for an award in connection with an action brought by [Redacted]. However, Claimant 3 is not eligible for an award in connection with [Redacted]. First, the record shows that [Redacted] did not use any information that Claimant 3 provided in [Redacted]. Second, Claimant 3 is not even eligible for an award in connection with the Commission’s Covered Action. Qualification for an award in the Commission’s covered action is a prerequisite to qualification for an award in a “related action.” See Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5) (defining a “related action” as based upon the same original information provided by the whistleblower that led to the successful enforcement of the Commission action); Exchange Act Rules 21F-3(b) & 11(a), 17 C.F.R. §§ 240.21F-3(b) & 240.21F-11(a); Order Determining Whistleblower Award Claim, Exchange Act Release No. 84503, 2018 SEC LEXIS 3030, at *7 n.4 (Oct. 30, 2018) (“The Commission may make an award to a whistleblower in connection with a related action only if the Commission has determined that the whistleblower is entitled to an award for a Commission covered action.”).

SEC

88803

05/04/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** [Redacted] of the monetary sanctions collected in the above-referenced Covered Action (the “Covered Action”) for a payout of almost $2 million.[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determinations.

The recommendation of the CRS is adopted.[fn2] The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn3]

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn4] In reaching that determination, we positively assessed the following facts: (i) although Claimant did not submit the tip that led to opening the investigation, Claimant did provide new information regarding an ongoing fraud that the Commission was not aware of at the time; (ii) Claimant’s information about the ongoing fraudulent scheme informed the staff’s need to expeditiously seek a temporary restraining order and asset freeze to prevent further investor losses; (iii) Claimant provided Commission staff with specific, timely and credible information, significant ongoing assistance and supporting documents, including answering detailed follow-up inquiries from the staff; (iv) in major part due to Claimant’s information and assistance, investors recovered much of their investments; and (v) Claimant suffered hardship.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** [Redacted] of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1]For purposes of determining the amount of the monetary sanctions collected, the distributions to the investors ordered by the court in the Covered Action, net of monetary sanctions paid by [Redacted] (and therefore separately deemed to be collected), are treated as collected monetary sanctions. Cf. Order Determining Whistleblower Award Claim, Release No. 34-77530 , at 2 n.1 (April 5, 2016) (expressing policy against double counting of collected sanctions).
[2] The CRS also preliminarily determined to recommend that the Commission deny a related-action award to Claimant with respect to certain actions of another agency. Claimant has not contested that Preliminary Determination. As a result, the CRS’s Preliminary Determination of Claimant’s related action award claims became the final determination of the Commission pursuant to Exchange Act Rule 21F-11(f). See Order Determining Whistleblower Award Claim, Release No. 34-82996 , at 3 n.3 (Apr. 5, 2018).
[3] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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] In assessing the appropriate award amount, Exchange Act 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.

CFTC

05/01/2020

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from five claimants in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted] (collectively, the “Covered Action”) and related actions taken by the [Redacted].[fn1] The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant 1, Claimant 3, and Claimant 4 each receive whistleblower awards of ***%, and that Claimant 2 receive a slightly higher award of ***% of the monetary sanctions collected in the Covered Action and the Related Action. As the Commission has collected a total of $[Redacted] in connection with the Covered Action, and the [Redacted] has collected a total of $[Redacted] in connection with the Related Action, Claimant 1, Claimant 3, and Claimant 4 would each receive award payments of $[Redacted], and Claimant 2 would receive an award payment of $[Redacted], for a total award of $[Redacted].

The recommendation of the CRS with respect to Claimant 1, Claimant 2, Claimant 3, and Claimant 4 is adopted. We find that the record demonstrates that Claimant 1, Claimant 2, Claimant 3, and Claimant 4 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the Commodity Exchange Act (“CEA” or “Act”). 7 U.S.C. § 26(b)(1)(2012). The information Claimant 1, Claimant 2, Claimant 3, and Claimant 4 provided jointly by these claimants was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based in part on conduct that was the subject of the original information provided by these four claimants. In addition to providing information that led to the opening of the Commission’s investigations, Claimant 1, Claimant 2, Claimant 3, and Claimant 4 each provided significant, ongoing assistance in connection with the primary investigation which merits increased awards for these four claimants. According to Commission staff, Claimant 1, Claimant 2, Claimant 3, and Claimant 4, through separate interviews, each provided crucial information that formed the core of the enforcement actions that the CFTC brought and settled against the defendants in the primary investigation. Claimant 2 will receive a slightly higher award because Claimant 2 [Redacted].

We also find that Claimant 1, Claimant 2, Claimant 3, and Claimant 4’s information led to the successful resolution of the Related Action brought by the [Redacted] because the actions were based, at least in part, on the original information that Claimant 1, Claimant 2, Claimant 3, and Claimant 4 voluntarily submitted to the Commission, and led to the successful resolution of the Commission action. See 7. U.S.C. § 26(a)(5); 17 C.F.R § 165.11.

In addition, the Preliminary Determination recommended that the award applications submitted by Claimant 5 be denied. The Preliminary Determination found that the information provided by Claimant 5 was not useful to the Commission’s investigation and, therefore, did not lead to the successful enforcement of the Covered Action. Claimant 5 failed to submit a request for reconsideration of the Preliminary Determination; therefore, the Preliminary Determination denying his/her claim for award has become the Final Order of the Commission. 17 C.F.R. § 165.7(h) (2018).

Accordingly, it is hereby ORDERED that Claimant 1, Claimant 3, and Claimant 4 each receive whistleblower awards of ***%, and that Claimant 2 receive ***%, of the monetary sanctions collected in the Covered Action and in the Related Action. By the Commission.

[1] [Redacted] (collectively, referred to as the “Related Action”). Claimant 5 did not request an award in connection with the Related Action.

SEC

88759

04/28/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent (***) of the monetary sanctions collected in the above referenced Covered Action (“Covered Action”) for a payout of more than $18 million. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn3] In reaching that determination, we positively assessed the following facts: (1) Claimant’s information was significant in that it alerted Commission staff to potential securities violations at the firm and prompted an examination by staff in the Commission’s Office of Compliance, Inspections, and Examinations; (2) Claimant provided assistance to staff during the examination; (3) there are important law enforcement interests here as the Covered Action resulted in millions of dollars being returned to retail investors; (4) Claimant suffered hardships as a result of Claimant’s internal reporting; and, (5) Claimant reported multiple times internally in an attempt to immediately correct the problem. In determining the appropriate award percentage, we also considered that while Claimant’s information was significant, exam staff discovered violations that were broader than what was alleged by Claimant, and that a large portion of the monetary sanctions ordered against the firm related to conduct that was not reported by the Claimant to the Commission.

Accordingly, it is ORDERED that Claimant shall receive an award of *** percent (***) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] The Preliminary Determination of the CRS also recommended denying an award to three other individuals who submitted award claims in the Covered Action. Those claimants did not submit a request for reconsideration, and the preliminary denial of their award claims is now deemed to be the Final Order of the Commission pursuant to Rule 21F-10(f) under the Securities Exchange Act of 1934 (“Exchange Act”), 17 C.F.R. § 240.21F-10(f).
[2] See Exchange Act Section 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).
[3] In assessing the appropriate award amount, Exchange Act 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.

SEC

88689

04/20/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent (***) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”) for a payout of approximately $5 million. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn2] In reaching that determination, we positively assessed the following facts: (i) Claimant’s information prompted staff in the Commission’s Office of Compliance Inspections and Examinations to open an examination into the alleged violations which were subsequently referred to staff in the Division of Enforcement for further action; (ii) Claimant provided a critical document to staff [Redacted] that evidenced possible wrongdoing and helped save time and resources in the Commission’s investigation; (iii) Claimant promptly reported the information to the Commission after learning of it; and (iv) Claimant suffered a unique hardship as Claimant was terminated soon after raising concerns internally about the conduct in question with Claimant’s supervisor.

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.

SEC

88687

04/20/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** [Redacted] of the monetary sanctions collected, or to be collected, in the above-referenced Covered Action.[fn1] The CRS also preliminarily determined to recommend that we waive the “in writing” requirement of Securities Exchange Act (“Exchange Act”) Rule 21F-9(d)[fn2] given the highly unusual facts and circumstances in this matter. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

In reaching this determination, we have relied upon Exchange Act provision Rule 21F-4(c)(3), which provides that original information will be deemed to have led to the successful enforcement of a judicial or administrative action if:

(3) the information the entity provided to the Commission satisfied either paragraph (c)(1) or (c)(2) of [Rule 21F-4]; and

(4) the whistleblower submitted the same information to the Commission in accordance with the procedures set forth in Rule 21F-9 within 120 days of providing it to the entity.[fn5]

Claimant reported the information internally [Redacted], who, in turn, submitted a written tip to the Commission relaying the Claimant’s information. Enforcement staff opened the investigation after receiving the written tip and phone call with the [Redacted], and the Commission brought the Covered Action based, in part, on the information provided by [Redacted] tip, in satisfaction of Rule 21F-4(c)(1). In a phone interview with Enforcement staff the next day, Claimant relayed the same information Claimant reported to [Redacted].

Although Claimant did not provide the same information to the Commission in writing as required by Rule 21F-9(d), we have determined that it is appropriate in the public interest and consistent with the protection of investors that we exercise our discretionary authority under Section 36(a) of the Exchange Act to waive this requirement of Rule 21F-9(d) in light of the unique facts and circumstances of this case.[fn6] Those circumstances include the following: (1) Claimant was expeditious in alerting [Redacted] of Claimant’s concerns that the Covered Action company was operating a fraudulent scheme; (2) Claimant provided the relevant information and documentation to [Redacted] officer and understood that [Redacted], in turn, provided the information and documentation to the Commission; and (3) it is undisputed that Claimant thereafter provided additional follow-up information to Enforcement staff in the form and manner they requested, i.e., verbally in the form of a telephone call. Thus, the indicia of reliability and the certainty as to the time that the information was provided, which are principal policy rationales underlying the Rule 21F-9(d) writing requirement, are clearly satisfied in the context of this claim. Moreover, Claimant provided the information to the Commission before the effective date of the whistleblower rules.

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.[fn7] In reaching that determination, we positively assessed the following facts: (1) Claimant acted quickly to redress the violations by immediately internally reporting [Redacted]; (2) Claimant’s information was significant in that it caused staff to open the investigation and there exists a close nexus between Claimant’s information and the charges brought by the Commission; (3) there are strong law enforcement interests in this matter, as Claimant alerted the Commission to an ongoing fraudulent scheme; (4) Claimant provided assistance in the form of an interview with Enforcement staff early in the investigation; and (5) the lack of collections in this matter.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of thirty percent (30%) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] The CRS also preliminarily determined to recommend that the award application of a second claimant be denied. The second claimant did not submit a request for reconsideration and, as such, the Preliminary Determination with respect to that award claim became the Final Order of the Commission, pursuant to Rule 21F-10(f).
[2] Pursuant to Rule 21F-9(d), individuals who provide tips to the Commission after July 21, 2010, the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), but before August 12, 2011, the effective date of the whistleblower rules, are required to have submitted original information in writing to the Commission in order to qualify as a whistleblower who could potentially obtain an award.
[3] 15 U.S.C. § 78u-6(b)(1).
[4] 17 C.F.R. § 240.21F-3(a).
[5] See Order Determining Whistleblower Award Claim, Release No. 85936 (May 24, 2019).
[6] We have waived the “in writing” requirement of Rule 21F-9(d) previously, where the unique facts and circumstances of the case warranted a waiver of this requirement. See Order Determining Whistleblower Award Claim, Release No. 82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 81227 (July 27, 2017); Order Determining Whistleblower Award Claim, Release No. 79747 (January 6, 2017).
[7] 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.

SEC

04/20/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a joint whistleblower award claim from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimants 1 and 2 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] The investigation that led to the Covered Action was opened as a result of investigative staff’s efforts in connection with an earlier investigation and not based on information provided by Claimants 1 and 2. Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants 1 and 2. The Claimants’ submission [Redacted] was not provided to the investigative staff.

SEC

04/20/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities
and Exchange Commission received a whistleblower award claim from [Redacted]
(“Claimant 1”) and [Redacted] (“Claimant 2”) for the above-referenced matter(s).
Pursuant to Section 21F of the Securities Exchange Act of 1934 (the ”Exchange Act”) and
Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above
claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn1] The basis for this determination is marked below as follows:

Claimant 1’s submission(s), upon which Claimant bases the claim for an award, was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1) because Claimant made the submission(s) after a request, inquiry, or demand that relates to same subject matter as the submission(s)was directed to Claimant or anyone representing Claimant (such as an attorney) by (i) the Commission, (ii) another regulatory or law enforcement agency or self-regulatory organization (such as FINRA), or (iii) Congress or any other authority of the federal government.[fn4]

Claimant 2’s submission(s), upon which Claimant bases the claim for an award, was not made voluntarily as required by Exchange Act Section 21F and Rules 21F-3 and 21F-4(a)(1) because Claimant 2 made the submission(s) after a request, inquiry, or demand that relates to same subject matter as the submission(s)was directed to Claimant 2 or anyone representing Claimant 2 (such as an attorney) by (i) the Commission, (ii) another regulatory or law enforcement agency or self-regulatory organization (such as FINRA), or (iii) Congress or any other authority of the federal government.[fn5]

By: Claims Review Staff.

[2] Claimant 1 did not submit information on Form TCR or online, through the Commission’s website. In addition, Claimant 1 did not sign the required whistle blower declaration as required under Exchange Act Rule 21F-9(b).

[3] Claimant 2 did not submit information on Form TCR or online, through the Commission’s website. In addition, Claimant 2 did not sign the required whistle blower declaration as required under Exchange Act Rule 21F-9(b).

[4] On [Redacted], the Commission sent a subpoena for documents to Claimant 1. Claimant 1 responded to the subpoena [Redacted], two weeks after the Commission sought information from Claimant 1.

[5] On [Redacted], the Commission sent a subpoena for documents to Claimant 2. Claimant 2’s responded to the subpoena [Redacted], fifteen days after the Commission sought information from Claimant 2. Additionally, [Redacted], FINRA contacted Claimant 2 on [Redacted].

CFTC

04/20/2020

The recommendation of the CRS with respect to Claimant 1 is adopted. We find that the record demonstrates that he/she voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26(b)(1) (2012). The information Claimant 1 provided was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based in part on conduct that was the subject of the original information provided by Claimant 1. Claimant 1 also provided Commission staff with assistance throughout the course of the Commission’s investigation, including crucial information that Commission staff heavily relied on [Redacted] against the defendant and as [Redacted] evidentiary support for the Covered Action.

In addition, the Preliminary Determination recommended that the award application submitted by Claimant 2 be denied. The Preliminary Determination found that the information provided by Claimant 2 was not useful to the Commission’s investigation and did not lead to the successful enforcement of the Covered Action. Claimant 2 failed to submit a request for reconsideration of the Preliminary Determination; therefore, the Preliminary Determination denying his/her claim for an award has become the Final Order of the Commission. 17 C.F.R. § 165.7(h) (2018).

It is hereby ORDERED that Claimant 1 shall receive an award of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

By the Commission.

SEC

88658

04/16/2020

The Commission received a timely whistleblower award claim from [Redacted] (“Claimant”) for the above referenced Notice of Covered Action. The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected in the above referenced Covered Action, relating to [Redacted] (“the Covered Action”).[fn1] Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination. After considering the administrative record, we choose to depart from the Preliminary Determination’s recommendation and increase the award to Claimant to [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, for a payout of more than $27,000,000.

The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action.[fn2]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find an award of [Redacted] is appropriate.[fn3] In reaching that determination, we positively assessed the following facts: (i) Claimant’s information was significant as it allowed Commission staff to uncover hidden conduct occurring, in part, overseas; (ii) Claimant provided a substantial amount of ongoing assistance and cooperation by meeting with staff numerous times and providing relevant documents and critical investigative leads that advanced the investigation and saved the Commission a significant amount of time and resources; (iii) Claimant’s information helped the Commission further significant law enforcement interests by enabling the Commission to bring an action addressing a particular form of misconduct [Redacted]; and (iv) Claimant repeatedly and strenuously raised Claimant’s concerns internally. In determining the appropriate award percentage, we also considered whether Claimant unreasonably delayed in reporting the information to the Commission. We are mindful of the importance of whistleblowers reporting their information to the Commission promptly, and will continue to make appropriate reductions to award percentages in cases where we find, under all of the facts and circumstances, that the whistleblower unreasonably delayed in doing so. However, we determined that no reduction for unreasonable reporting delay was warranted under the specific facts and circumstances of this case due to the strength of the positive factors and the fact that Claimant repeatedly and tenaciously objected to and escalated Claimant’s concerns about misconduct within Claimant’s organization.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] of the monetary sanctions collected in the Covered Action.
By the Commission.

SEC

88667

04/16/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that the claim submitted by [Redacted] (“Claimant”) in connection with the Notice of Covered Action (“Covered Action”) identified above be denied. Claimant subsequently filed a timely written response contesting the Preliminary Determination.

After careful consideration of the administrative record, including Claimant’s written response, we deny Claimant’s award claim.

I. Background.

A. The Covered Action.

On [Redacted] the Commission found that [Redacted], (“Company”) violated [Redacted] the Commission ordered the Company [Redacted] to pay a total of $[Redacted] consisting of disgorgement plus prejudgment interest and a civil penalty. The Covered Action was posted on the Commission’s website on [Redacted] and in response Claimant filed a timely whistleblower award claim.

B. The Preliminary Determination.

On [Redacted], the CRS issued a Preliminary Determination[fn1] recommending that Claimant’s award claim be denied because Claimant’s information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Claimant’s information did not cause the Commission staff to open the investigation. Nor did Claimant’s information significantly contribute to the success of the Covered Action, as Enforcement staff responsible for the Covered Action never received Claimant’s tips, did not communicate with Claimant, and did not know who Claimant was.

In [Redacted], Division of Enforcement (“Enforcement”) [Redacted] opened a Matter Under Inquiry into the Company, as a result of [Redacted].

On or about [Redacted], Claimant sent the Commission tips alleging that [Redacted] (the “Firm”), was involved in “rampant illegal activity and FINRA and SEC rule violations and possible tax evasion.” Claimant’s tips were not routed to the [Redacted] investigation of the Company, but to a different Commission office.

Separately, on or about [Redacted], [Redacted] Enforcement staff working on the investigation of the Company, without any knowledge of, or information from Claimant, sent a document request to the Firm. Enforcement staff understood that the Firm [Redacted] may have had information about the securities transactions [Redacted]. During the investigation of the Company, the involved [Redacted] Enforcement staff never received or were aware of Claimant’s two tips, and, were not aware of Claimant.[fn2] Furthermore, the [Redacted] Enforcement staff investigating the Company did not know [Redacted] and had no communication with Claimant and did not receive any information from Claimant.

C. Claimant’s Response to the Preliminary Determination.

After requesting and receiving a copy of the record, Claimant submitted a timely written response contesting the Preliminary Determination.[fn3] Claimant believes the information submitted by the Claimant was high quality and “should have or could have been used” in the investigation of the Company.

Claimant asks the Commission to reconsider an award based on the quality of the information that Claimant provided despite it not being used.

II. Analysis.

We must look to whether the Claimant’s information actually contributed to the success of the Covered Action, not whether “it should have or could have,” as Claimant urges us to do.[fn7] We find that the record conclusively shows that the information submitted by Claimant did not significantly contribute to the Covered Action. The information submitted by Claimant was not received by the Enforcement staff responsible for the investigation, and as such, could not have significantly contributed to the Covered Action.[fn8] In particular, we credit the staff declarations in the administrative record, which demonstrate that the information submitted by Claimant did not cause the Commission staff to open the investigation that eventually resulted in the Covered Action, did not cause the staff to initiate a new line of inquiry or reopen an investigation that resulted in the Covered Action, and did not significantly contribute to the success of the Covered Action. The staff declarations demonstrate that Claimant’s information was never reviewed or used by the Enforcement staff responsible for the Covered Action during the course of the investigation or as part of the Covered Action.

III. CONCLUSION.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[2] Claimant’s tips were assigned to another investigation in a different Commission office for review and potential follow-up action. The Commission staff on this other investigation [Redacted] to whom the Claimant’s tips were assigned, did not communicate or provide any information from or about Claimant or Claimant’s tips to the [Redacted] Enforcement staff investigating the Company.

[3] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[4] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[5] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[6] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2). In determining whether information significantly contributed to an enforcement action, we consider factors such as “whether the information allowed us to bring: (1) Our successful action in significantly less time or with significantly fewer resources; (2) additional successful claims; or (3) successful claims against additional individuals or entities.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011). “The individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.’” Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 , 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).

[7] See Order Determining Whistleblower Award Claim, Release No. 34-85412 (Mar. 26, 2019) (denying whistleblower award to claimant who argued that staff errors resulted in improper processing of submission, because information submitted did not actually lead to successful enforcement of covered action) ; Order Determining Whistleblower Award Claim, Release No. 34-79294 (Nov. 14, 2016) (same), pet. rev. denied sub nom. Doe v. SEC, 729 F. App’x1 (D.C. Cir. 2018).

[8] See Footnote 2.

SEC

88547

04/03/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent ( *** %) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”) for a payout of approximately $2 million. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn2] In reaching that determination, we positively assessed the following facts: (i) Claimant provided significant new information during the course of an ongoing investigation that would have been difficult for the staff to obtain in the absence of the Claimant’s tip; (ii) Claimant expeditiously reported the information to the Commission despite certain obstacles to reporting and provided valuable assistance to the investigative staff; (iii) Claimant assisted with the Commission’s investigation despite implied threats made to Claimant; (iv) Claimant suffered hardships as a result of Claimant’s whistleblowing; and (v) the law-enforcement interests here are high.

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.[fn3]
By the Commission.

[1] See Securities Exchange Act of 1934 (“Exchange Act”) Section 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).
[2] In assessing the appropriate award amount, Exchange Act 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.
[3] For purposes of determining the payment of the Claimant’s award under Exchange Act Rule 21F-14, the Director of the Division of Enforcement, or his or her designee, may determine whether any Commission enforcement action where the total monetary sanctions do not exceed $ 1 million should be treated as part of this Covered Action pursuant to Exchange Act Rule 21F-4(d)(2).

CFTC

04/01/2020

The Claims Review Staff (“CRS”) has evaluated the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2019), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). The CRS sets forth its Preliminary Determination for Claimants as follows:

1. The CRS has determined to recommend that the Commission deny both applications because they did not meet the requirements of Section 23 of the CEA and the Rules. Claimant 1’s award claim should be denied because Claimant 1 is not a whistleblower within the meaning of the Rules, and staff in the Division of Enforcement (“Division”) that brought the [Redacted] did not find Claimant 1’s information helpful. Although Claimant 1 provided information to Division staff during the investigation by email and phone, Claimant 1 never submitted a Form TCR (Tip, Complaint or Referral). To become a whistleblower under the CFTC’s Whistleblower Program, an individual must submit a Form TCR to the Commission. See 17 C.F.R. §§ 165.2(p), 165.3. However, even if Claimant 1 had filled out and submitted a Form TCR, the Division did not rely on the information Claimant 1 provided.

2. The Division opened an investigation in this matter not because of either Claimant, but because it received an online complaint from [Redacted].

3. The Division’s case was brought based on the results of the Division’s investigation, [Redacted]. The Division obtained documents from various sources, [Redacted].

4. Claimant 1’s information did not significantly contribute to [Redacted]. Claimant 1 [Redacted]. The Division did not receive Claimant 1’s first production of documents until [Redacted].

5. [Redacted]. Ultimately, Division staff did not rely on Claimant 1’s information. As previously stated, the Division opened the matter because of [Redacted], and the Division brought the case based on [Redacted]. Thus, Claimant 1’s information did not lead to the successful enforcement of the [Redacted].

6. Claimant 2’s information also did not lead to [Redacted]. Claimant 2’s information regarding [Redacted] appears to have no factual nexus to [Redacted]. Division staff did not contact Claimant 2 in connection with [Redacted]. Division staff also did not use any information provided by Claimant 2 to investigate or bring the matter. Accordingly, Claimant 2 did not lead to the successful enforcement of [Redacted].

7. Because Claimants did not lead to the successful enforcement action against Defendants, any claims on purported related actions should be denied. Under the CEA, in order to be eligible for awards on Related Actions, a whistleblower must have provided information that led the Commission to a successful enforcement action. See 17 C.F.R. §§ 165.2(m), 165.11. A Related Action is a judicial or administrative action brought by the Department of Justice; an agency or department of the U.S. government; a registered entity, registered futures association, or self-regulatory organization; a State criminal or civil agency; or a foreign futures authority. See 17 C.F.R. § 165.11(a)(1). A Related Action must be “based on the original information that the whistleblower voluntarily submitted to the Commission and led to a successful resolution of the Commission judicial or administrative action.” Id. § 165.11(a)(2) (emphasis added).

8. As applied, because Claimants did not lead to the Commission’s enforcement action against Defendants, they do not qualify for awards on any related actions. Accordingly, any claims on related actions should be denied.

SEC

88507

03/30/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** ( *** ) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”) for a payout of $450,000. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

In reaching this determination, we have considered the application of Exchange Act Rule 21F-4(b)(4)(iii)(B), which excludes information from being credited as the whistleblower’s “independent knowledge” or “independent analysis”—and hence original information[fn2]—if the whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities. . . .”[fn3] Here, the record reflects that Claimant became aware of the potential securities law violations in connection with Claimant’s compliance-related responsibilities. However, an exception applies if [a]t least 120 days have elapsed since you provided the information to the relevant entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or your supervisor, or since you received the information, if you received it under circumstances indicating that the entity’s audit committee, chief legal officer, chief compliance officer (or their equivalents), or your supervisor was already aware of the information.[fn4]

Here, Claimant first reported certain of the information to the firm’s [Redacted], who was also Claimant’s supervisor, and then waited more than 120 days to report the same information to the Commission. The rest of the information that led to the successful action that Claimant reported to the Commission would have been known to Claimant’s supervisor at the time. Because Claimant satisfies the 120-day exception, the compliance officer exclusion does not apply here to disqualify Claimant’s information from treatment as original information.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn5] In reaching that determination, we positively assessed the following facts: (i) although not the source of the investigation, Claimant’s information was significant in that it refocused the investigation on the violations that were ultimately charged; (ii) Claimant assisted Commission staff early in the investigation including by meeting with them in-person; (iii) Claimant suffered unique hardships as a result of Claimant’s internal reporting, including [Redacted]; and (iv) Claimant participated in Claimant’s employer’s internal compliance program.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** ( *** ) of the monetary sanctions collected or to be collected in the Covered Action.
By the Commission.

[1] See Securities Exchange Act of 1934(“Exchange Act”) Section 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).
[2] Under Exchange Act Rule 21F-4(b)(1), “[i]n order for[a] whistleblower submission to be considered original information, it must, ”among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1).
[3] 17 C.F.R. § 240.21F-4(b)(4)(iii)(B).
[4] 17 C.F.R. § 240.21F-4(b)(4)(v)(C); Order Determining Whistleblower Award Claim, Rel. No. 34-72947 (Aug. 29, 2014) (finding individual who had compliance or internal audit responsibilities eligible for an award because he or she internally reported the information at least 120 days before reporting the information to the Commission).
[5] In assessing the appropriate award amount, Exchange Act 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.

SEC

88462

03/24/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of [Redacted] percent *** %) of the monetary sanctions collected in: [Redacted] “Covered Action”)[fn1] and [Redacted] percent *** %) of the monetary sanctions collected in related actions brought by the [Redacted] (“Other Agency”): *** [Redacted] (“Related Actions”) and that [Redacted] (“Claimant 2”) receive a whistleblower award in the amount of *** percent *** %) of the monetary sanctions collected in the Covered Action.[fn2] These proposed awards would yield a likely payout to Claimant 1 of approximately $478,000 and a likely payout to Claimant 2 of approximately $94,000. Claimant 1 and Claimant 2 provided written notice of their decisions not to contest the Preliminary Determination.

The recommendation of the CRS is adopted. The record demonstrates that Claimant 1 voluntarily provided the same original information to the Commission and to the Other Agency, and that this information led to the successful enforcement of both the Covered Action and the Related Actions,[fn3] and that Claimant 2 voluntarily provided original information to the Commission that led to successful enforcement of the Covered Action.

Applying the award criteria in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find the proposed award amounts are appropriate.[fn4] In reaching that determination, we positively assessed the following facts as to Claimant 1: (1) Claimant 1 reported significant information to the Commission; (2) the information reported by Claimant 1 saved Commission time and resources; (3) Claimant 1 provided assistance to staff in the form of an in-person interview early in the investigation; and (4) there are significant law enforcement interests here, as Claimant 1’s information helped the agency bring antifraud charges related to conduct that had been ongoing at the time Claimant 1 reported to the Commission. In addition, Claimant 1’s information bears a close nexus to the charges brought by the Commission, as well as by the Other Agency in the Related Actions. The record further demonstrates that Claimant 1 should receive a substantially higher award percentage in the Covered Action as compared to Claimant 2 because Claimant 1’s information was significantly more important than Claimant 2’s information, as it was provided early in the investigation, played a critical role in helping staff develop their case, and related to all enforcement actions. By comparison, Claimant 2’s information was important, but contributed to charges against only one of the respondents.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] *** percent *** %) of the monetary sanctions collected in the Covered Action and [Redacted] percent *** %) of the monetary sanctions collected in the Related Actions and Claimant 2 shall receive an award of *** percent *** %) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] For the purposes of payment on the award in this matter, we are treating the enforcement actions against the individual respondents and defendants in this matter, together with the action against the company, as a single Covered Action, as the proceedings arise out of the same nucleus of operative facts. See Securities Exchange Act of 1934 (“Exchange Act”) Rule 21F-4(d), 17 C.F.R. § 240.21F-4(d)(2).

[2] Additionally, the CRS recommended that Claimant 2’s claim for an award in connection with the Related Actions be denied in part because the original information submitted by Claimant 2 used by the Commission in connection with the Covered Action was not used in the Related Actions. Because Claimant 2 provided written notice of Claimant 2’s decision not to contest the preliminary determination, the CRS’s preliminarily determination as to the denial of the award in connection with the Related Actions became the final order of the Commission pursuant to Exchange Act Rule 21F-11(f); 17 C.F.R. § 240.21F-11(f).

[3] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a) and (b), 17 C.F.R. § 240.21F-3(a), (b). See also In the Matter of Claim for Award, Rel. No. 34-84046 (Sept. 6, 2018) (for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”) (citing Exchange Act Rule 21F-11(c); 17 C.F.R. § 240.21F-11(c)).

[4] In assessing the appropriate award amount, Exchange Act 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. Exchange Act Rule 21F-6; 17 C.F.R. § 240.21F-6.

SEC

88464

03/24/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claims of [Redacted] (“Claimant”) in connection with Covered Action [Redacted] Covered Action [Redacted] and Covered Action [Redacted] (collectively, the “Covered Actions”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claims are denied.

I. Background.

A. The Covered Actions.

On [Redacted] the Office of the Whistleblower (“OWB”) posted the Notice for Covered Action [Redacted] relating to [Redacted] on its website. The ninety-day filing deadline was posted as [Redacted].

On [Redacted] OWB posted the Notice for Covered Action [Redacted] relating to [Redacted] on its website. The ninety-day filing deadline was posted as [Redacted].

The Commission received Claimant’s award application for the Covered Actions on [Redacted] approximately 5 1/2 years, 41 months, and 31 months after the deadlines to apply for awards for the Covered Actions, respectively.[fn1] Claimant stated that Claimant did not know the Covered Actions had been published but did not attempt to explain or justify the late filing of the award claims beyond stating that Claimant believed the Commission would notify Claimant of the posting of the Covered Action.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn2] recommending that Claimant’s award claims be denied because they were submitted years after the filing deadlines.[fn3]

C. Claimant’s Response to the Preliminary Determination.

Claimant submitted a timely written response contesting the Preliminary Determination. Specifically, Claimant argues in the response to the Preliminary Determination that the Commission has “a pattern and practice of avoidance not communicating the status of covered actions” and that the agency never alerted Claimant to the issue of filing for a whistleblower award in the Covered Actions. Claimant believed that the Commission would contact claimants about filing an award application.

II. Analysis.

The requirement that claimants file whistleblower award claims within ninety days of the posting of a Notice of Covered Action (“NoCA”), set forth in Exchange Act Rule 21F-10(b), serves important programmatic functions.[fn4] The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that the Commission can make timely awards to meritorious whistleblowers.[fn5]

Applying that demanding standard here, we find that Claimant has failed to show that extraordinary circumstances beyond Claimant’s control were responsible for the years of delay between the application deadline for the Covered Actions and Claimant’s untimely whistleblower application in [Redacted]. Contrary to Claimant’s contentions, the Commission is not obligated to notify a claimant of the posting of a NoCA or the deadline for submitting an award application.[fn9] As we have explained, our whistleblower rules provide “for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim.”[fn10] The NoCAs for the Covered Actions were clearly posted on the Commission’s website, along with the requisite deadlines. Under our rules, that is all the notice that Claimant was due.

Despite Claimant’s asserted unawareness of this notice, “a lack of awareness about the [whistleblower award] program does not . . . rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.”[fn11] “A potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim.”[fn12] Claimant’s failure to regularly monitor the Commission’s web page for NoCA postings is not an “extraordinary circumstance” that might trigger our discretion to excuse the fact that Claimant submitted the award application more than two years late.[fn13]

III. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claims be, and hereby are, denied.
By the Commission.

[1] Claimant’s single award application also sought award claims in connection with four other Covered Actions. On March 26, 2019, we denied Claimant’s award claim in Covered Action [Redacted] because it had been submitted after the deadline for submitting award claims for that covered action. See Order Determining Whistleblower Award Claim, Release No. 34-85412 (Mar. 26, 2019).
[2] See 17 C.F.R. § 240.21F-10(d).
[3] Exchange Act Rule 21F-10(a) (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred”); see Order Determining Whistleblower Award Claim, Release No. 34-77368 , at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018).
[4] See 17 C.F.R. § 240.21F-10(b).
[5] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545 , 76 Fed. Reg. 34300, 34300.
[6] 17 C.F.R. § 240.21F-8(a).
[7] Order Determining Whistleblower Award Claim, Release No. 34-77368 , at 3 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S.Ct. 2005 (2018); Order Determining Whistleblower Award Claim, Release No. 34-85412 , at 13 (Mar. 26, 2019) (denying same claimant on grounds of untimeliness).
[8] See id.; Order Determining Whistleblower Award Claim, Release No. 34-82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 34-72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 34-72178 (May 16, 2014).
[9] Order Determining Whistleblower Award Claim, Release No. 34-77368 , at 3 (Mar. 14, 2016).
[10] Id. at *3-4 & n.11 (citing Rule 21F-10(a)).
[11] Order Determining Whistleblower Award Claim, Release No. 34-72659 , at 5 (July 23, 2014) (“The Commission is under no duty to provide Claimant . . . with direct notice of the filing deadline.”).
[12] Order Determining Whistleblower Award Claim, Release No. 34-77368 , at 4.
[13] If the Commission believes that an award is merited notwithstanding that the untimely filing was within the claimant’s control, the Commission could still have recourse to its general exemptive authority under Section 36(a) of the Exchange Act. However, we do not find any evidence that would support the Commission exercising its authority to exempt Claimant from Claimant’s obligation to have timely filed.

SEC

88449

03/23/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected in the above-referenced Commission enforcement matters (collectively, the “Covered Action”) for a payout of more than $1.6 million. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn2] In reaching this determination, we took particular note of the following: (i) Claimant’s original information caused staff in the Division of Enforcement to open the investigation and supported some of the charges in the Covered Action, while other charges were unrelated to the Claimant’s information; (ii) the allegations reported by Claimant would have been hard to detect; (iii) Claimant’s information and assistance saved the staff time and resources early in its investigation; and (iv) Claimant unreasonably delayed in reporting to the Commission. With respect to the unreasonable delay, we have not applied this factor as severely here as we otherwise might have done had the delay occurred entirely after the whistleblower award program was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act.[fn3]

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** of the monetary sanctions collected or to be collected in the Covered Action.[fn4]
By the Commission.

[1] See Securities Exchange Act of 1934 (“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).
[2] In assessing the appropriate award amount, Exchange Act 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. Exchange Act Rule 21F-6, 17 C.F.R. § 240.21F-6.
[3] See, e.g., Order Determining Whistleblower Award Claim, Release No. 34-81227 (July 27, 2017).
[4] For the purposes of making an award and determining the payment on the award, we consider the administrative and judicial actions in this matter as a single Covered Action because they arose out the same nucleus of operative facts. See Exchange Act Rule 21F-4(d), 17 C.F.R. § 240.21F-4(b).

SEC

88299

02/28/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent ( *** ) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”) for a payout of more than $7 Million. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determination.

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn2] In reaching that determination, we positively assessed the following facts: Claimant’s tip exposed abuses in [Redacted]. Claimant provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including identifying witnesses and helping staff understand complex fact patterns and issues related to the matters under investigation; the Commission used information Claimant provided to devise an investigative plan and to craft its initial document requests; and recognition of Claimant’s persistent efforts to remedy the issues, while suffering hardships.

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.

[1] See Exchange Act Section 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).
[2] In assessing the appropriate award amount, Exchange Act 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.17C.F.R. § 240.21F-6.

SEC

02/17/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a joint whistleblower award claim from [Redacted] and [Redacted] (collectively “Claimants”).[fn1]

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is as follows.

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation was opened based on a referral from examination staff. Neither examination staff nor investigative staff responsible for the Covered Action received any information from, or had any communications with, Claimants, and as such, Claimants did not provide any information that was used by or had any impact on the staff’s examination, investigation or the Covered Action.

By: Claims Review Staff.

[1] We are treating [Redacted] joint claimants as their whistleblower award applications are functionally identical and were submitted together, and the tips upon which they base their award claims were jointly submitted.

SEC

02/14/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimants”)[fn1] for the above-referenced matter(s). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set fo1ih in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims.[fn2] The basis for this determination is marked below as follows:

Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because any information provided did not, under Rule 21F-4(c)(1) of the Exchange Act: (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimants’ information; or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn3]

By: Claims Review Staff

[1] We are treating [Redacted] as joint claimants as their whistleblower award applications are functionally identical and were submitted together, and the tips on which they base their award claim were jointly submitted.

[2] To the extent Claimants have applied for an award in a related action, because Claimants are not eligible for an award in an SEC Covered Action, they are not eligible for an award in connection with any related action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F4(g) and (f); Rule 21F-11(a); see also Order Determining Whistleblower Award Claim, Release No. 34-86902 (Sept. 9, 2019).

[3] Investigative staff responsible for the Covered Action never received any information from, or had any communications with, Claimants. Claimants’ submissions [Redacted] were not provided to the investigative staff until after [Redacted], when the Office of the Whistleblower provided the Claimants’ Claim for Award to the staff for review. As the staff’s investigation was concluded and a settled order was instituted by the Commission in [Redacted], the Claimants’ submissions played no role in the staff’s investigation opening, nor in the administrative enforcement action brought against [Redacted].

SEC

01/25/2020

Pursuant to Section 21F of the Securities Exchange Act of 1934 (”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17

[Redacted].

Claimants 2, 3, [Redacted].[fn1]

The Claims Review Staff has also preliminarily determined to recommend that the Commission deny the award claims of Claimant 2, Claimant 3, [Redacted]. The basis for this determination is as follows:

Claimants 2, 3, [Redacted] did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because their information did not:

a. cause the Commission to commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of the information under Rule 21F-4(c)(1) of the Exchange Act; or

b. significantly contribute to the success of the Covered Action under Rule 21F-4(c)(2) of the Exchange Act.

In making this preliminary determination, we note that the record reflects that joint Claimants 2 and 3 began providing information [Redacted] on [Redacted], and within 120 days, submitted a whistleblower tip on F0rm TCR, to the Commission, dated [Redacted]. As such, we preliminarily credit Claimants 2 and 3 with having reported to the Commission as of [Redacted] any information that they provided to both the [Redacted] and to the Commission.[fn2] But even thus crediting Claimants 2 and 3 with reporting to the Commission as of [Redacted] (as opposed to [Redacted], the record is clear that no information they provided led to the successful enforcement of the Covered Action. First, Enforcement staff had already opened the investigation that resulted in the Covered Action in [Redacted] based on information provided by [Redacted]. Second, prior to [Redacted], Enforcement staff was aware of every issue subsequently charged by the Commission against [Redacted] in the Covered Action, because of information and documentation provided by [Redacted] or through their own investigative efforts. As such, Claimants 2 and 3’s information was generally duplicative of information already known by the Enforcement staff. Third, although Claimants 2 and 3 provided certain new information concerning other alleged misconduct by [Redacted], staff was not able to corroborate those allegations, and they did not become part of the charges against [Redacted] in the Covered Action. In short, none of the information from Claimants 2 or 3 either caused Enforcement staff to open the investigation or significantly contributed to the success of the enforcement action.

[Redacted].

By: Claims Review Staff.

[1] Claimants 2. 3 [Redacted] also applied for an award in connection with an action brought by [Redacted] (“[Redacted] Action”). We are preliminarily determining to recommend that their claims for award in connection with the Action be denied for two reasons. First, Claimants 2, 3, [Redacted] are not eligible for an award in the Commission’s Covered Action. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See, e.g., Order Determining Whistleblower Award Claims, Exchange Act Release No. 86902 (Sept. 9, 2019); Order Determining Whistleblower Award Claims, Exchange Act Release No. 84506, 2018 SEC LEXIS 3031, at *8 n.5 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claim, Exchange Act Release No. 84503, 2018 SEC LEXIS 3030, at *7 n.4 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claims, Exchange Act Release No. 84596, 2017 SEC LEXIS 1318, at *11 n .10 (May 4, 2017) (same); 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f), and Rule 21F-11(a). Second, the [Redacted] Action was a state civil action and therefore does not qualify as a related action under the Commission’s whistleblower rules. See Exchange Act Rule 21F-3(b)(1)(iv) [Redacted]).

[2] See Exchange Act Rule 21F-4(b)(7). Claimant 2 and Claimant 3 erroneously argue in their whistleblower award application that they should be deemed to have reported to the Commission in [Redacted], 120 days before reporting to the [Redacted]. However, Rule 21F-4(b)(7) provides a limited safe-harbor process or claimants who provide their information to the Commission pursuant to Rule 21F-9 within 120 days of internally reporting their information or reporting their information to another regulator. The safe harbor does not extend to reports made by claimants to other agencies within 120 days of an internal report.

SEC

88015

01/22/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent ( *** ) of the monetary sanctions collected, or to be collected in [Redacted] (the “Covered Action”) and *** percent ( *** ) of the monetary sanctions collected or to be collected, in a related criminal prosecution, [Redacted] (“Related Action”). These proposed awards would yield a likely payout to the Claimant of more than $277,000. 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 the same original information to the Commission and, through the Commission, to the United States Attorney’s Office for the [Redacted] (“USAO”), and that this information led to the successful enforcement of both the Covered Action and the Related Action.[fn1]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn2] In reaching that determination, we positively assessed the following facts: (1) Claimant reported significant information to the Commission, alerting the staff to an ongoing fraudulent scheme; (2) Claimant’s information saved Commission time and resources; (3) Claimant’s information bears a close nexus to the charges brought by the Commission, as well as by the USAO; (4) Claimant provided assistance to staff in the form of an in-person interview; (5) there are significant law enforcement interests here, as Claimant’s information helped the agency shut down an ongoing fraudulent scheme that was preying on retail investors; and (6) there have been low collections to date.

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, and *** percent ( *** ) of the monetary sanctions collected or to be collected in the Related Action.[fn3]
By the Commission.

[1] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a) and (b), 17 C.F.R. § 240.21F-3(a), (b). See also In the Matter of Claim for Award, Rel. No. 34-84046 (Sept. 6, 2018) (for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”) (citing Exchange Act Rule 21F-11(c)).
[2] In assessing the appropriate award amount, Exchange Act 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.
[3] We have treated those amounts distributed to injured investors by the court-appointed receiver in the Covered Action as collected monetary sanctions on which Claimant’s award can be based. Further, monetary sanctions collected by the Commission in the Covered Action or by the USAO in the Related Action, including those that are either deemed to satisfy or are in fact used to satisfy any payment obligations of the defendants in the other action, shall not be double counted for purposes of paying an award; further, for purposes of calculating an award payment, any monetary sanctions collected in the manner just described shall be attributed, first, to the Commission’s Covered Action up to the full amount of monetary sanctions ordered in the Covered Action, with any remaining amounts attributed to the Related Action. See Order Determining Claim for Award, Rel. No. 34-77530 (April 5, 2015).

SEC

88014

01/22/2020

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of *** percent ( *** %) of the monetary sanctions collected in Covered Action [Redacted] (the “Covered Action”) for a payout of $45,000. 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 led to the successful enforcement of the Covered Action.[fn1] In reaching this determination, we have relied upon Exchange Act Rule 21F-4(b)(7) to treat Claimant as a whistleblower eligible for an award as of the date Claimant reported the misconduct to a state Attorney General, which was before our staff contacted Claimant seeking information.[fn2]

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate.[fn3] In reaching that determination, we positively assessed the following facts: Claimant was a harmed investor who lost money in the scheme; while not the source of the investigation, Claimant provided new, critical, time-sensitive information that allowed staff to recover assets that were later returned to harmed investors; Claimant’s information saved the staff time and resources in conducting its investigation and helped the Commission shut down a fraudulent scheme targeting retail investors; Claimant provided continuing assistance; and collections from the defendants of the monetary sanctions ordered were low.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of *** % of the monetary sanctions collected or to be collected in the Covered Action.[fn4]
By the Commission.

[1] See Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).
[2] Rule 21F-4(b)(7), 17 C.F.R. § 240.21F-4(b)(7), in relevant part provides, “If you provide information to … [certain designated persons or agencies, including a state Attorney General] …, and you, within 120 days, submit the same information to the Commission pursuant to § 240.21F-9 of this chapter, … then, for purposes of evaluating your claim to an award …, the Commission will consider that you provided [the] information as of the date of your original disclosure, report or submission to one of these other authorities or persons.” The rule operates as a 120-day safe harbor, assuring an individual who voluntarily reports misconduct to certain other agencies first that the individual will be deemed for award purposes to have reported directly to the Commission at the same time that the individual reported to the other agency. See Order Determining Whistleblower Award Claim, Release No. 34-82996 , 2018 SEC LEXIS 856 (April 5, 2018). Claimant also satisfied the voluntariness requirement by voluntarily reporting the violations to the state Attorney General before being contacted by the Commission staff. See Exchange Act Rule 21F-4(a)(2), 17 C.F.R. § 240.21F-4(a)(2).
[3] In assessing the appropriate award amount, Exchange Act 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. Exchange Act Rule 21F-6, 17 C.F.R. § 240.21F-6.
[4] The defendants in the Covered Action were found to be liable for over $ 1,000,000 in disgorgement and prejudgment interest, with all but $ [Redacted] of the total amount waived due to demonstrated financial inability to pay. We have treated the full amount for which defendants were held liable as “monetary sanctions,” thus making the action eligible for award consideration as a covered judicial action. See Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1). However, the whistleblower award payment can only be based on the $ [Redacted] actually “collected.” See Exchange Act Section 21F(b)(1)(A) and (B), 15 U.S.C. § 78u-6(b)(1)(A) and (B); see also Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300 at 34,348-34,349 n. 373 (June 13, 2011) (“[I]f monetary sanctions are ordered to be paid … but payment is waived, in whole or in part, for inability to pay or for other reasons, payment to a whistleblower is made only with respect to the amounts actually collected in such action. However, this does not affect whether the $ 1,000,000 monetary sanctions threshold is satisfied for purposes of qualifying as a covered action.”).

SEC

01/07/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (collectively, “Claimants”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigative staff responsible for the Covered Action declared that none of the Claimants provided any information that was helpful to or used in the above-referenced Covered Action or the related investigation.[fn1]

By: Claims Review Staff.

[1] Because Claimants do not qualify for an award in the Covered Action brought by the Commission, any claims for award they made in connection with various purported related actions cannot succeed. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), Rule 21F-3(b)(1); Rule 21F-11(a).

SEC

01/07/2020

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (collectively, “Claimants”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the ”Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that that the investigation that resulted in the Covered Action was not opened based on information provided by Claimants. Further, Enforcement staff responsible for the Covered Action received no information from, or had communications with, any of the Claimants.

By: Claims Review Staff.

SEC

12/27/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is as follows.

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation was opened based on information received from a source other than Claimant. The investigative staff responsible for the Covered Action did not have any communications with Claimant and Claimant did not provide any information that was used by or had any impact on the staffs investigation or the Covered Action.

By: Claims Review Staff.

SEC

87828

12/20/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that the claim submitted by [Redacted] (“Claimant”) in connection with Notice of Covered Action [Redacted] (“Covered Action”) identified above be denied. Claimant subsequently filed a timely written response contesting the Preliminary Determination.[fn1]

After careful consideration of the administrative record, including Claimant’s written response, we deny Claimant’s award claim.

I. Background.

A. The Covered Action.

On [Redacted], Division of Enforcement (“Enforcement”) staff opened a Matter Under Inquiry (“MUI”), which was elevated to a formal investigation on [Redacted], that resulted in the Covered Action. Enforcement staff opened the investigation based on a self-report by [Redacted] (the “Company”) in [Redacted]. On [Redacted] the SEC filed a civil injunctive complaint in federal district court. On [Redacted] the court entered final judgment, ordering the Company to disgorge $[Redacted], together with prejudgment interest of $[Redacted], for a total of $[Redacted], and a civil penalty in the amount of $[Redacted].

On [Redacted], over 21 months after the MUI was opened, Claimant made a written submission with accompanying documentation to the Commission, which was subsequently uploaded to the Commission’s Tips, Complaints, and Referrals Intake and Resolution System (“TCR system”). Claimant submitted additional tips on [Redacted] and [Redacted]. Because Claimant’s tips appeared to contain potentially privileged information, the tips were referred to a privilege filter team (the “filter team”), which was completely separate from the Enforcement staff responsible for the Covered Action. In [Redacted], the filter team had a call with Claimant in an effort to determine whether the information submitted by Claimant was privileged. Although the filter team redacted from the tips information it believed to be privileged, Enforcement staff responsible for the Covered Action determined not to review Claimant’s tips, including in redacted form, because the investigation had been ongoing for a significant period of time and the staff did not want to risk compromising the investigation by reviewing potentially privileged information. The Enforcement staff also had no communication with Claimant.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn3] recommending that Claimant’s award claim be denied because Claimant’s information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Claimant’s information did not cause the Commission staff to open the investigation, as it was opened 21 months before the Commission received any information from Claimant. Nor did Claimant’s information significantly contribute to the success of the Covered Action as Enforcement staff responsible for the Covered Action determined not to review Claimant’s tips out of concern that they contained potentially privileged information, and had no communications with Claimant before or during the investigation of the Covered Action.

C. Claimant’s Response to the Preliminary Determination.

After requesting and receiving a copy of the record, Claimant submitted a timely written response contesting the Preliminary Determination,[fn4] including a declaration from Claimant. Specifically, Claimant makes two principal contentions in response to the Preliminary Determination.

First, Claimant asserts that the Commission failed to provide any statements from either the filter team or Enforcement staff to confirm the two staff attorney declarations that documented that Claimant’s information was not used in any way to advance the investigation. Claimant asserts that the staff declarations fail to provide an exhaustive representation that no one else on the staff used Claimant’s information to advance the investigation. Claimant re-asserts that Claimant provided valuable information that was used in the charges that were ultimately brought by the Commission against the Company.

Second, Claimant contends that the Commission staff disclosed Claimant’s identity as a Commission whistleblower to the Company and then used that information to secure a more favorable settlement with the company.

II. Analysis.

After careful consideration of the record, including Claimant’s request for reconsideration, we conclude that Claimant is not eligible for a whistleblower award because Claimant’s information did not lead to the successful enforcement of the Covered Action. In particular, we credit the staff declarations in the administrative record, which demonstrate that the information submitted by Claimant did not cause the Commission staff to open the investigation that eventually resulted in the Covered Action, did not cause the staff to initiate a new line of inquiry or reopen an investigation that resulted in the Covered Action, and did not significantly contribute to the success of the Covered Action.

The Claimant cannot be credited with causing the Enforcement staff to open the investigation. The staff declarations demonstrate that the investigation was opened on [Redacted], based on a self-report by the Company in [Redacted], over 21 months before Claimant’s first submission in [Redacted]. As such, Claimant’s information could not have caused the staff to open the investigation.

In addition, none of the information submitted by Claimant caused the staff to initiate a new line of inquiry or significantly contributed to the successful enforcement of the Covered Action. The staff declarations demonstrate that Claimant’s information was never reviewed or used by the Enforcement staff responsible for the Covered Action during the course of the investigation or as part of the Covered Action.

Finally, for the reasons discussed below, we reject the arguments raised in Claimant’s written response to the Preliminary Determination.

First, Claimant contends that the staff attorney declarations supporting the Preliminary Determination are not sufficient because they “fail to provide an exhaustive representation that no one on the [Redacted] staff, including the taint team, used Claimant’s information.” We reject this argument and find that the staff declarations supporting the Preliminary Determination adequately demonstrate that the Covered Action investigative staff did not review or use Claimant’s information in any way and had no communications with Claimant. We credit the sworn declaration from one of the primary Enforcement staff attorneys responsible for the investigation that she conferred with other staff on the investigation and no member of the staff responsible for the investigation reviewed any of the information that Claimant submitted or had any contact with Claimant. Further, supplemental declarations from Enforcement staff confirm and buttress the conclusion that Enforcement staff responsible for the Covered Action did not review or use Claimant’s information in any way. The staff declarations demonstrate that it was the staff conducting the filter review—who were completely separate from the investigative staff responsible for the Covered Action—that interviewed Claimant in an effort to determine whether Claimant’s information was privileged, and that the Enforcement staff on the investigation had no communications with either the filter team or Claimant. The Enforcement staff declarations further show that they did not learn of the Company’s misconduct from Claimant, and none of Claimant’s information was used to support the underlying charges in the Covered Action. Further, the record reflects that the filter team who reviewed Claimant’s tips and who interviewed Claimant did not forward those tips to the Enforcement staff responsible for the Covered Action and did not relay the substance of their communications with Claimant to the Enforcement staff responsible for the Covered Action.

Second, Claimant’s surmise that staff disclosed Claimant’s identity as a Commission whistleblower to the Company and then used that information to secure a more favorable settlement is contradicted by the record. As noted, the investigative staff responsible for the Covered Action never communicated with Claimant or accessed any of Claimant’s information. Further, in a supplemental declaration, investigative staff confirmed that they did not disclose to the Company counsel directly, or indirectly, that Claimant was a Commission whistleblower or that Claimant had submitted tips to the Commission. Likewise, one of the filter team staff who interviewed Claimant also does not recall any contact with the Company or its counsel, and the documentary records of the filter team’s work—which do not show any such contacts—further support this conclusion. As such, the fact that Claimant submitted tips to the Commission did not advance the staff’s settlement negotiations with the Company or provide staff with any leverage in those settlement discussions. As reflected above, there is no evidence in the record that the Claimant’s tips helped advance or were used in the investigation, including in the context of the staff’s settlement discussions with the Company. And at no point during the settlement negotiations, did counsel for the Company indicate that it was willing to settle the case because of Claimant.

III. CONCLUSION.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

[1] The Preliminary Determination of the CRS also recommended denying an award to Claimant 2, who has not filed a written response. Accordingly, Claimant 2 has failed to exhaust administrative remedies and the Preliminary Determination has become the Final Order of the Commission with respect to Claimant 2 pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[1] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[3] See Exchange Act Rule 21F-10(d), 17 C.F.R. § 240.21F-10(d).

[4] See Exchange Act Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

[5] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[6] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[7] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2). In determining whether information significantly contributed to an enforcement action, we consider factors such as “whether the information allowed us to bring: (1) Our successful action in significantly less time or with significantly fewer resources; (2) additional successful claims; or (3) successful claims against additional individuals or entities.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011). “The individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.’” Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 , 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).

CFTC

12/19/2019

Claimant 1, [Redacted], provided information that led to a successful enforcement action first by causing the case to be opened and second by significantly contributing to the investigation. He/she first reported his/her information to another regulator through his/her company’s internal reporting procedures, and then the other regulator referred the case to the CFTC.[fn2] Claimant 1 also directly provided Division staff with additional assistance through a CFTC-requested interview with Division staff and by providing additional documents through his/her employer’s counsel. Claimant 1 voluntarily provided information to the CFTC because Claimant 1’s employer acted as his/her representative in submitting the information to the other regulator, and then Claimant 1 directly provided information to the CFTC both during and subsequent to his/her interview. [C.F.R. §§ 165.2(i), (l)(1) & (o)(1)]. Claimant 1’s report to the other regulator should not be considered mandatory under the Rules. [C.F.R. § 165.2(o)(2)].

The Commission then brought a successful action based on conduct that was related to the subject of the original information provided by Claimant 1. Although Claimant 1 filed a Form TCR to perfect his/her status as a whistleblower after the conclusion of the investigation, we find that Claimant 1 complied with the form and manner requirements of the Rules per the language of Rule 165.3(a), which does not require a whistleblower to submit information on a Form TCR in his/her initial submission. [C.F.R. § 165.3(a)].

It is hereby ORDERED that Claimant 1 shall receive an award of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action.

By the Commission.

[1] The Preliminary Determination also recommended denying the award application submitted by Claimant 2. Claimant 2 failed to submit a request for reconsideration of the Preliminary Determination, and, therefore, the Preliminary Determination denying his claim for an award has become the Final Order of the Commission. [C.F.R. § 165.7(h) (2019)].

[2] Claimant 1 initially submitted his/her information to another regulator through his/her employer’s compliance process, but later provided direct assistance to Division of Enforcement (“Division”) staff through an interview that greatly assisted Division staff. We have determined that Claimant 1 has successfully established that he/she was the original source of information that the Division received from [Redacted] regulator. [C.F.R. § 165.2(l)]. We have also decided to give credit to Claimant 1 for causing the case to be opened because the information Claimant 1 provided, albeit up through his/her employer’s compliance process and then over via the other regulator, was sufficiently specific, credible, and timely to cause the Commission to open an investigation. [C.F.R. § 165.2(i)(1)].

SEC

87662

12/05/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award applications submitted by the following individuals (collectively, the “Claimants”) in connection with the above-referenced proceeding (the “Covered Action”):

[Redacted] (“Claimant 1”);

[Redacted] (“Claimant 2”);

[Redacted] (“Claimant 3”);

[Redacted] (“claimant 5”);

[Redacted] (“claimant 8”): and

[Redacted] (“claimant 10”).[fn1]

Claimants filed timely responses contesting the preliminary denials. For the reasons discussed below, and upon careful consideration of the administrative record with respect to each contesting claimant, Claimants’ award applications are denied.

I. INTRODUCTION.

A. The Covered Action.

On [Redacted], staff in the Commission’s Division of Enforcement (“Enforcement”) opened a matter under inquiry (“MUI”) based on a corporate entity’s tip to the Commission’s Division of Trading and Markets two days earlier concerning misstatements and omissions by [Redacted] (the “Company”) in public filings [Redacted]. The MUI was converted to an investigation in [Redacted] and then a Formal Order of Investigation was issued [Redacted], entitled [Redacted]. Initially, the investigation included one investigative track, referred to in the administrative record as the [Redacted] (the “First Track”), which later culminated in the Covered Action.

In [Redacted], the Enforcement staff initiated a second investigative track as part of the same investigation, referred to in the administrative record as the [Redacted] (the “Second Track”). The staff initiated the Second Track based upon the staff’s own quantitative analysis of [Redacted]. This review consisted of a quantitative analysis that was independently devised and conducted by Commission staff as part of a broader initiative [Redacted]. The Second Track was conducted by a separate Enforcement team that investigated different facts and securities violations from the First Track and resulted in a separate enforcement action with different named defendants, underlying facts, and charged violations. Neither investigative track focused on any matters relating to the Company’s and its affiliates’ conduct [Redacted].

The First Track focused on the Company’s failure to inform its investors about [Redacted]. The First Track ultimately resulted in the Covered Action, which was a settled administrative proceeding instituted by the Commission on [Redacted]. In the Covered Action, the Commission found that the Company violated [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] on the Commission’s public website to notify interested individuals to file award applications with respect to the Covered Action within 90 days, by [Redacted].[fn3] OWB received whistleblower award applications from all of the Claimants.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn4] recommending that the Commission deny each of the Claimants’ award applications because none of the information provided by any of the Claimants led to the successful enforcement of the Covered Action.[fn5] The record supporting that Preliminary Determination included the declarations of the primary Enforcement staff attorneys responsible for the First Track and Covered Action, which stated under penalty of perjury that the Claimants’ tips to the Commission were not used in the investigation, including the First Track, or enforcement of the Covered Action.

The CRS also preliminarily denied Claimant 1’s claim on the additional independent grounds that Claimant 1’s award application was untimely[fn6] and that any information Claimant 1 provided to the Commission for the first time before July 21, 2010 was not “original information.”[fn7] The CRS also preliminarily denied Claimant 8’s claim on the additional independent ground that Claimant 8 failed to qualify as a whistleblower by not submitting Claimant 8’s tips to the Commission on Form TCR.[fn8]

The Claimants subsequently filed timely written responses contesting the Preliminary Determination.[fn9]

II. ANALYSIS.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn10] As relevant here, information leads to the success of a covered action if it: (1) causes the Commission staff to (i) open or reopen an investigation, or (ii) inquire into different conduct as part of a current Commission investigation;[fn11] or (2) significantly contributes to the success of a Commission judicial or administrative enforcement action.[fn12]

Having considered the administrative record with respect to each contesting claimant, including their responses to the Preliminary Determination, we conclude that Claimants 1, 2, 3, 5, 8 and 10 are not eligible for a whistleblower award because none of their respective information led to the successful enforcement of the Covered Action. In particular, we credit the staff declarations in the administrative record, which demonstrate that the information submitted by the Claimants did not cause the Commission staff to open the investigation that resulted in the Covered Action, did not cause the staff to initiate a new line of inquiry or reopen an investigation that resulted in the Covered Action, and did not significantly contribute to the success of the Covered Action.

First, no claimant can be credited for causing the Enforcement staff to open the investigation. The staff declarations demonstrate that the investigation, which included the First Track from its inception, was opened on [Redacted], based upon a non-whistleblower complaint, wholly separate from and independent of Claimants’ tips.[fn13]

Second, none of the information submitted by Claimants caused the staff to initiate a new line of inquiry or significantly contributed to the successful enforcement of the Covered Action. The staff declarations demonstrate that the Enforcement staff for the First Track did not use any of the Claimants’ information dining the course of the First Track or as part of the Covered Action.

Third, for the reasons discussed below, we reject the contrary arguments raised in the Claimants’ respective written responses to the Preliminary Determination, and we find additional grounds for denying the award applications of Claimants 1 and 8.

Moreover, we conclude that the related action award claims submitted by Claimants 1, 2, 3, and 10 should be denied because these claimants have not qualified for an award for the Covered Action, which is a necessary precondition for a related action award.[fn14] Also, the civil and administrative cases that Claimants 1, 2, 3, and 10 submitted for related action award claims should be denied because the various matters identified by these claimants were not brought by designated non-Commission agencies and thus do not qualify as “related actions.”[fn15]

A. Claimant 1.

1. Claimant 1’s information did not lead to the successful enforcement of the Covered Action.

Claimant 1 submitted numerous tips and additional information, which the Commission received in [Redacted] and on various dates in [Redacted]. In those submissions Claimant 1 provided information concerning, among other things, a [Redacted] criminal prosecution of the Company’s employees and other individuals, as well as a [Redacted] civil suit brought by Claimant I against the Company [Redacted]. The underlying factual events discussed in Claimant 1’s submissions allegedly occurred between 1982 and 1990. Claimant 1 also claims to have previously provided this same information to the Commission on two earlier occasions, specifically on or around [Redacted] and [Redacted].[fn16]

The staff declarations in the administrative record, which we credit, demonstrate that none of Claimant 1’s information led to the successful enforcement of the Covered Action. The declaration of one of the primary Enforcement staff attorneys responsible for the First Track and the Covered Action attests that the Enforcement investigative team did not receive any information from Claimant 1, that they did not have any communications with Claimant 1, and that Claimant 1 did not assist or contribute in any way to the First Track or the Covered Action. Moreover, the declaration of the OWB staff attorney corroborates, based on a review of the Commission’s files, that none of the information submitted by Claimant 1 in [Redacted] and [Redacted] was shared with the Enforcement investigative team responsible for the First Track.[fn17]

Both the nature and the timing of Claimant 1’s tips corroborate these staff declarations. The nature of the information that Claimant 1 provided, and claims to have provided, to the Commission about the criminal conduct of the Company’s employees and about the Company’s [Redacted], on their face, do not relate to the claims that were asserted by the Commission in the Covered Action. Specifically, the Covered Action’s claims are based upon events primarily occurring around [Redacted] and [Redacted] —decades after the facts alleged in Claimant 1’s information—and concerned the Company’s failure to make required disclosures [Redacted]. With respect to timing, as reflected in the record., the [Redacted] and [Redacted] tips were submitted after the First Track had been opened and the Covered Action had concluded, and so could not have been used during the First Track or enforcement action. Likewise, Claimant 1’s purported [Redacted] tip was sent to the Commission after the investigation was opened in [Redacted].

Moreover, Claimant 1’s written response offers no factual evidence or legal arguments that rebut the Preliminary Determination that Claimant 1’s information did not lead to the successful enforcement of the Covered Action. Rather, Claimant 1 offers two objections to the Preliminary Determination in this regard, neither of which has merit.

First, Claimant 1 argues, without invoking specific facts or legal authority, that the CRS’s preliminary denial of the award claim violated Claimant 1’s rights under the Constitution and Bill of Rights, Claimant 1’s civil rights, and Claimant 1’s human rights. Claimant 1 also claims that the CRS violated two criminal statutes involving false statements and embezzlement, and violated the civil and uniformed services oath of office. But the Exchange Act and our whistleblower rules do not authorize granting Claimant 1’s award claim based upon any of those grounds.[fn18] Furthermore, and specific to Claimant 1’s constitutional argument, there is no constitutional right to receive a Commission whistleblower award, and the grounds for denying Claimant 1’s claims are based upon Claimant 1’s failure to qualify for an award based on criteria that do not implicate Claimant 1’s constitutionally protected interests.[fn19] Claimant 1 has not demonstrated eligibility for an award based on the neutral, objective criteria in the Exchange Act and our whistleblower rules.

Second, Claimant 1 argues that Claimant 1 deserves an award because Claimant 1 is a victim of [Redacted] the Company and the Company retaliated against Claimant 1, because Claimant 1 has been a longtime whistleblower to federal agencies about the Company, and because Claimant 1’s [Redacted] tip to the Department of Justice (“DOJ”) led to the criminal prosecution of the Company’s employees and others. But even accepting these assertions as true for the sake of argument, they have no bearing on whether Claimant 1 qualifies for a whistleblower award for the Covered Action, since these arguments do not show Claimant 1 was a whistleblower who voluntarily provided the Commission with original information that led to a successful enforcement of the Covered Action[fn20]; nor do these arguments show that Claimant 1 meets any of the other requirements necessary to qualify for whistleblower awards.[fn21]

We therefore conclude that Claimant 1’s information did not lead to the successful enforcement of the Covered Action, and that as a result, Claimant 1 is ineligible for an award with respect to either the Covered Action or any related action.[fn22]

2. Claimant l’s whistleblower award application was untimely.

Claimant 1 first submitted an award application identifying the Covered Action ([Redacted]) by U.S. Mail postmarked [Redacted].[fn23] This date was several months after the 90-day deadline of [Redacted], which was listed on the Notice of Covered Action posted on the Commission’s public website.[fn24] Claimant 1’s award application was thus untimely.[fn25] In responding to the Preliminary Determination, Claimant 1 argues that we should excuse this untimeliness because of extraordinary circumstances consisting of an amended award application submitted by Claimant 1 in [Redacted]. But we have consistently interpreted the “extraordinary circumstances” standard under our whistleblower rules[fn26] in narrow fashion as requiring a claimant to show that the reason for the failure to file was beyond the control of the claimant—such as attorney misconduct or serious illness.[fn27] Claimant 1’s amended application in [Redacted] post-dates dates the untimely application in and thus cannot show that Claimant 1’s failure to file an application by [Redacted] was beyond Claimant 1’s control.[fn28] We therefore conclude that Claimant 1’s award application should be denied for the independent reason that it was untimely.[fn29]

3. Any information submitted by Claimant 1 for the first time before July 21, 2010 is not original information.

Any information that Claimant 1 provided to the Commission for the first time before July 21, 2010, even if resubmitted after that date, is not “original information” that would support a whistleblower award.[fn30] In responding to the Preliminary Determination, Claimant 1 argues that information submitted before July 21, 2010 qualifies as “original information” as defined by statute (as opposed to Commission rule). But, as we previously have concluded, “the whistleblower statutory provisions [concerning “original information” under the Dodd-Frank Act] do not authorize awards for information originally provided prior to Dodd-Frank [Act]’ s enactment” and the meaning of “original information” is not intended to “pay [awards] for information that was already in the Commission’s possession on July 21, 2010.”[fn31] We therefore conclude that any information submitted by Claimant 1 for the first time before July 21, 2010 will not support a whistleblower award for the independent reason that it is not “original information.”

B. Claimants 2 and 3.

The administrative record demonstrates that none of Claimant 2 and 3’s information led to the successful enforcement of the Covered Action. First, Claimants 2 and 3 submitted their joint complaint to the Commission in [Redacted], four years after the investigation was opened in [Redacted], and so their tip did not cause the Enforcement staff to open the investigation. Second, the declaration of one of the primary Enforcement staff attorneys responsible for the First Track and the Covered Action attests that the Enforcement staff for the First Track did not receive any information from Claimants 2 and 3, that they had no communications with Claimants 2 and 3, and that Claimants 2 and 3 did not contribute in any way to the First Track and Covered Action.

In their written response to the Preliminary Determination, Claimants 2 and 3 do not contest that their information did not lead to the success of the Covered Action. Rather, Claimants 2 and 3 argue only that they are eligible for a related action award on the theory that the information that they provided to the Commission in [Redacted] ultimately was sent to the DOJ and assisted the DOJ in overcoming [Redacted]. But as already noted, Claimants 2 and 3 are ineligible for a related action award because they have not demonstrated eligibility for a Covered Action award in the first instance.[fn32]

We therefore conclude that Claimant 2 and 3’s information did not lead to the successful enforcement of the Covered Action, and that as a result, Claimants 2 and 3 are ineligible for an award with respect to either the Covered Action or any related action.[fn33]

C. Claimant 5.

Claimant 5 submitted a tip to the Commission on [Redacted], and later met with Enforcement investigative staff In this tip and the subsequent meetings, Claimant 5 (i) alleged that in [Redacted] the Company [Redacted] and (ii) described Claimant 5’s [Redacted] experience with, and observations of, the Company’s [Redacted]. In addition, Claimant 5’s information did not mention [Redacted], which played a significant role in the Covered Action. Indeed, Claimant 5’s award application describes Claimant 5’s information similarly.

The staff declarations in the administrative record, which we credit, demonstrate that none of Claimant 5’s information led to the successful enforcement of the Covered Action. As described in those declarations. Claimant 5’s tip was submitted two years after the investigation was opened in [Redacted]. As a result, the Enforcement staff on the First Track, since the First Track’s inception, had focused on the misconduct that was the basis for the Covered Action–specifically, the Company’s failure to disclose to investors in its public filings with the Commission, [Redacted].

As attested in the staff declarations, the Enforcement staff on the First Track received and reviewed Claimant 5’s tip and met once with Claimant 5 before determining that Claimant 5’s information was outside the focus of and thus would not advance the First Track. The staff on the First Track then referred Claimant 5’s tip to the staff for the Second Track. Although the staff for the First Track was aware that Claimant 5 subsequently twice met with the staff for the Second Track in [Redacted], the staff for the First Track did not attend either of those meetings. The staff declarations further attest that Claimant’s 5 information was not used by the staff on the First Track and did not contribute in any way to either the First Track or the Covered Action.

In responding to the Preliminary Determination, Claimant 5 raises three arguments in an attempt to demonstrate that Claimant 5’s information led to the successful enforcement of the Covered Action. All three arguments lack merit.

First, Claimant 5 contends that the information Claimant 5 provided to the Commission bears some resemblance to certain Commission findings in the Covered Action insofar as Claimant 5 alleged information about systematic and pervasive practices of the Company that were unstated background facts for the Commission’s Covered Action. But, as just discussed, the staff declarations demonstrate, and we find, that Claimant 5’s *** tip was submitted after the staff already had initiated the First Track and had focused on the misconduct that was the basis for the Covered Action. Claimant 5 also has not demonstrated a factual nexus between the information that Claimant 5 provided to the Commission and the conduct underlying the Covered Action’s claims. 34 Claimant 5 admits to having merely reported certain observable effects of the conduct underlying the Covered Action’s charges, rather than reporting the underlying violative conduct itself:

[Claimant 5] reported … the effects that occurred outside [the Company] as a result of its internal machinations – effects that [Claimant 5] personally observed [Redacted]. While [Claimant 5] concedes [Claimant 5] did not allege that [Redacted], those facts are plainly what led to the behavior [Claimant 5] was able to observe and report to the Commission – [Redacted].[fn35]

The conduct described in Claimant 5’s information does not resemble the misconduct described in the Commission’s findings in the Covered Action, which focused on the Company’s failure in *** to make disclosures [Redacted].[fn36] By Claimant 5’s own admission, the conduct described in these Commission findings was not the subject of the information Claimant 5 provided to the Commission, and thus Claimant 5 has not shown the requisite factual nexus between Claimant 5’s information and the Covered Action.

Moreover, even if Claimant 5 could show some factual resemblance between Claimant 5’s information and the Commission’s findings in the Covered Action, that nexus by itself would not undermine the staff declarations, described above, attesting that the staff assigned to the First Track never actually used Claimant 5’s information in either the First Track or the Covered Action. Claimant 5 separately attacks the legal sufficiency of the staff declarations as “patently self-serving” and as executed “well after” Claimant 5’s award application. But the staff declarations in the administrative record were signed under penalty of perjury and therefore are adequate to support our finding that Claimant 5’s information did not contribute to either the First Track or the Covered Action.[fn37]

Second, Claimant 5 argues that Claimant 5 provided information about “both [Redacted] industry in general and [the Company’s practices] in particular” at several in-person meetings with the Commission staff, and that the staff attending these meetings “were keenly interested in what [Claimant 5] had to say, and they asked salient follow-up questions afterwards.” But even taking Claimant 5’s account at face value, that account is wholly consistent the staff declarations in the administrative record. As described earlier, those declarations attest that the staff on the First Track met once with Claimant 5 before determining that Claimant 5’s information was outside the focus of the First Track and referring Claimant 5’s tip to the staff on the Second Track, After that point, the staff on the First Track was aware of later meetings by Claimant 5 with the staff on the Second Track but did not attend those later meetings. In short, Claimant 5’s account does nothing to undermine our finding, based on the staff declarations in the record, that Claimant 5’s information was never actually used to advance the First Track or Covered Action.

Third, Claimant 5 argues that the staff on the Second Track purportedly informed Claimant 5’s counsel that DOJ personnel were “taking the lead” and that Claimant 5’s counsel was in contact with those DOJ personnel up through the day that the DOJ announced [Redacted]. But Claimant 5 has not applied for any related action awards for the Covered Action, nor has Claimant 5 argued that any DOJ actions were related to the Covered Action for award purposes.[fn38] Assisting a different enforcement action conducted by another agency does not demonstrate Claimant 5’s assistance with the Covered Action. Nor does Claimant 5 identify any specific information that Claimant 5 provided to the DOJ that the DOJ, in turn, provided to the Commission for use in connection with the Covered Action. More importantly, claimants are eligible for a whistleblower award only if they voluntarily provide original information to the Commission that leads to a successful enforcement action.[fn39] If a claimant provides information only to another agency, even if that agency then passes it on to the Commission and the Commission uses it, the claimant would not be eligible for an award unless the claimant (or a claimant’s representative) also provides that information directly to the Commission himself or herself.[fn40] Because we find that the Enforcement staff for the First Track did not use the information that Claimant 5 provided directly to the Commission, any additional information that Claimant 5 may have provided to the DOJ does not support an award for the Covered Action.

We therefore conclude that Claimant 5’s information did not lead to the successful enforcement of the Covered Action, and that as a result. Claimant 5 is ineligible for an award.

D. Claimant 8.

1. Claimant 8’s information did not lead to the successful enforcement of the Covered Action.

Claimant 8 submitted a single tip to the Commission dated [Redacted], more than three years after the investigation was opened. The staff declarations in the administrative record, which we credit, demonstrate that none of Claimant 8’s information led to the successful enforcement of the Covered Action. The declaration of one of the primary Enforcement staff attorneys responsible for the First Track and the Covered Action attests that the Enforcement investigative team did not receive any information from Claimant 8, that they did not have any communications with Claimant 8, and that Claimant 8 did not assist or contribute in any way to the First Track or the Covered Action. Moreover, the declaration of the OWB staff attorney corroborates, based on a review of the Commission’s files, that Claimant 8’s [Redacted] tip was not even shared with the Enforcement investigative team.[fn41]

Claimant 8 raises three arguments in challenge to the Preliminary Determination that Claimant 8’s information did not lead to the successful enforcement of the Covered Action. None of these arguments has merit.

First, Claimant 8 claims the Preliminary Determination does not refer to, and therefore does not apply to, Claimant 8. But the Preliminary Determination identifies Claimant 8 as a member of the group referred to as “Claimants” and states, “None of the Claimants provided information that led to the successful enforcement by the Commission of the Covered Action. Accordingly, the Preliminary Determination sufficiently reflects the determination that Claimant 8’s information did not lead to the Covered Action’s success.[fn42]

Second, Claimant 8 argues that Claimant 8’s information significantly contributed to the success of an enforcement matter unrelated to the Covered Action,[fn43] for which Claimant 8 previously applied for an award and was denied. But any alleged contributions Claimant 8 may have made to a different enforcement action are not relevant to whether Claimant 8’s information led to the successful enforcement of this Covered Action.[fn44] Furthermore, Claimant 8 already applied for an award connected to the other enforcement action, and the Commission denied that claim.[fn45]

Third, Claimant 8 claims that the Preliminary Determination did not address Claimant 8’s purported application for a related action award. But Claimant 8 failed to identify any case as a related action in the relevant section of Claimant 8’s award application on Form WB-APP for Notice of Covered Action [Redacted], and thus Claimant 8 did not apply for a related action award.[fn46] Even accepting, without deciding, that Claimant 8 intended to apply for a related action award, Claimant 8 would not be entitled to one because Claimant 8 has not demonstrated eligibility for an award with respect to the Covered Action.[fn47]

We therefore conclude that Claimant 8’s information did not lead to the successful enforcement of the Covered Action, and that as a result, Claimant 8 is ineligible for an award with respect to either the Covered Action or any related action.

2. Claimant 8 failed to submit information in the form and manner required to qualify as a whistleblower.

The administrative record, which includes a declaration from an OWB staff attorney, reflects that Claimant 8 submitted Claimant 8’s [Redacted] tip to the Commission by mail without a Form TCR. Because Claimant 8 did not submit this information either on a Form TCR or through the Commission’s online TCR portal, and thus did not include the required declaration, Claimant 8 failed to submit information in the form and manner required by our whistleblower rules[fn48] and cannot qualify as a whistleblower.[fn49] In responding to the Preliminary Determination that Claimant 8 was not a whistleblower, Claimant 8 argues that Claimant 8 complied with the statutory requirements of the Dodd-Frank Act and was not subject to any further requirements in the Commission’s whistleblower rules at the time Claimant 8 submitted tips. But Section 21F of the Exchange Act, which was added by the Dodd-Frank Act, expressly conditions whistleblower status on providing information to the Commission “in a manner established, by rule or regulation, by the Commission,”[fn50] and further directs that “[n]o award . . . shall be made . . . to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule, require.”[fn51] Moreover, our rules specifying the form and manner of submission took effect on August 12, 2011, almost [Redacted] before Claimant 8’s initial tip in [Redacted].[fn52]

We therefore conclude that Claimant 8’s award application should be denied for the independent reason that Claimant 8 never qualified as a whistleblower by submitting Claimant 8’s information in the form and manner required by our whistleblower rules.

E. Claimant 10.

Claimant 10 submitted a tip to the Commission on or about [Redacted], and made five supplemental submissions in *** and early ***. The staff declarations in the administrative record, which we credit, demonstrate that none of Claimant 10’s information led to the successful enforcement of the Covered Action. The declaration of one of the primary Enforcement attorneys assigned to the First Track attests that he received and reviewed information submitted by Claimant 10 on multiple occasions between [Redacted] and [Redacted] but concluded each time that Claimant 10’s information was outside the focus of, and therefore would not advance, the First Track. Both this declaration and another from a second attorney assigned to the First Track further attest that the Enforcement team on the First Track did not use any information from Claimant 10, that they had no communications with Claimant 10, and that Claimant 10 neither assisted nor contributed in any way to either the First Track or the Covered Action. In addition, a separate declaration from an OWB staff attorney describes, based on a review of the Commission’s files, the submissions the Commission received from Claimant 10, including certain additional submissions that were never even shared with the Enforcement staff on the First Track.[fn53]

In challenging the Preliminary Determination, Claimant 10 raises three main arguments, none of which has merit.

First, Claimant 10 asserts for the first time, without substantiation, that Claimant 10 allegedly submitted information in [Redacted][fn54] that caused the staff to open the investigation and “created pressure” for the Commission to file a complaint in a different enforcement action on [Redacted]. But any information submitted by Claimant 10 in [Redacted] would not qualify as “original information” to support an award because it was provided for the first time before July 21, 2010.[fn55] Moreover, the action filed by the Commission on [Redacted] was the subject of a different Notice of Covered Action for which Claimant 10 did not apply for an award. Any contributions Claimant 10 might have made to that action would do nothing to establish that Claimant 10’s information led to the successful enforcement of this Covered Action.

Second, Claimant 10 also asserts that Claimant 10 provided several additional reports identifying potential securities violations and discussed these reports when contacted in *** by attorneys in OWB and Enforcement. But the staff declarations in the administrative record unequivocally attest that the staff opened the First Track based on a non-whistleblower complaint, that the staff had no communications with Claimant 10, and that none of the information submitted by Claimant 10 was found to be relevant or contributed in any way during either the First Track or the Covered Action. Accordingly, we credit the account in these staff declarations.

Third, Claimant 10 accuses the Enforcement staff for the First Track of intentionally limiting the scope of the Covered Action by ignoring potential securities violations purportedly identified by Claimant 10’s reports and argues that the staff declarations are inconsistent with the information provided in Claimant 10’s reports, as well as with the charges filed in the unrelated *** enforcement action. But Claimant 10 offers no evidence to substantiate the accusation that the staff limited the Covered Action or acted with any improper motive. Rather, Claimant 10’s contention that the staff overlooked Claimant 10’s reports bolsters the conclusion that Claimant 10’s information did not contribute to the First Track and Covered Action. Likewise, whatever may have happened in a different action is irrelevant to whether Claimant 10’s information led to the successful enforcement of this Covered Action.

We therefore conclude that Claimant 10’s information did not lead to the successful enforcement of the Covered Action, and that as a result, Claimant 10 is ineligible for an award with respect to either the Covered Action or any related action.

III. CONCLUSION.

Accordingly, it is hereby ORDERED that Claimant 1, 2, 3, 5, 8 and 10’s claims for awards are denied.

By the Commission.

[1] Eight other individuals also submitted award applications in connection with the Covered Action. However, these individuals did not contest the preliminary denial of their claims and, as such, the Preliminary Determination with respect to their award claims became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] [Redacted].

[3] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[4] See Exchange Act Sections 21F(b), (c), 15 U.S.C. § 78u-6(b), (c); Exchange Act Rule 21F-10, 17 C.F.R. § 240.21F-10.

[5] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3(a)(3) & 21F-4(c), 17 C.F.R. §§ 240.21F-3(a)(3) & 21F-4(c).

[6] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[7] See Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1); Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[8] See Exchange Act Rides 21F-9(a)-(b), 17 C.F.R. §§ 240.21F-9(a)-(b).

[9] Upon receiving executed confidentiality agreements from Claimants 2, 3, 5. and 10, OWB provided each of these claimants with a copy of the record that formed the basis of the Preliminary Determination as to their respective claims. See Exchange Act Rule 21F-10(e)(1)(i), 17 C.F.R. § 240.21F-10(e)(1)(i). Claimants 1 and 8 submitted then requests for reconsideration without having requested a copy of the record that formed the basis of the Preliminary Determination as to their claims.

[10] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[11] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[12] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2). In determining whether information significantly contributed to an enforcement action, we consider “whether the information allowed us to bring: (1) Our successful action in significantly less time or fewer resources; (2) additional successful claims: or (3) successful claims against additional individuals or entities.” Securities Whistleblower Incentives anti Protections, 16 Fed. Reg. 34300, 34325 (June 13, 2011). In other words, “[t]he individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.’” Order Determining Whistleblower Award Claims. Exch. Act Rel. No. 85412, 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 82897 , 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).

[13] For purposes of this analysis under Exchange Act Rule 21F-4(c)(1), we deem the investigation to have been opened the date that the MUI was opened–[Redacted]–regardless of the fact that the MUI was converted to an “investigation” the following month. In addition, because the investigation was opened on [Redacted], the claimants’ information could not have prompted its opening unless they had submitted their information on or prior to that date. But any information submitted in or before [Redacted] would not qualify as “original information” to support an award because it would have been submitted to the Commission for the first time before July 21, 2010. See Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1); Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv): see also Order Whistleblower Award Claim, Exch. Act Rel. No. 70772 , 2013 WL 5819623, at *5-9 (Oct. 30, 2013), pet. rev. denied sub nom. Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[14] See Exchange Act Section 21F(b), 15 U.S.C. § 78u-6(b); Exchange Act Rules 21F-3(b), (b)(1), 21F-4(g) & (f), 21F-11(a), 17 C.F.R. §§ 240.21F-3(b), (b)(1), 21F-4(g) & (f), 21F-11(a) (providing that related action awards may be made only if. among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 84506 , 2018 SEC LEXIS 3031, at *8 n.5 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claim, Exch. Act Rel. No. 84503 , 2018 SEC LEXIS 3030, at *7 n.4 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 80596 , 2017 SEC LEXIS 1318, at *11 n.10 (May 4, 2017) (same).

[15] See Exchange Act Rules 21F-3(b)(1), 21F-4(f) & (g), 17 C.F.R. §§ 240.21F-3(b)(1), 21F-4(f), (g).

[16] We assume without deciding that Claimant 1 did in fact make these submissions in [Redacted] and [Redacted], although the record reflects that the Commission’s files do not contain any such earlier submissions from Claimant 1.

[17] The OWB staff declaration explains that the submissions were reviewed by other Commission staff and determined either to be not relevant or otherwise not warranting further action or investigation.

[18] See Exchange Act Section 21F, 15 U.S.C. § 78u-6; Dodd-Frank Act Section 924, 15 U.S.C. § 78u-7; Exchange Act Rules 21F-1 to 21F-17, 17 C.F.R. §§ 240.21F-1 to 21F-17 (authorizing awards when whistleblower voluntarily provided the SEC with original information that led to a successful enforcement action resulting in an order of monetary sanctions exceeding $ 1 million, among other requirements); see also Order Determining Whistleblower Award Claim, Exch. Act Rel. No. 85273 , 2019 WL 1098914, at *2 n.11 (Mar. 8, 2019) (permitting a limited and discretionary exemption from an award eligibility requirement if claimant satisfies the requirements that exemption is “necessary or appropriate in the public interest, and is consistent with the protection of investors”).

[19] See, e.g., Perry v. Sindermann, 408 U.S. 593, 597 (1972) (recognizing that “a person has no ‘right’ to a valuable governmental benefit and . . . the government may deny him the benefit for any number of reasons” unless denial is on grounds that infringe constitutionally protected interests).

[20] See Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[21] See Exchange Act Section 21F, 15 U.S.C. § 78u-6; Dodd-Frank Act Section 924, 15 U.S.C. § 78u-7; Exchange Act Rules 21F-1 to 21F-17, 17 C.F.R. §§ 240.21F-1 to 21F-17.

[22] We also determine that the five new related action awards that Claimant 1 seeks in the request for reconsideration do not meet the requirements for filing award applications for related actions and are time-barred for late filing. See Exchange Act Rules 21F-11(b)(1), (2), 21F-10(b), 17 C.F.R. §§ 240.21F-11(b)(1), (2), 21F-10(b) (collectively establishing procedures and deadlines for submitting related action award claims).

[23] On [Redacted] OWB received from Claimant 1 an award application that did not identify any covered action. In response. OWB sent Claimant 1 a notice, dated [Redacted], which explained that because Claimant 1 “did not provide a Covered Action case name or notice number, [but r]ather … referenced a [Redacted] civil lawsuit that [Claimant 1] had brought against [the Company],” Claimant 1 “has not submitted a properly filed whistleblower award application and we cannot consider [Claimant l’s] claim for an award at this time.” Several months after the [Redacted] deadline, Claimant 1 submitted a Form WB-APP identifying the Notice of Covered Action, which was postmarked [Redacted]

[24] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[25] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[26] See Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

[27] See, e.g., Claim for Award, Release No. 34-77368 , 2016 WL 1019130, at *2 (Mar. 14, 2016), pet. denied sub nom. Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017), cent. denied, 138 S. Ct. 2005 (2018), reh ‘g denied, 138 S. Ct. 2715 (2018).

[28] See Order Determining Whistleblower Award Claim, Exch. Act Rel. No. 82181 , 2017 WL 5969236, at *4 (Nov. 30, 2017) (“[S]ubsequent events cannot be used to retroactively excuse an untimely submission.”).

[29] Furthemore, claimants cannot cure untimeliness merely by filing an amended application after a claim deadline expires because “[s]ubsequent events cannot be used to retroactively excuse an untimely submission.” Order Determining Whistleblower Award Claims at 9, Exch. Act Rel. No. 82181 (Nov. 30, 2017).

[30] See Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1); Exchange Act Rule 21F 4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[31] Order Denying Whistleblower Award Claims, Exch. Act Rel. No. 70772 , 2013 WL 5819623, at *5-9 (Oct. 30, 2013), pet. rev. denied sub nom. Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[32] See Exchange Act Section 21F(b), 15 U.S.C. § 78u-6(b); Exchange Act Rules 21F-3(b), (b)(1), 21F-4(g) and (f), 21F-11(a), 17 C.F.R. §§ 240.21F-3(h), (b)(1), 21F-4(g) and (0, 21F-11(a); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 84506 , 2018 SEC LEXIS 3031, at *8 n.5 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claim, Exch. Act Rel. No. 84503 , 2018 SEC LEXIS 3030, at *7 n.4 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 80596, 2017 SEC LEXIS 1318, at *8 n.5 (May 4, 2017) (same).

[33] To the extent that Claimants 2 and 3 have requested additional documents outside the administrative record in connection with their reconsideration request, that request is denied. See Exchange Act Rule 21F-12, 17 C.F.R. § 240.21F-12 (authorizing a claimant to receive only the materials listed in Rule 21F-12(a) that formed the basis for the determination with respect to his or her own award application). Pursuant to Rule 21F-10(e)(1)(i), OWB already provided Claimants 2 and 3 with a copy of the entire record that formed the basis of the Preliminary Determination as to their joint claim.

[34] See Order Determining Whistleblower Award Claim. 2018 WL 495695, Exch. Rel. No. 82562 . at *2 (Jan. 22, 2018) (to establish that their information led to a successful enforcement action claimants must “establish a nexus between the information Claimant submitted to the Commission and the misconduct charged in the underlying Covered Action”); see also Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 84046 , 2018 SEC LEXIS 303 L at *34 (Sept. 6, 2018) (similar); Order Determining Whistleblower Award Claim, Exch. Act Rel. No. 82181 . 2017 WL 5969236, at *11 (Nov. 30, 2017) (similar).

[35] Form WB-APP by Claimant 5 for Notice of Covered Action [Redacted] (emphasis added).

[36] Specifically, the Commission found as follows: [Redacted]

[37] See Summers v. DOJ. 999 F.2d 570, 572-73 (D.C. Cir. 1993) (discussing adequacy of unsworn declaration under 28 U.S.C. § 1746 to establish “any matter”); see also Jifry v. FAA, 370 F.3d 1174, 1181 (D.C. Cir. 2004) (affidavit of agency official constitutes substantial evidence). Claimant 5 also requests the production of additional documents outside the administrative record, but our whistleblower rules entitle a claimant to receive only those record materials that formed the basis of the Preliminary Determination with respect to the claimant’s award application See Exchange Act Rules 21F-10(e)(1)(i), 21F-12, 17 C.F.R. §§ 240.21F-10(e)(1)(i), 2 IF-12. hi other words, our whistleblower rules do not entitle claimants to seek discovery of the Commission’s law enforcement files concerning a covered action. See Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b). Because OWB has already provided Claimant 5 with all the record materials that formed the basis of the Preliminary Determination with respect to Claimant 5’s award application. Claimant 5’s request for the production of additional documents is denied.

[38] See Exchange Act Rule 21F-3(b)(1), 17 C.F.R. § 240.21F-3(b)(1) (defining a related action award as an action brought by [certain enumerated entities], and is based on the same original information that the whistleblower voluntarily provided to the Commission, and that led the Commission to obtain monetary sanctions totaling more than $ L000,000).

[39] See Exchange Act Rule 21F-3(a)(1)-(3), 17 C.F.R. § 240.21F-3(a)(1)-(3).

[40] See Exchange Act Rule 21F-4(b)(7), 17 C.F.R. § 240.21F-4(b)(7); Order Determining Whistleblower Award Claims., Exch. Act Rel. No. 80596 , 2017 SEC LEXIS 1318, at *10 n.9 (May 4, 2017).

[41] The OWB staff declaration explains that the submission was reviewed by other Commission staff and determined not to warrant further action or investigation.

[42] Even if the Preliminary Determination had not identified Claimant 8. that omission would not affect our own conclusion, based on the record evidence summarized above, that Claimant 8’s information did not lead to the success of the Covered Action.

[43] Specifically, Claimant 8 asserts that Claimant 8’s information significantly contributed to the success of the enforcement matter referred to in Notice of Covered Action [Redacted]

[44] See Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[45] See Order Determining Whistleblower Award Claim, Exch. Rel. No. 79604 , 2016 WL 7367248 (Dec. 19, 2016).

[46] Rather, Claimant 8 merely provided the names of individuals and entities to whom Claimant 8 allegedly sent a tip by letter–the Director of the Office of Professional Responsibility at the Internal Revenue Service, the Federal Bureau of Investigation, a state’s Attorney General, a state governor, and a U.S. senator–but Claimant 8 entered “N/A” on Claimant 8’s Form WB-APP for the Covered Action for the sections for identifying a related action’s date filed, case name, and case number.

[47] See Exchange Act Section 21F(b), 15 U.S.C. § 78u-6(b); Exchange Act Rules 21F-3(b), (b)(1), 21F-4(g) and (f), 21F-11(a), 17 C.F.R. §§ 240.21F-3(b), (b)(1), 21F-4(g) and (f), 21F-11(a); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 84506, 2018 SEC LEXES 3031, at *8 n.5 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claim, Exch. Act Rd. No. 84503, 2018 SEC LEXIS 3030, at *7 n.4 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 80596, 2017 SEC LEXIS 1318, at *8 n.5 (May 4, 2017) (same). Furthermore, all but one of the individuals and entities whom Claimant 8 allegedly tipped could not bring “related actions” in the first instance since they are not the specific entities that can bring related actions as designated by the Exchange Act. See also Exchange Act Rules 21F-3(b)(1), 21F-4(f), (g), 17 C.F.R. §§ 240.21F-3(b)(1), 21F-4(f),(g).

[48] See Exchange Act Rules 21F-8(a) and 21F-9(a)-(b), 17 C.F.R. §§ 240.21F-8(a), 21F-9(a)-(b).

[49] See Exchange Act Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6), and Exchange Act Rule 21F-2(a)(1), 17 C.F.R. § 240.21F-2(a)(1).

[50] Exchange Act Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6).

[51] Exchange Act Section 21F(c)(2)(D), 15 U.S.C. § 78u-6(c)(2)(D).

[52] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300. 34.313 (June 13, 2011).

[53] The OWE staff declaration explains that the submissions were reviewed by other Commission staff and determined not to warrant further action or investigation.

[54] Claimant 10 claims to have submitted the report without providing contemporaneous evidence to establish that this alleged report was ever sent to or received by the Commission. Our determination to deny Claimant 10’s award claim assumes, without deciding, that Claimant 10 sent the Commission the report on or around [Redacted].

[55] See Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1); Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv); see also Order Denying Whistleblower Award Claim, Exch. Act Rel. No. 70772 , 2013 WL 5819623, at *5-9 (Oct. 30, 2013), pet. rev denied sub nom. Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

SEC

87663

12/05/2019

[Redacted] (“Claimant 1”);

[Redacted] (“Claimant 2”);

[Redacted] (“Claimant 3”);

[Redacted] (“Claimant 5”); and

[Redacted] (“Claimant 8”).[fn1]

I. INTRODUCTION.

A. The Covered Action.

On [Redacted], staff in the Commission’s Division of Enforcement (“Enforcement”) opened a matter under inquiry (“MUI”) based on a tip to the Commission two days earlier. The MUI was converted to an investigation in [Redacted] and then a Formal Order of Investigation was issued in [Redacted], entitled [Redacted]. Initially, the investigation included one investigative track, referred to in the administrative record as the [Redacted] (the “First Track”).

In [Redacted], the Enforcement staff initiated a second investigative track as part of the same investigation, referred to in the administrative record as the [Redacted] (the “Second Track”), which later culminated in the Covered Action. The staff initiated the Second Track based upon the staff’s own review [Redacted] at [Redacted] (the “Parent Company”). This review consisted of a quantitative analysis that was independently devised and conducted by Commission staff as part of a broader initiative [Redacted]. The Second Track was conducted by a separate Enforcement team that investigated different facts and securities violations from the First Track and resulted in a separate enforcement action with different named defendants, underlying facts, and charged violations. Neither investigative track focused on any matters relating to the Parent Company’s, [Redacted] (the “Company”), and their affiliates’ conduct [Redacted].

The Second Track focused on potential securities fraud violations committed by the Company and certain affiliated entities, in offering and selling to investors [Redacted] (“Securities”). The Second Track ultimately resulted in the Covered Action, which was a civil action filed on [Redacted], based upon charges that the defendants violated [Redacted] by making misstatements and omissions in the Securities offering documents [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] on the Commission’s public website to notify interested individuals to file award applications with respect to the Covered Action within 90 days, by [Redacted].[fn2] OWB received whistleblower award applications from all of the Claimants.

B. The Preliminary Determination.

The CRS issued a Preliminary Determination[fn3] recommending that the Commission deny each of the Claimants’ award applications because none of the information provided by any of the Claimants led to the successful enforcement of the Covered Action.[fn4] The record supporting that Preliminary Determination included the declaration of one of the primary Enforcement staff attorneys responsible for the Second Track and Covered Action, which stated under penalty of perjury that the Claimants’ tips to the Commission were not used in the investigation, including the Second Track, or enforcement of the Covered Action.

The CRS also preliminarily denied Claimant 1’s claim on the additional independent grounds that Claimant 1’s award application was untimely[fn5] and that any information Claimant 1 provided to the Commission for the first time before July 21, 2010 was not “original information.”[fn6] The CRS also preliminarily denied Claimant 8’s claim on the additional independent grounds that Claimant 8’s award application was untimely[fn7] and that Claimant 8 failed to qualify as a whistleblower by not submitting Claimant 8’s tips to the Commission on Form TCR.[fn8]

The Claimants subsequently filed timely written responses contesting the Preliminary Determination.[fn9]

II. ANALYSIS.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn10] As relevant here, information leads to the success of a covered action if it: (1) causes the Commission staff to (i) open or reopen an investigation, or (ii) inquire into different conduct as part of a current Commission investigation;[fn11] or (2) significantly contributes to the success of a Commission judicial or administrative enforcement action.[fn12]

Having considered the administrative record with respect to each contesting claimant, including their responses to the Preliminary Determination, we conclude that Claimants 1, 2, 3, 5, and 8 are not eligible for a whistleblower award because none of their respective information led to the successful enforcement of the Covered Action. In particular, we credit the staff declarations in the administrative record, which demonstrate that the information submitted by the Claimants did not cause the Commission staff to open the investigation that resulted in the Covered Action, did not cause the staff to initiate a new line of inquiry or reopen an investigation that resulted in the Covered Action, and did not significantly contribute to the success of the Covered Action.

First, no claimant can be credited for causing the Enforcement staff to open the investigation. The staff declarations demonstrate that the investigation was opened on [Redacted], based upon a non-whistleblower complaint, wholly separate from and independent of Claimants’ tips.[fn13]

Second, none of the information submitted by Claimants caused the staff to initiate a new line of inquiry or significantly contributed to the successful enforcement of the Covered Action. The staff declaration for one of the primary Enforcement staff for the Second Track demonstrates that the Second Track was initiated in [Redacted] based solely upon the quantitative analysis by the staff, and that the Enforcement staff for the Second Track did not use any of the Claimants’ information during the course of the Second Track or as part of the Covered Action.

Moreover, we conclude that the related action award claims submitted by Claimants 1, 2, 3, and 8 should be denied because these claimants have not qualified for an award for the Covered Action, which is a necessary precondition for a related action award.[fn14] Also, the civil and administrative cases that Claimants 1, 2, 3, and 8 submitted for related action award claims should be denied because the various matters identified by these claimants were not brought by designated non-Commission agencies and thus do not qualify as “related actions.”[fn15]

A. Claimant 1.

1. Claimant 1’s information did not lead to the successful enforcement of the Covered Action.

Claimant 1 submitted numerous tips and additional information, which the Commission received in [Redacted] and on various dates in ***. In those submissions Claimant 1 provided information concerning, among other things, a *** criminal prosecution of the Parent Company’s employees and other individuals, as well as a *** civil suit brought by Claimant 1 against the Parent Company [Redacted]. The underlying factual events discussed in Claimant 1’s submissions allegedly occurred between 1982 and 1990. Claimant 1 also claims to have previously provided this same information to the Commission on two earlier occasions, specifically on or around [Redacted] and [Redacted].[fn16]

The staff declarations in the administrative record, which we credit, demonstrate that none of Claimant 1’s information led to the successful enforcement of the Covered Action. The declaration of one of the primary Enforcement staff attorneys responsible for the Second Track and the Covered Action attests that the Enforcement investigative team did not receive any information from Claimant 1, that they did not have any communications with Claimant 1, and that Claimant I did not assist or contribute in any way to the Second Track or the Covered Action. Moreover, the declaration of the OWB staff attorney corroborates, based on a review of the Commission’s files, that none of them information submitted by Claimant 1 in **** and **** was shared with the Enforcement investigative team responsible for the Second Track.[fn17]

Both the nature and the timing of Claimant l’s tips corroborate these staff declarations. The nature of the information that Claimant 1 provided, and claims to have provided, to the Commission about the criminal conduct of the Parent Company’s employees and about the Parent Company’s [Redacted], on their face, do not relate to the claims that were asserted by the Commission in the Covered Action. Specifically, the Covered Action’s claims are based upon events primarily occurring around **** and **** —decades after the facts alleged in Claimant 1’s information—and concerned the Company and certain affiliated entities misstating or omitting certain material facts in the Securities offering documents. With respect to timing, as reflected in the record, the **** and **** tips were submitted after the Second Track was initiated and, apart from the [Redacted] tip, after the Covered Action had concluded, and so could not have been used during the Second Track or enforcement action. Likewise, Claimant 1’s purported [Redacted] tip was sent to the Commission after the investigation was opened in [Redacted] and the Second Track was initiated in [Redacted].

Moreover, Claimant 1’s written response offers no factual evidence or legal arguments that rebut the Preliminary Determination that Claimant 1’s information did not lead to the successful enforcement of the Covered Action. Rather, Claimant 1 offers three objections to the Preliminary Determination in this regard, none of which has merit.

First, according to Claimant 1, Claimant 1’s information circuitously led to the success of the Covered Action on the theory that the information that Claimant 1 submitted on [Redacted] to the Commission, and earlier tips submitted to other federal agencies, led to the successful enforcement of an alleged and unnamed enforcement action of [Redacted],[fn18] and that action led to the Covered Action. But any such tip to the Commission in [Redacted] could not have caused and did not cause the staff to open the Second Track, since the tips were sent to the Commission after the Second Track began in [Redacted]. Additionally, for all of the reasons just discussed, we credit the staff declaration attesting that the Enforcement staff who worked on the Second Track did not receive or use any information from Claimant 1 in connection with the Second Track and following enforcement action, nor did they communicate with Claimant I. Thus, the tips could not have contributed in any manner to the Second Track nor the Covered Action. Furthermore, the nature of the information that Claimant 1 claims to have provided to the Commission about the criminal conduct of the Parent Company’s employees and about the Parent Company’s [Redacted], on their face, do not relate to the claims that were asserted by the Commission in the Covered Action. Specifically, the Commission’s claims in the Covered Action concerned the Company and certain affiliated entities misstating or omitting certain material facts in the Securities offering documents.

Second, Claimant 1 argues, without invoking specific facts or legal authority, that the CRS’s preliminary denial of the award claim violated Claimant 1’s rights under the Constitution and Bill of Rights, Claimant 1’s civil rights, and Claimant 1’s human rights. Claimant 1 also claims that the CRS violated two criminal statutes involving false statements and embezzlement, and violated the civil and uniformed services oath of office. But the Exchange Act and our whistleblower rules do not authorize granting Claimant 1’s award claim based upon any of those grounds.[fn19] Furthermore, and specific to Claimant 1’s constitutional argument, there is no constitutional right to receive a Commission whistleblower award, and the grounds for denying Claimant 1’s claims are based upon Claimant 1’s failure to qualify for an award based on criteria that do not implicate Claimant 1’s constitutionally protected interests.[fn20] Claimant 1 has not demonstrated eligibility for an award based on the neutral, objective criteria in the Exchange Act and our whistleblower rules.

Third, Claimant 1 argues that Claimant 1 deserves an award because Claimant 1 is a victim [Redacted] by the Parent Company and the Parent Company retaliated against Claimant 1, because Claimant 1 has been a longtime whistleblower to federal agencies about the Parent Company, and because Claimant 1’s **** tip to the Department of Justice (“DOT’) led to the criminal prosecution of the Parent Company’s employees and others. But even accepting these assertions as true for the sake of argument, they have no bearing on whether Claimant 1 qualifies for a whistleblower award for the Covered Action, since these arguments do not show Claimant 1 was a whistleblower who voluntarily provided the Commission with original information that led to a successful enforcement of the Covered Action[fn21]; nor do these arguments show that Claimant 1 meets any of the other requirements necessary to qualify for whistleblower awards.[fn22]

2. Claimant 1’s whistleblower award application was untimely.

Claimant 1 first submitted an award application identifying the Covered Action
([Redacted]) by U.S. Mail postmarked [Redacted].[fn24] This date was after the 90-day deadline of [Redacted], which was listed on the Notice of Covered Action posted on the Commission’s public website.[fn25] Claimant 1’s award application was thus untimely.[fn26] In responding to the Preliminary Determination, Claimant 1 argues that we should excuse this untimeliness because of extraordinary circumstances consisting of an amended award application submitted by Claimant 1 in [Redacted]. But we have consistently interpreted the “extraordinary circumstances” standard under our whistleblower rules[fn27] in narrow fashion as requiring a claimant to show that the reason for the failure to file was beyond the control of the claimant—such as attorney misconduct or serious illness.[fn28] Claimant 1’s amended application in [Redacted] post-dates the untimely application in [Redacted] and thus cannot show that Claimant 1’s failure to file an application by [Redacted] was beyond Claimant 1’s control.[fn29] We therefore conclude that Claimant 1’s award application should be denied for the independent reason that it was untimely.[fn30]

3. Any information submitted by Claimant 1 for the first time before July 21, 2010 is not original information.

Any information that Claimant 1 provided to the Commission for the first time before July 21, 2010, even if resubmitted after that date, is not “original information” that would support a whistleblower award.[fn31] In responding to the Preliminary Determination, Claimant 1 argues that information submitted before July 21, 2010 qualifies as “original information” as defined by statute (as opposed to Commission rule). But, as we previously have concluded, “the whistleblower statutory provisions [concerning “original information” under the Dodd-Frank Act] do not authorize awards for information originally provided prior to Dodd-Frank [Act]’s enactment” and the meaning of “original information” is not intended to “pay [awards] for information that was already in the Commission’s possession on July 21, 2010.”[fn32] We therefore conclude that any information submitted by Claimant 1 for the first time before July 21, 2010 will not support a whistleblower award for the independent reason that it is not “original information.”

B. Claimants 2 and 3.

The administrative record demonstrates that none of Claimant 2 and 3’s information led to the successful enforcement of the Covered Action. First, Claimants 2 and 3 submitted their joint complaint to the Commission in [Redacted], after the investigation was opened in [Redacted] and after the Second Track was initiated in [Redacted], and so their tip did not cause the Enforcement staff to open the investigation or to initiate the Second Track. Second, the declaration of one of the primary Enforcement staff attorneys responsible for the Second Track and the Covered Action attests that the Enforcement staff for the Second Track did not receive any information from Claimants 2 and 3, that they had no communications with Claimants 2 and 3, and that Claimants 2 and 3 did not contribute in any way to the Second Track and Covered Action.

C. Claimant 5.

Claimant 5 submitted a tip to the Commission on [Redacted], and later met with Enforcement investigative staff In this tip and the subsequent meetings, Claimant 5 provided information that, by Claimant 5’s own description, concerned tactics by the Parent Company [Redacted]. As asserted by Claimant 5, this behavior created the conditions [Redacted] that led to the Parent Company’s misstatements and omissions in the Securities offering documents.

The staff declarations in the administrative record, which we credit, demonstrate that none of Claimant 5’s information led to the successful enforcement of the Covered Action. As described in those declarations, Claimant 5’s tip was submitted well after the investigation was opened in [Redacted] and after the Second Track was initiated in [Redacted] Since the Second Track’s inception, and before the tip was received, the Enforcement staff on the Second Track had focused on the misconduct that was the basis for the Covered Action–specifically, misstatements and omissions by the Company and certain affiliated entities in the Securities offering documents [Redacted]

After receiving Claimant 5’s tip, the Enforcement staff on the Second Track met with Claimant 5 and counsel in [Redacted] before concluding that Claimant 5’s information was outside the focus of and not relevant to, the Second Track. Although the staff for the Second Track further considered opening a new investigative path or separate investigation based upon Claimant 5’s information, they ultimately determined it was not appropriate to do so. The declaration of one of the primary staff attorneys on the Second Track attests that Claimant 5’s information did not contribute in any way to either the Second Track or the Covered Action.

First, Claimant 5 contends that the information Claimant 5 provided to the Commission bears some resemblance to certain Commission allegations in the Covered Action insofar as Claimant 5 alleged information about systematic and pervasive practices of the Parent Company that were unstated background facts for the Commission’s Covered Action. But, as just discussed, the staff declarations demonstrate, and we find, that Claimant 5’s **** tip was submitted after the staff already had opened the Second Track and had focused on the misconduct that was the basis for the Covered Action. Claimant 5 also has not demonstrated a factual nexus between the information that Claimant 5 provided to the Commission and the conduct underlying the Covered Action’s claims.[fn35] In particular, Claimant 5 admits that the information Claimant 5 provided to the Commission “did not single out” the Securities. Instead, Claimant 5’s information, summarized above, merely described alleged tactics by the Parent Company that created pressures that, according to Claimant 5, indirectly led to the Covered Action’s violative conduct. Thus, by Claimant 5’s own admission, Claimant 5 did not provide the Commission with information about any conduct by the Company and the affiliates relating to the Securities offering, which is the relevant conduct that the Complaint charged.[fn36] It follows that Claimant 5 has not shown the requisite factual nexus between Claimant 5’s information and the Covered Action.

Moreover, even if Claimant 5 could show some factual resemblance between Claimant 5’s information and the Commission’s allegations in the Covered Action, that nexus by itself would not undermine the staff declaration, described above, attesting that the staff assigned to the Second Track never actually used Claimant 5’s information in either the Second Track or the Covered Action. Claimant 5 separately attacks the legal sufficiency of the staff declarations as “patently self-serving” and as executed “well after” Claimant 5’s award application. But the staff declarations in the administrative record were signed under penalty of perjury and therefore are adequate to support our finding that Claimant 5’s information did not contribute to either the Second Track or the Covered Action.[fn37]

Second, Claimant 5 argues that Claimant 5 provided information about “both [Redacted] industry in general and [the Parent Company’s practices] in particular” at several in-person meetings with the Commission staff, and that the staff attending these meetings “were keenly interested in what [Claimant 5] had to say, and they asked salient follow-up questions afterwards.” But even taking Claimant 5’s account at face value, that account is wholly consistent the staff declarations in the administrative record. As described earlier, those declarations attest that the staff on the Second Track met twice with Claimant 5 before determining that Claimant 5’s information was outside the focus of the Second Track and did not warrant opening a new investigative path or separate investigation. In short, Claimant 5’s account does nothing to undermine our finding, based on the staff declarations in the record, that Claimant 5’s information was never actually used to advance the Second Track or Covered Action.

Third, Claimant 5 argues that the staff on the Second Track purportedly informed Claimant 5’s counsel that DOS personnel were “taking the lead” and that Claimant 5’s counsel was in contact with those DOJ personnel up through the day that the DOJ announced [Redacted]. But Claimant 5 has not applied for any related action awards for the Covered Action, nor has Claimant 5 argued that any DOJ actions were related to the Covered Action for award purposes.[fn38] Assisting a different enforcement action conducted by another agency does not demonstrate Claimant 5’s assistance with the Covered Action. Nor does Claimant 5 identify any specific information that Claimant 5 provided to the DOJ that the DOJ, in turn, provided to the Commission for use in connection with the Covered Action. More importantly, claimants are eligible for a whistleblower award only if they voluntarily provide original information to the Commission that leads to a successful enforcement action.[fn39] If a claimant provides information only to another agency, even if that agency then passes it on to the Commission and the Commission uses it, the claimant would not be eligible for an award unless the claimant (or a claimant’s representative) also provides that information directly to the Commission himself or herself.[fn40] Because we find that the Enforcement staff for the Second Track did not use the information that Claimant 5 provided directly to the Commission, any additional information that Claimant 5 may have provided to the DOJ does not support an award for the Covered Action.

We therefore conclude that Claimant 5’s information did not lead to the successful enforcement of the Covered Action, and that as a result, Claimant 5 is ineligible for an award.

D. Claimant 8.

1. Claimant 8’s information did not lead to the successful enforcement of the Covered Action.

Claimant 8 submitted a single tip to the Commission dated [Redacted], more than three years after the investigation was opened in [Redacted] and more than two years after the Second Track was initiated in [Redacted]. The staff declarations in the administrative record, which we credit, demonstrate that none of Claimant 8’s information led to the successful enforcement of the Covered Action. The declaration of one of the primary Enforcement staff attorneys responsible for the Second Track and the Covered Action attests that the Enforcement investigative team did not receive any information from Claimant 8, that they did not have any communications with Claimant 8, and that Claimant 8 did not assist or contribute in any way to the Second Track or the Covered Action. Moreover, the declaration of the OWB staff attorney corroborates, based on a review of the Commission’s files, that Claimant 8’s [Redacted] tip was not even shared with the Enforcement investigative team.[fn41]

Claimant 8 raises two arguments in challenge to the Preliminary Determination that Claimant 8’s information did not lead to the successful enforcement of the Covered Action. Neither argument has merit.

First, Claimant 8 claims the Preliminary Determination does not refer to, and therefore does not apply to, Claimant 8. But the Preliminary Determination identifies Claimant 8 as a member of the group referred to as “Claimants” and states, “None of the Claimants provided information that led to the successful enforcement by the Commission of’ the Covered Action. Accordingly, the Preliminary Determination sufficiently reflects the determination that Claimant 8’s information did not lead to the Covered Action’s success.[fn42]

2. Claimant 8 failed to submit information in the form and manner required to qualify as a whistleblower.

The administrative record, which includes a declaration from an OWB staff attorney, reflects that Claimant 8 submitted Claimant 8’s [Redacted] tip to the Commission by mail without a Form TCR. Because Claimant 8 did not submit this information either on a Form TCR or through the Commission’s online TCR portal, and thus did not include the required declaration. Claimant 8 failed to submit information in the form and manner required by our whistleblower rules[fn46] and cannot qualify as a whistleblower.[fn47] In responding to the Preliminary Determination that Claimant 8 was not a whistleblower, Claimant 8 argues that Claimant 8 complied with the statutory requirements of the Dodd-Frank Act and was not subject to any further requirements in the Commission’s whistleblower rules at the time Claimant 8 submitted tips. But Section 21F of the Exchange Act, which was added by the Dodd-Frank Act, expressly conditions whistleblower status on providing information to the Commission in a manner established, by rule or regulation, by the Commission,”[fn48] and further directs that “[n]o award. . . shall be made. . . to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule, require.”[fn49] Moreover, our rules specifying the form and manner of submission took effect on August 12, 2011, almost [Redacted] before Claimant 8’s initial tip in [Redacted].[fn50]

3. Claimant 8 failed to submit a timely application for a whistleblower award and used a false document in responding to this issue in the Preliminary Determination.

The administrative record reflects that Claimant 8 first submitted an award application identifying Notice of Covered Action [Redacted] on a Form WB-APP that was signed [Redacted], and faxed to the Commission on [Redacted]. This submission was several months after the 90-day deadline of [Redacted], which was posted on the Commission’s public website for Notice of Covered Action [Redacted].[fn51] Although Claimant 8 previously submitted a separate award application by fax to the Commission on [Redacted], that submission failed to identify Notice of Covered Action [Redacted] (and instead identified a different covered action) as the basis for an award. Because Claimant 8 failed to identify Notice of Covered Action [Redacted] in the [Redacted] application and did so for the first time only in the application—several months after the [Redacted] deadline Claimant 8’s award application was untimely.[fn52]

In responding to the Preliminary Determination, Claimant 8 does not attempt to explain why Claimant 8’s award application for Notice of Covered Action [Redacted] was untimely.[fn53] Rather, Claimant 8 asserts, “I submitted my WB-APP within ninety (90) days of the notice date for Notice of Covered Action [Redacted],” and encloses what Claimant 8 describes as “copies of original WB-APP for Notice of Covered Action ****.” The document enclosed by Claimant 8 comprises a fax cover sheet dated [Redacted], together with what appears to be a two-page award application for the Covered Action ([Redacted]) signed and dated by Claimant 8 also on (the “Copy”).

The Copy offered by Claimant 8 lacks credibility, both on its face and by visual comparison side-by-side with the fax actually received by OWB on [Redacted]. The fax cover sheet on Claimant 8’s Copy, both in the handwritten notes and in the “Transmission Verification Report,” states that five pages were sent, and yet Claimant 8’s Copy comprises only three pages total. What is more, the first page of Claimant 8’s Copy reflects the same fax cover sheet that OWB received, and the third page reflects the same signature page that OWB received on [Redacted], but the second page of Claimant 8’s Copy is entirely different from what OWB received. Specifically, this second page in Claimant 8’s Copy purports to be a page from Form WB-APP identifying Notice of Covered Action [Redacted] as the basis for an award, whereas the Form WB APP actually received by OWB instead identifies a different covered action and contains two additional handwritten pages (for five pages total rather than three). Moreover, each page in the fax actually received by OWB bears a transmission header reflecting the date and time of transmission (“[Redacted] 17:40”) and a unique page number of “01/05” through “05/05″—thus confirming that the five-page document in OWB’ s files is what was actually submitted on that date.

Accordingly, we credit the fax actually received by OWB on [Redacted] and we reject the Copy submitted by Claimant 8 as containing a false and fictitious second page. We find that Claimant 8 submitted the Copy to OWB knowing that the second page was false, and not by mistake or accident, in light of all the evidence detailed above, including Claimant 8’s awareness of Claimant 8’s own prior correspondence with OWB.[fn54] We further find that Claimant 8 submitted this document with intent to mislead the Commission, since the Preliminary Determination had given Claimant 8 notice that the date of the award application was at issue and Claimant 8’s insertion of an entirely new second page in the Copy appears to have been designed to mislead as to the true date of the award application for the Covered Action ([Redacted]).[fn55] We therefore conclude that Claimant 8’s award application should be denied for the independent reasons that the application was untimely[fn56] and that Claimant 8 knowingly used a false document in Claimant 8’s written response to the Preliminary Determination with intent to mislead the Commission.[fn57]

III. CONCLUSION.

Accordingly, it is hereby ORDERED that Claimant 1, 2, 3, 5, and 8’s claims for awards are denied.

By the Commission.

[1] Three other individuals also submitted award applications in connection with the Notice of Covered Action. However, these individuals did not contest the preliminary denial of their claims and, as such, the Preliminary Determination with respect to their award claims became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[3] See Exchange Act Sections 21F(b), (c), 15 U.S.C. § 78u-6(b), (c); Exchange Act Rule 21F-10, 17 C.F.R. § 240.21F-10.

[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); Exchange Act Rules 21F-3(a)(3) & 21F-4(c), 17 C.F.R. §§ 240.21F-3(a)(3) & 21F-4(c).

[5] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[6] See Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1); Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[7] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[8] See Exchange Act Rules 21F-9(a)-(b), 17 C.F.R. §§ 240.21F-9(a)-(b).

[9] Upon receiving executed confidentiality agreements from Claimants 2, 3, and 5, OWB provided each of these claimants with a copy of the record that formed the basis of the Preliminary Determination as to their respective claims. See Exchange Act Rule 21F-10(e)(1)(i), 17 C.F.R. § 240.21F-10(e)(1)(i). Claimants 1 and 8 submitted their requests for reconsideration without having requested a copy of the record that formed the basis of the Preliminary Determination as to their claims.

[10] See Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[11] See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1).

[12] See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2). In determining whether information significantly contributed to an enforcement action, we consider “whether the information allowed us to bring: (1) Our successful action in significantly less time or fewer resources: (2) additional successful claims; or (3) successful claims against additional individuals or entities.” Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34325 (June 13, 2011). In other words, “[t]he individual’s information must have been ‘meaningful’ in that it ‘made a substantial and important contribution’ to the success of the covered action.’” Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 85412 , 2018 SEC LEXIS 615, at *16 (Mar. 26, 2019); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 82897, 2018 SEC LEXIS 750, at *16 (Mar. 19, 2018).

[13] For purposes of this analysis under Exchange Act Rule 21F-4(c)(1), we deem the investigation to have been opened the date that the MUI was opened–[Redacted]–regardless of the fact that the MUI was converted to an “investigation” the following month. In addition, because the investigation was opened on [Redacted] the Claimants’ information could not have prompted its opening unless they had submitted their information on or prior to that date. But any information submitted in or before [Redacted] would not qualify as “original information” to support an award because it would have been submitted to the Commission for the first time before July 21, 2010. See Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1); Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv); see also Order Denying Whistleblower Award Claim, Exch. Act Rel. No. 70772 , 2013 WL 5819623, at *5-9 (Oct. 30, 2013), pet. rev. denied sub nom. Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[14] See Exchange Act Section 21F(b), 15 U.S.C. § 78u-6(b); Exchange Act Rules 21F-3(b), (b)(1), 21F-4(g) & (f), 21F-11(a), 17 C.F.R. §§ 240.21F-3(b), (b)(1), 21F-4(g) & (f), 21F-11(a) (providing that related action awards may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance); Order Determining Whistleblower Award Claims, Exch. Act Rel. No. 84506 , 2018 SEC LEXIS 3031, at *8 n.5 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claim, Exch. Act Rd. No. 84503, 2018 SEC LEXIS 3030, at *7 n.4 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 80596, 2017 SEC LEXIS 1318, at *11 n.10 (May 4, 2017) (same).

[15] See Exchange Act Rules 21F-3(b)(1), 21F-4(f) & (g), 17 C.F.R. §§ 240.21F-3(b)(1), 21F-4(f), (g).

[16] We assume without deciding that Claimant I did in fact make these submissions in **** and ****, although the record reflects that the Commission’s files do not contain any such earlier submissions from Claimant 1.

[18] [Redacted].

[19] See Exchange Act Section 21F, 15 U.S.C. § 78u-6: Dodd-Frank Act Section 924, 15 U.S.C. § 78u-7; Exchange Act Rules 21F-1 to 21F-17. 17 C.F.R. §§ 240.21F-1 to 21F-17 (authorizing awards when whistleblower voluntarily provided the SEC with original information that led to a successful enforcement action resulting in an order of monetary sanctions exceeding $1 among other requirements); see also Order Determining Whistleblower Award Claim, Exch. Act Rd. No. 85273, 2019 WL 1098914, at *2 n.11 (Mar. 8, 2019) (permitting a limited and discretionary exemption from an award eligibility requirement if claimant satisfies the requirements that exemption is “necessary or appropriate in the public interest, and is consistent with the protection of investors”).

[20] See, e.g., Perry v. Sindermann, 408 U.S. 593, 597 (1972) (recognizing that “a person has no ‘right’ to a valuable governmental benefit and . . . the government may deny him the benefit for any number of reasons” unless denial is on grounds that infringe constitutionally protected interests).

[21] See Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[22] See Exchange Act Section 21F, 15 U.S.C. § 78u-6: Dodd-Frank Act Section 924, 15 U.S.C. § 78u-7: Exchange Act Rules 21F-1 to 21F-17, 17 C.F.R. §§ 240.21F-1 to 21F-17.

[23] We also determine that the five new related action awards that Claimant 1 seeks in the request for reconsideration do not meet the requirements for filing award applications for related actions and are time-barred for late filing. See Exchange Act Rules 21F-11(b)(1), (2), 21F-10(b), 17 C.F.R. §§ 240.21F-11(b)(1), (2), 21F-10(h) (collectively establishing procedures and deadlines for submitting related action award claims).

[24] On [Redacted] , OWB received from Claimant 1 an award application that did not identify any covered action. In response, OWB sent Claimant 1 a notice, dated [Redacted], which explained that because Claimant 1 “did not provide a Covered Action case name or notice number, [but r]ather … referenced a civil lawsuit that [Claimant 1] had brought against [the Parent Company].” Claimant 1 has not submitted a properly filed whistleblower award application and we cannot consider [Claimant 1’s] claim for an award at this time.” Several months after the [Redacted] deadline. Claimant 1 submitted a Form WB-APP identifying the Notice of Covered Action, which was postmarked [Redacted].

[25] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[26] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[27] See Exchange Act Rule 21F-8(a), 17 C.F.R. § 240.21F-8(a).

[28] See, e.g., Claim for Award, Release No. 34-77368 , 2016 WL 1019130, at *2 (Mar. 14, 2016), pet. denied sub nom. Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018), reh ‘g denied, 138 S. Ct. 2715 (2018).

[29] See Order Determining Whistleblower Award Claim, Exch. Act Rel. No. 82181 , 2017 WL 5969236, at *4 (Nov. 30, 2017) (“[S]ubsequent events cannot be used to retroactively excuse an untimely submission.”).

[30] Furthermore, claimants cannot cure untimeliness merely by filing an amended application after a claim deadline expires because “[s]ubsequent events cannot be used to retroactively excuse an untimely submission.” Order Determining Whistleblower Award Claims at 9, Exch. Act Rel. No. 82181 (Nov. 30, 2017).

[31] See Exchange Act Section 21F(a)(1), 15 U.S.C. § 78u-6(a)(1): Exchange Act Rule 21F 4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv).

[32] Order Denying Whistleblower Award Claims, Exch. Act Rd. No. 70772, 2013 WL 5819623, at *5-9 (Oct. 30, 2013), pet. rev. denied sub nom. Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[33] See Exchange Act Section 21F(b), 15 U.S.C. § 78u-6(b): Exchange Act Rules 21F-3(b), (b)(1), 21F-4(g) and (f), 21F-11(a), 17 C.F.R. §§ 240.21F-3(b), (b)(1), 21F-4(g) and (f), 21F-11(a); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 84506, 2018 SEC LEXES 3031, at *8 n.5 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claim, Exch. Act Rd. No. 84503, 2018 SEC LEXIS 3030_ at *7 n.4 (Oct. 30, 2018) (same); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 80596, 2017 SEC LEXES 1318. at *8 n.5 (May 4, 2017) (same).

[34] To the extent that Claimants 2 and 3 have requested additional documents outside the administrative record in connection with their reconsideration request, that request is denied. See Exchange Act Rule 21F-12, 17 C.F.R. § 240.21F-12 (authorizing a claimant to receive only the materials listed in Rule 21F-12(a) that formed the basis for the determination with respect to his or her own award application). Pursuant to Rule 21F-10(e)(1)(i), OWB already provided Claimants 2 and 3 with a copy of the entire record that formed the basis of the Preliminary Determination as to their joint claim.

[35] See Order Determining Whistleblower Award Claim, 2018 WL 495695, Exch. Rel. No. 82562 , at *2 (Jan. 22, 2018) (to establish that their information led to a successful enforcement action claimants must “establish a nexus between the information Claimant submitted to the Commission and the misconduct charged in the underlying Covered Action”); see also Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 84046, 2018 SEC LEXIS 3031, at *34 (Sept. 6, 2018) (similar); Order Determining Whistleblower Award Claim, Exch. Act Rd. No. 82181, 2017 WL 5969236, at *11 (Nov. 30, 2017) (similar).

[36] The Complaint for the Covered Action alleged that the Company and certain affiliates misstated or omitted certain material facts in the Securities offering documents. [Redacted]

[37] See Summers v. DOJ, 999 F.2d 570, 572-73 (D.C. Cir. 1993) (discussing adequacy of unsworn declaration under 28 U.S.C. § 1746 to establish “any matter”); see also Jifiy v. FAA, 370 F.3d 1174, 1181 (D.C. Cir. 2004) (affidavit of agency official constitutes substantial evidence). Claimant 5 also requests the production of additional documents outside the administrative record, but our whistleblower rules entitle a claimant to receive only those record materials that formed the basis of the Preliminary Determination with respect to the claimant’s award application. See Exchange Act Rules 21F-10(e)(1)(i), 21F-12, 17 C.F.R. §§ 240.21F-10(e)(1)(i), 21F-12. In other words, our whistleblower rules do not entitle claimants to seek discovery of the Commission’s law enforcement files concerning a covered action. See Exchange Act Rule 21F-12(b), 17 C.F.R. § 240.21F-12(b). Because OWB has already provided Claimant 5 with all the record materials that formed the basis of the Preliminary Determination with respect to Claimant 5’s award application, Claimant 5’s request for the production of additional documents is denied.

[39] See Exchange Act Rule 21F-3(a)(1)-(3), 17 C.F.R. § 240.21F-3(a)(1)-(3).

[40] See Exchange Act Rule 21F-4(b)(7), 17 C.F.R. § 240.21F-4(b)(7); Order Determining Whistleblower Award Claims, Exch. Act Rd. No. 80596, 2017 SEC LEXIS 1318, at *10 n.9 (May 4, 2017).

[41] The OWB staff declaration explains that the submission was reviewed by other Commission staff and determined not to warrant further action or investigation.

[42] Even if the Preliminary Determination had not identified Claimant 8, that omission would not affect our own conclusion, based on the record evidence summarized above, that Claimant 8’s information did not lead to the success of the Covered Action.

[43] Specifically, Claimant 8 asserts that Claimant 8’s information significantly contributed to the success of the enforcement matter referred to in Notice of Covered Action [Redacted]

[44] See Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[45] See Order Determining Whistleblower Award Claim, Exch. Rd. No. 79604. 2016 WL 7367248 (Dec. 19, 2016).

[46] See Exchange Act Rules 21F-8(a) and 21F-9(a)-(b), 17 C.F.R. §§ 240.21F-8(a). 21F-9(a)-(b).

[47] See Exchange Act Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6), and Exchange Act Rule 21F-2(a)(1), 17 C.F.R. § 240.21F-2(a)(1).

[48] Exchange Act Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6).

[49] Exchange Act Section 21F(c)(2)(D), 15 U.S.C. § 78u-6(c)(2)(D).

[50] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300, 34,313 (June 13, 2011).

[51] See Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a).

[52] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[53] In other matters where such an argument has been raised, we have considered. under Exchange Act Rule 21F-8(a), whether the claimant has demonstrated that “extraordinary circumstances” beyond the claimant’s control caused the late filing. See, e.g., Claim for Award, Release No. 34-77368 , 2016 WL 1019130, at *2 (Mar. 142016). pet. denied sub nom. Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018), reh’g denied, 138 S. Ct. 2715 (2018).

[54] See Exchange Act Section 21F(i)(2), 15 U.S.C. § 78u-6(i)(2) (addressing a claimant who “uses any false writing or document knowing the writing or document contains any false, fictitious, or fraudulent statement or entry”); Exchange Act Rule 21F-8(c)(7), 17 C.F.R. § 240.21F-8(c)(7) (same). In defining “knowing” conduct under these provisions, we look for guidance to analogous provisions of the False Claims Act. That statute proscribes “knowingly” presenting a false claim for payment to the Government or using false records or statements material to a false claim. 31 U.S.C. § 3729(a)(1). The statute also explains that element of acting “knowingly” is satisfied by either actual knowledge, deliberate ignorance, or reckless disregard with respect to the truth or falsity of the information. Id § 3729(b)(1). Here, the record evidence supports a finding of either reckless disregard or actual knowledge by Claimant 8 with respect to the false second page.

[55] See Exchange Act Rule 21F-8(c)(7), 17 C.F.R. § 240.21F-8(c)(7) (requiring “intent to mislead or otherwise hinder the Commission or another authority” in connection with submitting a false writing or document).

[56] See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b).

[57] See Exchange Act Section 21F(i)(2), 15 U.S.C. § 78u-6(i)(2); Exchange Act Rule 21F-8(c)(7), 17 C.F.R. § 240.21F-8(c)(7).

SEC

11/27/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (collectively, “Claimants”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows:

Claimants did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(l) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

[1] Because Claimants do not qualify for an award in the Covered Action brought by the Commission, any claims for award they made in connection with various purported related actions cannot succeed. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b ); Exchange Act Rule 21F-3(b), Rule 21F-3(b)(l); Rule 21F-11(a).

SEC

11/27/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (”Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set f01th in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim.[fn1] The basis for this determination is as follows:

First, Claimant is not a “whistleblower” under Exchange Act Rule 21F-2(a) with respect to the Covered Action. To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9, which Claimant did not do. Specifically, Claimant did not submit information on Form TCR or online, through the Commission’s website. In addition, Claimant did not sign the required whistleblower declaration as required under Exchange Act Rule 21F-9(b).[fn2]

Second, Claimant did not provide original information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not:

1. cause the Commission to (i) commence an exanimation, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission exanimation or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn3]

By: Claims Review Staff.

[1] To the extent Claimant contends that [Redacted] qualifies for an award in connection with a related action, [Redacted] claim cannot succeed because Claimant does not qualify for an award in the Covered Action brought by the Commission. A related action award may be made only if a claimant receives an award in a Commission covered action. See 15 U.S.C. § 78u-6(b); Exchange Act Rule 21F-3(b), Rule 21F-3(b)((l); Rule 21F-11(a).

[2] There is no evidence in the record that Claimant ever provided information to the Commission. Rather, claimant states that [Redacted] provided [Redacted] tip to the [Redacted], and that [Redacted] believes that [Redacted] “would have submitted the information to the SEC for further investigation.” WB-APP, Section F, No. 7; Section G.

[3] The record reflects that none of the members of the Enforcement team who worked on the Covered Action recall receiving any information provided by Claimant; nor do they recall communicating with Claimant, before or during the investigation.

SEC

11/27/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (collectively, “Claimants”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

11/27/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (collectively, “Claimants”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the investigation that resulted in the Covered Action was not opened based on information provided by Claimant, and that Enforcement staff responsible for the Covered Action received no information from, or had communications with, Claimant.

By: Claims Review Staff.

SEC

87544

11/15/2019

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.[fn1] 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 enforcement of the above-referenced Covered Action pursuant to Exchange Act Section 21F(b)(1)[fn2] and Rule 21F-3(a) thereunder.[fn3]

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.[fn4] 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.

[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] 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.

CFTC

10/24/2019

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted] (“[Redacted] Order” or “Covered Action”). The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2019) (as amended by 82 Fed. Reg. 24,487, 24,496–521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive ***% of the amount of monetary sanctions collected in the Covered Action, and that Claimant 2’s claim be denied. For the reasons set forth below, we agree with the CRS’s determination. Accordingly, Claimant 1’s claim is approved in the amount of ***%, and Claimant 2’s claim is denied.

I. BACKGROUND. The [Redacted] Order arose out of an investigation opened in response to a Form TCR that Claimant 1 submitted to the Commission regarding a possible [Redacted] operated by [Redacted], [Redacted] and [Redacted]. The Commission received Claimant 1’s Form TCR on or around [Redacted], in which Claimant 1, a [Redacted], identified and discussed several “red flags” that supported *** belief that [Redacted] was a [Redacted]. Claimant 1 also noted that [Redacted] appeared to be [Redacted] because the firm was purportedly seeking new employees and requesting new client referrals. The Commission opened an enforcement investigation based on the information supplied by Claimant 1.

For several months thereafter, Claimant 1 sent additional documents to Division staff, including account statements, text messages, and checks. Division staff found Claimant 1’s additional information to be useful because: (1) the account statements directly supported Division staff’s theory that [Redacted] were [Redacted] to further [Redacted]; (2) the text messages, which appeared to be current, furthered the Division staff’s belief that the [Redacted] was ongoing and active; and (3) the checks contained financial account information that Division staff used to draft subpoenas for information related to the Defendants’ bank accounts. Claimant 1 also participated in telephonic interviews on [Redacted], at the outset of the investigation and, again, on [Redacted], [Redacted] which provided additional information helpful to Division staff.

Claimant 1, however, did not provide the highest level of assistance to Division staff. Specifically, Claimant 1 declined Division staff’s request to provide a declaration in support of the Commission’s enforcement action against [Redacted]. According to Division staff, Claimant 1 declined to provide the declaration because he/she did not want to jeopardize any potential quarterly payments due from [Redacted]; and he/she feared that disclosure of his or her identity would result in some type of personal retribution from [Redacted]. Division staff noted that, aside from not providing a declaration, Claimant 1 was very helpful in the investigation of [Redacted].

On [Redacted], the Commission filed a complaint against [Redacted]. And, on [Redacted], the Court entered the [Redacted] Order against [Redacted] in which they were ordered to pay, jointly and severally, $[Redacted] in restitution and an $[Redacted] civil monetary penalty. [Redacted] obtained in connection with the Covered Action. Claimant 1 and Claimant 2 each subsequently submitted a Form WB-APP in response to the Notice of Covered Action No. [Redacted] regarding the [Redacted] Order.

II. PRELIMINARY DETERMINATION. On [Redacted], the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of ***% of sanctions collected because Claimant 1 voluntarily provided original information that led to the successful enforcement of a covered action. In its Preliminary Determination, the CRS noted that “when asked by Division staff, [Claimant 1] declined to provide a declaration in support of the Commission’s enforcement action.” The CRS decided that ***% appropriately recognized Claimant 1’s contributions to the success of the Covered Action given that Claimant 1’s decision to not provide a declaration ultimately had only a minimal impact on the [Redacted] investigation. The Preliminary Determination also recommended denying Claimant 2’s claim because the information provided by Claimant 2 was not useful to the Commission’s investigation and, therefore, did not lead to the successful enforcement of the Covered Action.

Claimant 1 did not request to review the record of materials that formed the basis for the CRS’s Preliminary Determination. See 17 C.F.R. § 165.10. However, on [Redacted], Claimant 1 timely submitted a brief written response contesting the CRS’s Preliminary Determination. See Rule 165.7(g)(2)(ii). In *** request, Claimant 1 asked the CRS to “reconsider a 30% full award rate in lieu of the preliminary ***% suggested rate…” Claimant 2 did not respond to the Preliminary Determination.

III. LEGAL ANALYSIS. The CRS has discretion in determining the award amount but must consider certain criteria specified in the CEA. 7 U.S.C. § 26(c)(1)(A). The Rules contain both factors that incorporate the statutory criteria for determining the award amount and factors that may increase or decrease the award amount. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. The Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing smoking gun documents could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

One of the factors in determining whether to increase the amount of an award is the degree of assistance provided by a whistleblower. 17 C.F.R. § 165.9(a)(2), (b)(2). In assessing assistance, the Commission will consider whether the whistleblower provided ongoing, extensive, and timely cooperation by, for example, explaining complex transactions, interpreting key evidence, or identifying new and productive lines of inquiry. 17 C.F.R. § 165.9 (b)(2). In determining the amount of award for Claimant 1, the CRS considered Claimant 1’s degree of assistance.

A. Claimant 1’s Request for Reconsideration. In a brief letter, Claimant 1 noted items already considered by the CRS when it issued its Preliminary Determination, including that he/she: (1) provided “crucial evidence” related to [Redacted] websites; (2) contacted “professional help” to review [Redacted]; (3) produced documents including [Redacted] account statements, text records, and phone records; and (4) promptly reported the [Redacted], which limited additional investor harm. In addition, Claimant 1 suggested that he/she would have been willing to provide a declaration to Division staff in the enforcement matter (“become more visible in the trial portion”) if Commission staff would have confirmed that he/she was the first whistleblower (“original information provider”) in the matter. Claimant 1 also wrote that he/she was never informed that an award may be reduced for failing to provide the additional assistance to Division staff, such as providing a declaration. For the above reasons, Claimant 1 asked the CRS to increase *** award from ***% to 30%.

The CRS reviewed Claimant 1’s request and did not believe an increase in award was warranted under the circumstances. We agree with the CRS’s award determination.

1. The CRS Has Considered All Relevant Documents and Assistance in Making its Award Determination. In making its Preliminary Determination, the CRS appropriately considered all relevant award factors under Rule 165.9.

In *** letter requesting reconsideration, Claimant 1 reiterated the assistance he/she provided to Division staff, such as “crucial evidence” related to [Redacted] websites, other documentary evidence, and *** promptness in contacting the Commission. But these points had already been considered by the CRS in making its award determination. Further, the CRS’s findings with respect to Claimant 1’s contributions were clearly noted in the Preliminary Determination. The CRS found that Claimant 1’s information via his/her Form TCR was sufficiently specific, credible, and timely to cause the Commission to open an investigation. Thereafter, and as noted in the Preliminary Determination, Claimant 1 provided significant, ongoing assistance to Division staff by submitting supplemental documents and participated in telephonic interviews. Further, “Claimant 1’s information was particularly crucial because, prior to the filing of the Commission’s enforcement action, Claimant 1 was the only [Redacted] to come forward with information regarding this matter.” Therefore, the Commission believes that the CRS has already appropriately considered the value of the information and documents supplied by Claimant 1. The Commission does not believe an increase in the award percentage is warranted based on the information and assistance that is already reflected by the ***% award.

2. Assessing “Degree of Assistance,” the CRS Appropriately Considered Claimant 1’s Decision Not to Provide a Declaration. According to Division staff, Claimant 1 declined to provide the declaration at the time requested because he/she did not want to jeopardize any potential quarterly payments due to him/her from [Redacted]; and he/she feared that disclosure of Claimant 1’s identity would result in some type of personal retribution from [Redacted]. According to Division staff, while it would have been more helpful to have a declaration from Claimant 1, Division staff proceeded with the filing of a complaint against the Defendants without the declaration. Division staff noted that, aside from not providing a declaration, Claimant 1 was very helpful in the investigation of [Redacted]. Therefore, the overall impact of Claimant 1’s decision not to provide a declaration on the success of the [Redacted] investigation appeared to be minimal.

On this point, the CRS’s Preliminary Determination noted:

“The Claims Review Staff also notes that Claimant 1, when asked by Division staff, declined to provide a declaration in support of the Commission’s enforcement action. Division staff noted that, while it would have been helpful to have a declaration from Claimant 1, it still proceeded with the filing of the complaint that led to the [Redacted] Order without a declaration from Claimant 1. Based on information in the record, it appears that Claimant 1’s decision not to provide a declaration ultimately had only a minimal impact on the Covered Action.”

If Claimant 1 had provided the declaration, the Commission would have been more likely to grant a full 30% award; however, based on a review of Claimant 1’s overall degree of assistance, the Commission agrees with the CRS’s recommendation of [Redacted]%.

Claimant 1 also wrote that he/she was never informed that an award may be reduced for failing to provide the additional assistance to Division staff (such as providing a declaration). We believe that this argument also holds no merit. Neither Division staff nor the Whistleblower Office is under any obligation to inform a witness that a potential whistleblower award may be reduced for failing to provide less than full assistance. Further, any whistleblower is free to view the Whistleblower Rules (posted on the whistleblower.gov website) and form an opinion as to how their assistance may be evaluated, should he/she later seek an award.

Finally, the Commission notes that the CRS made only a [Redacted] deduction in the award amount to ***% after carefully weighing all of the positive and negative factors discussed in Rule 165.9.

For the above reasons, we agree with the CRS’s determination to award ***% to Claimant 1.[fn1]

B. Claimant 2. Claimant 2 did not respond to the Preliminary Determination. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination has become final with respect to Claimant 2. Claimant 2’s failure to timely submit a response contesting the Preliminary Determination constituted a failure to exhaust administrative remedies. Accordingly, Claimant 2 is prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13.

IV. CONCLUSION. Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of *** percent (***%) of the monetary sanctions collected, or to be collected, in the Covered Action; and it is further ORDERED that Claimant 2’s whistleblower award claim be, and hereby is, denied.

By the Commission.

1 The Commission collected $[Redacted] in sanctions, which means Claimant 1 would receive a payment of $[Redacted]. While circumstances may change, the Commission does not anticipate being able to collect the remaining amount of sanctions ordered.

SEC

87288

10/11/2019

[Redacted] (“Claimant”) seeks a whistleblower award pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), and the rules thereunder, in connection with the above-referenced Commission enforcement matter (“Covered Action”). For the reasons set forth below, we deny Claimant’s claim.

A. Background.

In [Redacted] Claimant submitted two largely-duplicative tips to the Commission concerning [Redacted] (“Firm”). In [Redacted], staff of the Commission’s Division of Enforcement (“Enforcement”) reviewed the tips and concluded that they did not appear to allege a violation of applicable rules or regulations, and that they therefore did not warrant the opening of an enforcement investigation.[fn1]

In [Redacted] through independently developed leads and a referral from the Commission’s Office of Compliance Inspections and Examinations (“OCIE”), Enforcement staff opened an investigation concerning potential misconduct by the Firm that was unrelated to the conduct alleged in Claimant’s tips. On [Redacted] after a [Redacted] investigation, the Commission filed the Covered Action against the Firm.

On [Redacted] the Office of the Whistleblower (“OWB”) posted a Notice of Covered Action, which commenced the 90-day period for interested individuals to submit applications for award in connection with the Covered Action. See Exchange Act Rule 21F-10(b), 17C.F.R. § 240.21F-10(b). Claimant submitted a timely award application based on Claimant’s aforementioned tips.

After reviewing the award application and the relevant record compiled by OWB, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that we deny Claimant’s award application. The Preliminary Determination stated that none of the information Claimant provided to FINRA or directly to the Commission led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Exchange Act Rules 21F-3(a)(3), 17 C.F.R. § 240.21F-3(a)(3), and 21F-4(c), 17 C.F.R. § 240.21F-4(c).[fn2] In reaching this preliminary determination, the CRS relied on the declarations of one of the principal attorneys assigned to the investigation and the exam manager assigned to the examination that prompted OCIE’s referral to Enforcement staff. Together, the declarations demonstrated that Claimant’s information played no role in the decision to open an investigation or commence an examination of the Firm, and that it did not otherwise contribute to the success of the Covered Action. The CRS also noted in the Preliminary Determination that the information submitted by Claimant did not relate to the claims asserted by the Commission in the Covered Action.

Claimant filed a timely written response (“Response”) to the Preliminary Determination in which Claimant appears to argue that Claimant submitted information to the Commission that the CRS did not consider in reaching its Preliminary Determination.

B. Analysis.

After careful consideration of the administrative record, including Claimant’s Response, we have determined to deny Claimant’s award application. In the Response, Claimant contends that Claimant alleged misconduct related to the Firm’s pricing of newly-issued municipal bonds, the gravamen of the Covered Action. However, Claimant has not supported this contention with references to any tips Claimant submitted concerning newly-issued municipal securities, nor are we aware of any such tips. Moreover, we would not grant Claimant’s claim for a whistleblower award even if Claimant had identified such a tip, as we credit the sworn declarations of the Commission staff responsible for the investigation and examination of the Firm, which state that Claimant’s information played no role in staff’s decisions to open the investigation or commence the examination that led to the Covered Action, and that it did not otherwise contribute to the success of the Covered Action.[fn3]

In light of the foregoing, we deny Claimant’s award claim in connection with the Covered Action.

By the Commission.

[1] Enforcement staff also reviewed a substantively-identical *** complaint Claimant submitted to the Financial Regulatory Authority (“FINRA”). Staff concluded that the conduct alleged in the tip to FINRA also did not amount to a violation of the securities laws. Thereafter, in [Redacted] Claimant submitted a third, substantively-identical tip directly to the Commission.

[2] As relevant here, information leads to the success of a covered action if it: (1) causes the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation; or (2) significantly contributes to the success of a covered action based on conduct that was already under examination or investigation by the Commission. See Exchange Act Rule 21F-4(c)(1) and (2), 17 C.F.R. § 240.21F-4(c)(1) and (2).

[3] To the extent Claimant contends that we should grant the award claim based on Claimant’s tip that the Firm was [Redacted], we find that meritless as well in light of the sworn declarations stating that Claimant’s information was not used by Enforcement staff. We also note that (a) one of the declarations states that staff decided not to investigate the tip because the alleged conduct was not viewed as contrary to any law or regulation, and (b) the Covered Action did not include a charge relating to this alleged misconduct.

SEC

09/28/2019

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received two whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Prelimina1y Determination for each award claimant as follows.

[Redacted].

[Redacted] (Claimant 2).

No information provided by Claimant 2 led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because none of the information that Claimant 2 submitted:

a. caused the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

b. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] In reaching this preliminary determination, we note that the record reflects that Enforcement staff responsible for the Covered Action opened the investigation approximately one year before Claimant 2 submitted information to the Commission. Claimant 2’s information and supporting materials were duplicative of information Enforcement staff already had in its possession and none of the information provided by Claimant 2 identified any new issues or areas of investigation.

SEC

09/27/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] and a jointly filed whistleblower award claim from [Redacted] (“Claimants 3&4”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

Claimants 3&4.

The Claims Review Staff has preliminarily determined to recommend to the Commission that it deny awards to Claimants 3&4. The basis for this determination is that Claimants 3&4 did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder because their information did not:

a. cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of the information under Rule 21F-4(c)(1) of the Exchange Act; or

b. significantly contribute to the success of the Covered Action under Rule 21F-4(c)(2) of the Exchange Act.[fn6]

By: Claims Review Staff.

[6] In preliminarily finding that the information that Claimants 3&4 provided to the Commission did not lead to the success of the action, we have relied on the following facts that are identified in a declaration provided by one of the principal attorneys involved with the Covered Action: Enforcement staff opened the investigation that resulted in the Covered Action prior to Claimant 3&4’s submission of information and Claimant 3&4’s information did not significantly contribute to the investigation as it did not relate to the particular issues being investigated, and Enforcement staff had no communications with Claimants 3&4.

SEC

09/27/2019

In response to the above-referenced Covered Action, the Securities and Exchange Commission received whistleblower award claims from the following individuals:

[Redacted] (“Claimant 1”).

[Redacted] (“Claimant 3”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of claimants’ award claims. The basis for this preliminary determination is as follows.

A. Claimant 1 failed to submit Claimant 1’s claim for award to the Office of the Whistleblower within ninety (90) days of the date of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act.[fn1]

B. Claimant 3 is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1) with respect to the Covered Action. To qualify as a whistleblower, an individual must provide the Commission with information relating to a possible securities law violation pursuant to the procedures set forth in Exchange Act Rule 21F-9(a). Claimant 3 failed to comply with those procedures because, in each of the six TCRs Claimant 3 submitted to the Commission, Claimant 3 answered “No” to the question, “Are you submitting this tip, complaint or referral pursuant to the SEC’s whistleblower program?” As a further consequence, Claimant 3 did not sign the whistleblower declaration required by Exchange Act Rule 21F-9(b) at the time that Claimant 3 submitted Claimant 3’s TCRs.

C. None of the claimants provided information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4( c) thereunder because the information provided did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[1] See Order Determining Whistleblower Award Claim, Exchange Act Release No. 77368 (Mar. 14, 2016), aff’d sub nom. Cerny v. SEC, 707 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018), reh’g denied, 138 S. Ct. 2715 (2018). To the extent Claimant 1 claims that Claimant 1 qualifies for a related action, the matter Claimant 1 identified on Claimant 1’s WB-APP was not an appropriate related action brought by an enumerated entity as required by Rule 21F-3(b)(1).

[2] [Redacted].

CFTC

09/27/2019

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1, Claimant 2, Claimant 3, Claimant 4, and Claimant 5 (collectively, “Claimants”) in response to Notice of Covered Action No. [Redacted]. The underlying enforcement action is [Redacted]. The Claims Review Staff has evaluated the award applications in accordance with the Commission’s Whistleblower Regulations (“Regulations” or “Rules”), 17 C.F.R. pt. 165 (2019), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018). On February 28, 2019, the Claims Review Staff issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** of the monetary sanctions collected in [Redacted] because Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of a covered action. The Preliminary Determination also recommended denying the remaining award claims because Claimant 2, Claimant 3, Claimant 4, and Claimant 5 did not contribute to [Redacted].

I. LEGAL ANALYSIS.

The Claim Review Staff recommended the award amount to be *** of the amount of monetary sanctions collected in the covered action, which would result in a payment ***. We agree with this determination. In arriving at this award amount, the Claims Review Staff applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. Rule 165.9(b) provides a list of factors that may increase the award amount, and Rule 165.9(c) provides a list of factors that may decrease the award amount. However, the Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing documents containing direct evidence of violations could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

As applied, Claimant 1 did not provide particularly significant information to the Commission. The charges the Commission brought were ultimately different from Claimant 1’s allegations. In addition, Claimant 1 provided limited assistance because Claimant 1 could not provide specifics to CFTC staff investigating the matter and did not understand how the violations under investigation worked. The breakthrough in the investigation came from [Redacted].

The Commission will not pay out an award on related actions. [Redacted]. The Claims Review Staff also determined to recommend that the Commission deny the award claims from Claimant 2, Claimant 3, Claimant 4, and Claimant 5. Division staff did not contact Claimant 2, Claimant 3, Claimant 4, and Claimant 5 in connection with [Redacted]. Division staff also did not use any information provided by these Claimants to bring, investigate, or [Redacted]. Because Claimant 2, Claimant 3, Claimant 4, and Claimant 5 did not contribute to [Redacted], all of their award claims relating to the [Redacted] and any purported related actions were denied by the Claims Review Staff.

II. RESPONSE TO PRELIMINARY DETERMINATION.

None of the Claimants submitted additional materials to contest the Preliminary Determination. Because the Claimants did not exhaust administrative remedies, they are prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff with respect to Claimant 1. The Preliminary Determination became the Final Order of the Commission with respect to Claimant 2, Claimant 3, Claimant 4, and Claimant 5.

III. CONCLUSION

It is hereby ORDERED that Claimant 1 shall receive *** of the monetary sanctions collected in [Redacted].

By the Commission.

SEC

87039

09/20/2019

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected in the above-referenced Covered Actions[fn1] for a payout of more than $38,000. Claimant provided written notice of Claimant’s decision not to contest the Preliminary Determinations.[fn2]

The recommendation of the CRS is adopted. The record demonstrates that Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the above-referenced Covered Actions pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)[fn3] and Rule 21F-3(a) thereunder.[fn4]

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.[fn5] In reaching that determination, we positively assessed the following facts: Claimant acted quickly to alert the Commission to the misconduct, causing staff to open an investigation, which resulted in the filing of two successful enforcement actions involving [Redacted] on retail investors; Claimant provided continuing assistance by meeting with staff, providing investigative testimony, and encouraging others to cooperate with staff; and collections from the defendants of the monetary sanctions ordered were low. We negatively assessed that Claimant, when not yet aware of the fraudulent scheme, [Redacted] for a short period of time. We also considered that Claimant [Redacted] and, as such, did not financially profit from [Redacted].

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (*** %) of the monetary sanctions collected in the Covered Actions.[fn6]

By the Commission.

[1] Because of the significant factual and legal overlap between the Covered Actions and the identity of the Claimant on both matters, for administrative efficiency we are issuing a single Final Order with respect to both Covered Actions.

[2] The CRS’s Preliminary Determination in Covered Action [Redacted] also recommended denying awards to five other claimants. Those determinations were not contested and, thus, the CRS’s recommendation to deny those award applications became final pursuant to Exchange Act Rule 21F-10(f).

[3] 15 U.S.C. § 78u-6(b)(1).

[4] 17 C.F.R. § 240.21F-3(a).

[5] 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.

[6] We have treated those amounts distributed to injured investors by the court-appointed receiver in one of the Covered Actions as collected monetary sanctions on which Claimant’s award can be based.

SEC

86902

09/09/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant”) in connection with the above-referenced action (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

On [Redacted], staff in the Commission’s Division of Enforcement (“Enforcement”) opened an investigation into [Redacted] (the “Company”) based on information received from a source other than Claimant — more specifically, from [Redacted]. Approximately six months later, on [Redacted] the Commission filed a civil injunctive action alleging that the Company and [Redacted] (collectively, “Defendants”), had violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. [Redacted].

The Commission’s complaint alleged that from [Redacted] the Company [Redacted]. In reality, according to the complaint, Defendants [Redacted]. The complaint also alleged that Defendants [Redacted] despite having received a letter from the Commission’s staff directing the Company not to [Redacted].

On [Redacted] the Commission filed an amended complaint that named [Redacted] and that repeated the allegation of [Redacted] without alleging any additional instances of [Redacted].[fn1] The Court granted the Commission’s motion for summary judgment against Defendants on liability and, on [Redacted] entered a final judgment that ordered Defendants each to pay a $[Redacted] civil penalty and held them jointly and severally liable for disgorgement of $[Redacted] of proceeds and $[Redacted] of pre-judgment interest.

On [Redacted] the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. Claimant filed a timely whistleblower award application. In the application, Claimant self-identified as [Redacted] and asserted that Claimant had provided information to [Redacted] on [Redacted]. Claimant further asserted, as grounds for an award: [Redacted].

II. Preliminary Determination and Response.

A. Preliminary Determination.

The CRS preliminarily determined to deny Claimant’s award claim because Claimant’s information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. In reaching this preliminary determination, the CRS considered, among other record evidence, a declaration (“Declaration”) from an Enforcement staff member assigned to the investigation (“Staff”). In the Declaration, the Staff explained that Claimant had submitted a tip through the Commission’s online portal on [Redacted] more than [Redacted] after the Commission filed its initial complaint, and that Claimant also had spoken with the Staff by telephone just once on [Redacted]. In both the tip and the telephone call, according to the Declaration, Claimant alleged that a Company employee had [Redacted] after the Company had received the letter instructing it not to do so. Moreover, the Declaration explained, the Staff was previously aware of [Redacted] as alleged in the initial complaint, and was unable to corroborate Claimant’s allegation with respect to [Redacted]. As a result, the allegation of [Redacted] remained unchanged in the Commission’s amended complaint filed in [Redacted] and Claimant’s information did not contribute in any way to either the investigation or the litigation of the Covered Action.

B. Response.

After requesting and reviewing the record supporting the Preliminary Determination, Claimant submitted a timely written request for reconsideration. In the request, Claimant does not dispute that Claimant’s tip was submitted [Redacted] after the Commission filed its action or that the Staff was already aware of [Redacted] by the Company, as alleged in the initial complaint. Rather, Claimant focuses on Claimant’s asserted interactions with agents at the [Redacted]. Claimant contends that Claimant answered questions from agents at the [Redacted] and provided them with [Redacted] and used to support the case. Claimant contends that Claimant was told over the phone that [Redacted] while not “‘the smoking gun’, was beneficial and helped support the case.” In the response, Claimant does not identify any additional communications with the Staff; nor does Claimant attempt to explain how [Redacted] contributed to the Covered Action.

III. Analysis.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn2] For the reasons that follow, and based on our review of the entire record, including a supplemental declaration (“Supplemental Declaration”) from the Staff, we find that Claimant’s information did not lead to the success of the Covered Action.

Under the whistleblower rules, as relevant here, an individual’s original information leads to the success of an action where it causes staff to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or alternatively, where in the context of an existing investigation, the individual’s original information significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn3] In determining whether an individual’s information significantly contributed to an action, we consider factors such as whether the information allowed us to bring: the action in significantly less time or with significantly fewer resources; additional successful claims; or successful claims against additional individuals or entities.[fn4] The individual’s information must have been “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn5]

Claimant does not satisfy Rule 21F-4(c)(1) as the investigation that culminated in the Covered Action was opened in [Redacted] approximately ten months before Claimant submitted Claimant’s tip in [Redacted].

Claimant also does not satisfy Rule 21F-4(c)(2) as none of Claimant’s information was used in or contributed in any way to the Covered Action. Claimant submitted the tip approximately [Redacted] after the Commission filed its initial complaint in federal district court in [Redacted] Claimant does not dispute that the Staff was already aware of [Redacted] the Company, as alleged in the initial complaint, by the time Claimant submitted the tip or that the Commission’s allegation of [Redacted] remained unchanged in the amended complaint filed in [Redacted]. Nor does Claimant’s response to the Preliminary Determination offer any reason to doubt the Staff’s Declaration that none of the information provided by Claimant to the Staff in the tip and subsequent telephone call contributed in any way to either the investigation or the litigation of the Covered Action.

As explained above, Claimant’s response to the Preliminary Determination focuses on Claimant’s asserted acts of answering questions from *** agents and providing [Redacted] to [Redacted]. But the Supplemental Declaration makes clear that the Staff did not participate in any meetings between Claimant and [Redacted]. Moreover, Staff confirmed that it: (a) does not know how, or even if, the [Redacted] were used by [Redacted] (b) did not receive any information from [Redacted] as to whether the [Redacted] as Claimant contends in Claimant’s Response; and (c) did not receive any [Redacted] or any documents that had [Redacted]. In addition, the Supplemental Declaration makes clear that the Staff never told or otherwise implied to Claimant that the information Claimant asserted [Redacted] provided to [Redacted] helped support the Covered Action. The Staff further attested in the Supplemental Declaration that even if Claimant’s asserted [Redacted] were beneficial to [Redacted] investigation or the resulting [Redacted] that information was not useful to and did not in any way contribute to either the investigation or litigation of the Covered Action. Claimant has offered no credible assertion or evidence to the contrary, and we therefore credit the Declaration and Supplemental Declaration.[fn6]

IV. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] [Redacted].

[2] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[3] 17 C.F.R. § 240.21F-4(c)(1)-(2).

[4] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300, 34,325 (June 13, 2011).

[5] Order Determining Whistleblower Award Claim, Release No. 34-77833 (May 13, 2016). See generally Order Determining Whistleblower Award Claims, Release No. 34-85412 (Mar. 26, 2019), pet. filed, No. 19-11566 (11th Cir. Apr. 25, 2019).

[6] We do not read Claimant’s submissions as making any whistleblower award claim with respect to [Redacted] [Redacted] In particular, Claimant’s whistleblower award application on Form WB-APP fails to mention [Redacted] [Redacted] even though it did specify the name, docket number, and filing date of the Commission’s civil enforcement action. Even if Claimant were to seek an award with respect to [Redacted] on the ground that it was a “related action,” Claimant would face the obstacle that qualification for an award in the Commission’s covered action is a prerequisite to qualification for an award in a “related action.” See Exchange Act Section 21F(a)(5), 15 U.S.C. § 78u-6(a)(5) (defining a “related action” as based upon the same original information provided by the whistleblower that led to the successful enforcement of the Commission action); Exchange Act Rules 21F-3(b) & 11(a), 17 C.F.R. §§ 240.21F-3(b) & 240.21F-11(a); Order Determining Whistleblower Award Claim, Rel. No. 34-84503 at n.4 (Oct. 30, 2018) (“The Commission may make an award to a whistleblower in connection with a related action only if the Commission has determined that the whistleblower is entitled to an award for a Commission covered action.”).

SEC

86803

08/29/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action for a payout of more than $1,800,000. 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 led to the successful enforcement of the above-referenced Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)[fn1] and Rule 21F-3(a) thereunder.[fn2]

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.[fn3]

In reaching that determination, we positively assessed the following facts: Claimant’s tip was the first information on the charged misconduct that the Commission received and caused Enforcement staff to open an investigation; Claimant provided Enforcement staff with extensive and ongoing assistance during the course of the investigation, including the review of documents and the provision of sworn testimony; Claimant continued to provide additional new information that advanced the investigation; Claimant provided investigative leads, including identifying witnesses and assisting Enforcement staff with testimony preparation; Claimant encouraged witnesses to cooperate with Enforcement staff; on multiple occasions, Claimant internally reported the conduct; and Claimant’s information allowed the Commission to bring a programmatically significant enforcement action. In addition, without Claimant’s tip, the violations at issue would have been difficult or impossible to identify and prove, in part, because the misconduct occurred abroad.

Upon due consideration under Rules 21F-10(f) and (h) of the Exchange Act, the Preliminary Determination of the CRS is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of *** percent ( *** %) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] 15 U.S.C. § 78u-6(b)(1).
[2] 17 C.F.R. § 240.21F-3(a).
[3] 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.

CFTC

08/21/2019

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1 and Claimant 2 on [Redacted] and [Redacted], regarding: [Redacted]. The Claims Review Staff (“CRS”) has evaluated the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2018), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2018).[fn1] The CRS sets forth its Preliminary Determination for Claimant 1 and Claimant 2 as follows:

1. The CRS has determined to recommend that the Commission deny Claimant 1’s and Claimant 2’s applications because each application fails to meet the requirements of Section 23 of the Act and the Rules. Although Claimant 1 and Claimant 2 voluntarily provided the Commission with original information in the manner required by the Commission, neither Claimant 1’s nor Claimant 2’s information led to the successful enforcement of a judicial or administrative action or a related action.

Claimant 1 first contacted the Commission [Redacted], after the Commission began its investigation of [Redacted]. Division staff opened the Commission’s investigation based on the information Division staff learned from staff of another regulator. Accordingly, the Commission did not commence its investigation as a direct or indirect result of Claimant 1’s TCR submission.

[Redacted], none of the information in any of Claimant 2’s TCRs was used in connection with the Commission’s investigation of [Redacted]. Accordingly, the Commission did not commence its investigation as a direct or indirect result of Claimant 2’s TCR submissions.

Neither Claimant 1’s nor Claimant 2’s information significantly contributed to the [Redacted] because none of Claimant 1’s or Claimant 2’s information was used in connection with the [Redacted]; and Claimant 1’s information also did not lead to the successful enforcement of a related action.[fn2] Because Claimant 1’s information did not lead to the Commission’s successful enforcement action against the defendants in the [Redacted], Claimant 1’s information also did not lead to the successful enforcement of a related action.

[1] The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9(b) (2018) does not mean that the presence of negative factors will result in an award percentage lower than 30%, nor does the absence of negative factors in Rule 165.9(c) mean the award percentage will be higher than 10%. Not all factors may be relevant to a particular decision.

[2] Under the Rules, a related action is a judicial or administrative action brought by any of the following non-Commission entities: Department of Justice; an agency or department of the U.S. government; a registered entity, registered futures association, or self-regulatory organization; or a State criminal or civil agency. See 17 C.F.R. § 165.11 (2018). A related action must be “based on the original information that the whistleblower voluntarily submitted to the Commission and led to a successful resolution of the Commission judicial or administrative action.” Id. (emphasis added); see 17 C.F.R. § 165.11(a)(2)(2018); see also 17 C.F.R. § 165.2(m)(2018). In other words, for an action to qualify as a related action under the CEA and the Rules there must be a corresponding successful enforcement of a Commission action based on the same original information voluntarily submitted by the whistleblower to the Commission. Here, as referenced above, Claimant 1 ‘s information did not provide any meaningful assistance to Commission staff assigned to the investigation that led to the [Redacted].

SEC

08/19/2019

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows.

Claimants did not provide info1mation that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record reflects that the
investigative staff responsible for the Covered Action received no information from, and had no
communications with, Claimants [Redacted] 3. We also note that the record reflects that the
investigative staff received no information from, and had no communications with, Claimant 2
before the Commission filed its complaint in federal district court in connection with the Covered
Action, and that unsolicited emails from Claimant 2 that the investigative staff received after the
filing of the complaint provided no information that was used in, or contributed to, the
litigation or successful enforcement of the Covered Action.[fn1]

By: Claims Review Staff.

[1] We further note that Claimant 2 has not identified any submission of information in connection with this Covered Action that satisfies the requirements of Exchange Act Rule 21F-9(a) and (b).

SEC

08/19/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and
Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The bases for this determination is as follows.

First, Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn1]

Second, to the extent Claimant is relying on a letter, dated [Redacted], that [Redacted] sent to the Commission as the basis for [Redacted] award claim, that letter does not satisfy the requirements of Rules 21F-9(a) & (b) as it was not accompanied by the requisite whistleblower declaration. Accordingly, Claimant was not a whistleblower and not eligible for award consideration until [Redacted] satisfied these requirements with [Redacted] submission on [Redacted].[fn2]

By: Claims Review Staff.

[1] In reaching this preliminary determination, we note that the record shows that Enforcement staff opened the underlying investigation approximately two years before receiving Claimant’s Form TCR, dated [Redacted], and it did not contain any information not already publicly known and available. None of the information provided in the TCR was used in or in any way contributed to the covered action.

[2] Although not a basis for our preliminary determination, we note that [Redacted] information consisted of publicly available information, and did not include any independent assessment or evaluation of that publicly-available information. As such, there may be additional grounds on which to deny Claimant’s award claim, including that failed to provide “original information” as required under Exchange Act Rule 21F-4(b).

SEC

08/19/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is as follows

Claimant did not provide information that Jed to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because the information provided did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record shows that Enforcement staff opened the investigation of [Redacted] over two years prior to receiving Claimant’s TCR and had already taken significant investigative steps. Enforcement staff did not have any direct communication with the Claimant nor did the Claimant provide any additional information, or submit supporting documentation for the information reported in the TCR.[fn1]

By: Claims Review Staff.

[1] Although not a basis for our preliminary determination, we note that Claimant’s Form TCR states that [Redacted] information was based solely on publicly-available documents, such as Form 10-Ks and news articles. As such, there may be additional grounds on which to deny Claimant’s award claim, including that [Redacted] failed to provide “original information” as required under Exchange Act Rule 21F-4(b).

SEC

86431

07/23/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] percent ( *** %) of the monetary sanctions collected in the above-referenced Covered Action for a payout of approximately $500,000. 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, a foreign resident, voluntarily provided original information to the Commission that led to the successful enforcement of the above-referenced Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)[fn1] and Rule 21F-3(a) thereunder.[fn2]

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.[fn3] In reaching that determination, we positively assessed the following facts: Claimant’s tip was the first information on the charged misconduct that the Commission received; Claimant expeditiously reported to the Commission and pointed Enforcement staff to an important witness; and without Claimant’s tip, the violations at issue would have been difficult to identify and prove, in part because the misconduct occurred abroad. We also took into account that Claimant was not in a position to provide continuing assistance, and other witnesses provided the information to substantiate Claimant’s tip.

Upon due consideration under Rules 21F-10(f) and (h) of the Exchange Act, the Preliminary Determination of the CRS is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected in the Covered Action.
By the Commission.

[1] 15 U.S.C. § 78u-6(b)(1). Although not the sole source of information, Claimant’s tip was a principal motivating factor in the decision to investigate the misconduct. See Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-63237, 75 FR 70488, 70497 (Nov. 3, 2010) (Rule 21F-4(c)(1) “does not necessarily contemplate that the whistleblower’s information will be the only information that the staff obtains before deciding to proceed. However, the proposed rule would apply when the whistleblower gave the staff information about conduct that the staff is not already investigating or examining, and that information was a principal motivating factor behind the staff’s decision to begin looking into the whistleblower’s allegations.”).
[2] 17 C.F.R. § 240.21F-3(a).
[3] 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.

CFTC

07/01/2019

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant 1 and Claimant 2 in response to Notice of Covered Action [Redacted]. The underlying enforcement action is [Redacted]. The Claims Review Staff has evaluated the award applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2018), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). On [Redacted], the Claims Review Staff issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of ***% of monetary sanctions collected in [Redacted] because Claimant 1 voluntarily provided original information to the Commission that led to the successful enforcement of a covered action. The Preliminary Determination also recommended denying the other award claim because Claimant 2 did not contribute to [Redacted].

I. LEGAL ANALYSIS.

In arriving at this award amount, the Claims Review Staff applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant 1’s award application. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. The Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing smoking gun documents could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

As applied, Claimant 1’s information was significant. The Commission made numerous findings [Redacted] that were directly based on information Claimant 1 provided. Further, Claimant 1’s information helped conserve the Commission’s resources because Claimant 1 also reported the same information to [Redacted], which conducted its own investigation and shared its findings with the Commission. The [Redacted] findings significantly assisted the Commission [Redacted]. After causing the Division to open an investigation into [Redacted], Claimant 1 provided extensive and ongoing assistance to Division staff by identifying key relationships and explaining complex financial arrangements. The multiple interviews Claimant 1 gave and the numerous documents Claimant 1 provided were highly informative and the basis for the investigation. Lastly, no decreasing factors were found with respect to Claimant 1.

The Commission will not pay out an award on related actions. [Redacted]. The Claims Review Staff also determined to recommend that the Commission deny Claimant 2’s award claim because Claimant 2’s information did not add to or impact the course of the Division’s investigation into [Redacted]. Claimant 2 did not file a Form TCR until a year after the Division’s investigation had begun. By that time, Division staff had already made progress in its investigation, including reviewing several document productions, engaging in substantive discussions with [Redacted] and initiating discussions with [Redacted] regarding this matter. In light of this, Division staff investigating this matter did not contact or interview Claimant 2. Accordingly, Claimant 2’s information did not lead to [Redacted].

II. RESPONSE TO PRELIMINARY DETERMINATION.

Neither Claimant 1 nor Claimant 2 responded to the Preliminary Determination. Accordingly, pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff with respect to Claimant 1. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Final Order of the Commission with respect to Claimant 2. Claimant 2’s failure to submit a timely response contesting the Preliminary Determination constituted a failure to exhaust administrative remedies. Accordingly, Claimant 2 is prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13.

III. CONCLUSION.

It is hereby ORDERED that Claimant 1 shall receive ***% of monetary sanctions collected in [Redacted].

By the Commission.

[1] [Redacted].

CFTC

06/24/2019

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application from an anonymous applicant (“Claimant 1”) in response to the Commission’s Notice of Covered Action [Redacted] regarding [Redacted] (“Covered Action”).[fn1] The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2018) (as amended by 82 Fed. Reg. 24,487, 24,496-521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). On October 30, 2018, the CRS issued a Preliminary Determination recommending that Claimant 1 receive [Redacted] percent (***%) of the amount of monetary sanctions collected in the Covered Action. The award percentage recommended for Claimant 1 would yield a payout of $[Redacted], based on the amount recovered in the Covered Action to date.[fn2] For the reasons set forth below, we agree with the CRS’s determination. Accordingly, Claimant 1’s claim is approved in the amount of [Redacted] percent (***%).

I. BACKGROUND.

The Covered Action arose out of an investigation opened in response to information that Claimant 1 submitted to the Commission regarding [Redacted]. Specifically, Claimant 1 alleged that [Redacted]. The Commission received the information as a form TCR from [Redacted]. Division of Enforcement (“Division”) staff forwarded Claimant 1’s Form TCR to the Commission’s New York office for review, at which point the Division opened an investigation into [Redacted]. [Redacted]. The Commission found that [Redacted]. Claimant 1 subsequently submitted a whistleblower award application in response to Notice of Covered Action No. [Redacted] regarding the Covered Action.

II. PRELIMINARY DETERMINATION.

On October 30, 2018, the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of [Redacted] (***%) of monetary sanctions collected because Claimant 1 voluntarily provided original information that led to the successful enforcement of a covered action. [Redacted].

III. ANALYSIS.

The recommendation of the CRS with respect to Claimant 1 is adopted. We find that the record demonstrates that he/she voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the CEA. 7 U.S.C. § 26(b)(1) (2012). The information Claimant 1 provided was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based in part on conduct that was the subject of the original information provided by Claimant 1. Claimant 1 alleged several potential violations of the CEA, and the Commission’s investigation corroborated those allegations, in some instances to a high degree of specificity. Claimant 1’s information was significant to the success of the Commission’s action. See 17 C.F.R. § 165.9(a)(1), (b)(1).

Claimant 1’s assistance did not end with the TCR. [Redacted], Claimant 1 was able to produce a variety of documents, statements, and analyses that assisted with the investigation and corroborated Claimant 1’s allegations. Further, Claimant 1 [Redacted]. Claimant 1’s assistance was significant, and it continued throughout the course of the investigation. See 17 C.F.R. § 165.9(a)(2), (b)(2).

In addition, the Commission has a law enforcement interest in preserving the integrity and reliability of [Redacted]. See 17 C.F.R. § 165.9(a)(3), (4), (b)(3). The aforementioned facts and circumstances support granting Claimant 1 a high award percentage.

But, in spite of Claimant 1’s significant contributions and helpfulness with respect to the Covered Action, Claimant 1 delayed in submitting information to the Commission, and this single but significant negative factor justifies decreasing the amount of the award. Claimant 1 delayed reporting the wrongdoing to the Commission for [Redacted]. Failure to report violations in a timely manner can lead to additional financial loss to customers or the general public, [Redacted]. Accordingly, we agree with the CRS that the [Redacted] award percentage should be reduced to [Redacted] (***%).

IV. CONCLUSION.

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] (***%) of the monetary sanctions collected in the Covered Action.

By the Commission.

[1] The Preliminary Determination further recommended that the award application submitted by another claimant (“Claimant 2”) be denied. Claimant 2 failed to submit a request for reconsideration of the Preliminary Determination, and, therefore, the Preliminary Determination denying Claimant 2’s claim for an award has become the Final Order of the Commission. 17 C.F.R. § 165.7(h) (2018).

[2] [Redacted] has fully paid the [Redacted] ordered in connection with the Covered Action, [Redacted]. Thus, the total monetary sanctions under the Rules are [Redacted]. See 17 C.F.R. § 165.2(j).

SEC

06/24/2019

In response to the above-referenced Notices of Covered Actions, the U.S. Securities and Exchange Commission received jointly submitted whistleblower award claims from [Redacted] (“Claimants”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows.

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21 F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record shows that staff in the Commission’s Office of Market Intelligence closed Claimants’ tips ([Redacted]) with a disposition of no further action planned or NFA, and did not forward the tips to Enforcement staff in connection with any investigation, including the above-referenced Covered Actions.[fn1]

By: Claims Review Staff.

[1] We further note that the Claimants submitted award claims in connection with thirteen other matters, but subsequently withdrew those award claims. After withdrawing those claims, the Claimants then filed claims in connection with these three Covered Actions.

06/24/2019

In response to the above-referenced Notices of Covered Actions, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows.

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record shows that staff in the Commission’s Office of Investor Education and Advocacy closed Claimant’s tips with a disposition of no further action planned or NF A, and did not forward the tips to Enforcement staff in connection with any matter, including the Covered Actions.

Further, with respect to Covered Actions Redacted and Redacted Claimant failed to submit the claims for award to the Office of the Whistleblower within ninety (90) days of the respective dates of the above-referenced Notices for those Covered Actions, as required under Rule 21F-10(b) of the Exchange Act.[fn1]

By: Claims Review Staff.

[1] See Order Determining Whistleblower Award Claim, Release No. 34-77368 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. Sept. 7, 2017), cert. denied, 138 S.Ct. 2005 (2018).

SEC

06/24/2019

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received six whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

[Redacted] (“Claimant 2”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2. The basis for this determination is that (i) Claimant 2 is not eligible for a whistleblower award based on Claimant 2’s Redacted submission to the Commission (the “Initial Submission”) because Claimant 2 failed to provide a declaration under penalty of perjury as required by Rule 21F-9(b) and (ii) neither Claimant 2’s Initial Submission nor Claimant 2′ s subsequent whistleblower submission led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. Claimant 2’s information did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

[Redacted] (“Claimant 3”), [Redacted] (“Claimant 4”), [Redacted] (“Claimant 5”), and [Redacted] (“Claimant 6”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny awards to Claimants 3, 4, 5, and 6. The basis for this determination is that Claimants 3, 4, 5, and 6 are not whistleblowers within the meaning of Section 21F(a)(6) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-2(a) thereunder because they failed to submit information about a possible securities law violation pursuant to the procedures set forth in Rule 21F-9(a). Specifically, Claimants 3, 4, 5, and 6 failed to submit information on-line through the Commission’s website or on a Form TCR.[fn3] Because Claimants 3, 4, 5, and 6 did not submit information in the form and manner set forth in Rule 21F-9(a), they are ineligible for awards in connection with the Covered Action.

By: Claims Review Staff.

[2] In preliminarily finding that the information Claimant 2 provided to the Commission did not lead to the success of the action, we have relied on the following facts that are identified in a declaration provided by one of the principal attorneys involved with the Covered Action: by the time Claimant 2 submitted information to the Commission, Enforcement staff had already been investigating the fraud for over a year; was aware of the underlying conduct, had identified the primary defendants, and had subpoenaed documents; Claimant 2’s information did not cause the staff to look in a new direction; nor did it save the staff time or resources; Enforcement staff would have brought an action based on the same conduct without Claimant 2’s information; and Claimant 2’s information did not allow the staff to bring additional charges or charge additional defendants and did not significantly advance the investigation or litigation.

[3] We further note that Claimants 3, 4, 5, and 6 each failed to provide a declaration under penalty of perjury at the time they submitted their information, as required by Rule 21F-9(b).

SEC

86010

06/03/2019

The Commission received timely claims for whistleblower awards from [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (collectively “Claimants”) for the above referenced Notice of Covered Action. The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant 1 and Claimant 2 jointly receive a whistleblower award in the amount of [Redacted] percent ( *** ) of the monetary sanctions collected or to be collected in the Covered Action. Claimants provided written notice of Claimants’ decision not to contest the Preliminary Determination.[fn1] After considering the administrative record, we choose to depart from the Preliminary Determination’s recommendation and jointly award Claimants [Redacted] percent ( *** ) of the monetary sanctions collected or to be collected in the Covered Action, for an undivided payout of approximately $3,000,000.[fn2]

We find that the record demonstrates that Claimants provided original information to the Commission that led to[fn3] the successful enforcement of the above-referenced Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)[fn4] and Rule 21F-3(a) thereunder.

We conclude that Claimants did not act voluntarily under Section 21F(b)(1) and Rule 21F-4(a) thereunder because their submission of original information to the Commission was preceded by a related information request from the Other Authority to their employer asking for a response from Claimants.[fn5] In relevant part, Rule 21F-4(a)(1) provides that “[y]our submission of information is made voluntarily . . . if you provide your submission before a request, inquiry, or demand that relates to the subject matter of your submission is directed to you or anyone representing you (such as an attorney)” by the Commission or another designated government or regulatory authority.[fn6] Rule 21F-4(a) thus establishes a straightforward, temporal test for voluntariness; the whistleblower must come forward before the Commission or other designated authorities seek information from the whistleblower.[fn7] While we do not treat an information request to an employer as necessarily “directed to” all employees who may possess responsive information,[fn8] we treat a request to an employer specifically seeking an interview of, or other information from, a particular employee as “directed to” that employee or the employee’s representative for purposes of Rule 21F4(a)(1).

Nonetheless, we have determined that it is appropriate in the public interest and consistent with the protection of investors that we exercise our discretionary authority under Section 36(a) of the Exchange Act to waive the “voluntary” requirement of Rule 21F 4(a) in light of the unique facts and circumstances of this case. In particular, we note that: (1) neither Claimant was informed of the request from the Other Authority; (2) Claimants did not learn of the existence of the Other Authority’s investigation until several months after they reported their information to the Commission; (3) Claimants’ candid discussions [Redacted] in turn prompted the Other Authority to open its investigation—thus, Claimants’ own remedial efforts, in part, were an indirect cause of the investigation that resulted in the request for information from Claimants; and (4) absent a waiver, Claimants would be subject to undue hardship and unfairness as a result of their efforts in the circumstances described here.

Moreover, applying the award criteria specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find that an award of of the monetary sanctions collected in this matter is appropriate.[fn9] In reaching that determination, we positively assessed the facts that Claimants undertook significant and timely steps to have the firm remediate the harm caused by the violations, including advocating for full disclosure of the violation and for compensation of harmed investors. We also positively assessed the following facts: Claimants promptly participated in the firm’s internal compliance system after learning of the misconduct; Claimants experienced hardships by raising concerns about the violation; Claimants assisted the Commission staff by meeting with them in-person and identifying potential witnesses; and the significant law enforcement interest in deterring violations involving retail investors.

Accordingly, it is hereby ORDERED that Claimants shall receive an award of [Redacted] percent ( *** ) of the monetary sanctions collected in the Covered Action, including any monetary sanctions collected after the date of this Order.
By the Commission.

[1] The CRS also recommended that Claimants’ claims for award in connection with an action brought by the [Redacted] (“Other Authority”), be preliminarily denied because none of Claimants’ information led to the successful enforcement of that action. See Rule 21F 3(b)(2). Claimants did not contest that determination, and as such, the CRS’s preliminary determination as to the Other Authority action became the final determination of the Commission pursuant to Exchange Act Rule 21F 11(f).
[2] We have determined to treat Claimant 1 and Claimant 2 jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted a Form TCR and their respective Forms WB-APP are substantively identical. See Exchange Act Section 21F(a)(6) (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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.
[3] In making this determination, we apply Exchange Act Rule 21F-4(c)(2) because, at the time Claimants reported their information to the Commission, there was an ongoing investigation by the Other Authority. Although we generally apply the standards set forth under Rule 21F-4(c)(1) where (as was the case in this matter) a whistleblower’s information causes us to initiate the investigation that results in the Covered Action, the more demanding standard of Rule 21F-4(c)(2) governs here because, at the time that the Claimants submitted their tip to the Commission, the conduct that was the subject of the Claimants’ information was already under investigation by the Other Authority.
[4] 15 U.S.C. § 78u-6(b)(1).
[5] The information request from the Other Authority did not reference Claimants by name but did request a response from the relevant employees—which Claimants still were as of the date of that information request.
[6] 17 C.F.R. § 240.21F-4(a)(1) (emphasis in original). See also id. § 240.21F-4(a)(2) (“If the Commission or any of these other authorities direct a request, inquiry, or demand as described in paragraph (a)(1) of this section to you or your representative first, your submission will not be considered voluntary, and you will not be eligible for an award, even if your response is not compelled by subpoena or other applicable law.”).
[7] See Whistleblower Award Proceeding No. 2018-11, Exchange Act Release No. 84046 (Sept. 6, 2018).
[8] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34309 (June 13, 2011) (“[W]e have decided not to adopt a rule that would treat a request to an employer as directed as well to all employees whose documents or information fall within the scope of the request.”).
[9] 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.

SEC

05/28/2019

Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

b. significantly contribute to the success of the Covered Action under Rule 21F-4(c)(2) of the Exchange Act.

In making this preliminary determination, we note that the record reflects that staff in the Commission’s Office of Compliance, Inspections and Examinations (“OCIE”) opened an examination into [Redacted] (” *** ” or “the Firm”) in [Redacted], and that the decision to open the examination was not based on any information or tips from any individual outside of the Commission, including the Claimants. The record further shows that in [Redacted], OCIE staff began looking into the issue of [Redacted], which became the subject of the Commission’s subsequent charges against the Firm in the Covered Action, and that OCIE staff did not look into the issue of [Redacted] because of information provided by any of the Claimants.

[Redacted].

With respect to Claimants 3 and 4, neither the exam staff, nor the Enforcement staff, received any information from Claimant 3 or 4 before or during the course of the exam or investigation that resulted in the Covered Action, their information was unrelated to the issues in the Covered Action, and their information was closed with a disposition of “no further action” ( or “NFA”) and not forwarded to Enforcement staff for further action or review.

In addition, we preliminarily deny Claimant 4’s award claim because Claimant 4 is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1). To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner that is required by Exchange Act Rule 21F-9(a), which Claimant 4 did not do. Specifically, Claimant 4 did not submit information on Form TCR or through the Commission’s on-line system. Claimant 4 also is not eligible for an award because Claimant 4 did not sign the required whistleblower declaration as required under Exchange Act Rule 21F-9(b).

By: Claims Review Staff.

SEC

85936

05/24/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in [Redacted] (“Covered Action”) and [Redacted] percent (***%) of the monetary sanctions collected, or to be collected, in a related [Redacted] action, [Redacted] (“Related Action”). These proposed awards would yield a likely payout to the Claimant of more than $4.5 million. Claimant subsequently 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 the same original information to the Commission and to the [Redacted] (“Other Agency”), and that this information led to the successful enforcement of both the Covered Action and the Related Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rules 21F-3(a) and (b) thereunder, 17 C.F.R. § 240.21F-3(a), (b).[fn1]

In reaching this determination, we have relied on Exchange Act Rule 21F-4(c)(3). Rule 21F-4(c) sets forth the circumstances under which we will find that original information submitted by a whistleblower led to the successful enforcement of a judicial or administrative action. The first two prongs of this rule—Rules 21F-4(c)(1) and (c)(2)—generally provide that this test will be met where the claimant’s original information either caused the staff to open an investigation that resulted in an enforcement action based on the reported conduct, or the claimant’s submission during an ongoing investigation significantly contributed to the success of the resulting enforcement action. Rule 21F-4(c)(3) offers an alternative path to an award for whistleblowers who report internally as well. That rule provides that original information will be deemed to have led to the successful enforcement of a judicial or administrative action if:

You reported original information through an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law before or at the same time you reported them to the Commission; the entity later provided your information to the Commission, or provided results of an audit or investigation initiated in whole or in part in response to information you reported to the entity; and the information the entity provided to the Commission satisfies either paragraph (c)(1) or (c)(2) of this section. Under this paragraph (c)(3), you must also submit the same information to the Commission in accordance with the procedures set forth in §240.21F-9 within 120 days of providing it to the entity.

Rule 21F-4(c)(3) was one of several provisions we adopted as part of our whistleblower rules to incentivize whistleblowers to utilize internal compliance and reporting systems where appropriate.[fn2]

Applying Rule 21F-4(c)(3) to the facts of this matter, we find as follows: Initially, Claimant reported Claimant’s concerns to [Redacted] of [Redacted] (the “Company”)—persons responsible for the Company’s compliance with the law. Within 120 days of doing so, Claimant reported the same information to both the Commission, utilizing the procedures set forth in Rule 21F-9, and to the Other Agency.[fn3] Although the staffs never communicated with Claimant or Claimant’s counsel, the Company informed the Commission and the Other Agency about the tip it had received, and subsequently provided the results of an internal investigation it initiated in response to the tip. The Company’s report satisfied the requirements of Rule 21F-4(c)(1) because the Company’s findings were a principal motivating factor in the decisions of our staff and the staff of the Other Agency to open their respective investigations,[fn4] and the resulting Covered Action and Related Action were based in part on the conduct alleged by Claimant. Based on these facts, we find that Claimant’s original information led to the successful enforcement of the Covered Action and the Related Action under the standards set forth in Rule 21F-4(c)(3).

Applying the award criteria specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find that the proposed award percentages for both the Covered Action and the Related Action are appropriate.[fn5] In reaching that determination, we positively assessed the fact that Claimant’s information was highly significant because Claimant’s tip to the Company caused the Company first to alert the Commission and the Other Agency to the Company’s ongoing violations, and then to perform an internal investigation, the results of which were provided to the Commission’s and the Other Agency’s investigative staffs. Further, the Commission’s law enforcement interest was high here both because of the difficulty in discovering violations occurring outside the United States and because this matter involved a company [Redacted]. In addition, we credit the Claimant with having participated in the Company’s internal compliance procedures by first reporting the information to persons at the Company responsible for internal compliance. However, we also note that the staffs had no direct dealings with Claimant or Claimant’s counsel (hence, Claimant did not render continuing assistance to the investigations), and further that the Covered Action and the Related Action involved two sets of allegations, only one of which related to Claimant’s original information and that the other part of the case, concerning other misconduct, was not related or attributable to any information provided by Claimant.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( *** %) of the monetary sanctions collected in the Covered Action, and [Redacted] percent ( *** %) of the monetary sanctions collected in the Related Action, as well as any monetary sanctions collected in either action after the date of this Order.

By the Commission.

[1] See In the Matter of Claim for Award, Rel. No. 34-84046 (Sept. 6, 2018) (for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”) (citing Rule 21F-11(c)). The CRS also preliminarily denied Claimant’s award claim in connection with a previous action against the same defendant, [Redacted] that was in some respects related to the Covered Action in this matter. Claimant filed a response contesting that preliminary denial, but following the CRS’s Preliminary Determination recommending an award to Claimant in connection with the instant Covered Action, Claimant withdrew Claimant’s request for reconsideration in connection with the previous action. As such, the CRS’s Preliminary Determination with respect to Claimant’s award claim in the previous action has become the final order of the Commission.

[2] See Securities Whistleblower Incentives and Protections, 76 FR 34300, 34301 (June 13, 2011).

[3] By virtue of making a whistleblower submission to the Commission within 120 days, Claimant is also deemed to have reported to the Commission at the same time that Claimant originally reported to the Company. See Rule 21F-4(b)(7). Claimant later provided copies of other communications between Claimant and the Company, which did not prove useful to the investigation.

[4] See Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, 75 FR 70488, 70497 (Nov. 17, 2010). The investigations were also opened as a result of certain other conduct reported by the Company that was unrelated to Claimant’s tip.

[5] 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 Covered Action; (3) the 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.

SEC

85793

05/07/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of the whistleblower award claim submitted by [Redacted] (“Claimant” ) in connection with Covered Action [Redacted] (the “Covered Action”). Claimant filed a timely response contesting the preliminary denial. For the reasons discussed below, Claimant’s award claim is denied.

I. Background.

On [Redacted] the Commission filed a civil injunctive action in federal district court charging [Redacted] (collectively, the “Covered Action Defendants”), [Redacted]. On [Redacted] the district court entered a final judgment, in settlement of the Commission’s charges with the consent of the Covered Action Defendants, that ordered them to pay [Redacted]. The final judgment also [Redacted].

On [Redacted] the Commission’s Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. 1 Claimant filed a timely whistleblower award application. The application asserted that Claimant had voluntarily provided original information to Commission staff via telephone about violations of the federal securities laws by the Covered Action Defendants. The application further asserted that Claimant later worked with employees at [Redacted] (the “Firm”), where Claimant was [Redacted] to provide information to the staff that contributed to the success of the Covered Action. The application also pointed to a Form TCR submitted by Claimant in [Redacted] as supporting the award claim.

II. Preliminary Determination and Response.

The CRS preliminarily determined to deny Claimant’s award claim. The record of that preliminary determination included a declaration (“Initial Declaration”) by a member of the Commission’s staff who had served as a staff attorney on the investigation and the litigation of the Covered Action. The Initial Declaration explained that the staff had opened a matter under inquiry on [Redacted] in response to information received on an anonymous telephone call on or before [Redacted] and that the staff later converted the matter to a formal investigation on [Redacted]. Moreover, the Initial Declaration explained that on [Redacted] the staff sent the Firm a document request pursuant [Redacted] based on the Firm’s [Redacted] by the Covered Action Defendants. But, the Initial Declaration continued, the Firm “did not provide any information that substantially advanced the [investigation] or strengthened our position in the [litigation]” of the Covered Action. The Initial Declaration also explained that by the time Claimant submitted a Form TCR in [Redacted] the Covered Action was already in litigation and, in any event, the Form TCR referenced information already produced by the Firm and “did not contain any new information that was used in any way in” the litigation.

The CRS therefore gave three reasons for its preliminary denial of Claimant’s award application: First, any information provided by Claimant prior to the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) on July 21, 2010, did not qualify as “original” information under Exchange Act Rule 21F-4(b)(iv). Second, any information submitted by the Firm starting in [Redacted] in response to the staff’s requests was provided by the Firm, and not by Claimant. As such, Claimant was not a “whistleblower” at that time under Exchange Act Rule 21F-2(a)(1). Third, the information in Claimant’s [Redacted] Form TCR did not lead to the successful enforcement of the Covered Action under Exchange Act Rule 21F-4(c)(1)-(2), and the information also was not original because the same information was already in the Commission’s possession by that date.

After requesting and reviewing the record supporting the Preliminary Determination, Claimant submitted a written request for reconsideration. In the request, Claimant asserts that Claimant was the person who provided the anonymous tip via telephone call that prompted the staff to open its investigation in [Redacted] and that Claimant further “provided the staff with a complete summary of the facts in this matter as I knew them” prior to the staff’s document request to the Firm in [Redacted] Claimant also believes that the staff issued this document request to the Firm because of information Claimant had provided rather than because of any other information in the staff’s possession. And Claimant asks that “any technical flaws in my claim that may exist (e.g., timing of tip . . . )” be excused “to the extent that your office has any discretion in this matter (e.g., the Whistleblower Program was very new and the current procedural requirements didn’t exist at that time).”

OWB asked Claimant to supplement the request for reconsideration by answering certain written questions,[fn3] which Claimant did by facsimile. In this supplement, Claimant explains that Claimant provided additional information to staff verbally rather than in writing during the period between the enactment of Dodd-Frank on July 21, 2010, and the staff’s document request to the Firm on [Redacted]. Claimant also asserts that prior to this document request Claimant directed a colleague to create a document memorializing certain facts concerning the misconduct charged in the Covered Action (the “Memo”), that the information in the Memo was verbally communicated by Claimant to the staff prior to the document request, and that the Memo itself was provided to the staff later in [Redacted].

III. Analysis

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn4] For the reasons that follow, we conclude that Claimant’s whistleblower award claim should be denied.

A. Information provided prior to Dodd-Frank.

Claimant does not dispute that, as reflected in the Initial Declaration, the Commission’s staff opened the investigation that culminated in the Covered Action on [Redacted] in response to an anonymous tip received by telephone call on or before [Redacted]. Even assuming that Claimant was the person who provided the anonymous tip to the staff, that tip was undisputedly provided prior to the enactment of Dodd-Frank on July 21, 2010, and therefore does not qualify as original information under Exchange Act Rule 21F-4(b)(iv).[fn5]

Claimant asks that we excuse this noncompliance with Rule 21F-4(b)(iv) as a mere technicality. But, as we have previously explained, the Rule implements the considered policy judgment of Congress, as reflected in the text and history of Dodd-Frank, that the whistleblower award program in Exchange Act Section 21F was designed to create new incentives for persons to provide information to the Commission after Dodd-Frank’s enactment, rather than to reward persons who already had provided information in the past.[fn6] Against this backdrop, Claimant offers no reason to believe that an exemption for information provided prior to Dodd-Frank would be appropriate in the public interest or consistent with the protection of investors.[fn7] While we commend Claimant for any efforts Claimant made to alert the staff to possible misconduct in this matter, we have never before granted an exemption from Rule 21F-4(b)(iv), and we decline Claimant’s invitation to do so now.

B. Information provided after Dodd-Frank and before the staff’s document request to the Firm.

Claimant also does not dispute that any information Claimant submitted to the Commission’s staff between July 21, 2010, and [Redacted] (the date of the staff’s document request to the Firm) was provided verbally rather than in writing. Claimant’s submissions during this period thus failed to comply with Exchange Act Rule 21F-9(d), which requires that any information submitted after Dodd-Frank but before the effective date of our whistleblower rules must have been provided in writing, in order for the submitter to be considered a whistleblower. Claimant therefore was not a whistleblower during this period.

To the degree that Claimant could be understood as asking us to excuse this noncompliance with Rule 21F-9(d), we decline to do so. We previously have exercised our discretionary exemptive authority to excuse noncompliance with Rule 21F-9(d) where we determined, due to highly unusual circumstances, that an exemption would be appropriate in the public interest and consistent with the protection of investors.[fn8] In particular, the records in these cases unambiguously established that: (i) prior to Dodd-Frank, the claimant was actively working with the staff, (ii) after Dodd-Frank, the claimant provided new information in a format expressly requested by the staff, and (iii) the indicia of reliability and certainty were clearly satisfied with respect to the time the information was provided, thus fulfilling the principal policy rationale underlying the writing requirement of Rule 21F-9(d).[fn9]

By contrast, the record in this case does not clearly establish what information Claimant provided verbally, when, or whether Claimant in fact provided any information at all. When OWB asked Claimant to supplement the request for reconsideration by specifying the dates, contents, and recipients of Claimant’s post-Dodd-Frank submissions, Claimant conceded, “Unfortunately, I do not have a firm recollection of all the individuals I spoke to at that time (and when) and exactly what was conveyed during each such communication.” Further, responding to Claimant’s assertions, the staff attorney assigned to the investigation reaffirmed his Initial Declaration, in which he describes his sole experience with Claimant as being the Firm’s principal point of contact for purposes of coordinating the Firm’s response to the staff’s document request. This case illustrates the importance of the requirement of Rule 21F-9(d) that a submission prior to the effective date of our rules be made “in writing” for a claimant to qualify as a whistleblower and the reasons for our reluctance to grant exemptions to the rule. The record here lacks the requisite indicia of reliability and certainty with respect to the time(s) Claimant purportedly provided information to the staff between July 2010 and [Redacted] as well as with respect to the contents and recipients of any such submissions. We therefore conclude that Claimant has failed to meet Claimant’s burden[fn10] to show that an exemption would be appropriate in the public interest and consistent with the protection of investors,[fn11] in light of the need for reliability and certainty that underlies the writing requirement of Rule 21F-9(d).

C. Information provided after the staff’s document request to the Firm.

Claimant also was not a whistleblower with respect to information provided after the [Redacted] staff’s document request to the Firm on The record reflects that the staff directed its information request to the Firm, and that responsive information was provided by the Firm, with Claimant acting as the principal point of contact at the Firm given Claimant’s roles as [Redacted] As such, Claimant did not provide such information in an individual capacity and thus was not a whistleblower under Exchange Act Rule 21F-2(a)(1).

Claimant tries to take credit for information provided by the Firm by suggesting that it was Claimant’s prior sharing of information that prompted the staff to issue the document request to the Firm. But we reject this assertion in light of the more plausible explanation in the Initial Declaration that the document request to the Firm was prompted rather by the staff’s “understanding that [the Firm] [Redacted] [the Covered Action Defendants], and, as such, [the staff] believed that [the Firm] might have documents and other information relevant to the” investigation.

Claimant likewise attempts to take credit for a Memo that, Claimant asserts, was created by a colleague at Claimant’s direction to memorialize facts relevant to the misconduct. But Claimant concedes that this document was provided to the staff only in [Redacted] well after the staff’s document request. Moreover, the email cited by Claimant as submitting this Memo to the staff was sent from Claimant’s email address at the Firm, with a signature identifying Claimant as [Redacted] of the Firm. Thus, the record simply does not reflect that Claimant provided the Memo to the staff in an individual capacity.

Even if we were to give Claimant credit for any of the information provided by the Firm, this information would still fail to support an award for the alternative reason that none of this information led to the successful enforcement of the Covered Action. The Initial Declaration emphatically states that the staff “had already obtained a significant amount of information from other parties” prior to the document request to the Firm and that “the information provided by [the Firm] corroborated, but did not materially add to, information [the staff] had already learned during the” investigation. As a result, the Initial Declaration explains, the Firm “did not provide any information that substantially advanced the [investigation] or strengthened our position in the [litigation].” Therefore, none of the information for which Claimant seeks credit significantly contributed to the successful enforcement of the Covered Action under Exchange Act Rule 21F-4(c)(2).[fn12]

D. Information provided in the [Redacted] Form TCR.

Finally, Claimant does not contest the Preliminary Determination of the CRS that Claimant’s [Redacted] Form TCR does not provide a basis for granting a whistleblower award. Accordingly, Claimant has forfeited any challenge in this respect. Even if Claimant did raise such a challenge, the Initial Declaration fully supports the CRS’s preliminary conclusions that the information provided by Claimant in the [Redacted] Form TCR did not lead to the successful enforcement of the Covered Action under Exchange Act Rule 21F-4(c)(1) & (2)[fn13] and that the information also was not original.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] See Exchange Act Rule 21F-10(b).

[2] [Redacted].

[3] See Exchange Act Rules 21F-8(b), 21F-10(d).

[4] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[5] See also Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[6] See generally In the Matter of the Claim for Award, Release No. 34-70772 (Oct. 30, 2013), pet. rev. denied sub nom. Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[7] See Exchange Act Section 36(a), 15 U.S.C. § 78mm(a).

[8] See Exchange Act Section 36(a), 15 U.S.C. § 78mm(a).

[9] See In the Matter of Claims for Award, Release No. 34-82181, at n.5 (Nov. 30, 2017); In the Matter of the Claim for Award, Release No. 34-81227, at n.4 (July 27, 2017); In the Matter of Claim for Award, Release No. 34-79747, at n.3 (Jan. 6, 2017).

[10] See, e.g., In the Matter of the Claim for Award, Release No. 34-77368 (Mar. 14, 2016) (“We believe that none of the Claimants has met their burden to demonstrate any considerations that would satisfy the requirements for us to exercise our Section 36(a) exemptive authority.”), pet. rev. denied, 707 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018), reh’g denied, 138 S. Ct. 2715 (2018); Definition of Terms in and Specific Exemptions , Release No. 34-44291 (May 11, 2001) (“As a general matter, under the federal securities laws, parties relying on an exception or exemption have the burden of demonstrating that they qualify for such exception or exemption. “).

[11] See Exchange Act Section 36(a), 15 U.S.C. § 78mm(a).

[12] As already discussed, it is undisputed that the staff’s investigation was opened prior to the staff’s document request to the Firm, and thus the Firm’s information could not have prompted the opening of the investigation. See Exchange Act Rule 21F-4(c)(1).

[13] As we have previously explained, a claimant’s TCR submission “may not piggyback off of the contributions to the [i]nvestigation that resulted from the earlier disclosures of the original information. ” Rather, a claimant must demonstrate that something unique about the claimant’s submission of the same information in a later-filed TCR made an additional significant contribution to the success of the covered action. See In the Matter of Claims for Award, Release No. 34-82181 (Nov. 30, 2017).

CFTC

05/06/2019

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from five claimants in response to the Commission’s Notice of Covered Action No. [Redacted] regarding [Redacted] (“Covered Action”) and a related action, [Redacted] (“Related Action”) brought by [Redacted] (“Federal Regulator”). The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** percent (***%) of the monetary sanctions collected in the Covered Action and the Related Action. This recommended award percentage would yield a payment of $***, based on the funds recovered in the Covered Action and Related Action to date.

The recommendation of the CRS with respect to Claimant 1 is adopted. We find that the record demonstrates that he/she voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the Commodity Exchange Act (“CEA” or “Act”). 7 U.S.C. § 26(b)(1) (2012). The information Claimant 1 provided was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based in part on conduct that was the subject of the original information provided by Claimant 1. The information provided by Claimant 1 was directly incorporated into strategy involving witness interviews, and his/her early assistance saved Commission resources through his/her explanation of a complex scheme. Claimant 1 also appears to have attempted to report his/her concerns internally [Redacted] prior to reporting to the Commission and the Federal Regulator, which also weighs in favor of a high-percentage award.

We also find that Claimant 1’s information led to the successful resolution of the Related Action brought by the Federal Regulator because the action was based, at least in part, on the original information that Claimant 1 voluntarily submitted to the Commission, and led to the successful resolution of the Commission action. See 7 U.S.C. § 26(a)(5); 17 C.F.R. § 165.11.

In addition, the Preliminary Determination recommended that the award applications submitted by four other Claimants be denied. The Preliminary Determination found that the information provided by Claimant 2, Claimant 3, Claimant 4, and Claimant 5 was not useful to the Commission’s investigation and, therefore, did not lead to the successful enforcement of the Covered Action. On or about [Redacted], Claimant 4 submitted a letter and appended several documents in response to the Preliminary Determination. The CRS reviewed Claimant 4’s response to the Preliminary Determination and confirmed that the information provided by Claimant does not relate to the Covered Action or Related Action. We agree with the CRS’s determination; accordingly, Claimant 4’s claim is denied.

The other three Claimants—Claimant 2, Claimant 3, and Claimant 5—failed to submit a request for reconsideration of the Preliminary Determination, and, therefore, the Preliminary Determination denying their claims for an award has become the Final Order of the Commission. 17 C.F.R. § 165.7(h) (2018).

Accordingly, it is hereby ORDERED that Claimant 1 shall receive an award of *** percent (****%) of the monetary sanctions collected in the Covered Action and in the Related Action; and it is further ORDERED that Claimant 4’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] [Redacted] has fully paid the $[Redacted] ordered in connection with the Covered Action, and [Redacted] has fully paid the $[Redacted] ordered in connection with the Related Action. Accordingly, a ***% award would yield Claimant I a payment of $[Redacted] based on the amounts collected.

SEC

85412

03/26/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination related to Covered Action [Redacted] (“Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant 1”)receive a whistleblower award of *** in the Covered Action and that [Redacted] (“Claimant #2”) receive a whistleblower award of *** in the Covered Action. The Preliminary Determination also recommended that the award application submitted by [Redacted] (“Claimant #4”) be denied. [Redacted] (referred to herein as “Claimant #7”) subsequently filed an untimely award claim in connection with the Covered Action. The CRS issued a second Preliminary Determination denying Claimant #7’s untimely award claim. Claimants #4 and #7 filed timely responses contesting the preliminary denial of their award claims.[fn1]

For the reasons stated below, we make the following determinations: Claimant #1’s award claim is approved in the amount of *** of the monetary sanctions collected in the Covered Action, for a payout of more than $13,000,000; Claimant #2’s award claim is approved in the amount of *** of the monetary sanctions collected in the Covered Action, excluding the amount upon which Claimant #2’s award from [Redacted] (“Other Agency”) was based, for a payout of more than $37,000,000; and the applications submitted by Claimants #4 and #7 are denied.

I. Background.

A. The award program.

In 2010, Congress added Section 21F to the Securities Exchange Act of 1934 (the “Exchange Act”). Among other things, Section 21F authorizes the Commission to pay monetary awards—subject to certain limitations, exclusions, and conditions—to individuals who voluntarily provide the Commission with original information about a violation of the securities laws that leads to a successful Commission judicial or administrative action in which the monetary sanctions exceed $1,000,000.[fn2] The total award amounts paid shall be “not less than 10 percent, in total, of what has been collected of the monetary sanctions” and “not more than 30 percent, in total, of what has been collected[.]”[fn3]

B. Relevant facts.

On [Redacted], the Commission instituted a settled administrative and cease-and-desist proceeding in the Covered Action. The Commission charged [Redacted] (inclusive of all subsidiaries or affiliates, “the Firm”). [Redacted].

In the same order, the Commission also charged [Redacted].

In addition to other relief, the Commission ordered [Redacted] all of which has been paid in full.[fn4]

Because the monetary sanctions imposed on the Respondents exceeded the statutory threshold for a potential whistleblower award under Section 21F of the Exchange Act, the Office of the Whistleblower (“OWB”) posted Notice of Covered Action (“NoCA”) [Redacted] for the Covered Action on the Commission’s public website.

II. Claimant #1.

We find that Claimant #1 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder.[fn5] Based on our review of the record, including declarations from Commission staff who handled the Covered Action, we find the following events occurred with respect to Claimant #1’s award application.

On [Redacted], counsel for Claimant #1 met with staff in the Commission’s Division of Enforcement (“Enforcement”) to brief staff about a tip that Claimant #1 would be making concerning the Firm. On the same date, staff opened a Matter Under Inquiry (“MUI”). A few days later, Claimant #1 submitted an online tip alleging, among other things, that the Firm had [Redacted]. Staff elevated the MUI to an investigation on [Redacted] (hereinafter, “First Investigation”). During the First Investigation, Claimant #1 met with staff one time to provide additional information and assistance.

Based on the foregoing contributions that Claimant #1 made to the Commission’s successful pursuit of this Covered Action, and considering the relative contributions of Claimant #1 vis-à-vis the other meritorious whistleblower in this matter, we adopt the Preliminary Determination’s recommendation that Claimant #1 should receive *** of the monetary sanctions collected in the Covered Action. In reaching this determination, we have carefully considered the award criteria specified in Exchange Act Rules 21F-5 and 21F-6 as they relate to Claimant #1’s contributions to the Covered Action. In particular, we have considered the facts that the information Claimant #1 provided to the Commission was significant in that one of the findings in the Commission’s Order concerning [Redacted] was based on Claimant #1’s information; and that Claimant #1 provided some additional assistance to the Enforcement staff during the First Investigation. We also have taken into account that Claimant #1 unreasonably delayed in reporting the information to the Commission, during which time investors were continuing to suffer harm and the disgorgement amounts upon which Claimant #1’s award will be based were growing, and that Claimant #1 passively financially benefitted from the underlying misconduct during a portion of the period of delay.

III. Claimant #2.

We find that Claimant #2 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder.[fn6] Based on our review of the record, including declarations from Commission staff who handled the Covered Action, we find the following events occurred with respect to Claimant #2’s award application.

On [Redacted], Claimant #2 submitted a specific and detailed whistleblower tip alleging that the Firm had engaged in [Redacted]. Claimant #2 alleged that [Redacted]. The tip also alleged that the Firm had [Redacted]. The whistleblower submission was accompanied by a number of key documents that substantiated the allegations about [Redacted] as well as demonstrated [Redacted].

On [Redacted] — following two meetings with Claimant #2 and Claimant #2’s counsel — Enforcement staff opened a new and separate investigation (the “Second Investigation”) (the First and Second Investigations are referred to herein collectively as the “Covered Action Investigations”) focused on Claimant #2’s allegations. During the Second Investigation, Claimant #2 met with Enforcement staff two additional times and provided information and documentation that were of a significantly high quality and critically important to staff’s ability to bring the Covered Action Investigations to an efficient and successful resolution. The documents Claimant #2 provided staff were akin to “smoking gun” evidence in that they indisputably showed that [Redacted].

Based on the foregoing contributions that Claimant #2 made to the Commission’s successful pursuit of this Covered Action, and considering the relative contributions of Claimant #2 and Claimant #1 to this matter, we adopt the Preliminary Determination’s recommendation that Claimant #2 should receive *** of the monetary sanctions collected in the Covered Action, excluding the amount of monetary sanctions for which Claimant #2 has already received an award from the Other Agency under its whistleblower award program.[fn7] In reaching this determination, we have carefully considered the award criteria specified in Exchange Act Rules 21F-5 and 21F-6 as they relate to Claimant #2’s contributions to the Covered Action. In particular, we have considered the facts that Claimant #2’s information was highly significant and critical to the success of the Covered Action; that Claimant #2 acted swiftly in reporting the information to the Commission; and that Claimant #2 provided continuing additional assistance to the Enforcement staff.

IV. Claimant #4’s Claim Is Denied.

A. Preliminary Determination.

The CRS preliminarily determined to deny Claimant #4’s award claim because Claimant #4’s information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. None of the information submitted by Claimant #4 caused the Commission in connection with this Covered Action to: (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary determination, the CRS considered record evidence—including a declaration from an Enforcement staff member assigned to the Covered Action Investigations (hereinafter, “Responsible Covered Action Staff”)—that revealed that the information provided to the Commission by Claimant #4 did not contribute in any way to the Covered Action Investigations or assist with any of the charges brought in the Covered Action.

In [Redacted], Claimant #4’s counsel approached staff in the [Redacted] Regional Office (“Regional Office Staff”) with allegations concerning certain [Redacted] by the Firm, including related [Redacted]. Counsel met with Regional Office Staff, submitted a tip through the Commission’s online portal, and provided additional documents, including [Redacted] between Claimant #4 and the Firm. Based on Claimant #4’s information, exam staff in the Regional Office opened an exam, and, in [Redacted] referred to Enforcement staff the exam’s findings that the Firm had [Redacted]. The resulting enforcement investigation led to a successful enforcement action against the Firm (“Other Covered Action”).[fn8] In the Other Covered Action, the Commission found that, between [Redacted]. The Commission issued a whistleblower award to Claimant #4 in connection with the Other Covered Action.

Although the Regional Office investigation was focused on [Redacted], in [Redacted], staff assigned to the Regional Office investigation became aware that other Commission staff were pursuing an investigation of the Firm related to [Redacted] issues, which was a particular focus of Claimant #4’s counsel.

In [Redacted], after the First and Second Investigations had opened, Regional Office Staff forwarded the [Redacted] that Claimant #4 had provided to the Responsible Covered Action Staff. Responsible Covered Action Staff provided a declaration affirming that the [Redacted] did not contain any information that was useful to their investigations, and that they did not take any further action based on this information. Responsible Covered Action Staff had no communications with Claimant #4 or Claimant #4’s counsel, and nothing in the [Redacted] contributed to the success of the Covered Action.

B. Response.
Claimant #4’s Response makes the following principal contentions. First, Claimant #4 argues that Claimant #4’s tip alleged not only misconduct relating to [Redacted] (which, as noted, was the subject of the Other Covered Action), but also the Firm’s [Redacted]. As such, Claimant #4 contends that Claimant #4’s tip was the first, on-point tip the Commission received relating to the issues in the Covered Action. Claimant #4 argues that the declaration provided by the Responsible Covered Action Staff does not accurately consider the significance of Claimant #4’s tip or [Redacted]. Second, Claimant #4 contends that Claimant #4 should not be denied an award because the tip was not triaged properly or because of a breakdown in communication between the Commission’s offices. Along with the Response, Claimant #4 submits affidavits and other exhibits detailing the contacts and communications between Claimant #4’s counsel and Regional Office Staff and between counsel and OWB staff. Based on discussions with Regional Office Staff, Claimant #4’s counsel understood that Claimant #4’s information was valuable and would be shared with other Commission offices.
C. Analysis.
We find that, as the record clearly demonstrates, Claimant #4 did not provide information that led to the successful enforcement of the Covered Action under Section 21F(b)(1) of the Exchange Act and Rules 21F 3(a)(3) and 21F-4(c) thereunder. In reaching this conclusion, we have carefully considered the entire record as it relates to Claimant #4’s award application, including the materials that Claimant #4 submitted in response to the Preliminary Determination and the detailed supplemental declaration prepared by the Responsible Covered Action Staff (“Supplemental Declaration”), as well as a declaration from Regional Office Staff who met with Claimant #4’s counsel (“Regional Office Declaration”). Under the whistleblower rules, as relevant here, an individual’s original information leads to the success of an action where it causes the staff to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or alternatively, where in the context of an existing investigation, the individual’s original information significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn9] In determining whether an individual’s information significantly contributed to an action, we consider factors such as whether the information allowed us to bring: the action in significantly less time or with significantly fewer resources; additional successful claims; or successful claims against additional individuals or entities.[fn10] The individual’s information must have been “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn11] As discussed below, Claimant #4’s information does not satisfy either prong of the “led to” requirement, as the information did not cause the Responsible Covered Action Staff to open the Covered Action Investigations, and it did not significantly contribute to the success of the Covered Action.[fn12] In the first place, we find based on the record evidence that Claimant #4’s information did not cause the staff to open either of the two investigations that culminated in the Covered Action. The initial and supplemental declarations by the Responsible Covered Action Staff state unequivocally that the staff opened the MUI that became the First Investigation on [Redacted] as a result of information provided by Claimant #1 through counsel that same day, and that
the staff opened the Second Investigation on [Redacted] as a result of information provided by Claimant #2. Although Claimant #4’s counsel initiated contact with the Regional Office Staff on [Redacted] Claimant #4’s information was forwarded by the Regional Office Staff and reviewed by the Responsible Covered Action Staff only in [Redacted] after both of the Covered Action Investigations were already opened. Moreover, the Regional Office Declaration corroborates this timeline.[fn13] Claimant #4 offers no reason to doubt the staff declarations in the record and instead argues that Claimant #4’s tip should be credited as first in time for this Covered Action because Claimant #4’s counsel met with Regional Office Staff on [Redacted] —three days before the MUI was opened in the First Investigation—and followed up with a formal tip through the Commission’s website on [Redacted] Even assuming that Claimant #4 was first in time, however, that fact would be relevant at most to our consideration of whether any later claimant’s information was sufficiently “original” to qualify for an award,[fn14] and would fail, by itself, to establish Claimant #4’s own entitlement to an award. What matters for Claimant #4’s award claim under Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c)(1) is not whether Claimant #4’s information was first in time but whether that information led to the success of the Covered Action by causing the staff to open either of the Covered Action Investigations.[fn15] The undisputed evidence shows that it did not. Claimant #4 also contends that Claimant #4’s initial tip should have been forwarded to and reviewed by the Responsible Covered Action Staff when it was submitted in [Redacted] not later in [Redacted] and that this delay was inconsistent with the policies on the OWB website and in the Division of Enforcement Manual. We find that Claimant #4 has failed to demonstrate any error by the staff. As the Regional Office Declaration explains, Claimant #4’s tip was properly triaged and prompted the examination that culminated in the Other Covered Action for which Claimant #4 has already received an award; and after the Regional Office Staff learned of the Covered Action Investigations in or about [Redacted] they forwarded Claimant #4’s [Redacted] to the Responsible Covered Action Staff for their independent assessment.[fn16] In any event, even assuming the staff erred in processing Claimant #4’s information, that fact would fail to establish Claimant #4’s entitlement to an award. What matters for Claimant #4’s award claim is that the undisputed evidence shows that, regardless of any such error, Claimant #4’s information did not lead to the Covered Action by causing the staff to open either of the Covered Action Investigations.[fn17] Furthermore, we also find based on the record evidence that Claimant #4’s information did not significantly contribute to the success of the Covered Action. The Supplemental Declaration emphatically states that “none of the information provided by [Claimant #4] …
helped advance the … Investigations, played any role in our settlement negotiations with [the Firm], or affected any of the charges brought by the Commission” in the Covered Action.[fn18] The same declaration also explains why the Responsible Covered Action Staff determined not to use or further pursue Claimant #4’s information: Claimant #4’s submissions addressed [Redacted] issues gleaned from Claimant #4’s [Redacted] and did not address how the Firm had [Redacted] which was the core misconduct investigated by the staff and charged by the Commission in the Covered Action. Further, the First Investigation had been ongoing for over a year by the time the Responsible Covered Action Staff received the [Redacted] and, in any event, focused on [Redacted] and hence was not a subject of Claimant #4’s tip. In addition, before the Responsible Covered Action Staff received the [Redacted] they spent many hours over two days interviewing Claimant #2, [Redacted] who was able to provide direct evidence showing that [Redacted]. Against this backdrop of the different investigative focus and the compelling evidence already obtained, the Responsible Covered Action Staff did not find Claimant #4’s [Redacted] to be helpful.[fn19]
V. Claimant #7’s Claim is Denied.
A. Preliminary Determination.
On [Redacted] Claimant #7 submitted a single untimely application for award on Form WB-APP in connection with 7 different Covered Actions, including Covered Action [Redacted]. This submission was approximately 15 months after the deadline for filing award claims in this matter, as OWB posted NoCA [Redacted] on [Redacted] and thus all whistleblower award applications were due 90 days later on [Redacted].[fn20] On [Redacted] the CRS preliminarily denied Claimant #7’s award claim in the Covered Action as untimely.
B. Response.
Claimant #7 submitted a timely request for reconsideration. Claimant #7 contends that the Commission has “a pattern and practice of avoidance not communicating the status of covered actions” and that the agency never alerted Claimant #7 to the issue of filing for a whistleblower award in the Covered Action. Claimant #7 was under the impression that the Commission would contact claimants about filing an award application. Claimant #7 also attached a series of emails to the reconsideration request between Claimant #7 and various Commission staff concerning issues not related to this Covered Action, as well as Claimant #7’s demands for payment.
C. Analysis.
The 90-day deadline set forth in Rule 21F-10(b) serves several important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that we can make timely awards to meritorious whistleblowers.[fn21] Notwithstanding these important programmatic functions, we recognize that there may be rare situations where an exception should be made. To allow for this, Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive” the 90-day filing requirement “upon a showing of extraordinary circumstances.”[fn22] We have explained that the “extraordinary circumstances” exception is “narrowly construed” and requires an untimely claimant to show that “the reason for the failure to timely file was beyond the claimant’s control.”[fn23] Further, we have identified “attorney misconduct or serious illness” that prevented a timely filing as two examples of the “demanding showing” that an applicant must make before we will consider exercising our discretionary authority to excuse an untimely filing.[fn24] Applying that demanding standard here, we find that Claimant #7 has failed to show that extraordinary circumstances beyond Claimant #7’s control were responsible for the roughly 15-month delay between the application deadline for NoCA [Redacted] in [Redacted] and Claimant #7’s untimely whistleblower award application in [Redacted] Contrary to Claimant #7’s contentions, the Commission is not obligated to notify a claimant of the posting of a NoCA or the deadline for submitting an award application.[fn25] As we have explained, our whistleblower rules provide “for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim.”[fn26] The NoCA for this matter was clearly posted on the Commission’s website, along with the deadline. Under our rules, that is all the notice that Claimant #7 was due. Despite Claimant #7’s asserted unawareness of this notice, “a lack of awareness about the [whistleblower award] program does not … rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.”[fn27] “A potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim.”[fn28] Claimant #7’s failure to regularly monitor the Commission’s web page for NoCA postings is not an “extraordinary circumstance” that might trigger our discretion to excuse the fact that Claimant #7 submitted the award application approximately 15 months late.
VI. Conclusion.
Accordingly, it is ORDERED that Claimant #1 shall receive an award of *** percent *** of the monetary sanctions collected in the Covered Action.
ORDERED that Claimant #2 shall receive an award of [Redacted] percent *** of the monetary sanctions collected in the Covered Action, excluding the amount upon which Claimant #2’s award from the Other Agency was based.

ORDERED that Claimant #4’s whistleblower award claim be denied.
ORDERED that Claimant #7’s whistleblower award claim be denied.
By the Commission.
[1] The Preliminary Determination further recommended that the award applications submitted by three other claimants be denied. Those three claimants failed to submit a response contesting the Preliminary Determination and, therefore, the Preliminary Determination denying their claims for awards has become the final order of the Commission with respect to their award applications.
[2] See Exchange Act §§ 21F(a) & (b).
[3] Exchange Act § 21F(b)(1). We note that, in the context of an award proceeding involving two or more meritorious whistleblower claimants, the award must be allocated among the claimants and may never exceed an aggregate percentage amount of 30% of the monetary sanctions collected. See Exchange Act Rule 21F-5(c) (explaining that “[i]f the Commission makes awards to more than one whistleblower in connection with the same action or related action,” then “in no event will the total amount awarded to all whistleblowers in the aggregate be … greater than 30 percent of the amount the Commission or the other authorities collect”).
[4] On the same day, the Other Agency instituted administrative proceedings against the Firm for [Redacted] (hereinafter, “Other Agency Action”). In settlement of those proceedings, the Other Agency ordered the Firm to pay [Redacted]. By the terms of this order, [Redacted]. Both Claimant #1 and Claimant #2 applied for a related action award in connection with the Other Agency Action. The CRS preliminarily determined to deny the related action award claims because enforcement actions by the Other Agency do not qualify as related actions under the Commission’s whistleblower rules. [Redacted]. Neither Claimant #1 nor Claimant #2 contested the preliminary denial of their related action claims. As a result, the CRS’s Preliminary Determination of the related action claims became the final determination of the Commission pursuant to Exchange Act Rule 21F-11(f).
[5] 17 C.F.R. § 240.21F-3(a).
[6] 17 C.F.R. § 240.21F-3(a).
[7] On [Redacted] the Other Agency issued Claimant #2 a whistleblower award of [Redacted] calculated as *** of the full [Redacted] of monetary sanctions in the Other Agency Action—including both the [Redacted] payable to the Other Agency and also the [Redacted]. As a result, were we to grant Claimant #2 an award based on the full amount of monetary sanctions collected in the Covered Action, we would effectively grant Claimant #2 a second award with respect to the same [Redacted] that was paid just once in satisfaction of both orders. We believe this situation exposes an ambiguity in the operation of the organic statutes for our whistleblower program and that of the Other Agency, both of which [Redacted]. First, Congress wrote Dodd-Frank to establish a 30% ceiling on awards [Redacted]. To permit double-counting of the [Redacted] Other Agency’s award and in our award to Claimant #2 would vitiate the statutory ceiling. Second, neither [Redacted] suggests that Congress considered [Redacted] when a payment to one agency offsets an obligation to the other. Third, permitting such double-counting would also produce the irrational result of encouraging multiple “bites at the apple” in adjudicating claims for the same action and potentially could allow multiple recoveries. See Lawson v. Suwannee Fruit & S.S. Co., 336 U.S. 198, 201 (1949) (rejecting literal application of statutorily defined term that would “create obvious incongruities in the language”); Mova Pharm. Corp. v. Shalala, 140 F.3d 1060, 1068 (D.C. Cir. 1998) (“If a literal construction of the words of a statute be absurd, the act must be so construed as to avoid the absurdity.”). Indeed, we cited similar concerns about multiple “bites at the apple” when we adopted Rule 21F-3(b)(3), which provides that we will not pay on a related action if the whistleblower program administered by the U.S. Commodities Futures Trading Commission has issued an award for the same action. See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300, 34,305 (June 13, 2011); see also Order Determining Whistleblower Award Claim, Release No. 34-77530, at 2 n.1 (April 5, 2016) (ordering that monetary sanctions collected in the covered action or in the related criminal action that are either deemed to satisfy or are in fact used to satisfy any payment obligations of the defendants in the other action shall not be double counted for purposes of paying an award).
We believe this ambiguity is best resolved by excluding from our award calculation the amount of monetary sanctions [Redacted] for which Claimant #2 already received an award from the Other Agency. This approach respects the textual limit of 30% [Redacted] and thus accords with the fundamental rule that courts should “interpret the statute as a symmetrical and coherent regulatory scheme.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (citation and internal quotation marks omitted).
[8] [Redacted].
[9] 17 C.F.R. § 240.21F-4(c)(1)-(2).
[10] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34,325.
[11] Order Determining Whistleblower Award Claim, Release No. 34-77833 (May 13, 2016).
[12] We do not read Claimant #4’s Response as raising any argument that Claimant #4’s information
caused the staff to commence an examination or to inquire into different conduct as part of an existing
examination or investigation. See Rule 21F-4(c)(1).
[13] Claimant #4 appears to misunderstand the timeline of events. In the Response, Claimant #4 provides a chronology that suggests that the Responsible Covered Action Staff opened a MUI in [Redacted] and then only opened the investigation a year later in [Redacted]. However, the record is clear that the Responsible Covered Action Staff opened the MUI in [Redacted] based on Claimant #1’s information,
and elevated the MUI to an investigation (the First Investigation) in [Redacted]. The Responsible Covered Action Staff then opened the Second Investigation in [Redacted] based on information provided by Claimant #2. Neither of the Covered Action Investigations was opened based on information provided by Claimant #4.
[14] See Exchange Act § 21F(a)(3)(B) (requiring that “original information” be “not known to the Commission from any other source….”). Where the Commission already knows some information about a matter, a whistleblower can receive credit in award consideration for information that “materially adds” to that base of knowledge. See Exchange Act Rule 21F-4(b)(6), 17 C.F.R. 240 § 21F-4(b)(6). Even assuming that Claimant #4 was the first to provide information regarding the Firm’s [Redacted] we find that both Claimant #1 and Claimant #2 provided other information about this general subject matter that was “original” because it materially added to the information in our possession from Claimant #4. First, information from Claimant #1 and Claimant #2 showed how the Firm had [Redacted] as distinct from Claimant #4’s information, which—Claimant #4 argues—focused on the Firm’s [Redacted]. Second, Claimant #1 provided information about the Firm’s [Redacted] and therefore was not part of Claimant #4’s tip. Third, Claimant #2, [Redacted] was able to provide information that demonstrated the [Redacted] and that also demonstrated the Firm’s [Redacted].
[15] See Order Determining Whistleblower Award Claims, Release No. 34-82181, at 14-16 (Nov. 30, 2017) (denying whistleblower award to claimant who claimed to be first in time, because information submitted did not actually lead to successful enforcement of covered action), pet. for rev. docketed, Nos. 18-1124, 18-1127 (2d Cir. Apr. 19, 2018); see also Order Determining Whistleblower Award Claim, Release No. 34-79464, at 2-3 (Dec. 5, 2016) (denying whistleblower award to claimant who argued that submitted information should have caused the staff to open an investigation, when information did not actually lead to successful enforcement of covered action); Order Determining Whistleblower Award Claim, Release No. 34-75752, at 1-2 (Aug. 24, 2015) (similar).
[16] The Regional Office Declaration clarifies that to the extent they stated or implied that Claimant
#4’s information was valuable, it was only with respect to the Other Covered Action, as the Regional
Office Staff were not members of the teams conducting the Covered Action Investigations that resulted in
this Covered Action, and as such, were not in a position to comment on the usefulness or relevance of
Claimant #4’s information to the Covered Action. Further, the same declaration confirms that in sending
Claimant #4’s materials to the Responsible Covered Action Staff, Regional Office Staff was not making
an independent assessment as to the usefulness or relevance of Claimant #4’s information to the Covered
Action.
[17] See Order Determining Whistleblower Award Claim, Release No. 34-79294 (Nov. 14, 2016)
(denying whistleblower award to claimant who argued that staff errors resulted in improper processing of
submission, because information submitted did not actually lead to successful enforcement of covered
action), pet. for rev. denied sub nom. Doe v. SEC, 729 F. App’x 1 (D.C. Cir. 2018).
[18] Supp’l Decl. ¶16. Claimant #4 does not dispute, and we therefore credit, the initial declaration’s
representation that the Responsible Covered Action Staff received no information originating from
Claimant #4 aside from the [Redacted] between Claimant #4 and [Redacted].
[19] To be clear, we do not consider Claimant #4’s award claim as being in any way intertwined with
those of Claimants #1 and #2. Rather, we have considered Claimant #4’s award claim strictly on its own
merits. In that context, we credit the Responsible Covered Action Staff’s assessment of the claimants’
respective information, as documented in the Supplemental Declaration, as a cogent explanation why the
staff did not use Claimant #4’s information in the Covered Action Investigations and the Covered Action.
[20] See Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a) (“A claimant will have ninety (90) days from the
date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be
barred.”). Both NoCA [Redacted] and the corresponding deadline may still be found at the following
public website: https://www.sec.gov/whistleblower/nocas?aId=edit-year&year=[Redacted].
[21] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34,343.
[22] 17 C.F.R. § 240.21F-8(a).
[23] Order Determining Whistleblower Award Claim, Release No. 34-77368, at 3 (Mar. 14, 2016),
pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005
(2018).
[24] See id.; Order Determining Whistleblower Award Claim, Release No. 34-82181 (Nov. 30, 2017);
Order Determining Whistleblower Award Claim, Release No. 34-72659 (July 23, 2014); Order
Determining Whistleblower Award Claim, Release No. 34-72178 (May 16, 2014).
[25] Order Determining Whistleblower Award Claim, Release No. 34-77368, at 3 (Mar. 14, 2016).
[26] Id. at *3-4 & n.11 (citing Rule 21F-10(a)).
[27] Order Determining Whistleblower Award Claim, Release No. 34-72659, at 5 (July 23, 2014)
(“The Commission is under no duty to provide Claimant … with direct notice of the filing deadline.”).
[28] Order Determining Whistleblower Award Claim, Release No. 34-77368, at 4 (Mar. 14, 2016).

SEC

85273

03/08/2019

[Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”) (together, “Claimants” ) seek whistleblower awards pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act” ), and the rules thereunder, in connection with the above-referenced Commission enforcement matter (“Covered Action”).

The Office of the Whistleblower posted a Notice of Covered Action (“NoCA”) on its website on [Redacted] and the ninety-day period for filing claims for award ended in [Redacted]. Because Claimants submitted their award claims after the ninety-day period, and have not demonstrated extraordinary circumstances justifying waiver of that requirement, Claimants’ claims are denied.

A. Background.

The Commission received Claimant 1’s award application on [Redacted] approximately eleven months after the deadline to apply for an award for the Covered Action. Claimant 1 stated in Claimant 1’s application that Claimant 1 was under the impression that the Commission would contact Claimant 1 regarding the need to file an award claim, that Claimant 1 was never advised to watch for a posting of a NoCA on the Commission’s website, and that Claimant 1 was unaware of the ninety-day period for filing an award claim.

The Commission received Claimant 2’s award application on [Redacted] more than two years after the deadline to apply for an award for the Covered Action. Claimant 2 did not provide an explanation or justification for the late filing in Claimant 2’s application, nor did Claimant 2 acknowledge in the application that Claimant 2 filed it late.

On [Redacted] the Claim Review Staff (“CRS”) preliminarily determined to recommend that we deny Claimants’ award claims on the grounds that they were untimely.

B. Requests for Reconsideration.

On [Redacted] Claimant 1 filed a timely request for reconsideration in which Claimant 1 does not dispute that Claimant 1’s award application was filed after the deadline, but appears to request that the Commission waive that procedural defect based upon extraordinary circumstances. First, Claimant 1 represents that Claimant 1 never knew of, nor agreed to, the requirement that claimants file an application for a whistleblower award within ninety days of a posting of a NoCA. Second, Claimant 1 represents that hackers intentionally kept Claimant 1 from learning of the posting of the relevant NoCA by repeatedly taking Claimant 1’s website offline, requiring Claimant 1 to spend all of Claimant 1’s online time working to get Claimant 1’s website up and running again.

On [Redacted] Claimant 2 submitted a timely request for reconsideration. Claimant 2 appears to argue that the Commission has not collected (or finished collecting) funds in the Covered Action, that the NoCA therefore was premature, and that Claimant 2’s application therefore is timely. Claimant 2 also argues that the application was timely because the Commission was put on notice when Claimant 2 submitted a tip to the Commission that Claimant 2 wished to be considered for an award.

C. Analysis.

The requirement that claimants file whistleblower award claims within ninety days of the posting of a NoCA, set forth in Exchange Act Rule 21F-10(b), serves important programmatic functions. See 17 C.F.R. § 240.21F-10(b). The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claim process so that the Commission can make timely awards to meritorious whistleblowers.[fn1]

Under Exchange Act Rule 21F-8(a), “the Commission may, in its sole discretion, waive” certain procedural requirements, including the ninety-day filing deadline, “upon a showing of extraordinary circumstances. ” 17 C.F.R. § 240.21F-8(a). In determining whether a claimant has demonstrated extraordinary circumstances that would trigger the Commission’s discretion to waive the ninety-day filing deadline, we have previously looked to our decision in In the Matter of the Application of PennMont Securities.[fn2] There, in determining whether applicants had demonstrated extraordinary circumstances that would trigger the Commission’s discretion to waive the thirty-day filing deadline under Commission Rule of Practice 420(b), 17 C.F.R. § 201.420(b), we explained that “the ‘extraordinary circumstances’ exception is to be narrowly construed and applied only in limited circumstances.”[fn3] An extraordinary circumstance is one “where the reason for the failure timely to file was beyond the control of the applicant … “[fn4] Further, “[e]ven when circumstances beyond the applicant’s control give rise to the delay, … an applicant must also demonstrate that he or she promptly arranged for the filing … as soon as reasonably practical thereafter.”[fn5] We have declined requests to waive the ninety-day filing deadline for whistleblower award claims because of claimants’ failures to meet the PennMont standard.[fn6]

Claimant 1 represents that Claimant 1 was unaware of the posting of the relevant NoCA and the ninety-day deadline for submitting Claimant 1’s application, but the lack of awareness of the submission deadline does not constitute an extraordinary circumstance justifying a waiver of the requirement that applicants file their claims within ninety days.[fn7] As we have previously explained, “a lack of awareness about the [whistleblower award] program does not … rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.”[fn8] “A potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim.”[fn9]

As explanation for Claimant 1’s purported failure to learn of the NoCA and the filing deadline, Claimant 1 proffers that hackers took Claimant 1’s website offline, requiring Claimant 1 to spend all of Claimant 1’s online time during the ninety-day filing period working to get Claimant’s website back online. But this proffer is insufficient, as it does not suggest that Claimant 1 could not access the Commission’s website because of circumstances beyond Claimant 1’s control; rather, it merely suggests that Claimant 1 chose to use Claimant 1’s online time restoring Claimant 1’s website rather than checking the Commission’s website to learn of the NoCA and the deadline for filing an award claim.[fn10]

Claimant 2 contends that Claimant 2’s submission was not untimely filed because the Commission’s collections efforts have supposedly not been completed in the Covered Action, and because, in any event, Claimant 2’s tip put the Commission on notice of Claimant 2’s interest in an award. But even if, as Claimant 2 suggests, collections have not been completed in the Covered Action, these contentions are unavailing. A NoCA is posted when a Commission action results, through entry of a final judgment or order, in monetary sanctions totaling more than $1 million, independent of the status of any collections in the action. See 17 C.F.R. § 240.21F-10(a). Moreover, a claimant must file a timely award claim on a Form WB-APP in order to qualify for an award; the filling of a tip does not suffice. See id. (“A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred.”)

For the above reasons, Claimants’ whistleblower award claims were not timely filed, and Claimants have not demonstrated the existence of “extraordinary circumstances” necessary to trigger the Commission’s discretion to waive their lack of compliance with Exchange Act Rule 21F-10(b)’s ninety-day filing deadline.[fn11]

D. Conclusion.

Accordingly, it is ORDERED that Claimants’ whistleblower award claims be, and hereby are, denied.
By the Commission.

[1] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545, at 172 (Effective Aug. 12, 2011) available at http://www.sec.gov/rules/final/2011/34-64545.pdf .
[2] PennMont Sec., Release No. 34-61967 (Apr. 23, 2010), pet. for rev. denied sub nom. PennMont Sec. v. SEC, 414 F. App’x 465 (3rd Cir. 2011).
[3] Id. at 8-9.
[4] Id. at 9.
[5] Id.
[6] See Order Determining Whistleblower Award Claim, Release No. 34-77368 (Mar. 14, 2016), pet. for rev. denied sub nom. Cerny v. SEC, 708 F. App’x 29 (2d Cir. 2017), cert. denied, 138 S. Ct. 2005 (2018), reh’g denied, 138 S. Ct. 2715 (2018) (” Release No. 34-77368″); see also Order Determining Whistleblower Award Claim, Release No. 34-82181 (Nov. 30, 2017); Order Determining Whistleblower Award Claim, Release No. 34-72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Release No. 34-72178 (May 16, 2014).
[7] See Release No. 34-77368 at 3.
[8] Order Determining Whistleblower Award Claim, Release No. 34-72659 at 5 (July 23, 2014). See also id. (“The Commission is under no duty to provide Claimant. …with direct notice of the filing deadline. …”).
[9] Release No. 34-77368 at 4.
[10] Even if, as Claimant 1 asserts, Claimant 1 was unable to check the Commission’s website through most of [Redacted] Claimant 1 has not explained why Claimant 1 could not file an application between the end of *** and [Redacted] the date the SEC received Claimant 1’s application. Claimant 1’s proffer therefore is also insufficient because it fails to demonstrate, as required by the second PennMont factor, that Claimant 1 “promptly arranged for the filing . . . as soon as reasonably practical” after Claimant 1’s purported problems with hackers supposedly ceased.
[11] Although the Claimants have not requested that we invoke our separate exemptive authority under Section 36(a) of the Exchange Act, we would decline to do so if they had. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” We believe that Claimants have not met their burdens of demonstrating any considerations that would satisfy the requirements for us to exercise our Section 36(a) exemptive authority.

CFTC

03/04/2019

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of *** percent (***%) of the monetary sanctions to be collected in [Redacted] (“Covered Action”) and in a related action brought by the [Redacted] (“Federal Regulator”).[fn1] This recommended award percentage would yield a payout of over $[Redacted] based on [Redacted]. Claimant 1 subsequently provided written notice of his/her decision not to contest the Preliminary Determination.

The recommendation of the CRS with respect to Claimant 1 is adopted. We find that the record demonstrates that he/she voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 23(b)(1) of the Commodity Exchange Act (“CEA” or “Act”). 7 U.S.C. § 26(b)(1) (2012). The information Claimant 1 provided was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful covered action based in part on conduct that was the subject of the original information provided by Claimant 1. Claimant 1 provided Commission staff with assistance throughout the course of the Commission’s investigation, including assistance and analysis in interpreting voluminous data.

We also find that Claimant 1’s information led to the successful resolution of a related action brought by the Federal Regulator because the action was based, at least in part, on the original information that Claimant 1 voluntarily submitted to the Commission, and led to the successful resolution of the Commission action. See 7 U.S.C. § 26(a)(5); 17 C.F.R. § 165.11.

It is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] (***%) of the monetary sanctions collected, or to be collected, in the Covered Action and in the related action.

By the Commission.

[1] The Preliminary Determination further recommended that the award applications submitted by four other Claimants be denied. One of the Claimants withdrew his/her award application, and therefore his/her application is no longer pending before the Commission. The other three Claimants, Claimant 2, Claimant 3, and Claimant 4, failed to submit a request for reconsideration of the Preliminary Determination, and, therefore, the Preliminary Determination denying their claims for award has become the Final Order of the Commission. 17 C.F.R. § 165.7(h) (2018).

SEC

02/11/2019

In response to the above-referenced Notices of Covered Actions, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows.

First, Claimant was not a “whistleblower” during the relevant period under Exchange Act Rule 21F-2(a)(1). To qualify as a whistleblower, an individual must provide the Commission with information relating to a possible securities law violation pursuant to the procedures set forth in Exchange Act Rule 21F-9(a), which Claimant did not do. Specifically, Claimant did not submit Claimant’s information by mailing or faxing a Form TCR to the Office of the Whistleblower or through the Commission’s on-line system at any time before the qualifying final judgments or orders were issued in the above-listed matters.[fn1]

Second, Claimant’s information did not lead to the success of any of the above-referenced Covered Actions within the meaning of Exchange Act Rule 21F-4(c). Claimant’s tips on their face do not appear to allege a possible violation of the federal securities laws and were submitted after the entry of the qualifying final judgments and orders in the Covered Actions, and as such, could have had no effect on the success of those enforcement actions, and were not forwarded to Enforcement staff in connection with any matter.

By: Claims Review Staff.

[1] Claimant submitted a Form TCR via fax to the Office of the Whistleblower on [Redacted], alleging that an unidentified “Department of Human Resources” ”violated the Estate & Gift Tax laws.” Claimant also submitted an on-line tip on [Redacted] containing similar allegations. Claimant’s submissions were provided after the issuance of the qualifying final judgments or orders in each of the Covered Actions for which Claimant applied for an award.

CFTC

02/07/2019

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from Claimant #1, Claimant #2, and Claimant #3 (collectively, “Claimants”) in response to Notice of Covered Action [Redacted]. The Claims Review Staff has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2018), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). The Claims Review Staff sets forth its Preliminary Determination for Claimants as follows:

1. The Claims Review Staff has determined to recommend that the Commission deny all applications because they did not meet the requirements of Section 23 of the CEA and the Rules. Although Claimants are whistleblowers who voluntarily submitted some original information, Claimants’ information did not lead to the covered action [Redacted].

2. None of the Claimants played a role in [Redacted]. In [Redacted], the Division subsequently opened an investigation based on this [Redacted].

3. Division staff responsible for [Redacted] did not use any information from any of the Claimants to bring, investigate, [Redacted]. Division staff did not contact any of the Claimants regarding [Redacted]. Accordingly, Claimants’ information did not lead to [Redacted].

4. Any claims for awards on related actions are also denied. Under the CEA, in order to be eligible for awards on Related Actions, a whistleblower must have provided information that led the Commission to a successful Commission action. See 17 C.F.R. §§ 165.2(m), 165.11. Since none of the Claimants contributed to [Redacted], Claimants are ineligible for awards on any potential related actions.

SEC

12/28/2018

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received *** whistleblower award claims, two of which were submitted jointly. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination to recommend that the Commission deny an award to each claimant as follows.[fn1]

[Redacted] (Claimant #1) and [Redacted] (“Claimant #2”).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant #1 and Claimant #2 based on the following.

No information provided by Claimant #1 and Claimant #2 led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) because none of the information that the claimants submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

[Redacted].

By: Claims Review Staff.

[1] [Redacted].

[2] The record demonstrates that staff investigating the covered action opened the investigation based on other sources of information and that none of the information Claimant #1 and Claimant #2 submitted to the Commission was forwarded to the staff handling the Covered Action.

SEC

12/11/2018

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received one whistleblower award claim from [Redacted] (“Claimant”).

Pursuant to Section 21 F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is as follows.

First, Claimant is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1). To qualify as a whistleblower, an individual must provide the Commission with information relating to a possible securities law violation pursuant to the procedures set forth in Exchange Act Rule 21F-9(a), which Claimant did not do. Specifically, Claimant did not submit Claimant’s information on Form TCR or through the Commission’s on-line system.[fn1] Second, Claimant is not eligible for an award because Claimant did not sign the whistleblower declaration as required under Exchange Act Rule 21F-9(b).

In reaching this determination, we note that while Claimant asserts that *** provided information to various government agencies, *** does not contend that *** provided any information directly to the Commission or had any communications with Commission staff, and that the record reflects that Claimant did not provide a tip to the Commission on Form TCR or through the Commission’s on-line portal. Any information Claimant might have provided solely to these other government entities, and not directly to the Commission in accordance with the procedures set forth in Rule 9(a), could not be the basis for an award.[fn2]

By: Claims Review Staff.

[1] Although the requirements of Rule 21F-9(a) could also be satisfied by another form of writing if submitted after the effective date of Section 21F of the Exchange Act and before August 12, 2011 (the effective date of the Commission’s whistleblower rules), see Rule 21F-9(d), we find no evidence of any such qualifying submission from Claimant.

[2] See Final Order of the Commission, Exchange Act Release No. 80596 at *6 n.9 (May 4, 2017); see generally Rule 21F-4(b)(7) (permitting an individual the benefit of having submitted infom1ation to another agency which provided the information to the Commission only if the individual submitted the same information directly to the Commission within 120 days). Claimant also applied for a related action award in connection with a parallel criminal action. Because Claimant does not qualify for an award in the Covered Action brought by the Commission, Claimant’s request for a related action award is denied. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u—6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a).

SEC

11/06/2018

In response to the above-referenced Notice of Covered Action,[fn1] the Commission received whistleblower award claims from [Redacted] (Claimant 1) and from [Redacted] (Claimant 2) (collectively, “Claimants”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to the Claimants. The basis for this determination is as follows:

b. significantly contribute to the success of the Covered Action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this determination as to Claimant 1, we note that the record reflects that staff in the Commission’s [Redacted] Regional Office [Redacted] opened the investigation that resulted in the Covered Action more than a year before Claimant 1 submitted Claimant 1’s first two tips to the Commission [Redacted]. Claimant 1’s tips were forwarded to staff in the Commission’s [Redacted] Regional Office [Redacted] in connection with a separate investigation which was subsequently closed and merged into the [Redacted] investigation [Redacted]. All of the [Redacted] investigative files, including Claimant 1’s first two tips, were then made available to staff conducting the [Redacted] investigation; however, by this time, the [Redacted] investigation had been ongoing for over two years, and the *** investigative files did not provide [Redacted] staff with any new or useful information, and did not have any impact on the [Redacted] investigation or the resulting settled administrative proceedings. We further credit the sworn declaration of the Enforcement staff responsible for the [Redacted] investigation that the staff never had any direct communications with Claimant 1 during the investigation. Moreover, Claimant 1 submitted Claimant 1’s third tip in [Redacted] after the two settled administrative proceedings had already been instituted in [Redacted].

As to Claimant 2, we note that Enforcement staff responsible for the Covered Action did not receive any information from Claimant 2 before or during the course of the investigation and had no communications with Claimant 2. The tip upon which Claimant 2 relies for the award claim was reviewed by staff in the Office of Market Intelligence and thereafter closed with a disposition of “no further action,” and not forwarded to Enforcement staff for further action or review.[fn2]

By: Claims Review Staff.

[1] The Claims Review Staff has preliminarily determined to include a second Commission administrative proceeding, [Redacted] as part of the covered acti0n. See Rule 21F-4(d)(1).

[2] While not a basis for the preliminary denial, we note that the tip upon which Claimant 2 relies appears to be based only on publicly-available information, and further, does not contain any assessment, evaluation, or analysis that is separate and apart from the publicly-available information. As such, Claimant 2’s tip does not appear to consist of “independent analysis” (as defined under Rule 21F-4(b)(3)) or “independent knowledge” (as defined under Rule 21F-4(b)(2)), a constituent element of “original information.” See Exchange Act Rule 21F-4(b)(1)(i).

SEC

11/06/2018

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant because Claimant did not provide information that led to the successful enforcement of the above-referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c). Specifically, the information did not:

1. cause the Commission to commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this determination, we note that the record reflects that Enforcement staff responsible for the Covered Action opened the investigation approximately fifteen months prior to receiving Claimant’s initial submission, and that much of Claimant’s information was duplicative of information that Enforcement staff had already obtained or learned prior to receiving Claimant’s submission. Additionally, Claimant’s second submission was provided months after the Commission’s complaint in the Covered Action was filed. Although the second submission was received while staff was engaged in the settlement process, none of Claimant’s information was used in or in any way contributed to the settlement process.

By: Claims Review Staff.

CFTC

10/30/2018

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application from Claimant, submitted on WB-APP [Redacted] regarding [Redacted] (“[Redacted] matter”) and a related action.[fn1] The Claims Review Staff (“CRS”) has evaluated the application in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2018) (as amended by 82 Fed. Reg. 24,487, 24,496-521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012).[fn2] The CRS sets forth its Preliminary Determination for Claimant as follows:

Claimant first contacted the Commission after the Commission filed its Complaint against the defendants in the [Redacted] matter. Accordingly, the Commission did not commence its investigation as a direct or indirect result of Claimant’s TCR submission;

Further, Claimant’s information did not significantly contribute to the [Redacted] matter because none of Claimant’s information provided any meaningful assistance to the Commission in connection with the [Redacted] matter; and

Claimant’s information did not lead to the successful enforcement of a related action.[fn3] Because Claimant’s information did not lead to the Commission’s successful enforcement action against the defendants in the [Redacted] matter, Claimant’s information also did not lead to the successful enforcement of a related action.

[1] According to the Form WB-APP, Claimant requested an award for a related action for information that Claimant purportedly provided to the “[Redacted].”

[2] The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9(b) does not mean that the presence of negative factors will result in an award percentage lower than 30%, nor does the absence of negative factors in Rule 165.9(c) mean the award percentage will be higher than 10%. Not all factors may be relevant to a particular decision.

[3] Under the Rules, a related action is a judicial or administrative action brought by any of the following non-Commission entities: Department of Justice; an agency or department of the U.S. government; a registered entity, registered futures association, or self-regulatory organization; or a State criminal or civil agency. See 17 C.F.R. § 165.11 (2016). A related action must be “based on the original information that the whistleblower voluntarily submitted to the Commission and led to a successful resolution of the Commission judicial or administrative action.” Id. (emphasis added); see 17 C.F.R. § 165.11(a)(2); see also 17 C.F.R. § 165.2(m). In other words, for an action to qualify as a related action under the CEA and the Rules, there must be a corresponding successful enforcement of a Commission action based on the same original information voluntarily submitted by the whistleblower to the Commission. Here, as referenced above, Claimant’s information did not provide any meaningful assistance to Commission staff assigned to the [Redacted] matter.

SEC

84506

10/30/2018

For the reasons discussed below, we deny the whistleblower award applications that have been submitted by [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”) and [Redacted] (“Claimant 3”) in connection with the above-referenced Notice of Covered Action.[fn1] See Section 21F(b) and (c) of the Securities Exchange Act of 1934 (“Exchange Act” ); Exchange Act Rule 21F-10, 17 C.F.R. § 240.21F-10.

A. Background.

In [Redacted] the Commission’s Enforcement Division opened an investigation based on a self-report [Redacted] (the “Company”) concerning potential securities-law violations. The Company thereafter undertook a global internal investigation and, by the end of [Redacted] the Enforcement Division staff and the Company had reached agreement in principle on the terms of a proposed settlement that would be put before the Commission for its consideration. However, the staff determined to delay its recommendation pending [Redacted].

Approximately one year later, on [Redacted] Claimant 1 made a whistleblower submission to the Commission; this submission was followed by a supplemental submission from Claimant 1 on [Redacted].

On [Redacted] Claimant 2 made a whistleblower submission to the Commission, which was followed on [Redacted] by an additional submission from Claimant 2.

On [Redacted] Claimant 3 made a whistleblower submission to the Commission.

On [Redacted] each of the Claimants, [Redacted].

Less than a month later, on [Redacted] the Commission filed a settled action against the Company with no material changes to the terms of the settlement that the staff in [Redacted] had determined to recommend to the Commission.

Following the successful resolution of the Covered Action, the Office of the Whistleblower posted the Notice of Covered Action to commence the 90-day period for interested individuals to file award applications. See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b). The Claimants made timely award applications based on the above-mentioned whistleblower submissions.

After reviewing their award applications and the relevant record as compiled by the Office of the Whistleblower, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending a denial for all three award applications. As the Preliminary Determination explained, none of the information provided by any of the Claimants led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Exchange Act Rules 21F-3(a)(3), 17 C.F.R. § 240.21F-3(a)(3), and 21F-4(c), 17 C.F.R. § 240.21F-4(c).[fn2] In reaching this preliminary recommendation, the CRS relied on a declaration from one of the principal staff attorneys responsible for both the investigation and the settlement discussions who stated under penalty of perjury that any new information provided by the three Claimants did not in the staff’s view warrant further investigation or revisiting the terms of the proposed settlement.

The Claimants — all individually represented by the same Counsel — subsequently filed effectively identical, timely written responses contesting the Preliminary Determination. Each of the responses expressly requested that the Commission supplement the administrative record to address “whether there were [staff-Company] communications about our client’s information and, if so, what they were.” The responses each went on to state that, “if there were no such communications, we would be inclined to agree with the [CRS’s] Preliminary Determination[.]” The responses did not raise any other factual or legal arguments to challenge the Preliminary Determination.

B. Analysis.

After careful consideration of the administrative record, including the Claimants’ written responses and a supplemental declaration from the above-referenced staff attorney, we have determined to deny the Claimants’ award applications.[fn3] As to the “very specific factual point” that had been the sole basis of the Claimants’ objection to the Preliminary Determination, we find that the Enforcement staff and the Company did not communicate regarding the Claimants’ submissions. We credit the sworn declaration of the Enforcement staff responsible for the investigation that there are no records of any such communications; and we further find based on the staff’s declaration that such records would exist had any of the Claimants’ submissions surfaced new information that was important for the investigation or the proposed settlement with the Company. This conclusion is further supported by the following statements in the sworn declaration of the investigative staff member: (1) each of the Claimants’ submissions was received at least a year after the staff and the Company had reached agreement in principle on a settlement to propose to the Commission and; (2) none of these submissions added anything of consequence to the then-existing thorough investigative record, which included the staff’s multi-year investigation and a global internal investigation by the Company.

In light of the foregoing, we find that the Claimants are not entitled to an award because the record conclusively demonstrates that the Claimants’ information was not used in connection with the Covered Action and, thus, did not lead to the successful enforcement of the Covered Action. The record demonstrates that the Enforcement staff opened the underlying investigation of the Company in [Redacted] as a result of the Company’s self-reporting of potential violations and that the terms of the proposed settlement in the Covered Action were reached in principle in [Redacted] — all well before any of the Claimants made their submissions to the Commission. See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1). Further, the supplemental declaration demonstrates that the Claimants’ information did not significantly contribute to the success of the Covered Action, as their information was not used in the investigation, including in the settlement discussions with the Company that ultimately resulted in the successful enforcement of the Covered Action. See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).[fn4]

C. Conclusion.

Accordingly, it is hereby ORDERED that the Claimants’ claims for awards are denied.[fn5]
By the Commission.

[1] Three other individuals also submitted award applications in connection with the Notice of Covered Action. However, these individuals did not timely contest the preliminary denial of their claims and, as such, the Preliminary Determination with respect to their award claims became the Final Order of the Commission through operation of Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).
[2] As relevant here, information leads to the success of a covered action if it: (1) causes the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.
[3] We credit as true the statements in the original declaration and the supplemental declaration from the staff attorney and adopt the statements therein as our findings of fact.
[4] We note that the staff sent the settlement recommendation to the Commissioners to begin their consideration of the proposal on [Redacted] — only eight days after [Redacted]. This short period further undermines the suggestion that any information [Redacted] could have played any part in the successful resolution of the Covered Action. Further, the record demonstrates that there were no changes to the staff’s settlement recommendation during this time period.
[5] Pursuant to Exchange Act Rule 21F-11, 17 C.F.R. § 240.21F-11, the Claimants seek an award in connection with a potential related action. The related-action award applications are denied. The Commission may make an award to a whistleblower in connection with a related action only if the Commission has determined that the whistleblower is entitled to an award for a Commission covered action. See Rule 21F-11(a); see also Rule 21F-3(b)(1).

SEC

84503

10/30/2018

For the reasons discussed below, we deny the whistleblower award application that has been submitted by [Redacted] (“Claimant”) in connection with the above-referenced Notice of Covered Action.[fn1] See Section 21F(b) and (c) of the Securities Exchange Act of 1934 (“Exchange Act” ); Exchange Act Rule 21F-10, 17 C.F.R. § 240.21F-10.

A. Background.

In approximately [Redacted] the Commission learned that [Redacted] (the “Company”) had potentially committed certain securities-law violations. The Commission learned this from [Redacted] and which was itself already under investigation for similar violations. The [Redacted] learned of the potential violations as part of [Redacted]. After the Company [Redacted] and reported its further findings of potential securities violations to the Enforcement staff. Following the [Redacted] undertook a global internal investigation of the Company’s operations.

While [Redacted] internal investigation of the Company was ongoing, the Claimant, on [Redacted] made a whistleblower submission to the Commission. This submission was followed by a supplemental submission from the Claimant on [Redacted].

In [Redacted] reported the results of its internal investigation of the Company to the Enforcement staff. Thereafter the Enforcement staff and the [Redacted] reached agreement on a proposed settlement regarding the Company’s violations for the Commission’s consideration. That proposal was adopted by the Commission and resulted in a settled action being filed against the Company on [Redacted]. The above-referenced self-reporting disclosures by [Redacted] formed the principal basis of the claims in the settled Covered Action.

Following the successful resolution of the Covered Action, the Office of the Whistleblower posted the Notice of Covered Action to commence the 90-day period for interested individuals to file award applications. See Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b). The Claimant made a timely award application based on the above-mentioned whistleblower submissions.

After reviewing the award application and the relevant record as compiled by the Office of the Whistleblower, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending a denial. As the Preliminary Determination explained, none of the information provided by the Claimant led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Exchange Act Rules 21F-3(a)(3), 17 C.F.R. § 240.21F-3(a)(3), and 21F-4(c), 17 C.F.R. § 240.21F-4(c).[fn2] In reaching this preliminary recommendation, the CRS relied on a declaration from one of the principal staff attorneys responsible for both the investigation and the settlement discussions; this declaration, which was signed under penalty of perjury, explains that given the extensive information the staff had already received from the [Redacted] by [Redacted] through the above-referenced self-reporting disclosures, the staff determined that the Claimant’s information did not warrant additional investigation. For this reason, as the declaration explains, the [Redacted] submissions were not used in connection with the Covered Action.

The Claimant subsequently filed a timely written response contesting the Preliminary Determination. The Claimant’s response expressly requested that the Commission supplement the administrative record to address “whether there were [staff-Company] communications about our client’s information and, if so, what they were.” The response went on to state that, “if there were no such communications, we would be inclined to agree with the [CRS’s] Preliminary Determination[.]” The response did not raise any other factual or legal arguments to challenge the Preliminary Determination.

B. Analysis.

After careful consideration of the administrative record, including the Claimant’s written responses and a supplemental declaration from the above-referenced staff attorney, we have determined to deny the Claimant’s award application.[fn3] The record demonstrates that the Claimant’s submissions did not cause the opening of the investigation that resulted in the Covered Action, nor did the information cause the Enforcement staff to inquire into different conduct as part of an ongoing investigation. See Exchange Act Rule 21F-4(c)(1), 17 C.F.R. § 240.21F-4(c)(1). Further, we find that the supplemental declaration provided by the staff attorney demonstrates that the Claimant’s information did not significantly contribute to the success of the Covered Action, as the Claimant’s information was not used in the investigation, including in the settlement discussions that ultimately resulted in the successful enforcement of the Covered Action. See Exchange Act Rule 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(2).

Further, the supplemental declaration directly addresses the “very specific factual point” that had been the sole basis of the Claimant’s objection to the Preliminary Determination. Based on the explanation of events as set forth therein, we find that any communications that may have occurred with the [Redacted] concerning the Claimant’s submissions to the Commission or [Redacted] had no effect on (nor otherwise influenced in any way) the investigation, the settlement negotiations, the charges brought by the Commission, or the relief ultimately obtained in the Covered Action.

In light of the foregoing, we conclude that the Claimant is not entitled to an award because the Claimant’s information did not lead to the successful enforcement of the Covered Action.

C. Conclusion

Accordingly, it is hereby ORDERED that the Claimant’s claim for award is denied.[fn4]

By the Commission.

[2] As relevant here, information leads to the success of a covered action if it: (1) causes the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[3] We credit as true the statements in the original declaration and the supplemental declaration from the staff attorney and adopt the statements therein as our findings of fact.

[4] Pursuant to Exchange Act Rule 21F-11, 17 C.F.R. § 240.21F-11, Claimant seeks an award in connection with a potential related action. The related-action award application is denied. The Commission may make an award to a whistleblower in connection with a related action only if the Commission has determined that the whistleblower is entitled to an award for a Commission covered action. See Rule 21F-11(a); see also Rule 21F-3(b)(1).

SEC

10/03/2018

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”) for the above-referenced matter. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated this award claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant because Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In support of this preliminary recommendation, we note that the record demonstrates that the information that Claimant identified in *** Form WB-APP as the information that *** provided in connection with this Covered Action was never provided to the staff responsible for the Covered Action. The information was reviewed by staff in the Office of Market Intelligence and, based on that review, it was marked for a disposition of “No Further Action,” meaning that no further action would occur with respect to that submission unless subsequent information led the staff to reevaluate that assessment. Moreover, the Covered Action staff never reviewed or used any of Claimant’s information in pursuing the Covered Action or undertaking the underlying investigation.

By: Claims Review Staff.

SEC

10/03/2018

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant because Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In support of this preliminary recommendation, we note that the record demonstrates that the information that Claimant identified in *** Form WB-APP as the information that *** provided in connection with this Covered Action was not used in the investigation of the Covered Action. The information was reviewed by staff in the Office of Market Intelligence and, based on that review, it was marked for a disposition of “No Further Action,” meaning that no further action would occur with respect to that submission unless subsequent information led the staff to reevaluate that assessment. Moreover, the Covered Action staff did not use any of Claimant’s information in pursuing the Covered Action or undertaking the underlying investigation.

By: Claims Review Staff.

SEC

10/03/2018

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received one whistleblower award claim from [Redacted] (“Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-l through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is as follows.

First, Claimant is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1). To qualify as a whistleblower, an individual must provide the Commission with information relating to a possible securities law violation pursuant to the procedures set forth in Exchange Act Rule 21F-9(a), which Claimant did not do. Specifically, Claimant did not submit Claimant’s information on Form TCR or through the Commission’s on-line system.[fn1] Second, Claimant is not eligible for an award because Claimant did not sign the required whistleblower declaration as required under Exchange Act Rule 21F-9(b).

In reaching this determination, we note that while Claimant asserts that *** provided information to the Federal Bureau of Investigation (“FBI”), *** does not contend that *** provided any information directly to the Commission or had any communications with Commission staff, and that the record reflects that Claimant did not provide a tip to the Commission on Form TCR or through the Commission’s on-line portal. Any information Claimant might have provided solely to the FBI or other government entity, and not directly to the Commission in accordance with the procedures set forth in Rule 9(a), could not be the basis for an award.[fn2]

By: Claims Review Staff.

SEC

10/03/2018

In response to the above-referenced Covered Action, the Securities and Exchange Commission received three, timely whistleblower award claims from the following individuals:

[Redacted], [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”)

(collectively, “Claimants”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above-listed award claims. The basis for this determination is as follows.

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary recommendation, we note that the record shows that the Enforcement staff responsible for the Covered Action did not receive information from the Redacted Claimants and had no communications with any of them. As to [Redacted] Claimant 3, the tips they cite in their award applications were closed with a disposition of no further action and were not referred to staff responsible for the Covered Action.[fn1]

Additionally, we preliminarily deny Claimant 2’s award claim in the Covered Action because Claimant 2 is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1), with respect to the Covered Action. To qualify as a whistleblower, an individual must provide the Commission with information relating to a possible securities law violation pursuant to the procedures set forth in Exchange Act Rule 21F-9(a), which Claimant 2 did not do. Specifically, Claimant 2 did not submit information on Form TCR or through the Commission’s on-line system relating to this Covered Action.[fn2] Second, Claimant 2 is not eligible for an award because Claimant 2 did not sign the whistleblower declaration as required under Exchange Act Rule 21F-9(b). In reaching this preliminary determination, we note that Claimant 2 failed to identify the particular tip upon which Claimant 2 bases the award claim, and after searching the TCR system, staff could not locate a tip on Form TCR or through the on-line system submitted by Claimant 2 relating to the Covered Action.

By: Claims Review Staff.

[1] Claimant 3 also applied for various related action awards in connection with actions brought by other government agencies. Because Claimant 3 does not qualify for an award in the Covered Action brought by the Commission, Claimant’s request for a related action award is denied. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u-6(b) (2016); 17 C.F.R. § 240.21F-3(b) (2018); § 240.21F-4(g), (f); § 240.21F-11(a).

[2] Although the requirements of Rule 21F-9(a) could also be satisfied by another form of writing if submitted after the effective date of Section 21F of the Exchange Act and before August 12, 2011 (the effective date of the Commission’s whistleblower rules), see Rule 21F-9(d), we find no evidence of any such qualifying submission from Claimant.

SEC

10/03/2018

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received one (1) whistleblower award claim from [Redacted] (“Claimant”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claim. The basis for this determination is as follows:

First, Claimant is not a “whistleblower” under Exchange Act Rule 21F-2(a)(1). To qualify as a whistleblower, an individual must provide the Commission with information relating to a possible securities law violation pursuant to the procedures set forth in Exchange Act Rule 21F-9(a), which Claimant did not do. Specifically, Claimant did not submit Claimant’s information on Form TCR or through the Commission’s on-line system.[fn1] Second, Claimant is not eligible for an award because Claimant did not sign the required whistleblower declaration as required under Exchange Act Rule 21F-9(b). Third, to be eligible for an award, an individual who desires to remain anonymous, must submit his or her tip to the Commission through counsel, and counsel must sign the required counsel certification, which Claimant did not do here.

By: Claims Review Staff.

CFTC

09/27/2018

The Commodity Futures Trading Commission (“Commission”) received a whistleblower award application from Claimant, submitted on WB-APP [Redacted] regarding [Redacted]. The Claims Review Staff (“CRS”) has evaluated the application in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2017) (as amended by 82 Fed. Reg. 24,487, 24,496–521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). The CRS sets forth its Preliminary Determination for Claimant as follows:

1. The CRS has determined to recommend that the Commission deny Claimant’s application because the application fails to meet the requirements of Section 23 of the Act and the Rules. Although Claimant voluntarily provided the Commission with original information, Claimant never submitted a TCR (Tip, Complaint, or Referral), which is a requirement to receive an award. Even if Claimant had submitted a TCR, Claimant’s information was essentially the same as numerous other complainants who submitted information to the Commission well before Claimant was first contacted. While Claimant’s information was helpful, it did not significantly contribute to the successful enforcement of a judicial or administrative action or a related action.

The Division opened its investigation over a year before Claimant submitted any information.

Claimant’s information was essentially the same as the information received from numerous other complainants.

Claimant never submitted a TCR.

The Commission did not commence its investigation as a direct or indirect result of Claimant’s information. Information provided by Claimant was used in connection with the [Redacted] and the underlying investigation and was helpful, but did not significantly contribute to the resolution of the investigation.

SEC

84270

09/24/2018

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant [Redacted] receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected, or to be collected, in the Covered Action. This proposed award would yield a likely payout to the Claimant of nearly $4 million. Claimant subsequently 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, an individual residing in a foreign country, voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Moreover, applying the award criteria specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find that the proposed award amount is appropriate.[fn1] In reaching that determination, we positively assessed the facts that the Commission’s investigation that led to the Covered Action opened as a direct result of Claimant’s tip to the Commission and that Claimant provided extensive assistance to the Commission staff throughout the course of the investigation. We also positively assessed the following facts: Claimant [Redacted].[fn2]

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] 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.

[2] [Redacted].

SEC

84125

09/14/2018

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected, or to be collected, in the above-identified Covered Action. This proposed award would yield a likely payout to Claimant of more than $1,500,000. Claimant subsequently provided written notice of Claimant’s decision not to contest the Preliminary Determination.[fn1]

The recommendation of the CRS with respect to the Claimant’s award application is adopted. We find that the record demonstrates that the Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Turning to the award amount, we (consistent with the CRS’s recommendation) have severely reduced the award here after considering the award criteria identified in Rule 21F-6 of the Exchange Act.[fn2] Although Claimant provided important information in relation to the overall success of the enforcement action as well as ongoing assistance, Claimant unreasonably delayed in reporting the information to the Commission and was culpable. With respect to our finding that the Claimant unreasonably delayed, we have considered the following: Claimant waited for more than a year after learning of the facts underlying the violation before Claimant reported to the Commission; Claimant reported to us only after learning of the ongoing Commission investigation; during the period of Claimant’s delay, investors were being harmed; as a result of the delay, the monetary sanctions upon which Claimant’s award is based increased; and Claimant waited to report to the Commission until [Redacted]. With respect to our culpability determination, we have considered the fact that Claimant—while being fully aware of the wrongdoing—nonetheless [Redacted] received a significant and direct financial benefit. Whistleblowers with similar conduct should expect to receive a severely reduced award—indeed, even one as low as the minimum statutory threshold—in future cases.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] of the monetary sanctions collected in the Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] Additionally, the CRS recommended that Claimant’s claim for award in Covered Action [Redacted] be preliminarily denied because none of Claimant’s information led to the successful enforcement of that covered action. Claimant subsequently provided written notice of Claimant’s decision not to contest the preliminary denial of Claimant’s claim with respect to the other covered action. As a result, the CRS’s preliminary determination as to that covered action became the final determination of the Commission pursuant to Rule 21F-10(f).

[2] In assessing the appropriate award amount, Exchange Act Rule 21F-6 provides that the Commission consider: (1) the significance of information provided to the Commission; (2) the assistance provided in the Covered Action; (3) the 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.

SEC

84046

09/06/2018

Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act” ) and the Commission’s rules thereunder, the Claims Review Staff (“CRS”) issued a Preliminary Determination concerning various timely whistleblower award claims made in connection with the above-referenced Covered Action. In pertinent part, the Preliminary Determination recommended the following:

1. [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected in the Covered Action, for a payout of more than $39,000,000;

2. Claimant 1’s related-action award claim for an action brought by [Redacted] (“Agency 1”)[fn1] be denied;

3. [Redacted] (“Claimant 2”) receive a whistleblower award in the amount of [Redacted] of the monetary sanctions collected in the Covered Action, for a payout of more than $15,000,000;

4. Claimant 2’s related-action award claim for an action brought by [Redacted] (“Agency 2”)[fn2] be denied; and

5. The award application submitted by [Redacted] (“Claimant 3”) be denied.

We have considered the timely submissions that Claimants 1, 2, and 3 provided in response to the Preliminary Determination. We have determined to accept the award recommendations in the Preliminary Determination with respect to the claims submitted by Claimants 1 and 2 in connection with the Commission’s Covered Action.[fn3] Also consistent with the recommendations in the Preliminary Determination, we are denying Claimant 1’s and 2’s related-action award claims for the Agency 1 and Agency 2 actions, respectively, and denying the award application submitted by Claimant 3.[fn4]

I. BACKGROUND.

A. The Award Program.

In 2010, Congress added Section 21F to the Exchange Act. Among other things, Section 21F authorizes the Commission to pay monetary awards—subject to certain limitations, exclusions, and conditions—to individuals who voluntarily provide the Commission with original information about a violation of the securities laws that leads to a successful Commission judicial or administrative action in which the monetary sanctions exceed $1,000,000.[fn5] Further, when the Commission makes such an award to an individual, it may also make an award in a related action brought by certain statutorily identified law-enforcement and regulatory authorities if the original information the individual voluntarily provided to the Commission also led to the success of an enforcement action by such an authority.[fn6] For both Commission actions and related actions, the total award amounts paid shall be “not less than 10 percent, in total, of what has been collected of the monetary sanctions” and “not more than 30 percent, in total, of what has been collected [.]”[fn7]

B. Relevant Facts.

On [Redacted], the Commission issued a [Redacted] (“Order” or “Commission Order”) in the Covered Action in which it found that [Redacted] (“Respondent”) had violated the federal securities laws by [Redacted]. Respondent was ordered to [Redacted].

Because the monetary sanctions imposed on the Respondent exceeded the statutory threshold for a potential whistleblower award under Section 21F of the Exchange Act, the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action.

II. CLAIMANT 1.

A. Covered Action Award.

Based on our review of the record, including declarations from Commission staff who handled the Covered Action, we find that Claimant 1, [Redacted] voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder.

Based on the contributions that Claimant 1 made to the Commission’s successful pursuit of this Covered Action, and considering the relative contributions of Claimant 1 vis -à-vis Claimant 2 in this matter, we adopt the Preliminary Determination’s recommendation that Claimant 1 should receive [Redacted] of the monetary sanctions collected in the Covered Action.[fn8]

B. Agency 1 Related-Action Claim.

In reaching its Preliminary Determination to recommend that the Commission deny an award to Claimant 1 in connection with the Agency 1 action,[fn9] the CRS explained that Claimant 1’s original information did not lead to the successful enforcement of Agency 1’s action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(b) and 21F-4(c) thereunder. Claimant 1 filed a timely response challenging the CRS’s preliminary denial.

In the response, Claimant 1 contends that Agency 1 expressly relied upon the findings in the Commission’s Order in the Covered Action as a predicate for Agency 1’s decision to pursue its ultimately successful enforcement action against Respondent. Claimant 1 contends that because Agency 1 relied on the Commission’s Order in the Covered Action, it is reasonable to infer that Agency 1 also relied upon the factual information that the Commission relied upon in issuing the Order in the Covered Action. Because Agency 1 expressly relied upon the Commission’s Order in the Covered Action to sanction Respondent, Claimant 1 contends that Agency 1 therefore relied upon the same original information that Claimant 1 provided to the Commission.

Under the whistleblower rules, for a whistleblower to obtain an award in connection with a potential related action, the whistleblower must “demonstrate [that he or she] directly (or through the Commission) voluntarily provided the governmental agency, regulatory authority or self-regulatory organization the same original information that led to the Commission’s successful covered action, and that this information led to the successful enforcement of the related action.”[fn10] Claimant 1’s application fails to meet this standard in two respects.

First, Claimant 1 did not directly, or through the Commission, provide the original information to Agency 1. The record demonstrates that Claimant 1 never directly provided Claimant 1’s original information (or any materials) to Agency 1, or even had any communications with Agency 1.[fn11] The record also demonstrates that Claimant 1’s original information was not provided to Agency 1 by the Commission itself pursuant to the Commission’s procedures for sharing information.[fn12] Declarations in the administrative record reveal that the Enforcement staff responsible for the Covered Action and the underlying investigation never shared any information or materials with Agency 1—including the information and materials provided by Claimant 1 to the Commission—and that Agency 1’s staff never received any information or materials from Claimant 1 or the Commission.

Claimant 1 contends that “[b]ecause [Agency 1] relied on the Commission’s [final] order [in the Covered Action], there simply was no need for [Agency 1] to receive information directly from [Claimant 1], … or to receive any of the documents/testimony provided by [Claimant 1] that helped form the basis of the [Commission’s final] order.” We disagree. As discussed above, we believe that the appropriate interpretation of our whistleblower rules is that a whistleblower must directly provide the original information to the other agency or the Commission must do so pursuant to its procedures for sharing information.[fn13]

Relatedly, Claimant 1 argues that a requirement that a whistleblower provide information directly to the agency responsible for a related action would be “at war with Congress’ clear instruction that the identity of a whistleblower must be protected.” Claimant 1 thus posits that the Commission cannot require a whistleblower to directly provide information to another agency to obtain a related-action award for any successful enforcement action the other agency brings if the agency “does not have explicit rules protecting whistleblowers’ confidentiality [.]”

In advancing this argument, Claimant 1 appears to misunderstand the relevant statutory and regulatory framework. As discussed, Rule 21F-11(c) provides that a whistleblower can either directly submit the original information to the other agency or the other agency can receive the information “through the Commission[.]” To the extent that a whistleblower does not want to report directly to the other agency out of a concern that the agency lacks “explicit rules” protecting the whistleblower’s identity, they can choose not to do so. The whistleblower is in the best position to determine whether they are comfortable reporting directly to the other agency. There is an alternative avenue under which a whistleblower’s information may be shared with another agency and, in turn, may potentially be eligible for a related action award; the Commission may, when it deems it appropriate to do so after an assessment of the information, transmit his or her information to the other agency. Moreover, when the information is shared “through the Commission” in this manner, Section 21F(h)(2)(D)(ii)(I) of the Exchange Act provides that the other agency “shall maintain such information as confidential” subject to the same confidentiality requirements that apply to the Commission under Section 21F(h)(2)(A). Thus, we do not believe there is any conflict between the information transmittal mechanisms provided for in Rule 21F-11(c) and Section 21F’s confidentiality protections; rather, Congress, by statute, extended the same whistleblower confidentiality protections that govern the Commission to agencies that bring related actions when those agencies receive the whistleblower’s information from the Commission, irrespective of whether the other agency has “explicit rules” protecting a whistleblower’s identity. But here neither of these steps was taken to share Claimant 1’s information with Agency 1.

Second, we find that Claimant 1’s original information did not lead to the success of the Agency 1 action. Claimant 1 concedes that the applicable standard to assess whether Claimant’s information led to the success of the Agency 1 action is whether Claimant 1’s “submission significantly contributed to the success of the action.”[fn14] As described above, Agency 1 never received a submission that contained the actual original information that the Claimant provided to the Commission and, thus, the causal relationship required by this prong of the “led to” definition–a submission to Agency 1 (either from the whistleblower directly or through the Commission) that “significantly contributed” to the success of the Agency 1 matter–was not met here.[fn15]

Accordingly, Claimant 1’s related-action application for the Agency 1 matter is denied.[fn16]

III. CLAIMANT 2.

A. Covered Action.

Based on our review of the record, including declarations from Commission staff who handled the Covered Action and the underlying investigation, we find that Claimant 2, [Redacted], provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder. But we agree with the CRS’s preliminary determination that Claimant 2’s information was not submitted “voluntarily” under Rule 21F-4(a).

Section 21F(b)(1) of the Exchange Act requires that a whistleblower submit original information “voluntarily” in order to be considered for an award. Rule 21F-4(a) establishes a simple and straightforward test for when we will treat a whistleblower as having submitted information voluntarily; as relevant here, the whistleblower must provide his or her tip to the Commission before investigators direct a “request, inquiry, or demand” to the whistleblower that relates to the subject matter of the tip. If the Commission or any of the other governmental or regulatory authorities designated in the rule direct a request to the whistleblower first, the whistleblower is not eligible for an award.[fn17] Agency 2 is one of the authorities designated in the rule.

Here, it is undisputed that, [Redacted] , Claimant 2 appeared before Agency 2 for an investigative interview; [Redacted] that Claimant 2 made *** whistleblower submission more than a year after the interview; and that the interview related to the subject matter of Claimant 2’s later tip.[fn18]

Claimant 2 argues that Rule 21F-4(a) requires that Agency 2 have directed a “request, inquiry, or demand” for an interview specifically to Claimant 2, and that this never happened; [Redacted] Claimant 2 bases this argument on the following sequence of events: [Redacted]. Claimant 2’s [Redacted] interview does not foreclose Claimant 2’s later whistleblower submission from being deemed voluntarily made under Rule 21F-4(a). We disagree.

Rule 21F-4(a) establishes a straightforward, temporally based test for voluntariness; the whistleblower must come forward before the government or regulatory authorities designated in the rule seek information from the whistleblower. The Commission adopted this approach after considering extensive comments and alternative suggestions (e.g., that a submission should be deemed voluntary unless compelled by subpoena) to create a “strong incentive for whistleblowers to come forward early with information about possible violations of the securities laws rather than wait until Government or other official investigators ‘come knocking on the door.’”[fn19] [Redacted]. Thus, in our view, [Redacted]. Agency 2’s request became “directed to” Claimant 2 within the meaning of Rule 21F-4(a).

We also find a separate ground for determining that Claimant 2’s whistleblower submission was not voluntarily provided under our rule. [Redacted]. Then, at the interview, Agency 2 directed specific inquiries to Claimant 2. Under these circumstances, we find that Claimant 2’s subsequent whistleblower submission relating to the same subject matter was not made voluntarily.[fn21] In reaching this determination, we note our concern that the strong incentivizing purpose of the rule could be undermined if [Redacted] could claim an award by becoming whistleblowers only after learning that government investigators were seeking to question them.

At the same time, we recognize that the specific concerns animating Rule 21F-4(a) are not present under the unique circumstances of this case and that relief from the strict operation of the rule is appropriate. Although we reject Claimant 2’s interpretation of the rule, we concur with the CRS’s recommendation that we exercise our discretionary authority under Exchange Act Section 36(a) to grant a limited waiver of Rule 21F-4(a) to permit an award to Claimant 2 in connection with the Covered Action. Specifically, we have determined that it is appropriate in the public interest and consistent with the protection of investors that we grant a limited waiver here in light of certain unique circumstances presented by Claimant 2’s claim. These include the facts that: (1) at the time that Claimant 2 was interviewed by Agency 2, Claimant 2 did not know the information that later supplied the critical basis for Claimant 2’s whistleblower tip to the Commission; (2) when Claimant 2 learned of the information, Claimant 2 promptly reported that information to the Commission and to Agency 2, which is consistent with the policy goal of the whistleblower rules that a whistleblower come forward early with information about possible violations of the federal securities law rather than wait to be approached by investigators; (3) Claimant 2 was not legally obligated to update the information that Claimant 2 had provided to Agency 2, nor was Claimant 2 a target or a subject of Agency 2’s investigation (and therefore potentially motivated to implicate other actors instead of Claimant 2 in unlawful conduct), nor did Claimant 2 otherwise have a separate self-interested motive to come forward with new information learned subsequent to Claimant 2’s initial interview; and (4) a waiver will help minimize the hardship that Claimant 2 encountered by seeking to report the violations after learning of them.

Based on the foregoing, and considering the relative contributions of Claimant 2 vis -à-vis Claimant 1, we adopt the Preliminary Determination’s recommendation that Claimant 2 should receive *** of the monetary sanctions collected in the Covered Action.[fn22]

B. Agency 2 Related-Action Claim.

The CRS preliminarily denied Claimant 2’s claim for award in connection with the Agency 2 action because that action is predominantly a [Redacted].[fn23] Congress established a directly applicable whistleblower award program under [Redacted] to provide whistleblower awards to individuals who enable the Federal Government to [Redacted].[fn24] Due to the existence of [Redacted] whistleblower program and the overall nature of the Agency 2 action, the CRS determined that Claimant 2 should look to [Redacted] program for a recovery of any whistleblower award instead of arguing that the Agency 2 action qualifies for a related-action award from the Commission.

As an initial matter, we note that in Claimant 2’s award application for the Agency 2 action, Claimant 2 sought from the Commission an award in connection with [Redacted] but not [Redacted]. The apparent reason for this limited claim for recovery was that, at the time Claimant 2 made the award application, [Redacted]. As a result, under [Redacted] interpretation, Claimant 2 would be eligible for an award based only on [Redacted] that Respondent was ordered to pay in connection with the Agency 2 action. [Redacted].

Given this [Redacted] we have no hesitation in concluding that Claimant 2’s recourse is not to seek a related-action award from the Commission based on the Agency 2 action but to seek an award through [Redacted] program.

Under Exchange Act Section 21F(b) and Rule 21F-11, any whistleblower who obtains an award based on a Commission enforcement action may be eligible for an award based on monetary sanctions that are collected in a related action. Exchange Act Section 21F(a)(5) and Rule 21F-3(b)(1) provide that a related action is a judicial or administrative action that is both: (i) brought by the Attorney General, an appropriate regulatory authority (as defined in Rule 21F-4(g)), a self-regulatory organization (as defined in Rule 21F-4(h)), or a state attorney general in a criminal case; and (ii) based on the same original information that the whistleblower voluntarily provided to the Commission and that led to the successful enforcement of the Commission action. We acknowledge that, on its face, Exchange Act Section 21F does not exclude from the definition of related action those judicial or administrative actions such as the Agency 2 action that have a less direct or relevant connection to our whistleblower program than another whistleblower scheme. We nonetheless perceive ambiguity when considering this language in the context of the overall statutory scheme. We believe that an understanding focused exclusively on the statutory definition of related action would produce a result that Congress neither contemplated nor intended. We base this determination on several considerations.

First, when Congress established the Commission’s whistleblower program, it set a firm ceiling on the maximum amount that should be awarded for any particular action—”not more than 30 percent, in total, of what has been collected of the monetary sanctions imposed” in the action.[fn26] Indeed, it appears that in establishing federal whistleblower award programs in the modern era Congress has determined that an award of more than 30 percent on any particular action is not necessary or appropriate.[fn27] Yet if both the Commission’s whistleblower program and [Redacted] whistleblower award scheme were to apply to the Agency 2 action, this would create the very real potential for a total award exceeding the 30-percent ceiling due to a dual recovery.

Second, the apparent purpose of the related-action award component of the Commission’s whistleblower program was to allow meritorious whistleblowers the opportunity to obtain additional financial awards for the ancillary recoveries that may result from the same original information that the whistleblowers gave to the Commission. In this way, the potential for a related-action recovery can further enhance the incentives for an individual to come forward to the Commission. But neither the text of Section 21F, nor the relevant legislative history[fn28] suggests that Congress considered the unusual situation in which there may be a separate whistleblower award scheme that has a more direct or relevant connection to the judicial or administrative action, and that in such situations any additional financial incentive that would otherwise result from the related-action component of the Commission’s award program would be unnecessary to encourage individuals to report misconduct.

Third, we believe that permitting potential whistleblowers to recover under both our award program and a separate award scheme for the same action would produce the irrational result of encouraging multiple “bites at the apple” in adjudicating claims for the same action and could potentially allow multiple recoveries.[fn29] In the adopting release that accompanied the original whistleblower rules, the Commission recognized the irrational result that would flow from allowing a whistleblower to have multiple separate opportunities to adjudicate his or her contributions to a case and to potentially obtain multiple separate rewards on that same enforcement action; the Commission foreclosed such an approach in the specific contexts that the Commission considered at the time that it adopted the whistleblower program rules. Specifically, the Commission adopted Rule 21F-3(b)(3), which provides that the Commission will not pay on a related action if the whistleblower program administered by the Commodity Futures Trading Commission (“CFTC”) has issued an award for the same action, nor will the Commission allow a whistleblower to relitigate any issues decided against the whistleblower as part of the CFTC’s award denial. In adopting that rule, the Commission made clear its view that a whistleblower should neither have two recoveries on the same action nor multiple bites at the adjudicatory apple.[fn30] Relatedly, the Commission explained in the adopting release that it would for similar reasons not make an award to a whistleblower who was also a qui tam plaintiff under the False Claims Act.[fn31] Although at the time of the original rulemaking for the whistleblower program the Commission did not expressly consider the potential for separate awards issued by [Redacted] whistleblower award program, the principles underlying Rule 21F-3(b)(3) are nonetheless relevant here and consistent with the Commission’s views going back to the award program’s founding.[fn32]

The CRS also recommended denying Claimant 2’s application for an award in connection with Agency 2’s action on the separate ground that Claimant 2’s whistleblower submission was not made voluntarily and a discretionary waiver of this requirement to permit an award would not be appropriate. We concur. For the reasons discussed above, Claimant 2’s whistleblower submission to the Commission, more than a year after Claimant 2’s interview with Agency 2, cannot be considered voluntary under Rule 21F-4(a).[fn33] Further, we do not believe it would be in the public interest to waive this requirement in connection with Claimant 2’s application for an award for the Agency 2 action. The *** whistleblower program affords the appropriate forum for Claimant 2 to seek and possibly obtain an award in connection with Agency 2’s action. Congress established [Redacted] whistleblower program specifically to make awards available for [Redacted] and we believe that [Redacted] is in the best position to evaluate Claimant 2’s contributions to Agency 2’s [Redacted]. In particular, given the [Redacted] that unambiguously makes [Redacted]. Claimant 2 has not shown that Claimant 2 will suffer any prejudice by being required to present Claimant 2’s claim to the more appropriate whistleblower award program. Accordingly, we find that it is not in the public interest to extend the limited waiver that we provided to permit an award for the Covered Action to also permit an award for the Agency 2 action; we therefore decline to exercise our discretion to grant such a waiver.

IV. CLAIMANT 3.

The CRS preliminarily determined to deny Claimant 3’s award claim because Claimant 3’s information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. None of the information submitted by Claimant 3 caused the Commission to: (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

In reaching this preliminary determination, the CRS considered record evidence—including declarations from Enforcement staff members assigned to the Covered Action and underlying investigation—that Enforcement staff responsible for the Covered Action never received any information from Claimant 3 and had no communication with Claimant 3 during the course of the underlying investigation. We find that the record demonstrates that Claimant 3’s information was reviewed by staff in the Commission’s Office of Market Intelligence (“OMI”), closed with a disposition of “no further action planned,”[fn34] and was not forwarded to any other Enforcement staff members for action or follow-up.

In the response, Claimant 3 has not identified any factual or legal basis to refute the clear record evidence that Claimant 3’s information was not used in the Covered Action or the underlying investigation. Indeed, we note that based on our own review of Claimant 3’s information, we find that on its face that information lacks any reasonable nexus to the facts and circumstances of the Covered Action.

Accordingly, we find that the record demonstrates that Claimant 3 did not provide information that led to the success of the Covered Action. As staff on the Investigation did not receive any information directly or indirectly from Claimant 3, and Claimant 3’s information does not appear to have a reasonable nexus to the Respondent’s misconduct that was at issue in this matter, we conclude that Claimants 3’s information did not cause staff to open the investigation, nor did it significantly contribute to the success of the Covered Action.

V. CONCLUSION

Accordingly, it is ORDERED that Claimant 1 shall receive an award of [Redacted] of the monetary sanctions collected in the Covered Action.

ORDERED that Claimant 1’s related-action award claim in connection with Agency 1’s action is denied.

ORDERED that Claimant 2 receive an award of [Redacted] of the monetary sanctions collected in the Covered Action.

ORDERED that Claimant 2’s related-action award claim in connection with Agency 2’s action is denied.

ORDERED that Claimant 3’s whistleblower award claim be denied.

By the Commission.

[1] [Redacted].

[2] [Redacted]. We note that although Claimant 1 initially sought a related-action recovery for this matter as well, Claimant 1 is no longer pursuing that award claim. We further note that Claimant 2 did not challenge the CRS’s preliminary denial of Claimant 2’s award claim in connection with a separate action brought by [Redacted] and as such, the Preliminary Determination as to that claim became the final determination of the Commission pursuant to Rule 21F-11(f).

[3] We have relied upon the factors identified in Rule 21F-6 under the Exchange Act “to determine the relative allocation of [the] awards” between Claimants 1 and 2. See also Exchange Act Rule 21F-5 (“If the Commission makes awards to more than one whistleblower in connection with some action …, the Commission will determine an individual percentage award for each whistleblower, but in no event will the total amount awarded to all whistleblowers in the aggregate be less than 10 percent or greater than 30 percent of the amount the Commission … collect[s].”). In applying the award criteria to assess Claimant 1’s and Claimant 2’s relative contributions to the Covered Action, we relied upon a number of facts, including the following: (1) although both Claimants 1 and 2 [Redacted] who submitted specific and detailed whistleblower tips, Claimant 1 came to the Commission over one and a half years before Claimant 2; (2) by the time Claimant 1 came forward, the Commission staff had encountered numerous obstacles that were causing delays to the investigation and Claimant 1’s information (and assistance) was critical to advancing the investigation; (3) Claimant 1’s information, which included a wealth of documents that saved the Commission considerable time and resources, demonstrated that Respondent’s misconduct [Redacted]; (4) Claimant 1, unlike Claimant 2, unreasonably delayed in reporting the misconduct to the Commission, but see infra footnote 8 (discussing Claimant 1’s unreasonable delay); (5) in reporting to the Commission, Claimant 1 faced [Redacted] (6) Claimant 1 provided ongoing assistance to the Enforcement staff, including traveling at Claimant 1’s own expense to meet with staff in person on multiple occasions; (7) Claimant 2’s information, although submitted much later than Claimant 1’s, was particularly significant because it provided Enforcement staff with [Redacted] [Redacted] and (8) Claimant 2, [Redacted] After evaluating the foregoing considerations based on the unique facts and circumstances at issue, we have determined that Claimant 1’s award percentage should be meaningfully higher vis -à-vis Claimant 2’s award percentage. In assessing the relative award amounts for Claimants 1 and 2, we have not considered the fact that Claimant 2’s submission was not voluntary under the definition in Rule 21F-4(a).

[4] The Preliminary Determination also recommended denying awards to two other claimants. Those determinations were not contested and, thus, the CRS’s recommendation to deny those award applications became final pursuant to Exchange Act Rule 21F-10(f).

[5] See Exchange Act §§ 21F(a)(1) & (b).

[6] See Exchange Act §§ 21F(a)(5) & (b).

[7] Exchange Act § 21F(b)(1).

[8] See supra footnote 3. Although the record reflects that Claimant 1 knew of the misconduct [Redacted] before reporting to the Commission, we have chosen to reduce the award by a smaller amount than we otherwise might have because several facts mitigate the unreasonableness of Claimant 1’s reporting delay: Claimant 1 [Redacted] once Claimant 1 observed that [Redacted] Claimant 1 promptly reported to the Commission; [Redacted] and the majority of the delay occurred before the enactment of the Section 21F whistleblower program.

[9] On [Redacted] Agency 1 announced that it had [Redacted] order against Respondent for [Redacted]

[10] See Rule 21F-11(c).

[11] In Claimant 1’s opposition to the Preliminary Determination, Claimant 1 does not dispute that the record evidence demonstrates that Agency 1 never received the Claimant’s original information directly from the Claimant or that the Commission staff never provided it to Agency 1. Notably, OWB provided this record evidence to Claimant 1 following the issuance of the Preliminary Determination, as provided for by Rule 21F-11(e)(1)(i), and before Claimant 1 filed Claimant 1’s response to the Preliminary Determination. Accordingly, we find that Claimant 1 has waived any challenge to the record evidence on these factual points.

[12] We note that Section 21F provides express authority for the Commission to share information that may identify a whistleblower with other authorities that may, in turn, bring related actions. See Section 21F(a)(5) and (h)(2)(D)(i).

[13] We also believe that this interpretation is consistent with the requirement in Section 21F(a)(5) of the Exchange Act that a related action must be “based upon the original information provided [to the Commission] by a whistleblower [.]” To be “based upon” the whistleblower’s information, in our view, the same information that the whistleblower provided to the Commission must have been provided to the other authority and that information must have itself directly contributed to the other authority’s investigative or litigation efforts leading to the success of that authority’s enforcement action. It is undisputed that this did not happen with respect to Agency 1’s action. Instead, Agency 1’s order recited the fact of the Commission’s enforcement action as background in partial support of Agency 1’s action without Agency 1 ever actually receiving and utilizing Claimant 1’s original information. In this situation, Claimant 1’s original information could, at best, be described as a derivative factor potentially contributing to the success of Agency 1’s action, and we deem this too attenuated a causal connection to meet the “based upon” standard, which in our view requires actual reliance by Agency 1 on the whistleblower’s original information. Accordingly, we deny Claimant 1’s application for the additional reason that Agency 1’s action was not a “related action” because it was not “based upon” Claimant 1’s original information.

[14] See Rule 21F-4(c)(2); see also Rule 21F-3(b)(2) (providing that to grant an award to a whistleblower in connection with a related action, the Commission must determine that the same original information the whistleblower gave to the Commission also led to the successful enforcement of the related action under the same criteria described in the rules for awards made in connection with Commission actions).

[15] We believe that this result is particularly appropriate on the facts here given that (i) Agency 1, before the Commission’s issuance of the Order in the Covered Action, had already conducted its own investigation and learned the material facts of the Respondent’s misconduct; and (ii) Agency 1’s final order, on its face, recited the Commission’s action only as partial support for Agency 1’s action.

[16] Claimant 1 makes several additional arguments based on certain proposed amendments to the whistleblower rules that the Commission voted to release for public comment in June 2018 in accordance with Sections 553(b) and (c) of the Administrative Procedure Act (APA), see 5 U.S.C. 553(b) & (c). First, Claimant 1 “opposes the retroactive application of the proposed rules”; however, those proposed rule amendments have not been adopted and are not being applied to Claimant 1’s award claim. Second, Claimant 1 argues that the Commission should not “rely, directly or indirectly, on the…public comments submitted in response to the rulemaking proceeding when adjudicating” Claimant 1’s award claim. Any public comments received before the issuance of this order have not been considered in connection with the Commission’s resolution of this award claim. Third, Claimant 1 asserts that the Commission’s consideration of the proposed rule amendments might have interfered with Claimant 1’s rights under the Due Process Clause and the APA if a “Commissioner has formed an opinion on any of the issues outstanding in this matter” as a result of the rulemaking proposal. We find no due process or APA violation, however; even though the rulemaking proposal articulates the Commission’s interpretation of certain statutory and regulatory provisions that bear upon Claimant 1’s award application, we have carefully considered Claimant 1’s arguments against those interpretations and have determined that Claimant 1’s arguments are unpersuasive. See generally Air Transport Assoc. v. Nat’l Mediation Bd, 663 F.3d 476, 487 (D.C. Cir. 2011) (agency decision makers do not violate the due process clause unless they act with an “‘unalterably closed mind’ and are ‘unwilling or unable’ to rationally consider arguments”) (quoting Assoc. of Nat’l Advertisers v. FTC, 672 F.2d 1151, 1170 (D.C. Cir. 1979)). Accordingly, there is nothing improper about our determination to apply here any interpretations of existing statutory or regulatory text that we may have articulated in the proposing release that accompanied the proposed whistleblower rule amendments.

[17] See Rule 21F-4(a)(2).

[18] In Claimant 2’s request for reconsideration of the Preliminary Determination, Claimant 2 did not contest the finding of the CRS that the [Redacted]interview with Agency 2 and Claimant 2’s subsequent whistleblower submission related to the same subject matter. Further, we find no inconsistency between this conclusion and our determination (discussed below) that Agency 2’s enforcement action is not cognizable as a “related action” within the meaning of Section 21F because it was predominantly a [Redacted] matter subject to a separate whistleblower award program administered by [Redacted] Both Claimant 2’s [Redacted] interview and later whistleblower submission related to Respondent’s activities in [Redacted] That Agency 2–acting pursuant to its jurisdiction–[Redacted] and the Commission–acting pursuant to its separate jurisdiction–charged violations of the federal securities laws arising out of the same scheme, does not detract from the conclusion that Claimant 2’s [Redacted] interview and later whistleblower tip related to the same basic subject matter. Indeed, Claimant 2’s whistleblower submission, on its face, purported to offer new information about [Redacted]

[19] Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, 75 FR 70488, 70490/3 (Nov. 17, 2010); see also Securities Whistleblower Incentives and Protections, 76 FR 34300, 343006-307 (June 13, 2011).

[20] 76 FR 34300, 34309/1.

[21] Claimant 2 also argues that Claimant 2 was under no obligation to submit to the [Redacted]interview, but acted “of [his/her] own free will,” and that Agency 2 had no basis to [Redacted] Neither consideration is pertinent to the operation of Rule 21F-4(a), which, as noted, was intended to create a powerful reporting incentive through a straightforward, temporally based approach that requires would-be whistleblowers to come forward before investigators come to them. Cf., City of Chicago ex rel. Rosenberg v. Redflex Traffic Systems, 884 F.3d 798, 805 (7th Cir. 2018), citing United States ex rel. Paranich v. Sorgnard, 396 F.3d 326 (3d Cir. 2005) (voluntary requirement of federal False Claims Act “is designed to reward those who come forward with useful information and not those who provide information in response to a governmental inquiry”); Barth v. Ridgedale Electric, Inc., 44 F.3d 699, 704 (8th Cir. 1994) (qui tam relator did not “voluntarily provide” information to the government where government began its investigation first and investigator initiated interview with relator; “rewarding [relator] for merely complying with the government’s investigation is outside the intent of the Act.”). However, we consider the fact that Claimant 2 subsequently came forward with important new information that [Redacted] interview as relevant to our determination to grant Claimant 2 an exemption from the requirements of Rule 21F-4(a).

[22] See supra footnote 3.

[23] We agree with the CRS’s determination that the Agency 2 action is predominantly a [Redacted] and that the specific [Redacted] award program that Congress designed, which is administered by [Redacted] more appropriately applies than the general related-action recovery mechanism that Congress established in Section 21F of the Exchange Act. Cf. generally Norwest Bank Minnesota Nat’l. Ass’n v. FDIC, 312 F.3d 447 (D.C. Cir. 2002) (“When both specific and general provisions cover the same subject, the specific provision will control, especially if applying the general provision would render the specific provision superfluous.”). In finding that the Agency 2 action was predominantly a [Redacted] to which [Redacted] award program more directly and specifically applies, we have found the following facts determinative: Respondent [Redacted] and Respondent [Redacted] Further buttressing our conclusion, the administrative record reflects that Claimant 2 described Claimant 2’s [Redacted]interview before Agency 2 as “aggressively centered on [Redacted] and whether [Redacted] And Claimant 2’s later whistleblower submission states that the [Redacted]
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[Redacted]
• 25
[Redacted]

[26] Exchange Act § 21F(b)(1)(B) (emphasis added).

[27] See, e.g., 7 U.S.C. 26 (providing under the CFTC’s whistleblower program for awards of “not more than 30 percent, in total, of what has been collected of the monetary sanctions imposed in the action or related actions”); 26 U.S.C. 7623(b)(1) (providing under the IRS administered whistleblower award program for “an award … not more than 30 percent of the collected proceeds (including penalties, interest, additions to tax, and additional amounts)”); 31 U.S.C. 3730 (providing in a False Claims Action that a qui tam plaintiff shall receive “not more than 30 percent of the proceeds of the action or settlement”). We note that our preliminary analysis indicates that Congress’s determination not to go above a 30-percent ceiling for awards appears to comport with a similar determination by those states that have adopted their own false claims acts and securities-law whistleblower programs.

[28] See generally S. REP. NO. 111-176 at 110-112 (2010).

[29] Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1068 (D.C. Cir. 1998) (“If a literal construction of the words of a statute be absurd, the act must be so construed as to avoid the absurdity.”); see also United States v. X-Citement Video, Inc., 513 U.S. 64, 68-69 (1994) (rejecting the “most natural grammatical reading” of a statute to avoid “absurd” results); Green v. Bock Laundry Machine Company, 490 U.S. 504, 527, 527-29 (1989) (Scalia, J., concurring); In re Nofziger, 925 F.2d 428, 434 (D.C. Cir. 1991); Veronica M. Dougherty, Absurdity and the Limits of Literalism, 44 AM. U.L. REV. 127 (1994).

[30] 76 FR 34300, 34305/3.

[31] Id. n.52 (“[W]e do not believe Congress intended Section 21F of the Exchange Act to permit additional recovery for the same action above what it specified in the False Claims Act. “).

[32] Claimant 2 contends that “the concern with double recovery is … illusory because it is entirely avoidable through an offset or agreement” [Redacted] We disagree. First, as we explain above, we believe that it is illogical that Congress would have intended two separate whistleblower award programs to apply to the same case (in this instance, Agency 2’s enforcement action) . Second, any type of offset approach would run afoul of a separate concern that we have here–permitting a whistleblower two bites at the adjudicatory apple for the same enforcement action. Under an offset approach, Claimant 2 would presumably have the opportunity to argue Claimant 2’s grounds for a specific award percentage before both the Commission and [Redacted] Although Claimant 2 has offered no details on how precisely the offset might work, we assume that if one agency reached a larger award determination based on a different assessment of Claimant 2’s contributions to Agency 2’s enforcement action, the agency with the larger award assessment would just offset (or deduct) the amount paid by the other agency and pay Claimant 2 the balance. But the critical difficulty would remain–Claimant 2 would be permitted two bites at the adjudicatory apple with respect to the appropriate award percentage. Finally, we find that any type of agreement between [Redacted] and the Commission in connection with an allocation of responsibility to pay on Agency 2’s action would not be possible for the reasons discussed in paragraphs 9-12 of the supplemental declaration that was provided by the OWB staff attorney assigned to this award matter. See Exchange Act Rule 21F-3(b)(2)(ii) (“The Commission will deny an award in connection with the related action if: … (ii) The Commission is unable to make a determination because the Office of the Whistleblower could not obtain sufficient and reliable information that could be used as the basis for an award determination pursuant to § 240.21F-12(a) of this chapter.”).

[33] The voluntary provision of information to the Commission is a pre-requisite for an award in a related action just as it is in a Commission enforcement action. See Section 21F(b)(1) of the Exchange Act and Rule 21F-3(b)(1).

[34] Under normal practice, a “no further action” designation by OMI means that a tip will not be forwarded to Enforcement staff for any further investigation or follow-up unless subsequent information leads OMI staff to reopen, or re-examine, the tip.

SEC

08/13/2018

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant based on the following.

The Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because *** did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

This preliminary finding that the Claimant did not lead to the success of the Covered Action is based on several considerations. First, the record demonstrates that the information the Claimant submitted to the Commission was not forwarded to the staff handling the investigation of the Covered Action. Second, the record demonstrates that the Enforcement staff handling the investigation did not receive any information from the Claimant or have any contact with the Claimant. Finally, the information provided by the Claimant to the Commission, on its face, does not relate to the claims that were asserted by the Commission in the Covered Action.[fn1]

By: Claims Review Staff.

[1] Specifically, neither the subject matter nor time period of the Claimant’s tip relates to the claims in the Covered Action.

CFTC

08/02/2018

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from [Redacted] and [Redacted] in response to the Commission’s Notice of Covered Action [Redacted] regarding [Redacted]. The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R pt. 165 (2017) (as amended by 82 Fed. Reg. 24,487,24,496-521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). On [Redacted], the CRS issued a Preliminary Determination recommending that the Applicant receive ***% of the amount of monetary sanctions collected in [Redacted], and that [Redacted]’s claim be denied.

For the reasons set forth below, we agree with the CRS’s determination. Accordingly, the Applicant’s claim is approved in the amount of ***%, and [Redacted]’s claims are denied.

I. BACKGROUND.

[Redacted] arose out of an investigation opened in response to information that the Applicant [Redacted] submitted to the Commission regarding [Redacted]. [Redacted]. On [Redacted], the Applicant submitted a Form TCR (Tip, Complaint, or Referral), in which he/she alleged that [Redacted]. Division staff forwarded the Applicant’s Form TCR [Redacted] the Commission’s [Redacted] for review, at which point the Division opened investigation [Redacted]. The Applicant and [Redacted] subsequently submitted whistleblower award applications in response to a Notice of Covered Action [Redacted] regarding [Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that the Applicant receive a whistleblower award in the amount of ***% of monetary sanctions collected because the Applicant voluntarily provided original information that led to the successful enforcement of a covered action. The Preliminary Determination also recommended denying [Redacted] claims because [Redacted] Form TCR consisted of, among other things, text *** frivolously copied and pasted from [Redacted] order.

On [Redacted], [Redacted] requested that the Commission’s Whistleblower Office (“WBO”) provide the record forming the basis of the Preliminary Determination. See 17 C.F.R. § 165.7(g)(2)(i). On [Redacted], the WBO provided for review a copy of all of the documents in the record, as defined in Rule 165.10. [Redacted] reviewed the record in person at the Commission. On [Redacted], the Applicant, [Redacted], timely submitted a written response contesting the Preliminary Determination. See 17 C.F.R. § 165.7(g)(2)(ii). On [Redacted], the Applicant [Redacted] met with the director and staff of the WBO to present the Applicant’s arguments for reconsideration. On [Redacted], the Applicant submitted an additional letter to supplement his/her response, which the WBO accepted in its discretion.

[Redacted] did not request to view the record but submitted additional materials in response to the Preliminary Determination. Under Rule 165.7(g)(2)(i), [Redacted] had 60 calendar days from the date of Preliminary Determination, or until [Redacted], to submit a written response. [Redacted] timely submitted additional documents in [Redacted], but made two late submissions in [Redacted]. The submissions included filings [Redacted] made with the United States Patent and Trademark Office, a Wall Street Journal article about the Commission’s whistleblower program, an [Redacted] application [Redacted] submitted to [Redacted], and copies of correspondences with the WBO and UPS shipping labels.

III. LEGAL ANALYSIS.

The CRS has discretion in determining the award amount but must consider certain criteria specified in the CEA. 7 U.S.C. § 26(c)(l)(A). The Rules contain both factors that incorporate the statutory criteria for determining the award amount and factors that may increase or decrease the award amount. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. The Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing smoking gun documents could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

A. Applicant. The Applicant contests that the recommended award amount of ***% is too low, arguing that the CRS considered inadmissible material in the record and failed to properly apply the criteria in the Rules for making an award determination. We agree with the CRS that these arguments are baseless. In arriving at the recommended award amount, the CRS has applied the factors in Rule 165.9 in relation to the facts and circumstances of the Applicant’s award application. Further, the record is properly constituted, and neither the CEA nor the Rules prohibit the CRS from considering certain facts, including those relating to [Redacted].

1. The CRS Has Considered All Relevant Award Factors.

a) Significance of the Applicant’s Information.

The Applicant argues that because his/her information led to the opening of the investigation, it is the most significant information available to the Commission. This argument ignores the plain language of the Rules and conflates an eligibility requirement with a factor for increasing the award amount. Causing the Commission to open an investigation is merely one of the ways a whistleblower can satisfy the basic eligibility requirement that his or her information led the Commission to bring a successful enforcement action. See 17 C.F.R. § 165.2(i). It does not by itself justify the maximum award percentage. To assess the significance of a whistleblower’s information, the Commission would consider the nature of the whistleblower’s information and how it related to the enforcement action, including whether the whistleblower’s information is reliable and complete as to help the Commission conserve resources, and the degree to which the whistleblower’s information supported the claims that the Commission brought. See id. § 165.9(a)(l), (b)(1). In particular, if a whistleblower’s information related only to a small portion of a larger action, then a lower percentage is justified. See Whistleblower Incentives and Protection, 76 Fed. Reg. 53,172, 53,189 n.116 (Aug. 25, 2011) (“[I]f the whistleblower’s information supported only a small part of a larger action, that would be a reason for making an award based upon a smaller percentage amount than otherwise would have been awarded.”).

In addition, the details the Applicant provided to Division staff were largely inconsequential and extraneous to [Redacted], including information relating to *** [Redacted]. None of these formed the underpinnings of [Redacted]. In addition, none of the names the Applicant provided produced anything of consequence. The breakthrough in the [Redacted] came from [Redacted], which Division staff found to [Redacted]. Consequently, had the [Redacted]. In light of these facts, the Applicant did not provide particularly significant information to the Commission. Therefore, a ***% award is justified.

b) Degree of the Applicant’s Assistance. The CRS did not narrowly apply this factor as the Applicant claims. The Applicant’s information raised a red flag and pointed Division staff in the right direction toward *** generally, but the Applicant did little beyond [Redacted], causing the Division to open [Redacted]. The Applicant’s impact was minimal once [Redacted] were under way. As the CRS pointed out, the record is fraught with examples of how the Applicant was unable to aid Division staff once [Redacted] began. For example, [Redacted], that the Applicant provided in response to questions from Division staff:

[Redacted], but he/she could not provide specifics [Redacted].

[Redacted] “I could not really contribute to the debate because [Redacted].”

The Applicant did not and [Redacted].

[Redacted], but he/she could not provide [Redacted] because [Redacted] The Applicant stated,” [Redacted].”

The Applicant could not [Redacted] because [Redacted].

The Applicant did not know if [Redacted].

The Applicant believed that [Redacted] but was unable to [Redacted].

The Applicant was unable to provide [Redacted].

The Applicant described [Redacted], but [Redacted].

In addition, as stated in the Division staff declaration, although the [Redacted] were over [Redacted], only [Redacted] were relevant to [Redacted] were not particularly helpful. Because the Applicant’s impact was minimal once [Redacted] were under way, a ***% award is justified.

c) Commission’s Law Enforcement Interest. The CRS has considered the Commission’s law enforcement interest. The Commission has significant interests in [Redacted]. However, depending upon the facts and circumstances of each case, some factors deserve greater weight than others. See Whistleblower Incentives and Protection, 76 Fed. Reg. at 53,188. In this case, the Applicant contributed minimally beyond being [Redacted] that caused the Commission to open [Redacted], and [Redacted] was based on [Redacted] and not [Redacted]. Given these facts, the Commission’s general and ongoing interest in [Redacted] in and of itself does not support granting the Applicant a high award percentage.

d) Negative Factors. The Applicant argues that he/she deserves more than ***% because none of the decreasing factors in Rule 165.9(c) applies to him/her. We agree with the CRS that this argument is flawed. As previously stated, not satisfying any one of the positive factors does not mean that the award percentage must be lower than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles are consistent with those of the SEC’s whistleblower program, which Congress established at the same time as the Commission’s whistleblower program. See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34331 (June 13, 2011) (“[T]he absence of any one of the positive factors does not mean that the award percentage will be lower than 30 percent, nor does the absence of negative factors mean the award percentage will be higher than 10 percent.”). These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing smoking gun documents could receive 30 percent even if the whistleblower did not participate in any internal compliance systems. In contrast, to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10 percent even if none of the negative factors were present. Here, because the Applicant did little beyond causing the Division to open [Redacted], the lack of negative factors does not justify increasing the award amount.

2. The CRS Did Not Impermissibly Consider Certain Information in the Record.

The Applicant also argues that the CRS impermissibly considered prejudicial and irrelevant information in the record. The Applicant requests that the information be redacted or removed from the record and that the truncated record be subsequently sent to a newly constituted CRS for a new determination. We decline to grant this request.

The only factor that the CEA prohibits the Commission from considering in an award determination is the balance of the Customer Protection Fund, the fund from which whistleblower awards are paid. See 7 U.S.C. § 26(c)(1)(B)(ii). Conversely, the only enumerated factors the CEA requires the Commission to consider are the significance of the whistleblower’s information, the degree of his or her assistance, and the Commission’s programmatic interest. See id. § 26(c)(1)(B)(i). Except for these factors, Congress explicitly left determination of the award amount to the discretion of the Commission. Id. § 26(c)(1)(A) (“The determination of the amount of an award … shall be in the discretion of the Commission.”); id. § 26(c)(1)(B) (“In determining the amount of an award … the Commission shall take into consideration such additional relevant factors as the Commission may establish by rule or regulation.”).

In its discretion, the Commission has created a “permissible” and “non-exhaustive” list of factors. See Whistleblower Incentives and Protection, 76 Fed. Reg. at 53,188 (“The permissible Commission considerations include, but are not limited to … “); id. at 53,186 n.104 (referring to the list of factors in Rule 165.9 as “non-exhaustive”). Rule 165 states that the Commission “may take into account … other things” not specifically listed in the Rules when deciding whether to increase or decrease the award amount. See 17 C.F.R. § 165.9(b), (c). This permissive language is repeated throughout Rule 165.9 and included in what the Commission may consider when assessing the significance of the whistleblower’s information, the degree of his or her assistance, the Commission’s law enforcement interest, the whistleblower’s culpability, the whistleblower’s participation in internal compliance systems, and any unreasonable delay in the whistleblower’s reporting. See, e.g., id. § 165.9(b) (“In considering this factor, the Commission may take into account, among other things … “). Hence, the Rules permit the CRS to consider [Redacted]. Consideration of [Redacted] is not arbitrary or capricious or manifestly contrary to the CEA. See Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 844 (1984). It is eminently reasonable because the determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances surrounding each matter. See 76 Fed. Reg. at 53,188. Consequently, the CRS cannot make a meaningful award determination without all of the relevant facts before it, particularly those that shed light on the context and background of the investigation leading up to the covered action. For example, in assessing the significance of a whistleblower’s information and the degree of his or her assistance, Rule 165.9(b) directs the Commission to consider resources conserved as a result of the whistleblower. See 17 C.F.R. § 165.9(b)(1)(i). An analysis of whether the Commission conserved resources because of information or assistance provided by the whistleblower, however, will depend in part on the availability of other information at the Commission’s disposal that contributed to the conservation of the Commission’s resources, including other whistleblowers, investigative journalism, and in this case, [Redacted]. In other words, the Commission cannot make a fully informed decision on the criteria for determining an award in a vacuum. Context is relevant and necessary.

In addition, Rule 165.10 states the Division staff declaration may include “any matters relevant to the award determination.” In this case, facts about the opening of the investigation are not only relevant but crucial to the Applicant’s determination because the Applicant is claiming an award on the basis that his/her information led to the opening of the investigation. Accordingly, the CRS had to learn what led Division staff to open an investigation. [Redacted]. Moreover, [Redacted] is particularly relevant to the significance of the information provided by the Applicant. Without knowing about [Redacted], it would be difficult for the CRS to adequately weigh this factor. Further, the Rules do not make a distinction between what the CRS is allowed to see and what constitutes the record. Under Rule 165.10, the record is what the CRS will see and use to make a determination. See 17 C.F.R. § 165.10. The only redactions referenced in Rule 165.10 pertain to redactions the WBO may make to shield any Commission pre-decisional or internal deliberative process materials from award applicants during the record-viewing stage of the proceeding. See id. § 165.10(b). In addition, the Applicant was not deprived of due process, as the Applicant had the ability to see what the CRS depended on for making its decision. The Applicant saw not only [Redacted] but also Division staff’s assessment of *** [Redacted].

Lastly, even if all references to [Redacted] were removed from the record in the manner requested by the Applicant,[fn1] the remaining facts in the record still justify a ***% award. The facts about the Applicant do not change. Consideration of [Redacted] was not prejudicial because it did not prevent the Applicant from receiving an award, and the ***% award is consistent with the factors in Rule 165.9 as applied. As previously stated, while the Applicant’s information led to the opening of [Redacted], he/she provided provided limited assistance during the investigation, and ultimately, [Redacted] was based on [Redacted], not [Redacted].

3. The Commission Gave the Applicant a Fair Proceeding in Accordance With the Commission’s Rules and Due Process Requirements.

Additionally, because the Commission has a general obligation under 17 C.F.R. § 11.3 to keep all information related to its investigations confidential, Rule 165.10(b) allows the WBO to make redactions when necessary.[fn2] [Redacted], the confidentiality requirement under Rule 165.4 would still have prevented the Commission from divulging *** [Redacted]. See 17 C.F.R. § 165.4(a). Consistent with this confidentiality rule, the WBO redacted, without any objection from the Applicant, [Redacted], before providing the record to [Redacted].

Further, as previously stated, with or without [Redacted], the facts in the record about the Applicant support a ***% award.

B. [Redacted]. [Redacted] additional submissions do not provide any grounds to justify an award. The submissions are frivolous and include random filings [Redacted] made with the United States Patent and Trademark Office, a Wall Street Journal article about the Commission’s whistleblower program, an [Redacted] application [Redacted] submitted to [Redacted] and copies of the Preliminary Determination, correspondences with the WBO, and UPS labels. [Redacted] did not provide any justification for an award in these submissions.

IV. CONCLUSION.

Accordingly, it is ORDERED that the Applicant shall receive an award of ***% of the monetary sanctions collected in [Redacted]; and it is further ORDERED that *** [Redacted] whistleblower award claim be, and hereby is, denied.

[1] [Redacted] provided the WBO with proposed redactions to the staff declaration.

[2] In balancing the Division’s obligation to keep investigative information confidential with the Applicant’s right to the record, the WBO minimally redacted [Redacted].

CFTC

08/02/2018

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from [Redacted] in response to the Commission’s Notice of Covered Action [Redacted] regarding [Redacted]. The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R pt. 165 (2017) (as amended by 82 Fed. Reg. 24,487, 24,496-521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). On [Redacted], the CRS issued a Preliminary Determination recommending that the Applicant receive ***% of the amount of monetary sanctions collected in [Redacted], and that [Redacted] claims be denied. For the reasons set forth below, we agree with the CRS’s determination. Accordingly, the Applicant’s claim is approved in the amount of ***%, and [Redacted] claims are denied.

I. BACKGROUND.

[Redacted] arose out of an investigation opened in response to information that the Applicant [Redacted] submitted to the Commission regarding [Redacted]. On [Redacted], the Applicant submitted a Form TCR (Tip, Complaint or Referral), in which he/she alleged that [Redacted]. Division staff forwarded the Applicant’s Form TCR [Redacted] the Commission’s [Redacted] for review, at which point the Division opened investigation [Redacted]. The Applicant, [Redacted], and [Redacted] subsequently submitted whistleblower award applications in response to the Notice of Covered Action [Redacted] regarding [Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that the Applicant receive a whistleblower award in the amount of ***% of monetary sanctions collected because the Applicant voluntarily provided original information that led to the successful enforcement of a covered action. The Preliminary Determination also recommended denying [Redacted] and [Redacted] claims because [Redacted] and [Redacted] information is unrelated to the subject matter of the covered action.

On [Redacted], [Redacted] requested that the Commission’s Whistleblower Office (“WBO”) provide the record forming the basis of the Preliminary Determination. See 17 C.F.R. § 165.7(g)(2)(i). On [Redacted], the WBO provided for review a copy of all the documents in the record, as defined in Rule 165.10. [Redacted] reviewed the record in person at the Commission. On [Redacted], the Applicant, [Redacted], timely submitted a written response contesting the Preliminary Determination. See 17 C.F.R. § 165.7(g)(2)(ii). On [Redacted], the Applicant [Redacted] met with the director and staff of the WBO to present the Applicant’s arguments for reconsideration. On [Redacted], the Applicant submitted an additional letter to supplement his/her response, which the WBO accepted in its discretion.

[Redacted] did not view the record but submitted additional materials in response to the Preliminary Determination. Under Rule 165.7(g)(2)(i), [Redacted] had 60 calendar days from the date of Preliminary Determination, or until [Redacted], to submit a written response. *** timely submitted additional documents on [Redacted], but none of the documents appear to have any facial nexus to [Redacted] or the covered action. [Redacted] neither viewed the record nor submitted reconsideration materials.

III. LEGAL ANALYSIS.

The CRS has discretion in determining the award amount but must consider certain criteria specified in the CEA. 7 U.S.C. § 26(c)(1)(A). The Rules contain both factors that incorporate the statutory criteria for determining the award amount and factors that may increase or decrease the award amount. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. The Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing smoking gun documents could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present.

A. Applicant.

The Applicant contests that the recommended award amount of *** % is too low, arguing that the CRS considered inadmissible material in the record and failed to properly apply the criteria in the Rules for making an award determination. We agree with the CRS that these arguments are baseless. In arriving at the recommended award amount, the CRS has applied the factors in Rule 165.9 in relation to the facts and circumstances of the Applicant’s award application. Further, the record is properly constituted, and neither the CEA nor the Rules prohibit the CRS from considering certain facts, including those relating to [Redacted].

1. The CRS Has Considered All Relevant Award Factors.

a) Significance of the Applicant’s Information.

The Applicant argues that because his/her information led to the opening of the investigation, it is the most significant information available to the Commission. This argument ignores the plain language of the Rules and conflates an eligibility requirement with a factor for increasing the award amount. Causing the Commission to open an investigation is merely one of the ways a whistleblower can satisfy the basic eligibility requirement that his or her information led the Commission to bring a successful enforcement action. See 17 C.F.R. § 165.2(i). It does not by itself justify the maximum award percentage. To assess the significance of a whistleblower’s information, the Commission would consider the nature of the whistleblower’s information and how it related to the enforcement action, including whether the whistleblower’s information is reliable and complete as to help the Commission conserve resources, and the degree to which the whistleblower’s information supported the claims that the Commission brought. See id. § 165.9(a)(1), (b)(1). In particular, if a whistleblower’s information related only to a small portion of a larger action, then a lower percentage is justified. See Whistleblower Incentives and Protection, 76 Fed. Reg. 53,172, 53,189 n.116 (Aug. 25, 2011) (“[l]f the whistleblower’s information supported only a small part of a larger action, that would be a reason for making an award based upon a smaller percentage amount than otherwise would have been awarded.”).

As applied, the Applicant’s information is only tangentially related to the claims in *** [Redacted], which is evident in a comparison between allegations in the Applicant’s submissions and the Commission’s charges [Redacted]. The Applicant primarily alleged that [Redacted], but [Redacted] was based on [Redacted], claims more aligned [Redacted]. Division staff found that [Redacted]. In addition, the details the Applicant provided to Division staff were largely inconsequential and extraneous to [Redacted], including information relating to *** [Redacted]. None of these formed the underpinnings of [Redacted]. [Redacted]. In addition, none of the names the Applicant provided produced anything of consequence. The breakthrough in the [Redacted] came from [Redacted], which Division staff found to [Redacted]. Consequently, had the [Redacted]. In light of these facts, the Applicant did not provide particularly significant information to the Commission. Therefore, a ***% award is justified.

b) Degree of the Applicant’s Assistance.

The CRS did not narrowly apply this factor as the Applicant claims. The Applicant’s information raised a red flag and pointed Division staff in the right direction toward *** [Redacted] generally, but the Applicant did little beyond [Redacted] causing the Division to open [Redacted]. The Applicant’s impact was minimal once [Redacted] were under way. As the CRS pointed out, the record is fraught with examples of how the Applicant was unable to aid Division staff once [Redacted] began. For example, [Redacted], that the Applicant provided in response to questions from Division staff:

[Redacted], but he/she could not provide specifics [Redacted].

[Redacted] “I could not really contribute to the debate because [Redacted].”

The Applicant did not and [Redacted].

[Redacted], but he/she could not provide [Redacted] because [Redacted]. The Applicant stated, “[Redacted].”

The Applicant indicated that “[Redacted].”

The Applicant could not [Redacted] because “[Redacted].”

The Applicant did not know if [Redacted].

The Applicant believed that [Redacted] but was unable to [Redacted].

The Applicant was unable to provide [Redacted].

The Applicant described [Redacted], but [Redacted].

c) Commission’s Law Enforcement Interest.

The CRS has considered the Commission’s law enforcement interest. The Commission has significant interests in [Redacted]. However, depending upon the facts and circumstances of each case, some factors deserve greater weight than others. See Whistleblower Incentives and Protection, 76 Fed. Reg. at 53,188. In this case, the Applicant contributed minimally beyond being [Redacted] that caused the Commission to open [Redacted], and [Redacted] was based on [Redacted] and not [Redacted]. Given these facts, the Commission’s general and ongoing interest in [Redacted] in and of itself does not support granting the Applicant a high award percentage.

d) Negative Factors.

The Applicant argues that he/she deserves more than ***% because none of the decreasing factors in Rule 165.9(c) applies to him/her. We agree with the CRS that this argument is flawed. As previously stated, not satisfying any one of the positive factors does not mean that the award percentage must be lower than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles are consistent with those of the SEC’s whistleblower program, which Congress established at the same time as the Commission’s whistleblower program. See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34300, 34331 (June 13, 2011) (“[T]he absence of any one of the positive factors does not mean that the award percentage will be lower than 30 percent, nor does the absence of negative factors mean the award percentage will be higher than 10 percent.”). These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing smoking gun documents could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present. Here, because the Applicant did little beyond causing the Division to open [Redacted], the lack of negative factors does not justify increasing the award amount.

2. The CRS Did Not Permissibly Consider Certain Information in the Record.

For example, in assessing the significance of a whistleblower’s information and the degree of his or her assistance, Rule 165.9(b) directs the Commission to consider resources conserved as a result of the whistleblower. See 17 C.F.R. § 165.9(b)(1)(i). An analysis of whether the Commission conserved resources because of information or assistance provided by the whistleblower, however, will depend in part on the availability of other information at the Commission’s disposal that contributed to the conservation of the Commission’s resources, including other whistleblowers, investigative journalism, and in this case, [Redacted]. In other words, the Commission cannot make a fully informed decision on the criteria for determining an award in a vacuum. Context is relevant and necessary.

In addition, Rule 165.10 states the Division staff declaration may include “any matters relevant to the award determination.” In this case, facts about opening of the investigation are not only relevant but crucial to the Applicant’s determination because the Applicant is claiming an award on the basis that his/her information led to the opening of the investigation. Accordingly, the CRS had to learn what led Division staff to open an investigation. [Redacted]. Moreover, [Redacted] is particularly relevant to the significance of the information provided by the Applicant. Without knowing about [Redacted], it would be difficult for the CRS to adequately weigh this factor. Further, the Rules do not make a distinction between what the CRS is allowed to see and what constitutes the record. Under Rule 165.10, the record is what the CRS will see and use to make a determination. See 17 C.F.R. § 165.10. The only redactions referenced in Rule 165.10 pertain to redactions the WBO may make to shield any Commission pre-decisional or internal deliberative process materials from award applicants during the record-viewing stage of the proceeding. See id. § 165.10(b). In addition, the Applicant was not deprived of due process, as the Applicant had the ability to see what the CRS depended on for making its decision. The Applicant saw not only [Redacted] but also Division staff’s assessment of *** [Redacted]. Lastly, even if all references to [Redacted] were removed from the record in the manner requested by the Applicant,[fn1] the remaining facts in the record still justify a ***% award. The facts about the Applicant do not change. Consideration of [Redacted] was not prejudicial because it did not prevent the Applicant from receiving an award, and the ***% award is consistent with the factors in Rule 165.9 as applied. As previously stated, while the Applicant’s information led to the opening of [Redacted], he/she provided limited assistance during the investigation, and ultimately, [Redacted] was based on [Redacted], not [Redacted].

3. The Commission Gave the Applicant a Fair Proceeding in Accordance With the Commission’s Rules and Due Process Requirements.

The Commission treated the Applicant fairly and equitably in the proceeding. In addition to providing all of the documents in the record for the Applicant’s review, [Redacted], the director and staff of the WBO agreed to meet with *** despite having discretion under the Rules to refuse such a meeting. The director also granted the Applicant an extension not required by the Rules to supplement his/her reconsideration letter. However, the Applicant complains that he/she is unfairly disadvantaged [Redacted] because the Commission withheld [Redacted]. Nevertheless, the Commission [Redacted]. Additionally, because the Commission has a general obligation under 17 C.F.R. § 11.3 to keep all information related to its investigations confidential, Rule 165.10(b) allows the WBO to make redactions when necessary.[fn2] [Redacted], the confidentiality requirement under Rule 165.4 would still have prevented the Commission from divulging *** [Redacted]. See 17 C.F.R. § 165.4(a). Consistent with this confidentiality rule, the WBO redacted, without any objection from the Applicant, [Redacted], before providing the record to [Redacted]. Further, as previously stated, with or without [Redacted], the facts in the record about the Applicant support a ***% award.

B. [Redacted] reconsideration submissions do not provide any grounds to justify an award. The submissions are a compilation of miscellaneous documents that have no facial nexus to the covered action. Accordingly, [Redacted] reconsideration request is denied.

C. [Redacted] did not submit a reconsideration request. Therefore, the Preliminary Determination became final with respect to [Redacted]. [Redacted] failure to submit a response contesting the Preliminary Determination constituted a failure to exhaust administrative remedies. Therefore, [Redacted] is prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13.

IV. CONCLUSION.

[1] [Redacted] provided the WBO with proposed redactions to the staff declaration.

[2] In balancing the Division’s obligation to keep investigative information confidential with the Applicant’s right to the record, the WBO minimally redacted [Redacted].

CFTC

08/02/2018

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from [Redacted] and [Redacted] in response to the Commission’s Notice of Covered Action [Redacted] regarding [Redacted]. The Claims Review Staff (“CRS”) has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2017) (as amended by 82 Fed. Reg. 24,487, 24,496- 521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). On [Redacted], the CRS issued a Preliminary Determination recommending that the Applicant receive ***% of the amount of monetary sanctions collected in [Redacted], and that [Redacted] claim be denied. For the reasons set forth below, we agree with the CRS’s determination. Accordingly, the Applicant’s claim is approved in the amount of ***%, and [Redacted] claim be denied.

I. BACKGROUND.

[Redacted] arose out of an investigation opened in response to information that the Applicant [Redacted] submitted to the Commission regarding [Redacted]. [Redacted], the Applicant submitted a Form TCR (Tip, Complaint or Referral), in which he/she alleged that [Redacted]. Division staff forwarded the Applicant’s Form TCR [Redacted] to the Commission’s [Redacted] for review, at which point the Division opened investigation [Redacted]. The Applicant and *** [Redacted] subsequently submitted whistleblower award applications in response to Notice of Covered Action [Redacted] regarding [Redacted].

II. PRELIMINARY DETERMINATION.

On [Redacted], the CRS issued a Preliminary Determination recommending that the Applicant receive a whistleblower award in the amount of ***% of monetary sanctions collected because the Applicant voluntarily provided original information that led to the successful enforcement of a covered action. The Preliminary Determination also recommended denying [Redacted] claim because [Redacted] information is unrelated to the covered action.

On [Redacted], [Redacted] requested that the Commission’s Whistleblower Office (“WBO”) provide the record forming the basis of the Preliminary Determination. See 17 C.F.R. § 165.7(g)(2)(i). On [Redacted], the WBO provided for review a copy of all of the documents in the record, as defined in Rule 165 .10. [Redacted] reviewed the record in person at the Commission. On [Redacted], the Applicant, [Redacted], timely submitted a written response contesting the Preliminary Determination. See 17 C.F.R. § 165.7(g)(2)(ii). On [Redacted], the Applicant [Redacted] met with the director and staff of the WBO to present the Applicant’s arguments for reconsideration. On [Redacted], the Applicant submitted an additional letter to supplement his/her response, which the WBO accepted in its discretion.

[Redacted] did not view the record but submitted additional materials in response to the Preliminary Determination. Under Rule 165.7(g)(2)(i), [Redacted] had 60 calendar days from the date of Preliminary Determination, or [Redacted] to submit a written response. [Redacted] timely submitted additional documents on [Redacted], but none of the documents appear to have any facial nexus to [Redacted] or the covered action.

III. LEGAL ANALYSIS.

A. Applicant.

The Applicant contests that the recommended award amount of ***% is too low, arguing that the CRS considered inadmissible material in the record and failed to properly apply the criteria in the Rules for making an award determination. We agree with the CRS that these arguments are baseless. In arriving at the recommended award amount, the CRS has applied the factors in Rule 165.9 in relation to the facts and circumstances of the Applicant’s award application. Further, the record is properly constituted, and neither the CEA nor the Rules prohibit the CRS from considering certain facts, including those relating to [Redacted].

1. The CRS Has Considered All Relevant Award Factors.

a) Significance of the Applicant’s Information.

The Applicant argues that because his/her information led to the opening of the investigation, it is the most significant information available to the Commission. This argument ignores the plain language of the Rules and conflates an eligibility requirement with a factor for increasing the award amount. Causing the Commission to open an investigation is merely one of the ways a whistleblower can satisfy the basic eligibility requirement that his or her information led the Commission to bring a successful enforcement action. See 17 C.F.R. § 165.2(i). It does not by itself justify the maximum award percentage. To assess the significance of a whistleblower’s information, the Commission would consider the nature of the whistleblower’s information and how it related to the enforcement action, including whether the whistleblower’s information is reliable and complete as to help the Commission conserve resources, and the degree to which the whistleblower’s information supported the claims that the Commission brought. See id. § 165.9(a)(1), (b)(1). In particular, if a whistleblower’s information related only to a small portion of a larger action, then a lower percentage is justified. See Whistleblower Incentives and Protection, 76 Fed. Reg. 53,172, 53,189 n.116 (Aug. 25, 2011) (“[I]f the whistleblower’s information supported only a small part of a larger action, that would be a reason for making an award based upon a smaller percentage amount than otherwise would have been awarded.”).

As applied, the Applicant’s information is only tangentially related to the claims in *** [Redacted], which is evident in a comparison between allegations in the Applicant’s submissions and the Commission’s charges [Redacted]. The Applicant primarily alleged that [Redacted], but [Redacted], claims more aligned [Redacted]. In addition, the details the Applicant provided to Division staff were largely inconsequential and extraneous to [Redacted], including information relating to *** [Redacted]. None of these formed the underpinnings of [Redacted]. In addition, none of the names the Applicant provided produced anything of consequence. The breakthrough in the [Redacted] came from [Redacted], which Division staff found to [Redacted]. Consequently, had the [Redacted].

In light of these facts, the Applicant did not provide particularly significant information to the Commission. Therefore, a ***% award is justified.

b) Degree of the Applicant’s Assistance.

The CRS did not narrowly apply this factor as the Applicant claims. The Applicant’s information raised a red flag and pointed Division staff in the right direction toward *** [Redacted] generally, but the Applicant did little beyond [Redacted], causing the Division to open [Redacted]. The Applicant’s impact was minimal once [Redacted] were under way. As the CRS pointed out, the record is fraught with examples of how the Applicant was unable to aid Division staff once [Redacted] began. For example, [Redacted], that the Applicant provided in response to questions from Division staff:

[Redacted], but he/she could not provide specifics [Redacted].

[Redacted], “I could not really contribute to the debate because [Redacted].”

The Applicant did not and [Redacted].

[Redacted], but he/she could not provide [Redacted] because [Redacted]. The Applicant stated, “[Redacted].”

The Applicant indicated that “[Redacted].”

The Applicant could not [Redacted] because “[Redacted].”

The Applicant did not know if [Redacted].

The Applicant believed that [Redacted], but was unable to [Redacted].

The Applicant was unable to provide [Redacted].

The Applicant described [Redacted], but [Redacted].

In addition, as stated in the Division staff declaration, although the [Redacted] were over [Redacted], only [Redacted] were relevant to [Redacted] not particularly helpful. Because the Applicant’s impact was minimal once [Redacted] were under way, a ***% award is justified.

c) Commission’s Law Enforcement Interest.

d) Negative Factors.

2. The CRS Did Not Impermissibly Consider Certain Information in the Record.

The only factor that the CEA prohibits the Commission from considering in an award determination is the balance of the Customer Protection Fund, the fund from which whistleblower awards are paid. See 7 U.S.C. § 26(c)(1)(B)(ii). Conversely, the only enumerated factors the CEA requires the Commission to consider are the significance of the whistleblower’s information, the degree of his or her assistance, and the Commission’s programmatic interest. See id. § 26(c)(1)(B)(i). Except for these factors, Congress explicitly left determination of the award amount to the discretion of the Commission. Id. § 26(c)(1)(A) (“The determination of the amount of an award … shall be in the discretion of the Commission.”); id.§ 26(c)(1)(B) (“In determining the amount of an award … the Commission shall take into consideration such additional relevant factors as the Commission may establish by rule or regulation.”).

Consideration of [Redacted] is not arbitrary or capricious or manifestly contrary to the CEA. See Chevron, U.S.A., Inc. v. Nat. Res. Def Council, Inc., 467 U.S. 837, 844 (1984). It is eminently reasonable because determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances surrounding each matter. See 76 Fed. Reg. at 53,188. Consequently, the CRS cannot make a meaningful award determination without all of the relevant facts before it, particularly those that shed light on the context and background of the investigation leading up to the covered action.

In other words, the Commission cannot make a fully informed decision on the criteria for determining an award in a vacuum. Context is relevant and necessary. In addition, Rule 165.10 states the Division staff declaration may include “any matters relevant to the award determination.” In this case, facts about opening of the investigation are not only relevant but crucial to the Applicant’s determination because the Applicant is claiming an award on the basis that his/her information led to the opening of the investigation. Accordingly, the CRS had to learn what led Division staff to open an investigation. [Redacted]. Moreover, [Redacted] is particularly relevant to the significance of the information provided by the Applicant. Without knowing about [Redacted], it would be difficult for the CRS to adequately weigh this factor.

Further, the Rules do not make a distinction between what the CRS is allowed to see and what constitutes the record. Under Rule 165.10, the record is what the CRS will see and use to make a determination. See 17 C.F.R. § 165.10. The only redactions referenced in Rule 165.10 pertain to redactions the WBO may make to shield any Commission pre-decisional or internal deliberative process materials from award applicants during the record-viewing stage of the proceeding. See id. § 165.10(b). In addition, the Applicant was not deprived of due process, as the Applicant had the ability to see what the CRS depended on for making its decision. The Applicant saw not only [Redacted] but also Division staff’s assessment of *** [Redacted].

Lastly, even if all references to [Redacted] were removed from the record in the manner requested by the Applicant,[fn1] the remaining facts in the record still justify a ***% award. The facts about the Applicant do not change. Consideration of [Redacted] was not prejudicial because it did not prevent the Applicant from receiving an award, and the ***% award is consistent with the factors in Rule 165.9 as applied. As previously stated, while the Applicant’s information led to the opening of [Redacted], he/she provided limited assistance during the investigation, and ultimately, [Redacted] was based on [Redacted], not [Redacted].

3. The Commission Gave the Applicant a Fair Proceeding in Accordance With the Commission’s Rules and Due Process Requirements.

The Commission treated the Applicant fairly and equitably in the proceeding. In addition to providing all of the documents in the record for the Applicant’s review, [Redacted], the director and staff of the WBO agreed to meet with *** [Redacted] despite having discretion under the Rules to refuse such a meeting. The director also granted the Applicant an extension not required by the Rules to supplement his/her reconsideration letter. However, the Applicant complains that he/she is unfairly disadvantaged [Redacted] because the Commission withheld [Redacted]. Nevertheless, the Commission [Redacted]. Additionally, because the Commission has a general obligation under 17 C.F.R. § 11.3 to keep all information related to its investigations confidential, Rule 165.10(b) allows the WBO to make redactions when necessary.[fn2] [Redacted], the confidentiality requirement under Rule 165.4 would still have prevented the Commission from divulging *** [Redacted]. See 17 C.F.R. § 165.4(a). Consistent with this confidentiality rule, the WBO redacted, without any objection from the Applicant, [Redacted], before providing the record to [Redacted]. Further, as previously stated, with or without [Redacted], the facts in the record about the Applicant support a ***% award.

B. [Redacted]. [Redacted] additional submissions do not provide any grounds to justify an award. The submissions are a compilation of miscellaneous documents that have no facial nexus to the covered action. Accordingly, [Redacted] reconsideration request is denied.

IV. CONCLUSION.

[1] [Redacted] provided the WBO with proposed redactions to the staff declaration.

[2] In balancing the Division’s obligation to keep investigative information confidential with the Applicant’s right to the record, the WBO minimally redacted [Redacted].

SEC

83689

07/23/2018

[Redacted] (“Claimant”) seeks a whistleblower award pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), and the rules thereunder, based on the above-referenced settled Commission enforcement matters (collectively the Covered Action[fn1]).

The Claimant’s application suffers from a fatal defect, however. At no point prior to the issuance of any of the final orders in the Covered Action did the Claimant qualify as a “whistleblower” in connection with any submission for which Claimant is now seeking an award. The Commission’s whistleblower rules provide that, to qualify as a whistleblower for purposes of the Commission’s award program, an individual must submit his or her information through the Commission’s website, or mail or fax a completed Form TCR to the Commission. See Exchange Act Rule 21F-2(a) & 21F-9(a).

Although the Claimant in making *** award request is relying on numerous submissions that the Claimant made to the Commission in the form of letters, none of these letters was accompanied by a completed Form TCR.[fn2] This is apparent from the administrative record and the Claimant does not contend otherwise. Indeed, the only completed Form TCR that the Claimant appears to have submitted was provided to the Commission well after the entry of the last final order in the Covered Action. This belated Form TCR, however, cannot serve to retroactively establish the Claimant’s status as a whistleblower eligible for an award.[fn3]

Relatedly, Claimant failed to declare under penalty of perjury at the time that the Claimant submitted the various letters that the information that Claimant was submitting was true and correct. See Exchange Act Rule 21F-9(b). This failure is also fatal to the Claimant’s application.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.[fn4]

By the Commission.

[1] See Exchange Act Rule 21F-4(d)(1) (providing that, “[f]or purposes of making an award …, the Commission will treat as a Commission action two or more administrative or judicial proceedings brought by the Commission if these proceedings arise out of the same nucleus of operative facts”).

[2] The record indicates that the letters were sent to the Commission rather than being submitted through the Commission’s web page and, thus, Exchange Act Rule 21F-9(a) would require that they be submitted with a Form TCR at the time that the letters were provided to the Commission.

[3] To ensure that this was the only Form TCR that the Claimant was relying on in seeking an award for the Covered Action, the Office of the Whistleblower on March 26, 2018, wrote to the Claimant to request that the Claimant “confirm that, in making your award application, you are relying exclusively on the Form TCR that you submitted to our office, dated [Redacted]?” In the Claimant’s response, the [Redacted] Form TCR was the only Form TCR that the Claimant identified. We deem this a concession on the part of the Claimant that [Redacted] did not submit a completed Form TCR in connection with any of the letters that [Redacted] submitted prior to the entry of the final judgments in the Covered Action.

[4] We deny the Claimant’s request for a hearing. Our rules do not provide for such a hearing, and there is nothing in the Claimant’s award application or reconsideration request that persuades us that it would be beneficial to our disposition of this matter to depart from the rules and offer the Claimant this additional procedural opportunity. Additionally, although not a basis for our decision, we note that the record shows that Claimant’s information was not relied upon by Enforcement staff assigned to the Covered Action and, therefore, Claimant’s information did not lead to the success of the Covered Action.

CFTC

07/12/2018

The Commodity Futures Trading Commission (“Commission”) received whistleblower award applications from [Redacted] (“Claimant #1”), [Redacted] (“Claimant #2”), *** [Redacted] (“Claimant #3”), and [Redacted] (“Claimant #4”) in response to the Commission’s Notice of Covered Action [Redacted] regarding [Redacted].

The Claims Review Staff has evaluated each of the applications in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt. 165 (2017) (as amended by 82 Fed. Reg. 24,487, 24,496-521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012). On January 9, 2018, the Claims Review Staff issued a Preliminary Determination recommending that Claimant #4 receive a whistleblower award in the amount of ***% of monetary sanctions collected in *** [Redacted] because Claimant #4 voluntarily provided original information to the Commission that led to the successful enforcement of a covered action. The Preliminary Determination also recommended denying the other award claims because the other applicants played no role in [Redacted].

I. LEGAL ANALYSIS.

Section 23(b)(1) of the CEA requires the Commission to pay an award to an individual who voluntarily provides the Commission with original information that leads to the successful enforcement of a covered or related action. 7 U.S.C. § 26(b)(1) (2012). The Claims Review Staff has determined that Claimant #4 voluntarily provided the Commission with original information that led to the successful enforcement of a covered action. Even though Claimant #4 did not submit a Form TCR (Tip, Complaint or Referral) until after the Commission concluded the enforcement action, Claimant #4 is a whistleblower. As a foreign national, Claimant #4 did not know about the Commission’s whistleblower program when he/she initiated contact with the Commission regarding an ongoing litigation matter. Claimant #4 provided significant information and assistance to Commission staff during the litigation, and he/she thereafter submitted a Form TCR to perfect his/her whistleblower status. Accordingly, Claimant #4 is a whistleblower within the meaning of the Rules. Claimant #4 also provided the information voluntarily, as he/she was not under a legal obligation to report to the Commission, and Commission staff did not know about Claimant #4’s existence until he/she came forth out of his/her own volition. In addition, Claimant #4’s information was original, as it was previously unknown to the Commission and derived from his/her personal experiences and observations. Lastly, Claimant #4 significantly contributed to the Commission’s action by helping Commission staff successfully settle the action and thereby avoid a costly trial. The Claim Review Staff recommended the award amount to be ***% of the amount of monetary sanctions collected in the covered action.[fn1] We agree with this determination. In arriving at this award amount, the Claims Review Staff applied the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of Claimant #4’s award application. The determination of the appropriate percentage of a whistleblower award involves a highly individualized review of the facts and circumstances. Depending upon the facts and circumstances of each case, some factors may not be applicable or may deserve greater weight than others. The analytical framework in the Rules provides general principles without mandating a particular result. The criteria for determining the amount of an award in Rule 165.9, 17 C.F.R. § 165.9, are not listed in any order of importance and are not assigned relative importance. The Rules do not specify how much any factor in Rule 165.9(b) or (c) should increase or decrease the award percentage. Not satisfying any one of the positive factors does not mean that the award percentage must be less than 30%, and the converse is true. Not having any one of the negative factors does not mean the award percentage must be greater than 10%. These principles serve to prevent a vital whistleblower from being penalized for not satisfying the positive factors. For example, a whistleblower who provides the Commission with significant information and substantial assistance such as testifying at trial and producing smoking gun documents could receive 30% even if the whistleblower did not participate in any internal compliance systems. In contrast, in order to prevent a windfall, a whistleblower who provides some useful but partial information and limited assistance to the Commission may receive 10% even if none of the negative factors were present. As applied, Claimant #4 significantly contributed to the Commission’s case, but he/she was not involved in the CEA violations at issue in the covered action. However, it was unlikely that Claimant #4 acted with scienter, as he/she was a junior-level employee in a foreign nation given instruction by his/her employer [Redacted]. Further, Claimant #4 did not financially benefit from the violations, and his/her information led the Commission to successfully settle the case and thereby avoid a potentially costly, risky, and cumbersome trial against [Redacted]. After considering the mitigating factors, we find that the Claims Review Staff’s determination of ***% is appropriate. The remaining Claimants did not contribute to the covered action. Commission staff responsible for the covered action did not know who the remaining Claimants were until the Commission’s Whistleblower Office informed staff of these Claimants’ award applications.

II. RESPONSE TO PRELIMINARY DETERMINATION.

On January 11, 2018, Claimant #1 wrote to the Commission to withdraw his/her award application from this proceeding. Therefore, Claimant #1 is no longer a claimant in this determination. On January 31, 2018, Claimant #4 informed the Commission in writing that he/she would not contest the Preliminary Determination within the 60-day deadline set out in Rule 165.7(g), 17 C.F.R. § 165.7(g). Accordingly, pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff with respect to Claimant #4. Claimant #2 and Claimant #3 did not respond to the Preliminary Determination. Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination became final with respect to Claimant #2 and Claimant #3. Claimant #2’s and Claimant #3’s failure to submit a timely response contesting the Preliminary Determination constituted a failure to exhaust administrative remedies. Accordingly, Claimant #2 and Claimant #3 are prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13.

It is hereby ORDERED that Claimant #4 shall receive ***% of monetary sanctions collected in [Redacted]; and it is further ORDERED that Claimant #2’s and Claimant #3’s whistleblower award claims be, and hereby are, denied.

By the Commission.

[1] The Commission collected [Redacted] of sanctions imposed, which means Claimant #4 would receive [Redacted] in payout. While circumstances may change, the Commission does not anticipate being able to collect the remaining amount.

CFTC

07/12/2018

The Commodity Futures Trading Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), [Redacted] (“Claimant 4”), and [Redacted] (“Claimant 5”) (collectively “Claimants”) in response to Notice of Covered Action [Redacted] regarding [Redacted], [Redacted] (“[Redacted]” or “Order”).

The Claims Review Staff (“CRS”) evaluated each claim in accordance with the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. pt.165 (2017) (as amended by 82 Fed. Reg. 24,487, 24,496-521 (May 30, 2017)), promulgated pursuant to Section 23 of the Commodity Exchange Act (“CEA” or “Act”), 7 U.S.C. § 26 (2012).

On February 12, 2018, the CRS issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award in the amount of [Redacted]% of the monetary sanctions collected in the [Redacted]. The Preliminary Determination also recommended denying the remaining award claims of Claimant 2, Claimant 3, Claimant 4, and Claimant 5 because their claims did not meet the requirements of the CEA and the Rules.

Claimant 1 met all the requirements under the CEA and Rules for an award, because Claimant 1 is a whistleblower who voluntarily provided original information to the Commission that led to the successful enforcement of a covered action. See 7 U.S.C. § 26(b)(1)(2012); 17 C.F.R. §§ 165.1, 165.5. Claimant 1 also satisfied the eligibility requirements for an award. See 17 C.F.R. §§ 165.5, 165.6.

Claimant 1 submitted a Form TCR, voluntarily provided original information, and provided assistance to Commission staff during the course of the investigation. Moreover, Claimant 1 does not fall into any of the categories of individuals ineligible for an award. See 17 C.F.R. § 165.6.

The Rules justify awarding Claimant 1 [Redacted]% of the monetary sanctions collected.[fn1] Claimant 1’s information was specific, timely, and credible, and caused Commission staff to launch an investigation. Claimant 1’s information was essential to the success of the [Redacted]. The Division was unaware of the violations before Claimant 1 provided information regarding them. Claimant 1 was extensively involved in the investigation and was truthful, forthcoming, and cooperative. Claimant 1’s willingness to provide the Commission with ongoing, extensive, and timely assistance conserved Commission resources. Moreover, the Commission has significant programmatic and law enforcement interests in ensuring that [Redacted]. Granting an award to Claimant 1 will incentivize whistleblowers to report {Redacted]. It would also provide notice to market participants that individuals are reporting quality information about violations of the CEA, thereby enhancing the Commission’s ability to enforce the CEA. [Redacted].

The CEA and the Rules do not require that the calculation of the award amount be based solely on the monetary sanctions collected by the Commission. The specific phrase “collected by the Commission”[fn2] is used in Section 23(g)(3)(A) of the CEA and Rule § 165.12(b)(1) when discussing deposits and credits into the Commission’s Customer Protection Fund. See 7 U.S.C. § 26(g)(3)(A); 17 C.F.R. § 165.12(b)(1). However, when discussing the calculation of a whistleblower award, the CEA and the Rules use the phrase “what has been collected of the monetary sanctions imposed in the covered judicial or administrative action or related action.” See 7 U.S.C. § 26(b); 17 C.F.R. § 165.8. Unlike the language used in subsection (g)(3) of the CEA and subsection 165.12(b)(1) of the Rules, this language does not require that the monetary sanctions be specifically collected by the Commission. Additionally, the CEA and the Rules broadly define “monetary sanctions” with respect to any judicial or administrative action to include “any monies, including penalties, disgorgement …, ordered to be paid.” 7 U.S.C. § 26(a)(3)(A); 17 C.F.R. § 165.2(j)(1) (emphasis added). Again, the requirement is only that these sanctions are “ordered to be paid” by the Commission; not directly collected by the Commission. [Redacted].

None of the Claimants responded to the Preliminary Determination.[fn6] Pursuant to Rule 165.7(h), 17 C.F.R. § 165.7(h), the Preliminary Determination becomes final because Claimants 2-5 failed to submit a timely response contesting the Preliminary Determination, which constitutes a failure to exhaust administrative remedies. Accordingly, Claimants are prohibited from pursuing an appeal under Rule 165.13, 17 C.F.R. § 165.13.

It is hereby ORDERED that Claimant 1 shall receive [Redacted]% of the monetary sanctions collected in [Redacted]; and it is further ORDERED that the award claims of Claimant 2, Claimant 3, Claimant 4, and Claimant 5 be, and hereby are, denied.

By the Commission.

[1] For whistleblowers eligible to receive an award, Rule 165.9 contains the factors that influence the percentage amount of an award that the whistleblower receives, including factors to be taking into consideration, factors that may increase the amount of a whistleblower’s award, and factors that may decrease the amount of a whistleblower’s award. See C.F.R § 165.9.

[2] The phrase “collected by the Commission” is defined in 17 C.F.R. § 165.2(d) to refer to any funds received, and confirmed by the U.S. Department of the Treasury, in satisfaction of part or all of a civil monetary penalty, disgorgement obligation, or fine owned to the Commission.”

[3] [Redacted].

[4] [Redacted].

[5] [Redacted].

[6] [Redacted].

SEC

07/11/2018

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated this claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination as follows.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant. The basis for this determination is that Claimant is not a whistleblower within the meaning of Section 21F(a)(6) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-2(a) thereunder because Claimant failed to submit information about a possible securities law violation pursuant to the procedures set forth in Rule 21F-9(a). Specifically, Claimant failed to submit Claimant’s information on-line through the Commission’s website or on a Form TCR.[fn1] Because Claimant did not submit information in the form and manner set forth in Rule 21F-9(a), Claimant is ineligible for an award in connection with this Covered Action.[fn2]

[1] We further note that Claimant failed to provide a declaration under penalty of perjury at the time *** submitted *** information, as require by Rule 21F-9(b).

[2] Claimant asks that any procedural deficiency be excused under Exchange Act Rule 21F-8(a), which provides that “the Commission may, in its sole discretion, waive” the procedures in Rules 21F-9(a) and (b) “based upon a showing of extraordinary circumstances.” The Commission has explained that the “extraordinary circumstances” exception of Rule 21F-8(a) is to be “narrowly construed” and “applied only in limited circumstances.” Order Determining Whistleblower Award Claim, Exchange Act Release No. 72178, at 3 (May 16, 2014) (quoting In the Matter of the Application of PennMont Securities et al., SEC Release No. 34-61967, 2010 WL 1638720, at 4 (April 23, 2010), aff’d 414 Fed. Appx. 465 (3d Cir. 2011)); Order Determining Whistleblower Award Claim, Exchange Act Release No. 72659, at 4-5 (July 23, 2014) (quoting PennMont, 2010 WL 1638720 at *4); Order Determining Whistleblower Award Claim, Exchange Act Release No. 77368, at 3 (Mar. 14, 2016), aff’d sub nom. Cerny v. SEC, No. 16-934, 2017 WL 3911581 (2d Cir. Sept. 7, 2017). An extraordinary circumstance is one where the reason for the failure to timely file was beyond the claimant’s control. Id. Here, Claimant has not demonstrated that extraordinary circumstances prevented Claimant from complying with Rules 21F-9(a) and (b). We note that, even if Claimant were eligible for an award in this matter, no award payments could be made at this time because, to date, no amount of monetary sanctions have been collected. See Exchange Act §21F(b)(1).

SEC

04/20/2018

In response to the above-referenced Notices of Covered Actions (collectively, the “Covered Actions”), the Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated these award claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above award claims. The basis for this determination is as follows:

First, Claimant was not a “whistleblower” during the relevant time period under Exchange Act Rule 21F-2(a)(1). To qualify as a whistleblower, an individual must provide the Commission with information relating to a possible securities law violation pursuant to the procedures set forth in Exchange Act Rule 21F-9(a), which Claimant did not do. Specifically, Claimant did not submit Claimant’s information by mailing or faxing a Form TCR to the Office of the Whistleblower or through the Commission’s on-line system at any time before the qualifying final judgments or order were issued in the above-listed matters.[fn1]

Second, Claimant’s information did not lead to the success of any of the above-referenced Covered Actions within the meaning of Exchange Act Rule 21F-4(c). Claimant’s tip was submitted after the entry of the qualifying final judgments or orders in the Covered Actions, and as such, could not have had any effect of the success of those enforcement actions, and was not forwarded to Enforcement staff in connection with any matter.

Finally, with respect to Covered Actions [Redacted] Claimant failed to submit the claims for award to the Office of the Whistle blower within ninety (90) days of the Notices of those Covered Actions, as required under Rule 21F-10(6) of the Exchange Act.

By: Claims Review Staff.

[1] Claimant submitted a Form TCR to the Commission on [Redacted] alleging property fraud. Claimant’s Form TCR was submitted after the issuance of the qualifying final judgments or orders in each of the Covered Actions for which Claimant applied for an award. *** tip also was submitted after the posting of the Notices for the Covered Actions.

SEC

83037

04/12/2018

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the above-referenced Covered Actions. This proposed award would yield a likely payout to the Claimant of more than $2.1 million.[fn1] Claimant subsequently provided written notice of Claimant’s decision not to contest the Preliminary Determination.

The recommendation of the CRS with respect to the Covered Actions is adopted. We find that the record demonstrates that the Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Actions pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Turning to the award amount, we have applied the award criteria identified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here.[fn2] In doing so, we find that the CRS’s proposed award determination is appropriate. We positively assessed the facts that the Claimant was a former company insider whose information strongly supported the findings in the Covered Actions and who thereafter continued to provide ongoing helpful assistance to the staff during the Commission’s investigation. We also negatively assessed the fact that Claimant unreasonably delayed in reporting the information to the Commission for approximately ten months.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( ***%) of the monetary sanctions collected in the Covered Actions, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] We note that one of the Covered Actions included [Redacted]. Exchange Act Rule 21F-4(e) defines “monetary sanctions” to mean “any money, including penalties, disgorgement, and interest, ordered to be paid . . . as a result of a Commission action or a related action.” (emphasis added). As such, in our view, [Redacted] is not a “monetary sanction,” [Redacted], and cannot be included for purposes of calculating a whistleblower award.

[2] In assessing the appropriate award amount, Exchange Act 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.

SEC

82996

04/05/2018

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] (“Claimant”) receive a whistleblower award in the amount of [Redacted] percent (*** %) of the monetary sanctions collected, or to be collected, in the Covered Action. This proposed award would yield a likely payout to the Claimant of more than $2.2 million. Claimant subsequently provided written notice of Claimant’s decision not to contest the Preliminary Determination.

The recommendation of the CRS with respect to the Covered Action is adopted. We find that the record demonstrates that the Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

In reaching this determination, we have relied upon Exchange Act Rule 21F-4(b)(7). That rule provides in relevant part that:

If you provide information to … any other authority of the federal government …, and you, within 120 days, submit the same information to the Commission pursuant to § 240.21F-9 of this chapter, as you must do in order for you to be eligible to be considered for an award, then, for purposes of evaluating your claim to an award …, the Commission will consider that you provided [the] information as of the date of your original disclosure, report or submission to one of these other authorities or persons.

Under Rule 21F-4(b)(7), if an individual submits his or her tip to another federal agency, then in considering an award application from that individual, the Commission will treat the information as though it had been submitted to the Commission directly from the individual at the same time that it was submitted to the other agency, provided that the individual submitted that same information to the Commission no later than 120 days after the individual first went to the other government agency. In this way, Rule 21F-4(b)(7) operates as a 120-day safe harbor, assuring an individual who voluntarily reports misconduct to another agency first that he or she will be deemed for award purposes to have reported directly to the Commission at the same time that the individual reported to the other federal agency.[fn1] Thus, the other agency’s use of the information in a referral that causes the staff to open an investigation is credited directly to the whistleblower for purposes of making an award determination, including the “led to” standard under Exchange Act Rule 21F-4(c).

Applying Rule 21F-4(b)(7) to the facts in this matter, we find that the Claimant is deemed to be have been a whistleblower who caused the opening of the investigation by providing original information to the Commission. The relevant facts here are clear: The Claimant voluntarily reported information to a federal agency covered by the rule, that federal agency in turn made a referral to the Commission based on the Claimant’s information, the Enforcement staff then promptly responded to the referral by opening the investigation that resulted in the Covered Action, and the Claimant within 120 days of reporting to the other agency (albeit after the Commission’s investigation was opened) provided the same information to the Commission in accordance with the procedures specified in Exchange Act Rule 21F-9. Based on the foregoing, we find that the Claimant satisfies the Rule 21F-4(b)(7) safe-harbor provision and, thus, in making an award to the Claimant for the Covered Action we have treated the Claimant’s submission to the Commission as though it had been made on the date that the Claimant provided that same information to the other federal agency.

Turning to the award amount, we have applied the award criteria identified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here.[fn2] In doing so, we find that the CRS’s proposed award determination is appropriate. We positively assessed the facts that the Claimant was a former company insider whose information caused the Commission to open the investigation into the misconduct and thereafter continued to provide ongoing helpful assistance to the staff during the Commission’s investigation.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent (***%) of the monetary sanctions collected in the Covered Action, including any monetary sanctions collected after the date of this Order.[fn3]

By the Commission.

[1] The 120-day safe harbor balances the important programmatic goal of encouraging individuals to report potential securities law violations to the Commission promptly with the practical recognition that an individual may in certain circumstances report wrongdoing to other federal agencies (or proceed through other channels recognized in the rule) before coming to the Commission. Moreover, by requiring that individuals submit the information to the Commission within 120 days pursuant to the requirements of Rule 21F-9, the safe harbor ensures that the Commission will have a reasonably contemporaneous record that the individual was the source of the information, which in turn helps to promote administrative accuracy in connection with the processing of any eventual whistleblower award application.

[2] In assessing the appropriate award amount, Exchange Act 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.

[3] The CRS recommended an award denial for the Claimant’s claim for an award in connection with [Redacted]. See generally Exchange Act Rule 21F-11 (“Procedures for determining awards based upon a related action.”). Claimant did not challenge that preliminary determination. As a result, the CRS’s preliminary determination as to the related-action award claim became the final determination of the Commission pursuant to Rule 21F-11(f).

SEC

82955

03/27/2018

On [Redacted] the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of a claim for a whistleblower award submitted by [Redacted] (“Claimant” ) in connection with Covered Action [Redacted] (the “Covered Action”).[fn1] Claimant filed a timely request for reconsideration.

For the reasons stated below, Claimant’s award claim is denied.

I. Background.

On [Redacted] (the “Company”), [Redacted].[fn2]

On [Redacted], the Commission’s Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. Claimant filed a timely whistleblower award application. In Claimant’s application, Claimant asserted that although Claimant [Redacted] (the “Report”), and that, through the online publication of the Report, [Redacted]. Further, Claimant argued — without appending any evidentiary support — that Claimant supplied additional documents from Claimant’s investigation, dropping them off at the Commission’s [Redacted] Regional Office (the “Regional Office”) to be provided to the staff investigating the Covered Action Defendants.

II. Preliminary Determination and Response.

On [Redacted] the CRS preliminarily determined to deny Claimant’s award application for three reasons. First, Claimant was not a whistleblower within the meaning of Rule 21F-2(a) under the Exchange Act because Claimant did not provide the Commission with information relating to a possible violation of the federal securities laws pursuant to the procedures set forth in Rule 21F-9(a).[fn3] Second, Claimant did not provide original information to the Commission on a voluntary basis, as required by Rule 21F-4(a), because any information that Claimant claimed to have provided followed a Commission request relating to the same subject matter as an earlier Commission request directed to [Redacted] (“Claimant’s Business”), of which Claimant was [Redacted].[fn4]

Third, the CRS preliminarily found that Claimant’s information did not “lead to” the successful enforcement of the Covered Action. It preliminarily found that the information purportedly provided by Claimant did not cause the Commission to open its investigation (or inquire into different conduct as part of a current Commission investigation) or significantly contribute to the success of the subsequent administrative proceeding.[fn5] The CRS added that “the staff obtained the [Report] regarding [the Company] from a public website; and . . . the record does not support [Claimant’s] claim that [Claimant] left other documents at the [Regional Office] to be delivered to staff investigating [the Company].”

After requesting and reviewing the record supporting the Preliminary Determination, Claimant submitted a written request for reconsideration on [Redacted]. Addressing the CRS’s first ground for denying Claimant’s award application, Claimant argues that Rule 21F-9 has no bearing here because that rule was adopted after Claimant’s purported submission of information, that the Report was Claimant’s, and that Claimant provided the Report to the Commission by way of online publication. Claimant further asserts that Claimant personally hand-delivered documents concerning the Company to a receptionist at the Regional Office, and Claimant points to an email from Regional Office staff inviting Claimant to deliver documents to the Regional Office. As to the requirement of voluntariness, Claimant contends that Claimant’s actions meet the everyday meaning of the word “voluntary” because Claimant did not act under any legal obligation and that Rule 21F-4 does not apply here because that rule, too, was adopted after Claimant’s alleged submission of information. Finally, Claimant argues that the Report was “the entire reason” for the Commission’s investigation of the Company, and that denying Claimant’s award application will discourage [Redacted] similar efforts to uncover [Redacted] fraud.

III. Analysis.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn6] Below, we analyze Claimant’s whistleblower award application and request for reconsideration by addressing: (A) whether Claimant provided information to the Commission; (B) whether Claimant did so voluntarily; and (C) whether Claimant’s information led to the successful enforcement of the Covered Action.

A. Claimant did not provide information to the Commission.

Claimant seeks a whistleblower award on the basis of two alleged submissions of information to the Commission between [Redacted]: the Report and the documents Claimant allegedly hand-delivered to the Regional Office. We consider both in turn and, upon a careful examination of the record, we conclude that neither alleged submission was actually provided by Claimant to the Commission, as required by Section 21F of the Exchange Act and our whistleblower rules. For this reason, Claimant does not qualify as a whistleblower under our statute and rules.

Section 21F of the Exchange Act directs that, in any covered action, “the Commission, under regulations prescribed by the Commission and subject to subsection (c), shall pay an award or awards to 1 or more whistleblowers who voluntarily provided original information to the Commission that led to the successful enforcement of” the covered action.[fn7] The statute defines the term “whistleblower” to include “any individual who provides . . . information relating to a violation of the securities laws to the Commission, in a manner established, by rule or regulation, by the Commission.[fn8] It also directs that “[n]o award under subsection (b) shall be made . . . to any whistleblower who fails to submit information to the Commission in such form as the Commission may, by rule, require.”[fn9]

The Commission implemented Section 21F by promulgating rules on May 25, 2011, with an effective date of August 12, 2011.[fn10] Rule 21F-2(a)(1) states, “You are a whistleblower if . . . you provide the Commission with information pursuant to the procedures set forth in § 240.21F-9(a) of this chapter, and the information relates to a possible violation of the Federal securities laws.”[fn11] The same rule also states, “To be eligible for an award, you must submit original information in accordance with the procedures and conditions described in §§ 240.21F-4, 240.21F-8, and 240.21F-9 of this chapter.”[fn12]

Rule 21F-9 generally requires that information be submitted either online through a portal on the Commission’s public website or by mailing or faxing a Form TCR (Tip, Complaint or Referral) to the Commission.[fn13] The same rule also provides a safe harbor for information submitted in writing to the Commission after the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was enacted and before the rules took effect: “If you submitted original information in writing to the Commission after July 21, 2010 (the date of enactment of [Dodd-Frank]) but before the effective date of these rules, your submission will be deemed to satisfy the requirements set forth in paragraphs (a) and (b) of this section.”[fn14]

1. The Report [Redacted].

Thus, during the relevant time period (that is, [Redacted]) , an individual must have submitted information in writing to the Commission in order to qualify as a “whistleblower” for award eligibility. However, it is undisputed that Claimant never submitted the Report to the Commission.

Claimant asserts that Claimant should receive full credit for the [Redacted] and online publication of the Report [Redacted]. Even assuming Claimant’s [Redacted] of the Report, however, Claimant errs in arguing that “[w]hether [Claimant] provided the information publicly or privately to the SEC, [Claimant] provided it.” The plain language of Section 21F and of our whistleblower rules, quoted above, requires that information be “provided” and “submitted” directly to the Commission in order to support an award — and makes no allowance for the online publication of information that, by happenstance, indirectly makes its way into the hands of Commission staff. As Congress explained in enacting Section 21F, the whistleblower awards program “aims to motivate those with inside knowledge to come forward and assist the Government to identify and prosecute persons who have violated securities laws and recover money for victims of financial fraud.”[fn15] If individuals were motivated only to post information online — and not to provide that information directly to the Commission — then this core purpose of the whistleblower awards program would be undermined. Accordingly, we reject Claimant’s argument that online publication of the Report constituted provision of the Report to the Commission.

Claimant contends that this result “somehow erases [Claimant] as the original source of the information” in the Report.[fn16] Even if Claimant was the original source of the Report, Claimant still would need to demonstrate that Claimant provided the Report to the Commission. That is, even an individual who qualifies as the original source of information that the Commission receives indirectly must also provide that same information directly to the Commission in order to qualify for an award.[fn17]

We recently explained this point with respect to another claimant (the “File No. 2017-10 Claimant” ) who sought an award based on information that the File No. 2017-10 Claimant had provided to other federal agencies, in light of the possibility that those agencies could have shared File No. 2017-10 Claimant’s information with the Commission:

[W]e note that [the File No. 2017-10] Claimant likely would have been procedurally barred from obtaining an award based on any information that either [agency] might have shared had they in fact done so. Specifically, for an individual to qualify for an award based on information that he or she provides, our whistleblower rules require that the individual must provide his or her tip directly to the Commission and he or she must do so in accordance with the requirements of Exchange Act Rule 21F-9. Among other things, Rule 21F-9 requires that tips provided to the Commission before the effective date of the whistleblower rules (i.e., August 12, 2011) must be provided in writing; and for any tip submitted on or after the effective date, the tip must be submitted through the Commission’s online portal or on Commission Form TCR. If the Commission receives an individual’s information in another manner or through another source (such as another federal government agency), the individual will generally not be able to recover an award for that information. . . . Among other things, failure to submit information to the Commission in accordance with the whistleblower rules discussed above means that the individual will generally not qualify as a “whistleblower” (as defined in Exchange Act Rule 21F-2(a)) with respect to the information the Commission received and used.[fn18]

With the Covered Action currently at issue, Claimant released a report to the Internet, instead of — but analogous to — the File No. 2017-10 Claimant’s sharing of information with federal agencies other than the Commission. Just like the File No. 2017-10 Claimant would have had to also provide the information to the Commission to be award-eligible, here, Claimant needed to have provided to the Commission the written report that Claimant had only released to the Internet to be award-eligible.

Claimant also argues that Rule 21F-9 has no bearing here because the Commission adopted its whistleblower rules after the time of Claimant’s alleged submission of the Report. Section 21F, however, directs the Commission to pay awards to qualifying whistleblowers “under regulations prescribed by the Commission.”[fn19] The statute, thus, conditions any possible entitlement to an award on conformity to the whistleblower rules that the Commission later adopted. Further, as noted above, our rules expressly considered the status of whistleblowers before the rules were adopted and provided a path to award consideration; these individuals needed only to submit information to the Commission in writing, which Claimant failed to do here.

Moreover, even if we were to consider the language of Section 21F in isolation from Rule 21F-9, the statute’s plain language directs the Commission to pay awards only to “whistleblowers who voluntarily provided original information to the Commission.”[fn20] The statute itself therefore requires the provision of information to the Commission in order to support an award, and so the same result follows.[fn21]

2. Other documents.

In requesting reconsideration, Claimant has submitted a declaration asserting that Claimant “personally hand delivered . . . documents to the receptionist at the [Regional Office] on or about [Redacted]. ” Claimant also attached to Claimant’s declaration an email addressed to Claimant from a member of the Regional Office staff, dated [Redacted], in which the staff states that “we would be happy to receive documents” on behalf of the Enforcement staff responsible for the investigation into the Company. At the same time, however, the record contains probative evidence reflecting that Claimant did not drop off documents. The two Regional Office staff members who were in contact with Claimant during the relevant time period have both declared that Claimant never provided them with any information regarding the Company. One of those two staff members — who also is on the email that Claimant attached to Claimant’s declaration — has also stated in a supplemental declaration, after reviewing the email and her own files, that “I know that I never received any documents relating to [the Company] from [Claimant] and that I never forwarded any documents relating to [the Company] that had been received from [Claimant] to” the [Redacted] Enforcement staff responsible for the investigation into the Company. Moreover, one of the principal Enforcement attorneys on the investigation into the Company has declared, based on personal knowledge and inquiries of other staff on the same matter, that “the staff on the [Company] Matter never received any documents from [the Regional Office] relating to the [Company] Matter from” Claimant.

Based on our thorough examination of the record and assessment of the evidence, we find that Claimant never delivered documents concerning the Company to the Regional Office. Claimant’s own declaration has less evidentiary value than the contrary declarations of Commission staff, because of the lack of probative corroborating materials in Claimant’s declaration. The one email offered by Claimant as corroboration does not state that any delivery to the Regional Office in fact took place. Instead, it simply suggests that the Commission’s staff was willing to accept such a delivery in the future. Claimant has not produced any email in which Claimant followed up with any of the Commission’s staff to confirm either the receipt of such documents from Claimant by the relevant Regional Office staff or the transmission of such documents to the staff responsible for the investigation into the Company.[fn22]

Further, the staff declarations in the record consistently point in a direction opposite from Claimant’s own declaration. The two Regional Office staff members who were in contact with Claimant never received any documents from Claimant concerning the Company, and the [Redacted] Enforcement staff on the investigation into the Company never received any documents concerning the Company from Claimant via the Regional Office. Having carefully reviewed all evidence in the record, we think the most reasonable conclusion is that Claimant never delivered documents to the Regional Office.

B. Claimant’s alleged delivery of documents was not done voluntarily.

Even if we were to credit Claimant’s declaration that Claimant personally hand-delivered documents concerning the Company to the Regional Office, we would conclude that this submission of documents cannot support an award for the independent reason that it was not done voluntarily.[fn23] The statute does not define the term “voluntarily,” but our whistleblower rules explain:

Your submission of information is made voluntarily . . . if you provide your submission before a request, inquiry, or demand that relates to the subject matter of your submission is directed to you or anyone representing you (such as an attorney) . . . [b]y the Commission [or another listed authority].[fn24]

The record reflects, and Claimant does not dispute, that on [Redacted], the Commission’s staff in the Regional Office sent a letter to Claimant’s Business requesting the production of, among other documents, “[a]ll documents relating to [the Company].” Although our rules do not deem a request directed to an employer as also having been directed to all employees per se,[fn25] it is appropriate on the facts of this matter to deem the letter request to Claimant’s Business as also having been directed to Claimant as [Redacted]. Indeed, Claimant responded to the request on behalf of Claimant’s Business. The letter request to Claimant’s Business preceded Claimant’s asserted hand-delivery of documents concerning the Company on [Redacted], and related to the subject matter of those documents — namely, the Company. Accordingly, Claimant’s alleged hand-delivery of documents to the Regional Office, even if it took place, was not done voluntarily.

Claimant argues that Claimant’s hand-delivery of documents was done “voluntarily” in the ordinary sense of the word because Claimant was not acting under any legal obligation, and that the Commission’s narrower interpretation of that term in Rule 21F-4(a)(1) was adopted only after Claimant made this submission. As explained above, however, Section 21F conditions any possible entitlement to an award on conformity to “regulations prescribed by the Commission.”[fn26] Moreover, not only does the plain language of the statute require that a submission be made “voluntarily” in order to support an award, but also the legislative history indicates that the core purpose of the whistleblower awards program is “to motivate those with inside knowledge to come forward and assist the Government.”[fn27] The language and design of the statute, as well as sound policy, thus support “a requirement that the whistleblower come forward before being contacted by government investigators.”[fn28] We therefore reject Claimant’s attempt to drive a wedge between Section 21F and our whistleblower rules.

C. Claimant’s information did not lead to the success of the Covered Action.

In the alternative, we conclude that neither the Report nor the documents Claimant allegedly hand-delivered to the Regional Office can support an award because none of this information led to the successful enforcement of the Covered Action.[fn29] The whistleblower rules explain:

The Commission will consider that you provided original information that led to the successful enforcement of a judicial or administrative action in any of the following circumstances: (1)You gave the Commission original information that . . . cause[d] the staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of your original information; or (2)You gave the Commission original information about conduct that was already under examination or investigation by the Commission . . . and your submission significantly contributed to the success of the action.[fn30]

Because Claimant never “provided” or “gave” either the Report or the purported other documents concerning the Company to the Commission, as discussed earlier, none of that information led to the successful enforcement of the Covered Action under Rule 21F-4(c). Moreover, even if Claimant had hand-delivered documents concerning the Company to the Regional Office, none of the Commission staff on the investigation into the Company received those documents, and therefore those documents were neither used in nor could have led to the success of the Covered Action.

In reaching this conclusion, we do not intend to diminish Claimant’s role in [Redacted] exposing the wrongdoing at the Company [Redacted]. Nor do we wish to discourage others from undertaking similar efforts. However, our whistleblower awards program is designed “to motivate those with inside knowledge to come forward and assist the Government to identify and prosecute persons who have violated securities laws and recover money for victims of financial fraud.”[fn31] To that end, Section 21F and our whistleblower rules unambiguously require individuals like Claimant to provide their original information directly to the Commission, prior to receiving a request from the Commission, if they wish to pursue a whistleblower award.

IV. Conclusion.

It is hereby ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] The Preliminary Determination also recommended denying an award to one other claimant. That determination was not contested and, thus, the CRS’s recommendation to deny that award application became final pursuant to Rule 21F-10(f) under the Securities Exchange Act of 1934 (“Exchange Act” ).

[2] [Redacted].

[3] See Exchange Act Rule 21F-2(a), 17 C.F.R. § 240.21F-2(a); Exchange Act Rule 21F-9(a), 17 C.F.R. § 240.21F-9(a).

[4] See Exchange Act Rule 21F-4(a), 17 C.F.R. § 240.21F-4(a).

[5] See Section 21F(b)(1) of the Exchange Act, 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[6] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[7] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1) (emphasis added).

[8] Exchange Act Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6) (emphasis added).

[9] Exchange Act Section 21F(c)(2)(D), 15 U.S.C. § 78u-6(c)(2)(D) (emphasis added; formatting altered).

[10] Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,300 (June 13, 2011).

[11] Exchange Act Rule 21F-2(a)(1), 17 C.F.R. § 240.21F-2(a)(1) (emphasis added).

[12] Id. § 240.21F-2(a)(2) (emphasis added).

[13] Id. § 240.21F-9(a).

[14] Exchange Act Rule 21F-9(d), 17 C.F.R. § 240.21F-9(d) (emphasis added).

[15] S. Rep. No. 111-176, at 110-12 (2010) (emphasis added).

[16] See Exchange Act Section 21F(a)(3)(B)-(C), 15 U.S.C. § 78u-6(a)(3)(B)-(C) (defining “original information” as information that, in addition to other requirements, “is not known to the Commission from any other source, unless the whistleblower is the original source of the information,” and “is not exclusively derived . . . from the news media, unless the whistleblower is a source of the information); Exchange Act Rule 21F-4(b)(1)(ii)-(iii), 17 C.F.R. § 240.21F-4(b)(1)(ii)-(iii) (same).

[17] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34,321 n.187 (original source of information “must still satisfy all of the other requirements of Section 21F and of [the whistleblower] rules, including that the information was submitted voluntarily, it led to a successful Commission enforcement action or related action, and [the claimant] is not ineligible for an award”).

[18] In the Matter of the Claims for Award, Notice of Covered Action [Redacted] Exchange Act Release No. 80596, Whistleblower Award Proceeding File No. 2017-10 at 6 n.9 (May 4, 2017), public/[Redacted] version available at www.sec.gov/rules/other/2017/34-80596.pdf (last visited Jan. 29, 2018).

[19] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[20] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1) (emphasis added); accord Exchange Act Section 21F(a)(6), 15 U.S.C. § 78u-6(a)(6); Exchange Act Section 21F(c)(2)(D), 15 U.S.C. § 78u-6(c)(2)(D).

[21] See Coalition for Common Sense in Gov’t Procurement v. United States, 707 F.3d 311, 317-19 (D.C. Cir. 2013) (rejecting challenge to application of later-adopted rule where statutory language expressly contemplated same result).

[22] Given all the circumstances of Claimant’s purported delivery to the Regional Office, one might expect that a reasonably prudent person in Claimant’s shoes would have sought such confirmation that the documents actually reached the intended recipient. The absence of any confirmation is telling.

[23] Section 21F authorizes the Commission to pay awards only to whistleblowers who provide information to the Commission “voluntarily.” Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); accord Exchange Act Rule 21F-3(a)(1), 17 C.F.R. § 240.21F-3(a)(1).

[24] Exchange Act Rule 21F-4(a)(1), 17 C.F.R. § 240.21F-4(a)(1).

[25] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34,309.

[26] Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1).

[27] S. Rep. No. 111-176, at 110-12.

[28] See Coalition for Common Sense in Gov’t Procurement, 707 F.3d at 317-19; Securities Whistleblower Incentives and Protections, 76 Fed. Reg. at 34,307 & n.71 (collecting cases).

[29] Section 21F authorizes the Commission to pay awards to whistleblowers who voluntarily provide information to the Commission only if that information “leads to the successful enforcement” of a covered action. Exchange Act Section 21F(b)(1), 15 U.S.C. § 78u-6(b)(1); accord Exchange Act Rule 21F-3(a)(3), 17 C.F.R. § 240.21F-3(a)(3).

[30] Exchange Act Rule 21F-4(c), 17 C.F.R. § 240.21F-4(c) (emphasis added; formatting altered).

[31] S. Rep. No. 111-176, at 110-12 (emphasis added).

SEC

82897

03/19/2018

The Claims Review Staff (“CRS”) issued a Preliminary Determination related to Covered Action [Redacted] (“Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant #1”) and [Redacted] (“Claimant #2”) jointly receive a whistleblower award of *** in the Covered Action identified in the caption above. The Preliminary Determination also recommended that [Redacted] (“Claimant #3”) receive a whistleblower award of *** in the Covered Action. The Preliminary Determination also recommended that the award application submitted by [Redacted] (“Claimant #5”) and the award application jointly submitted by [Redacted] (“Claimant #6”) and [Redacted] (“Claimant #7”) be denied. Claimants #5, #6, and #7 filed timely responses contesting the Preliminary Determination.[fn1]

For the reasons stated below, we make the following determinations: Claimant #1’s and Claimant #2’s joint award claim is approved in the amount of *** of the monetary sanctions collected, or to be collected, in the Covered Action, for an undivided payout of more than $49,000,000;[fn2] that Claimant #3’s award claim is approved in the amount of *** of the monetary sanctions collected, or to be collected, in the Covered Action, for a payout of more than $33,000,000; and that the applications submitted by Claimants #5, #6, and #7 are denied.

I. Background.

A. The award program.

In 2010, Congress added Section 21F to the Securities Exchange Act of 1934 (the “Exchange Act” ). Among other things, Section 21F authorizes the Commission to pay monetary awards—subject to certain limitations, exclusions, and conditions—to individuals who voluntarily provide the Commission with original information about a violation of the securities laws that leads to a successful Commission judicial or administrative action in which the monetary sanctions exceed $1,000,000.[fn3] The total award amounts paid shall be “not less than 10 percent, in total, of what has been collected of the monetary sanctions” and “not more than 30 percent, in total, of what has been collected [.]”[fn4]

B. Relevant facts.

On [Redacted] the Commission instituted [Redacted] the Covered Action in which the respondents named in the action (collectively, “Respondents” or “Company”) were ordered to [Redacted].

[Redacted].

II. Claimants #1 and #2.

We find that Claimants #1 and #2 jointly voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder.[fn5]

On [Redacted] staff in the [Redacted] Commission’s Division of Enforcement (“Enforcement”) received a specific and detailed whistleblower tip on Form TCR jointly submitted by Claimants #1 and #2, [Redacted]. In their tip, Claimants #1 and #2 provided detailed information concerning the Company’s alleged violation of [Redacted]. Among other things, the tip detailed [Redacted].

Based on that tip, Enforcement staff opened an investigation (hereinafter, “First Investigation”). The allegation in Claimant #1’s and #2’s tip concerning [Redacted] would become the focus of staff’s First Investigation and the cornerstone of [Redacted] *** the Commission’s subsequent action against the Company. During the First Investigation, Claimants #1 and #2 continued to provide ongoing assistance to the Enforcement staff, including through in-person meetings, conference calls, and supplemental submissions, and provided critical information that advanced the First Investigation, including the identification of potentially relevant documents and key witnesses.

Based on the foregoing contributions that Claimants #1 and #2 made to the Commission’s successful pursuit of this Covered Action, and considering the relative joint contributions of Claimants #1 and #2 vis-à-vis the other meritorious whistleblower in this matter, we adopt the Preliminary Determination’s recommendation that Claimants #1 and #2 should jointly receive *** of the monetary sanctions collected in the Covered Action. In reaching this determination, we have carefully considered the award criteria specified in Exchange Act Rules 21F-5 and 21F-6 as they relate to Claimant #1’s and #2’s joint contributions to the Covered Action. In particular, we considered the facts that Claimant #1 [Redacted] the information that Claimants #1 and #2 provided to the Commission was significant; and that Claimants #1 and #2 provided continuing and helpful assistance to the Enforcement staff during the First Investigation that saved a substantial amount of time and resources in the First Investigation. We also took into account that Claimants #1 and #2 unreasonably delayed in reporting their information to the Commission.[fn6]

III. Claimant #3.

We find that Claimant #3 voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder.[fn7]

Based on our review of the record, including declarations from Commission staff who handled the Covered Action, we find the following events occurred with respect to Claimant #3’s information. On [Redacted] the Enforcement staff responsible for the First Investigation, received a whistleblower tip on Form TCR from Claimant #3, [Redacted]. According to the tip, [Redacted].

The information was previously unknown to the staff handling the investigation that resulted in the Covered Action.

As a result of that tip, the same Enforcement staff on the First Investigation opened a second, separate investigation to investigate the misconduct alleged by Claimant #3 (hereinafter, the “Second Investigation”) (the “First Investigation” and “Second Investigation” are referred collectively herein as the Investigations). The allegation in Claimant #3’s tip concerning [Redacted] would become the focus of staff’s Second Investigation and the cornerstone of the [Redacted] in the Commissions subsequent action against the Company.

Based on the foregoing contributions that Claimant #3 made to the Commission’s successful pursuit of this Covered Action, and considering the relative contributions of Claimant #3 vis-à-vis the other meritorious whistleblower in this matter, we adopt the Preliminary Determination’s recommendation that Claimant #3 should receive *** of the monetary sanctions collected in the Covered Action. In reaching this determination, we have carefully considered the award criteria specified in Exchange Act Rules 21F-5 and 21F-6 as they relate to Claimant #3’s contributions to the Covered Action. In particular, we considered the facts that Claimant #3’s information was significant and that Claimant #3 provided follow-up assistance to the Enforcement staff.[fn8]

IV. Claimant #5’s Claim Is Denied.

A. Preliminary Determination.

In reaching this preliminary determination, the CRS considered record evidence—including a declaration from an Enforcement staff member assigned to the First and Second Investigations—that revealed that the information provided to the Commission by Claimant #5 did not help advance either investigation, did not affect the charges brought by the Commission in the Covered Action, and was not used in the successful enforcement of the Covered Action.

According to another Enforcement staff declaration, Claimant #5 began submitting whistleblower tips to the Commission in [Redacted] (hereinafter referred to as the “9/27 Tip” ). The 9/27 Tip was received by staff in the [Redacted] Regional Office [Redacted] which, after reviewing it, determined not to take further action on the tip and did not forward it to any other region or unit for further action or follow-up.

In [Redacted] Claimant #5 submitted another tip through the Commission’s on-line portal, which was received by staff on the Investigations in [Redacted]. After receiving this tip, staff reached out to Claimant #5’s counsel. Claimant #5 then sent the 9/27 Tip directly to staff on the Investigations in [Redacted].

According to Enforcement staff responsible for the Investigations, Claimant #5 reported very generally and in vague terms various problems at the Company, many of which appeared to be unrelated to the issues staff were investigating. Although Claimant #5 provided some information on [Redacted] the information was duplicative of information that staff had already received during the First Investigation, which had been opened several months prior to staff receiving any information from Claimant #5.

B. Response.

Claimant #5’s Response makes the following principal contentions.[fn9] First, Claimant #5 argues that the Commission should adopt a more flexible or lax standard for determining whether a claimant’s information led to the success of an enforcement action so as to allow Claimant #5’s claim for award in the Covered Action. Second, Claimant #5 contends that the 9/27 Tip was the first, on-point tip concerning [Redacted] in the Covered Action, even if the relevant staff on the Investigations did not receive the tip until two years later. Third, Claimant #5 alleges that Claimant #5 provided multiple submissions to the Commission during the [Redacted] timeframe that related, at least tangentially, to the misconduct in the Covered Action and that this should provide Claimant #5 a basis for an award in this matter.[fn10]

C. Analysis.

We find that, as the record firmly demonstrates, Claimant #5 did not provide information that led to the success of the Covered Action. In reaching this conclusion, we have carefully considered the entire record as it relates to Claimant #5’s award application, including the materials that Claimant #5 submitted in response to the Preliminary Determination and the detailed supplemental declaration prepared by an Enforcement staff member from the Investigations (“Supplemental Enforcement Declaration”).

As an initial matter, we decline Claimant #5’s suggestion that we adopt a more flexible or lax standard for determining whether a claimant’s original information “led to” the success of the particular covered action upon which his or her award application is based. That an individual’s original information must have “led to” the success of an enforcement action is a critical prerequisite to award eligibility, the standard for which was considered and commented on at length during the adoption of the whistleblower rules.[fn11] Were we to abandon our rules and apply a lower standard for determining when a claimant’s information leads to the success of an action, as Claimant #5 would have us do, such relaxation of this critical precondition to award eligibility could undermine the whistleblower program’s purpose of incentivizing individuals to come forward with credible intelligence that the agency can leverage in bringing securities law violators to justice and protecting investors from further harm. In this regard, we note that the “led to” requirement was carefully tailored as part of the Commission’s promulgation of the whistleblower program rules to provide a uniform standard that would apply to all claimants and thus we do not believe that adopting a more relaxed standard for this matter would be appropriate.[fn12]

Under the whistleblower rules, an individual’s original information leads to the success of an action where it causes staff to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or alternatively, where in the context of an existing investigation, the individual’s original information significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. In determining whether an individual’s information significantly contributed to an action, we consider factors such as whether the information allowed us to bring: the action in significantly less time or with significantly fewer resources; additional successful claims; or successful claims against additional individuals or entities.[fn13] The individual’s information must have been “meaningful” in that it “made a substantial and important contribution” to the success of the covered action.[fn14]

As discussed below, Claimant #5’s information does not satisfy either prong of the “led to” requirement, as the information did not cause the relevant Enforcement staff to open the Investigations, and it did not significantly contribute to the success of the Covered Action.

1. 9/27 Tip.

Contrary to Claimant #5’s assertions, the 9/27 Tip, which the relevant investigative staff received approximately two years later in [Redacted] was not on-point or directly related to the [Redacted].[fn15] As discussed above, [Redacted]. Unlike Claimant #3’s [Redacted] Claimant #5’s 9/27 Tip says nothing about [Redacted]. To the contrary, the 9/27 Tip alleged a different type of misconduct by an affiliate of the Company, which was not a part of the Commission’s findings in the Covered Action. The 9/27 Tip, on its face, was not relevant to the charges the Commission ultimately filed against the Company.

Based on the supplemental declaration prepared by an Enforcement staff member assigned to the First and Second Investigations, we find that it was not until [Redacted] when Enforcement staff received the whistleblower tip from Claimant #3, that they learned of the misconduct concerning [Redacted] the tip from Claimant #3 led the staff to open the Second Investigation.[fn16] Furthermore, after opening the Second Investigation, there was nothing in the 9/27 Tip that staff used in connection with the Second Investigation or affected the subsequent charges brought by the Commission, including with respect to [Redacted].

To be clear, Claimant #5 is not being denied an award because, as Claimant #5 suggests, the Commission failed to properly triage the 9/27 Tip. To the contrary, that tip was reviewed by two separate Enforcement teams, including the relevant Enforcement staff on the Investigations. Had the 9/27 Tip concerned the misconduct that Claimant #3 later detailed in Claimant’s #3’s tip, the relevant Enforcement staff may have opened the Second Investigation after receiving Claimant #5’s 9/27 Tip in [Redacted]. That the relevant staff received Claimant #5’s 9/27 Tip prior to receiving information from Claimant #3 underscores the fact that the 9/27 Tip was not on-point or directly related to [Redacted].

2. Supplemental Submissions.

Claimant #5 then argues that Claimant #5 made multiple submissions to the relevant Enforcement staff during the [Redacted] time period, and that the initial Enforcement staff declaration does not fully address the “14 detailed zones of information” supplied by Claimant #5 in those submissions.

Based on the supplemental declaration provided by Enforcement staff, we find that the information provided by Claimant #5 in [Redacted] neither caused staff to open the Investigations nor significantly contributed to the success of the Covered Action. None of those supplemental submissions advanced the Investigations or the resulting charges in the Commission’s Order. None of those submissions concerned the misconduct that became the cornerstone of [Redacted]. None of those submissions contained new information concerning the misconduct that staff were investigating in connection with the First Investigation. None of the information provided by Claimant #5 helped staff build a stronger case, bring additional charges, bring charges against additional wrongdoers, or allowed staff to save time and resources. None of Claimant #5’s information helped staff negotiate a more favorable settlement, and none of the information was used in the Commission’s Order. That Claimant #5 provided information alleging general or other kinds of purported misconduct by the Company does not make Claimant #5 eligible for an award with respect to this particular Covered Action.[fn17]

Accordingly, we find that the information provided by Claimant #5 in either the 9/27 Tip or the supplemental submissions did not help initiate or advance the Investigations, nor was the information in the submissions used in the successful enforcement of the Covered Action.

V. Claimants #6’s and #7’s Claim is Denied.

A. CRS Preliminary Denial.

The CRS preliminarily determined to deny Claimants #6 and #7’s joint award claim because their information did not lead to the successful enforcement of the Covered Action. In doing so, the CRS relied on record evidence that demonstrated that Enforcement staff on the Investigations received no information from Claimants #6 and #7 during the course of the Investigations and had no communications with them.

B. Claimants #6’s and #7’s Response.

In the response, Claimants #6 and #7 contend that they made multiple submissions over the course of several years that were not directed at specific or individual violations, but instead related more broadly to enforcement opportunities that covered a wide variety of illegal activity. In their Response, Claimants #6 and #7 specifically identify eleven of their submissions they believe to be most relevant.

In addition to filing a tip pursuant to the procedures specified in Exchange Act Rule 21F-9, Claimants #6 and #7 contend that they sent numerous submissions directly to the head of a specialty unit within the Division of Enforcement and met with the staff of that unit. It was their understanding that the staff would funnel their information throughout the Commission as appropriate.[fn18]

C. Analysis.

As an initial matter, we observe that Claimants #6 and #7 do not dispute in their Response that their information was never directly or indirectly provided to the staff handling the Investigations, or reviewed or used by those staff members in the course of the Investigations or otherwise. Indeed, Claimants #6 and #7 at no point dispute (either through argument or evidence) the finding in the Preliminary Determination that their information did not lead to the success of the Covered Action. Based on the foregoing, we find that Claimants #6 and #7 have thus waived any challenge to that preliminary finding and deny their joint award application on this ground.

We also deny their application on the separate ground that, as the record demonstrates, their information did not lead to the success of the Covered Action. Based on the declarations from an Enforcement staff member assigned to the First and Second Investigations, we find that staff on the Investigations never received any information directly from Claimants #6 and #7 or had any communications with them, nor did staff on the Investigations indirectly receive information from Claimants #6 and #7 through the specialty unit staff to which Claimants #6 and #7 had provided their information.[fn19] Furthermore, the eleven submissions identified by Claimants #6 and #7 in their Response do not appear to facially relate to the misconduct that was the focus of the Investigations or the findings made by the Commission in the Covered Action.

To be eligible for a whistleblower award, a claimant’s information must have led to the success of the underlying Covered Action. As staff on the Investigations did not receive any information directly or indirectly from Claimants #6 and #7, and their information does not appear to relate to the specific misconduct that was at issue in this matter, Claimants #6’s and #7’s information did not cause staff to open the Investigations, nor did it significantly contribute to the success of the Covered Action.[fn20]

VI. Conclusion.

Accordingly, it is ORDERED that Claimants #1 and #2 shall jointly receive an undivided award of [Redacted] percent (***) of the monetary sanctions collected, or to be collected, in the Covered Action.

ORDERED that Claimant #3 receive an award of [Redacted] percent (***) of the monetary sanctions collected, or to be collected, in the Covered Action.

ORDERED that Claimant #5’s, Claimant #6’s, and Claimant #7’s whistleblower award claims be denied because the record demonstrates that Claimant #5, Claimant #6, and Claimant #7 did not provide original information that led to the successful enforcement of the Covered Action and they have not shown otherwise in their requests for reconsideration of the Preliminary Determination.

By the Commission.

[1] The Preliminary Determination further recommended that the award applications submitted by two other claimants be denied. Those two claimants failed to submit a response contesting the Preliminary Determination and, therefore, the Preliminary Determination denying their claims for awards have become the final order of the Commission with respect to their award applications.

[2] We have determined to treat Claimants #1 and #2 jointly as a “whistleblower” for purposes of the award determination given that they jointly submitted their Form TCR and Form WB-APP. See Exchange Act Section 21F(a)(6) (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 #1 and #2. Unless Claimants #1 and #2, 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

[3] See Exchange Act §§ 21F(a) & (b).

[4] Exchange Act § 21F(b)(1). We note that, in the context of an award proceeding involving two or more meritorious whistleblower claimants, the award must be allocated among the claimants and may never exceed an aggregate percentage amount of 30% of the monetary sanctions collected. See Exchange Act Rule 21F-5(c) (explaining that “[i]f the Commission makes awards to more than one whistleblower in connection with the same action or related action,” then “in no event will the total amount awarded to all whistleblowers in the aggregate be … greater than 30 percent of the amount the Commission or the other authorities collect”).

[5] 17 C.F.R. § 240.21F-3(a).

[6] We have chosen to reduce the award amount less than we might otherwise have in recognition of the fact that Claimants #1 and #2 [Redacted] Claimants #1 and #2 subsequently learned additional facts [Redacted] [Redacted] and, after learning the additional facts, promptly reported their information to the Commission. However, we also note that [Redacted]

Our rules seek to incentivize individuals who are “aware of the relevant facts” to promptly report “possible violation[s] of the federal securities laws.” Exchange Act Rules 21F-6(b)(2)(i) and 2(a)(1), 17 C.F.R. § 240.21F-6(b)(2)(i) and 2(a)(1). We believe it important to recognize, through our discretion to determine an appropriate award percentage, that Claimant #1 and Claimant #2 unreasonably delayed reporting the relevant facts to the Commission for an extended period of time, while acknowledging the mitigating circumstance described above.

[7] 17 C.F.R. § 240.21F-3(a).

[8] Because of the specificity of the information in Claimant #3’s tip, and the credibility that the staff felt that Claimant #3 conveyed during a follow-up call, days later the staff determined that it was necessary to [Redacted]

[9] We note that along with the Response, Claimant #5 submitted the correct first page of a tip that Claimant #5 had submitted to the Commission, which Claimant #5 had inadvertently not included when initially submitting the Form WB-APP. For clarification, we note that the first page of that tip has been included as part of the record upon which we make our determination.

[10] Any factual or legal contentions not expressly raised and addressed in Claimant #5’s Response are deemed waived.

[11] See Securities Whistleblower Incentives and Protections, 76 Fed. Reg. 34,000, 34,323-34,327 (June 13, 2011) (“Adopting Release”).

[12] To the extent that Claimant #5 is requesting that we waive the “led to” requirement here, we decline to do so. First, we have never waived the requirement that a claimant’s tip must satisfy the “led to” requirement as provided for in the Commission’s whistleblower rules. Second, even if we might waive that requirement in some future matter, we would not do so here as we find that a waiver would not be in the public interest —a critical prerequisite for a waiver under Section 36(a) of the Exchange Act. Based on our review, the information in the 9/27 Tip generally did not relate to the specific violations that comprised the Covered Action, which alone defeats any contention that a waiver would be in the public interest in our view. Finally, to the extent that the Claimant has identified other award matters where we have waived a substantive requirement to permit an applicant to obtain an award, we note that these other matters involved either the application of our rules to events that predated the adoption of our rules (which is not the case here) or the unusual factual situations presented by those matters were simply not contemplated by the Commission in crafting the whistleblower rules and the Commission found that a strict application of the rules in those specific instances would be contrary to the public interest and the broader purposes of the whistleblower program (which is not the case here).

[13] See Adopting Release, 76 Fed. Reg. at 34,325.

[14] Release No. 77833, Whistleblower Award Proceeding File No. 2016-9 (May 13, 2016).

[15] Claimant #5 does not argue in the Response that the 9/27 Tip related to [Redacted] [Redacted] Claimant #5’s contentions with respect to the 9/27 Tip concerns only [Redacted] [Redacted] charged in the Covered Action. Thus, we find that Claimant #5 has waived any contention that the 9/27 tip led to the success of [Redacted]

[16] The supplemental declaration prepared by the Enforcement staff member addresses certain factual matters raised by Claimant #5’s Response to the Preliminary Determination.

[17] The record reflects that not only did Enforcement staff follow-up on Claimant #5’s allegations of different Company misconduct, but also that staff opened a new and separate investigation to test Claimant #5’s allegations and found insufficient evidence to support them.

[18] In [Redacted] staff in this specialized unit opened an investigation based on the information submitted by Claimants #6 and #7. However, in [Redacted] the staff closed that investigation after deciding not to recommend that the Commission pursue an enforcement action. The staff determined that the allegations were unfounded.

[19] The Enforcement staff member submitted two declarations. The first declaration was prepared at the preliminary-determination stage and a second declaration was prepared to address certain matters that Claimants #5, #6 and #7 raised in response to the Preliminary Determination.

[20] In their Response to the Preliminary Determination, Claimants #6 and #7 cite to TCR [Redacted] (which corresponds with a Form TCR that they submitted in [Redacted] [Redacted]), as well as 11 other submissions. They did not attach the 11 submissions to their Response. We note that the administrative record includes all of the supplemental submissions made under TCR [Redacted] as well as 10 of the 11 other submissions that Claimants #6 and #7 specifically identified in their Response. However, the record does not include one of the 11 submissions that the Claimants identify (purportedly entitled [Redacted] [Redacted]) because we have been unable to locate that item internally and have no record of having ever received it, nor (as noted above) did the Claimants submit it to us as part of their Response. We note that the absence of this item from the record has no bearing on our decision to deny Claimants #6 and #7 an award because, as explained in a declaration submitted by an Enforcement staff member involved with the Covered Action, nothing that the Claimants provided to the Commission was received by the Covered Action staff (either directly from the Claimants or indirectly through the specialty unit staff to which Claimants #6 and #7 had provided their information).

SEC

82807

03/06/2018

On [Redacted], the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending the denial of a claim for a whistleblower award submitted by [Redacted] (“Claimant”) in connection with Notice of Covered Action Claimant filed a timely request for reconsideration. [Redacted] (“Covered Action”).

For the reasons stated below, Claimant’s award claim is denied.

I. Background.

On [Redacted].[fn1]

On [Redacted], the Commission’s Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. Claimant filed a timely whistleblower award application with OWB; in it, Claimant identified just one submission of information to the Commission, on [Redacted], as the basis for a whistleblower award.

II. Preliminary Determination and Response.

On [Redacted], the CRS preliminarily determined to deny Claimant’s award application for two reasons. First, certain of Claimant’s submissions to the Commission, identified through an OWB staff search of relevant Commission databases, did not qualify as “original information” because they were given to the Commission prior to the enactment on July 21, 2010 of the Dodd- Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank”).[fn2] Second, Claimant’s submissions after July 21, 2010, including the [Redacted] submission identified in Claimant’s award application, did not “lead to” the successful enforcement of the Covered Action. The CRS preliminarily found that Claimant’s information did not cause the Commission to open its investigation (or inquire into different conduct as part of a current Commission investigation), and that Claimant’s information did not significantly contribute to the success of the subsequent administrative proceeding.[fn3]

After requesting and reviewing the record supporting the Preliminary Determination, Claimant submitted a written request for reconsideration on [Redacted]. In that request, Claimant offered no factual evidence or legal arguments to rebut the analysis in the Preliminary Determination. Rather, Claimant asserted that the record supporting the Preliminary Determination was incomplete because it failed to account for all communications between Claimant and Commission staff concerning the Covered Action Respondents.

III. Analysis.

To qualify for a whistleblower award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action.[fn4] As relevant here, original information “leads to” the successful enforcement of a covered action if either (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the covered action.[fn5]

As an initial matter, we observe that Claimant does not appear to contest the Preliminary Determination’s conclusion that any information Claimant submitted prior to July 21, 2010 does not qualify as “original information. ” Our whistleblower rules expressly provide as much, and we would adhere to those rules if Claimant had challenged them.[fn6]

Instead, Claimant’s response to the Preliminary Determination focuses on whether the record adequately accounts for all of Claimant’s communications with the Commission staff concerning the Covered Action Respondents. Significantly, Claimant fails to identify any particular communication that Claimant believes was erroneously omitted from the record. Because our own examination reveals that no post-Dodd-Frank submission by Claimant led to the successful enforcement of the Covered Action, we conclude that Claimant’s contention is without merit.[fn7]

Following Claimant’s response to the Preliminary Determination, OWB staff conducted a comprehensive search and review of all tips from Claimant stored in the Commission’s TCR System and TCR Repository.[fn8] As detailed in the OWB staff declarations in the record, that search revealed more than twenty tips submitted by Claimant that may be categorized as follows:

1. Four TCRs submitted prior to the enactment of Dodd-Frank on July 21, 2010;

2. Four TCRs submitted [Redacted], all of which were closed by the Commission’s Office of Market Intelligence with a disposition of no further action (“NFA”)[fn9];

3. Two TCRs submitted on [Redacted]; and

4. Fifteen TCRs submitted after the Commission instituted the Covered Action [Redacted].

We need not consider whether the tips submitted by Claimant prior to Dodd-Frank (category 1 above) led to the success of the Covered Action, because, as discussed above, Claimant does not dispute that those tips do not constitute “original information” for purposes of an award.

With respect to the tips that were closed with an NFA disposition (category 2), those tips could not have led to the success of the Covered Action, because it is undisputed that they were never forwarded to the Enforcement staff responsible for the investigation and the institution of the Covered Action.

As to the tips submitted by Claimant after the Covered Action was instituted (category 4), they could not possibly have led to the success of the Covered Action, because they were all provided to the Commission after the Commission reached its settlement with the Covered Action Respondents.

Further, we find that the tips submitted by Claimant on [Redacted] (category 3) also did not lead to the successful enforcement of the Covered Action. The record reflects that the [Redacted] tip was never forwarded to the Enforcement staff responsible for the Covered Action; instead, the Enforcement staff responsible for the Covered Action was simply informed that the [Redacted] tip had been received and that it contained no information that was not already known to them.

The record further reflects that the [Redacted] tip was not forwarded to the relevant Enforcement staff until [Redacted] — just two weeks before the institution of the Covered Action — and was determined not to directly relate to the subject matter of the Covered Action. In any event, the Enforcement staff declarations in the record show that neither of these two tips was used in any way in the investigation or the institution of the Covered Action. By the time these tips were submitted, the Enforcement staff had already completed its investigation and had agreed on a settlement agreement in principle with the Covered Action Respondents to be recommended to the Commission. We find these Enforcement staff declarations credible given the short time (roughly [Redacted]) between the time Claimant submitted these tips in [Redacted] and the institution of the Covered Action on [Redacted]. Moreover, Claimant has offered no contrary evidence or other reason to doubt the accuracy of these declarations.

Conclusion.

It is hereby ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] [Redacted].

[2] See Securities Exchange Act of 1934 (“Exchange Act” ) Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F- 4(b)(1)(iv).

[3] See Section 21F(b)(1) of the Exchange Act, 15 U.S.C. § 78u-6(b)(1); Exchange Act Rule 21F-3(a), 17 C.F.R. § 240.21F-3(a).

[4] 15 U.S.C. § 78u-6(b)(1).

[5] Exchange Act Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

[6] Exchange Act Rule 21F-4(b)(1)(iv), 17 C.F.R. § 240.21F-4(b)(1)(iv); see Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[7] In the same response to the Preliminary Determination, Claimant contends that the Commission should obtain additional declarations from other members of the Enforcement staff on the underlying investigation. One of the principal Enforcement staff attorneys responsible for the underlying investigation provided two detailed declarations in this matter. That Enforcement staff attorney specifically stated that, in making his declarations, he had consulted with the other members of the investigative team. As such, obtaining separate declarations from each member of the investigative team would not provide any additional insight into whether Claimant’s post-Dodd-Frank information was used in the Covered Action.

[8] The TCR System (short for “Tips, Complaints, and Referrals System”) is the Commission’s electronic database which records and stores information received from whistleblowers and others about potential securities law violations and records staff action taken with regard to tips, complaints, and referrals (“TCRs”) entered into the system. The TCR Repository is a Commission archive of TCRs that the Commission received prior to March 14, 2011, when the TCR System replaced the TCR Repository.

[9] An NFA disposition indicates that Commission staff will not take any additional steps with respect to a TCR unless subsequent information leads it to reopen or reexamine that TCR.

SEC

82562

01/22/2018

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that the claim submitted by [Redacted] (“Claimant” ) in connection with Notice of Covered Action [Redacted] (“Covered Action”) be denied. Claimant subsequently filed a timely written response contesting the Preliminary Determination.

After careful consideration of the administrative record, including Claimant’s written response, we deny Claimant’s award claim.

A. Background.

On [Redacted], Enforcement staff opened a Matter Under Inquiry (“MUI”), which was elevated to a formal investigation [Redacted], that resulted in the Covered Action. Enforcement staff opened the investigation based on [Redacted] after the investigation was initiated [Redacted], Claimant submitted a letter and accompanying documentation, which was subsequently uploaded to the Commission’s Tips, Complaints, and Referrals Intake and Resolution System (“TCR system”). After reviewing Claimant’s information, and after speaking with Claimant, staff in the Commission’s Office of Market Intelligence (“OMI”) closed the tip with a disposition of “no further action” or “NFA”, and did not forward Claimant’s submission to investigative staff for further action or follow-up. [Redacted].[fn1]

The Claimant submitted multiple supplements through [Redacted], which were uploaded to the TCR system as additional information under Claimant’s [Redacted] submission. OMI staff reviewed the additional information and determined that it did not alter the original NFA disposition and did not forward the information to Enforcement staff for further action or follow-up.

B. CRS Preliminary Denial and Claimant’s Response.

The CRS preliminarily determined to deny Claimant’s award claim because: (1) certain of Claimant’s information, namely Claimant’s [Redacted] submission, pre-dated the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), and as such, does not constitute “original information; “[fn2] and (2) any information provided by Claimant after the Dodd-Frank Act did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder.[fn3]

As discussed above, after reviewing Claimant’s information and speaking to Claimant, OMI staff closed the tip with an NFA disposition and did not forward it to Enforcement staff for further action or follow-up. Similarly, after receiving and reviewing Claimant’s additional information, OMI staff determined that the additional information did not alter the original NFA disposition and did not forward it to investigative staff. Furthermore, the Enforcement staff responsible for the Covered Action confirmed that they never received any information from the Claimant, had no communications with Claimant, and did not use Claimant’s information or materials in the investigation or prosecution of the Covered Action.

After receiving the record, per Claimant’s request, Claimant submitted a timely written request for reconsideration. According to Claimant, Claimant’s motivation in submitting the response is more of an effort to apprise the Commission of what is actually contained in the files Claimant submitted. Claimant questions whether the Commission is aware of what Claimant’s files contain as they were not made available to the investigative team responsible for the Covered Action. Because the materials were not provided to the relevant Enforcement staff, Claimant assumes that the files must have been misplaced.

Rather than trying to establish a nexus between the information Claimant submitted to the Commission and the misconduct charged in the underlying Covered Action, Claimant describes at length what Claimant believes Claimant’s submissions to the Commission show, which relate to alleged decades-old misconduct and include allegations of misconduct not charged in the underlying Covered Action.[fn4]

C. Analysis.

After careful consideration of the record, including the Claimant’s request for reconsideration, we are denying the Claimant’s award claim.

First, the tip submitted by Claimant in [Redacted] pre-dated the Dodd-Frank Act, and as such, does not constitute “original information. “[fn5] Furthermore, to the extent Claimant’s Response implies that Claimant provided materials to the Commission as early as 2000, but that those materials were “misplaced” or “lost,” those materials likewise pre-dated the Dodd-Frank Act and would not qualify as “original information. “

Second, the record conclusively shows that any information that Claimant submitted after the enactment of the Dodd-Frank Act did not lead to the success of the Covered Action. The investigation that led to the Covered Action was opened *** years before Claimant made Claimant’s submission in [Redacted]. As such, Claimant’s information could not have caused the staff to open the investigation. Furthermore, the record shows that Claimant’s information could not have significantly contributed to the success of the Covered Action because Claimant’s tip was closed with an NFA disposition by OMI in [Redacted] and Enforcement staff on the Covered Action confirmed that they never received any information from Claimant or had any communications with Claimant.

Contrary to Claimant’s supposition that Claimant’s files were lost or misplaced, Commission staff received Claimant’s [Redacted] submission and uploaded it to the TCR system. OMI staff reviewed Claimant’s information, and also spoke to Claimant in [Redacted]. It was after reviewing and considering Claimant’s information, and speaking with Claimant, that OMI staff determined to close the tip with an NFA disposition. That Claimant’s information was not forwarded to the Enforcement staff on the Covered Action does not mean that the information was “misplaced” or that the information was not appropriately reviewed. Rather, the record shows that Claimant’s information was received and reviewed, but that OMI staff determined that it did not warrant being forwarded on to investigative staff for further action or follow-up.

Additionally, claimants are required to show that the information they provided to the Commission led to the successful enforcement of the particular Covered Action for which they are applying for an award. Here, Claimant argues at length that Claimant provided information and supporting documentation concerning misconduct by the Company [Redacted] this does not establish that Claimant’s information led to the successful enforcement of the resulting Covered Action. Rather, the record is clear that the investigation opened *** years before any tip from Claimant and that none of Claimant’s information was received by, much less used in, the investigation or prosecution of the Covered Action.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] [Redacted].

[2] See Exchange Act Rule 21F-4(b)(1)(iv); Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[3] As relevant here, information leads to the success of a covered action if it: (1) causes the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[4] Claimant notes a meeting with the SEC in [Redacted] to discuss the issues raised in Claimant’s submissions. That meeting, however, occurred approximately *** months after Final Judgment was entered in the underlying Covered Action, and was not with the investigative staff responsible for the Covered Action.

[5] See Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

SEC

82214

12/05/2017

The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant [Redacted] receive a whistleblower award in the amount of [Redacted] percent ( *** %) of the monetary sanctions collected, or to be collected, in the Covered Action. This proposed award would yield a likely payout to the Claimant of more than $4.1 million. Claimant subsequently provided written notice of Claimant’s decision not to contest the Preliminary Determination.

The recommendation of the CRS is adopted. The record demonstrates that the Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Moreover, applying the award criteria specified in Rule 21F-6 of the Exchange Act to the specific facts and circumstances here, we find that the proposed award amount is appropriate.[fn1] In reaching that determination, we positively assessed the facts that the Claimant was a former company insider who both alerted the Commission to a widespread, multi-year securities-law violation, and continued to provide important information and assistance throughout the Commission’s investigation. Nonetheless, we have determined that these positive award considerations are somewhat offset by the Claimant’s unreasonable delay in reporting the misconduct to the Commission. On balance, we believe that these competing considerations support the CRS’s award determination.[fn2]

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent ( ***%) of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[2] We have not weighed the Claimant’s delay as severely as we might otherwise have done due to the existence of several mitigating factors that we find relevant given the particular facts and circumstances of this matter. We set forth two of those mitigating factors herein. First, much of the Claimant’s reporting delay occurred prior to the establishment of the whistleblower award program in July 2010, and we have generally not penalized whistleblowers as severely for such delays due to the absence of the substantial inducements that Section 21F of the Exchange Act provides. See, e.g., Exchange Act §§ 21F(a)-(c) (award program); id. § 21F(d) (anonymity); id. § 21F(heightened confidentiality protections). Second, the Claimant was a foreign national working outside the United States, and as such, it is unclear whether the employment anti-retaliation protections afforded by Section 21F(h)(1) of the Exchange Act would apply to the Claimant. See Liu v. Siemens AG, 763 F.3d 175 (2d Cir. 2014) (holding that “the whistleblower antiretaliation provision of the [Exchange] Act, 15 U.S.C. § 78u-6(h), does not apply extraterritorially”).

SEC

82181

11/30/2017

On July 27, 2016, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Covered Action [Redacted] (“Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant #1”) and [Redacted] (“Claimant #2”) each receive a whistleblower award of *** in the Covered Action. The Preliminary Determination also recommended that the award applications submitted by [Redacted] (“Claimant #3”), [Redacted] (“Claimant #4”), [Redacted] (“Claimant #5”), [Redacted] (“Claimant #6”), and [Redacted] (“Claimant #7”) be denied. Claimants #3, #4, #5, #6, and #7 filed timely responses contesting the Preliminary Determination.[fn1]

For the reasons stated below, we make the following determinations: Claimant #1’s claim is approved in the amount of *** of the monetary sanctions collected in the Covered Action, for a payout of more than $8,000,000; Claimant #2’s claim is approved in the amount of *** of the monetary sanctions collected in the Covered Action, for a payout of more than $8,000,000; and the applications submitted by Claimants #3, #4, #5, #6, and #7 are denied.

I. Background.

A. The award program.

In 2010, Congress added Section 21F to the Securities Exchange Act of 1934 (the “Exchange Act” ). Among other things, Section 21F authorizes the Commission to pay monetary awards—subject to certain limitations, exclusions, and conditions—to individuals who voluntarily provide the Commission with original information about a violation of the securities laws that leads to a successful Commission judicial or administrative action in which the monetary sanctions exceed $1,000,000. See Exchange Act §§ 21F(a) & (b). The total award amounts paid shall be “not less than 10 percent, in total, of what has been collected of the monetary sanctions” and “not more than 30 percent, in total, of what has been collected [.]”[fn2]

B. Relevant facts.

On [Redacted], the Commission filed a settled enforcement action against [Redacted] (hereinafter, “the Company”). The Commission found that the Company [Redacted].

In settlement of the violations, the Company agreed to pay [Redacted].

Because the monetary sanctions imposed on the Company exceeded the statutory threshold for a potential whistleblower award under Section 21F of the Exchange Act, the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action.

II. Claimant #1.

Based on our review of the record, including declarations from Commission staff who handled the Covered Action, we find the following events occurred with respect to Claimant #1’s award application. The investigation into the Covered Action (hereinafter, “the Investigation”) was opened on [Redacted] by staff in the Commission’s Division of Enforcement (“Enforcement”). On that date, [Redacted].[fn3]

Enforcement staff thereafter contacted Claimant #1 and arranged to meet with Claimant #1 for the first time on [Redacted]. During that meeting, Claimant #1 alleged various potential misconduct by the Company, including that the Company [Redacted]. This allegation would become the focus of staff’s Investigation and the cornerstone of the Commission’s subsequent action against the Company.[fn4] Following the meeting, Enforcement staff arranged to meet with Claimant #1 again in *** [Redacted]. Although Claimant #1 may not have complied with Exchange Act Rule 21F-9(d) at this time—an omission which might normally require an award denial—the CRS recommended that the Commission waive that rule here given certain highly unusual circumstances.[fn5] In total, Claimant #1 communicated with Enforcement staff approximately 5-6 times during the Investigation, and provided additional, critical information that advanced the Investigation, including the identification of potentially relevant documents and witnesses.

III. Claimant #2.

We find that Claimant #2 is an eligible whistleblower who voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, 17 C.F.R. § 240.21F-3(a).

Based on our review of the record, including declarations from Commission staff who handled the Covered Action, we find the following events occurred with respect to Claimant #2’s award application. In [Redacted], Claimant #2, [Redacted], first contacted the Commission by submitting a tip about the Company through the Commission’s on-line Tips, Complaints, and Referrals (“TCR”) system. In [Redacted] Claimant #2 met with the staff on the Investigation to provide additional follow-up information in support of Claimant #2’s earlier submission. In [Redacted], Claimant #2 provided further additional information under a Form TCR (Tip, Complaint, or Referral). Because Claimant #2 had extensive experience in [Redacted], Claimant #2’s submissions and assistance enabled the Enforcement staff to more fully and quickly understand the misconduct and to assess the legal consequences.

On [Redacted], Claimant #2 provided Enforcement staff with an expert report that Claimant #2 had commissioned from a [Redacted] firm [Redacted] by Claimants #3 and #4. Significantly, Claimant #2’s attorney submitted this report as additional information under Claimant #2’s [Redacted] Form TCR. Over the next year, the [Redacted] firm provided additional information in furtherance of Claimant #2’s application, including through the submission of letters dated [Redacted].

Based on Claimant #2’s contributions (including the submissions made on Claimant #2’s behalf by the [Redacted] firm that Claimant #2 had retained), and considering Claimant #2’s contributions vis-à-vis Claimant #1, we are awarding Claimant #2 *** of the monetary sanctions collected in the Covered Action.[fn6] In reaching this determination, we have carefully considered the award criteria specified in Exchange Act Rules 21F-5 and 21F-6. In particular, we considered the facts that Claimant #2 [Redacted] the information that Claimant #2 provided to the Commission was significant; and that Claimant #2 (directly and through the [Redacted] firm that Claimant #2 retained) provided continuing and helpful assistance to the Enforcement staff during the Investigation that saved a substantial amount of time and resources in the Investigation.

IV. Claimants #3 and #4.

A. Background.

The award applications submitted by Claimants #3 and #4 are inextricably intertwined with Claimant #2’s application. From approximately [Redacted] until [Redacted], the [Redacted] firm [Redacted] by Claimants #3 and #4, acting as an expert retained by Claimant #2, provided information to the Commission in furtherance of Claimant #2’s whistleblowing activities. During this period, there was never any suggestion to the Commission that Claimants #3 and #4 were themselves seeking to be whistleblowers, nor during this period did Claimants #3 and #4 undertake the steps required to perfect their status as whistleblowers eligible for an award.

This changed on or about [Redacted], when Claimants #3 and #4—with Claimant #2’s express consent—submitted a Form TCR to the Commission to become whistleblowers in their own right and asked to have the [Redacted] expert report prepared by their [Redacted] firm (and other follow-up assistance) credited to them for purposes of any future award consideration. Notably, Claimant #2’s determination to authorize Claimants #3 and #4 to recover as whistleblowers in their own right for the expert assistance that their firm had originally provided on behalf of Claimant #2 occurred shortly after [Redacted].[fn8]

The CRS’s Preliminary Determination recommended that the Commission deny an award to Claimants #3 and #4.

B. Analysis.

We find that the record does not support an award to Claimants #3 and #4. In discussing the grounds for our determination below, we address: (1) the submissions made (and information shared) with the Commission before [Redacted], when Redact firm was serving as an expert for Claimant #2; (2) the Claimants’ [Redacted] TCR submission; and (3) the information Claimants #3 and #4 provided after the [Redacted] submission.[fn9]

1. Information provided before [Redacted].

With respect to the information and assistance that Claimants #3 and #4 provided in connection with the Covered Action before the submission of their [Redacted] Form TCR, Claimants #3 and #4 were not “whistleblowers” under Rule 21F-2(a)(1) of the Exchange Act.

To qualify as a whistleblower, an individual must (among other things) provide information regarding a potential securities law violation to the Commission in the form and manner required by Rule 21F-9(a) of the Exchange Act. This is an essential first step in the sequence of required events to become eligible for an award. Failure to do so can result in the denial of an award application, even if the individual voluntarily provided original information to the Commission and that information led to the success of a covered action.[fn10]

It is undisputed that Claimants #3 and #4 did not submit a Form TCR to become whistleblowers until [Redacted].[fn11] In the period before their TCR submission, Claimants #3 and #4 (through [Redacted] firm that Claimant #2 had retained on behalf of Claimant #2’s whistleblowing efforts) were acting as experts, and the information [Redacted] firm provided during this period was offered exclusively in furtherance of Claimant #2’s whistleblowing activities.[fn12] Accordingly, they cannot seek an award based on those submissions or meetings.[fn13]

In their response to the Preliminary Determination, Claimants #3 and #4 request that we use our discretionary authority under Exchange Act Rule 21F-8(a) to excuse their untimely submission of the [Redacted] Form TCR and, in doing so, to deem them whistleblowers for the preceding period. In support of this relief, the Claimants identify various purported extraordinary circumstances that post-dated both their decision to have [Redacted] firm serve as an expert on behalf of Claimant #2 and their initial submission pursuant to that arrangement.[fn14]

Under Rule 21F-8(a), “the Commission may, in its sole discretion, waive any of [the] procedures [for submitting information or making a claim for an award] based upon a showing of extraordinary circumstances. ” In determining whether a claimant has demonstrated extraordinary circumstances for purposes of Rule 21F-8(a) to excuse untimely submissions, we have previously looked to our decision in In the Matter of the Application of PennMont Sec.[fn15] There, in determining whether extraordinary circumstances had been shown to permit an untimely filing under Commission Rule of Practice 420(b), 17 C.F.R. § 201.420(b), we explained that “the ‘extraordinary circumstances’ exception is to be narrowly construed and applied only in limited circumstances.”[fn16] An extraordinary circumstance is one “where the reason for the failure timely to file was beyond the control of the applicant that causes the delay.”[fn17] Moreover, subsequent events cannot be used to retroactively excuse an untimely submission.[fn18] The critical question is whether the facts and circumstances that gave rise to the procedural deficiency were sufficiently beyond the control of the claimant to support an exercise of our discretionary authority under Rule 21F-8(a) to excuse the untimeliness.

We find that Claimants #3 and #4 have failed to establish the existence of any “extraordinary circumstances” at the time of their procedural failures that would justify a waiver of our procedural requirements. It is undisputed that the [Redacted] firm [Redacted] agreed to produce an expert report (and to provide other assistance) for Claimant #2 on behalf of Claimant #2’s whistleblowing activities at the Commission. We find that their deliberate decision does not constitute an extraordinary circumstance that might excuse their failure timely to comply with Rule 21F-9’s requirements for becoming whistleblowers eligible for their own separate awards; accordingly, we decline to exercise our discretionary authority under Rule 21F-8(a).[fn19]

2. The [Redacted] TCR.

As we explain below, the [Redacted] TCR cannot be the basis for an award because it neither contained original information nor led to the success of the Covered Action.

(i) The [Redacted] TCR did not contain original information.

Rule 21F-4(b)(1)(ii) provides both the general requirement that to qualify as original information, the information a whistleblower provides must “[n]ot already [be] known to the Commission from any other source,” and the exception for circumstances where the Commission already knows the information but the whistleblower is “the original source of the information.” Rule 21F-4(b)(5) defines “original source” in pertinent part as follows: “The Commission will consider you to be an original source of the same information that we obtain from another source if the information satisfies the definition of original information and the other source obtained the information from you or your representative.” Claimants #3 and #4 do not dispute that the Commission was already in possession of all of the information that they included in the [Redacted], but instead argue that they were the “original source” of that information.[fn20] We reject that argument based on our determination that reading the original-source exception to cover Claimants #3 and #4 would be inconsistent with Rule 21F-4(b)(1)(ii)’s language and purpose and could undermine the proper functioning of our award program.

First, as a textual matter, Rule 21F-4(b)(5) is best read to foreclose the suggestion that an expert retained by and working on behalf of a whistleblower could be viewed as an “original source” of information developed in the context of that contractual relationship and submitted on behalf of the whistleblower to the Commission. By expressly distinguishing the “original source” from “the other source” that first provided the information to the Commission, the definition contemplates a degree of independence that is lacking in the relationship between a whistleblower and the whistleblower’s retained expert. In these circumstances, the expert is not reasonably viewed as an independent or separate “source”; rather, where an expert is hired to provide analysis and other services to assist a whistleblower in developing and presenting a claim to the Commission, the whistleblower is the only “source”—within the meaning of Rule 21F-4(b)—of information developed through or derived from the expert’s efforts and submitted to the Commission.

That reading is also consistent with, and supported by, the rationale for the original-source exception provided during the rulemaking that produced Rule 21F-4(b). The proposing release identified two scenarios in which the Commission anticipated an “original source” satisfying the “original information” requirement: (1) where a whistleblower first reports the information to Congress, any other authority of the federal government, a state Attorney General or securities regulatory authority, any self-regulatory organization, or the Public Company Auditing Oversight Board, and that law-enforcement or regulatory authority provides the information to the Commission before the whistleblower does; or (2) where the whistleblower reports the information pursuant to an entity’s internal whistleblower, legal, or compliance procedures for reporting allegations of possible violations of law, and the entity then reports the information to the Commission before the whistleblower does. Applying the original-source exception in these two situations is consistent with the Commission’s interest in encouraging whistleblowers to come forward promptly by reporting to any appropriate law-enforcement or regulatory authority, or by reporting internally.[fn21]

In crafting the original-source exception, we also left open the possibility that it could be applied in the context of multiple whistleblowers where an initial whistleblower submitted information to the Commission that he or she had obtained from an individual who later submitted the same information as a whistleblower. Although we could have adopted a narrower definition of original source that might have precluded subsequent whistleblowers from recovering in this scenario under the original-information requirement, we did not do so. This determination was based on the recognition that there could be some potential situations where having the initial whistleblower’s source come forward —even if he or she did not present new information that was unknown to the Commission—could still significantly contribute to the success of the Commission’s action.[fn22]

Claimants #3 and #4 do not fit within any of the circumstances for which we crafted the original source rule. In particular, we do not discern any programmatic benefit from permitting Claimant #2’s hired experts to come forward separately as the original source of Claimant #2’s information, and as we discuss further below, a contrary result could negatively affect the whistleblower program. Further, given that Claimants #3 and #4 knowingly chose to participate in the whistleblower process as Claimant #2’s experts in the first instance, there is no inequity in not permitting Claimants #3 and #4 to fundamentally alter their role and claim to be the original source of Claimant #2’s information.

Even apart from the foregoing rationale, we separately conclude that where an expert is retained by a whistleblower to provide information and analysis to the Commission on the whistleblower’s behalf, the retained expert should be deemed to have forfeited and waived any subsequent claim to being the original source of that information if such information was previously provided to the Commission by or on behalf of the whistleblower who retained the expert. As a matter of policy, we believe that where an individual, such as an expert, is retained to perform services on behalf of a whistleblower or in furtherance of another’s whistleblowing activities, that individual cannot subsequently claim that the information that he or she provided to the whistleblower, and that was correspondingly submitted to the Commission on behalf of the whistleblower, as his or her own information eligible for award consideration. A contrary result could create a perverse incentive in future cases for retained experts (or other professionals retained to assist whistleblowers) to abandon their contractual claims and obligations with whistleblowers in order to pursue an award on their own behalf, and we do not believe that this would be consistent with the proper functioning of our award program because, among other things, it could discourage whistleblowers from retaining professionals to help them refine and supplement their tips.[fn23]

(ii) The [Redacted] TCR did not lead to the success of the Covered Action.

The [Redacted] submission cannot be the basis for an award for a second critical reason: The submission did not lead to the success of the Covered Action within Exchange Act Rule 21F-4(c)(2). 24 The Commission’s Investigation was already underway (and indeed nearly complete) when Claimants #3 and #4 made their [Redacted] submission. As a result, in order to satisfy the “led to” requirement, they must demonstrate that their “submission significantly contributed to the success of the action.”[fn25] Moreover, given Rule 21F-4(c)(2)’s use of the term “submission,” and not “information,” Claimants #3 and #4 may not piggyback off of the contributions to the Investigation that resulted from the earlier disclosures of the original information. Rather, they must demonstrate that something unique about their submission of information made an additional significant contribution to the success of the Covered Action.[fn26]

But Claimants #3 and #4 have not shown that their [Redacted] submission itself contributed to the success of the action. And the declaration from the Enforcement staff member involved with the Covered Action explains that the investigative staff did not use the submission, as the same information was already in the staff’s possession. Nor is there any indication in the record that this is the rare situation where having an individual who claims to be the original source come forward to disclose information already known to the Commission somehow significantly contributed to the success of the Covered Action. Accordingly, we find that the [Redacted] TCR did not lead to the success of the Covered Action.

3. Information submitted after the [Redacted] TCR.

After Claimants #3 and #4 submitted their Form TCR (and thus for the first time qualified as whistleblowers) , they provided certain limited new information to the Commission. However, we find that the record demonstrates that none of the information provided by Claimants #3 and #4 following the submission of their TCR led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder.

For the foregoing reasons, the award applications submitted by Claimants #3 and #4 are denied.

V. Claimant #5’s Claim Is Denied.

A. Preliminary Determination.

The CRS preliminarily determined to deny Claimant #5’s award claim because Claimant #5’s information did not lead to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because none of the information caused the Commission to: (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. In reaching this preliminary determination, the CRS considered record evidence—including a declaration from an Enforcement staff member assigned to the Investigation—that revealed that the information provided to the Commission by Claimant #5 did not help advance the Investigation and neither was used in nor affected the charges brought by the Commission in the Covered Action or the successful enforcement of the Covered Action.

Although Claimant #5 provided information to the Commission in [Redacted], that information was not received by the Enforcement staff working on the Investigation at that time. Rather, Claimant #5 met with Commission staff unrelated to the Investigation. The first time staff on the Investigation received any information from Claimant #5 was in [Redacted]. The information provided by Claimant #5 at that time, consisting of [Redacted], was duplicative of information and materials that Enforcement staff already knew of or had obtained during the course of the Investigation.

Claimant #5 provided supplemental information to the staff on the Investigation in [Redacted] (which was re-submitted in [Redacted]), met with staff in [Redacted], and provided additional information and documents to staff in [Redacted]. However, the information provided by Claimant #5 in the supplemental submissions and during the [Redacted] meeting was largely duplicative of other information that staff had already received or had learned during the course of the Investigation. By the time staff received Claimant #5’s supplemental submissions and met with Claimant #5 in [Redacted], the Investigation had been ongoing for over two and a half years and staff had already conducted significant investigative steps. The Investigation also had been [Redacted], and much of Claimant #5’s information was duplicative of information [Redacted].

B. Response.

Claimant #5’s Response and the declaration submitted by Claimant #5’s counsel in support of the Response (hereinafter, “Counsel Declaration” ) make numerous arguments challenging the Preliminary Determination. We identify herein only several of the principal contentions.

First, Claimant #5 complains that Claimant #5 provided information to the Commission in [Redacted] concerning the conduct at issue in the Investigation —before Claimant #2—but that the CRS found Claimant #2’s information to be worthy of an award while preliminarily denying an award to Claimant #5. Claimant #5 surmises that this is the result of bias against Claimant #5.

Second, Claimant #5 complains that not only did Claimant #5 submit information before Claimant #2, but that Claimant #5’s information was qualitatively better than the information provided by Claimant #2 (as well as by Claimant #1).

Finally, Claimant #5 contends that the CRS credited Claimant #2 (through Claimant #2’s retained experts, Claimants #3 and #4) for providing information to staff in [Redacted] concerning [Redacted], but that Claimant #5 had earlier provided the same information to the staff in Claimant #5’s [Redacted] submissions, [Redacted] submission, and even in Claimant #5’s initial submissions in [Redacted] ***.[fn27]

C. Analysis.

We find that the record firmly demonstrates that Claimant #5 did not provide information that led to the success of the Covered Action. In reaching this conclusion, we have carefully considered the entire record as it relates to Claimant #5’s award application, including the materials that Claimant #5 submitted in response to the Preliminary Determination and the detailed supplemental declaration prepared by an Enforcement staff member from the Investigation (“Supplemental Enforcement Declaration”). We find that the Supplemental Enforcement Declaration is comprehensive and persuasive, and incorporate the factual statements therein as our findings of fact.

With respect to those contentions raised by Claimant #5 that we expressly identified above, we note that the Supplemental Enforcement Declaration demonstrates the following. First, the Enforcement staff on the Investigation received information from Claimant #2 (as well as from Claimant #1) before receiving any information from Claimant #5.[fn28] Second, the information provided by Claimant #5 was not of a higher quality than the information provided by Claimant #2 (or Claimant #1). Lastly, the information that Enforcement staff on the Investigation received from Claimant #5 concerning [Redacted] was not the same information that the staff subsequently received from Claimants #3 and #4, was not of the same high quality, and did not lead to the success of the Covered Action.

VI. Claimant #6’s Claim Is Denied.

A. CRS Preliminary Denial.

The CRS preliminarily determined to recommend that Claimant #6’s award claim be denied because Claimant #6’s information did not lead to the successful enforcement of the Covered Action. In [Redacted], Enforcement staff on the Investigation received Claimant #6’s Form TCR, and on [Redacted], had a conference call with Claimant #6 and Claimant #6’s counsel. Staff also received a supplemental submission from Claimant #6 in [Redacted]. At the time Enforcement staff received Claimant #6’s submission in [Redacted] they were close to finishing the Investigation. Claimant #6 did not provide any new information in the written submissions or during the conference call that added value to the case. Claimant #6’s information was largely duplicative of other information that staff had already received or had learned during the course of the Investigation.

B. Response.

Claimant #6 contends that notwithstanding that Claimant #6 submitted information later than other whistleblowers and that much of the information may have been known, Claimant #6 must have contributed to the success of the Covered Action given Claimant #6’s [Redacted] coupled with Claimant #6’s analysis and explanations. As an example, Claimant #6 contends that during the call with the Enforcement staff in [Redacted], the staff was very interested in Claimant #6’s [Redacted]. Claimant #6 then points to the Commission Order which states that [Redacted] during the relevant time period, and Claimant #6 surmises that Claimant #6’s information during the call somehow contributed to this part of the Order.

C. Analysis.

After reviewing the record, including Claimant #6’s Response, we find that the record conclusively shows that Claimant #6 did not provide original information that led to the successful enforcement of the Covered Action. The record shows that by the time Enforcement staff had their conference call with Claimant #6 in [Redacted], staff had already obtained from the Company documents [Redacted], and two internal Commission industry experts had already [Redacted].[fn29] Contrary to Claimant #6’s supposition, the [Redacted] stated in the Commission’s Order was based on a [Redacted], and was not based on any information provided by Claimant #6 during the conference call or in the written submissions.

None of the information provided by Claimant #6, including Claimant #6’s views about [Redacted], helped advance the Investigation and was not used in or affected the charges brought by the Commission in the Covered Action or the successful enforcement of the Covered Action.

VII. Claimant #7’s Claim is Denied.

A. CRS Preliminary Denial.

The CRS preliminarily determined to deny Claimant #7’s claim because Claimant #7’s information did not lead to the successful enforcement of the Covered Action. In doing so, the CRS relied on record evidence that demonstrated the facts described below. The first contact by the Enforcement staff on the Investigation with Claimant #7 was in [Redacted] at which point staff was almost finished with the Investigation. Most of the information provided by Claimant #7 was duplicative of other information that staff had already received or had learned during the course of the Investigation. However, there was one allegation made by Claimant #7 which staff was not aware, concerning certain incriminating statements purportedly made by [Redacted]. Staff took additional investigative steps to follow-up on Claimant #7’s allegation, but the staff was ultimately unable to substantiate this allegation.

B. Claimant #7’s Response.

In the response, Claimant #7 contends that shortly after Claimant #7 provided information to the Enforcement staff about the incriminating statements, staff re-interviewed a witness. Relying on the Commission’s award determination in In the Matter of the Claim for Award, File No. 2016-09, Exchange Act Release No. 77833 (May 13, 2016) (“May 2016 Order”), Claimant #7 contends that even if staff was not able to corroborate the incriminating statements, Claimant #7 still significantly contributed to the Covered Action because the evidence provided by Claimant #7, even though uncorroborated by the staff, contributed to accelerating resolution by generating sufficient concerns among Company personnel to motivate (or further motivate) a settlement of the Covered Action.

C. Analysis.

Claimant #7’s argument that Claimant #7’s unsubstantiated allegations increased the Company’s willingness to more quickly settle the matter is based mainly on Claimant #7’s speculation and is inconsistent with the factual record. In [Redacted], several months before staff re-interviewed the witness, staff and counsel for the Company had already commenced settlement discussions, and before the re-interview, counsel for the Company had expressed a willingness and desire to engage in settlement discussions to bring a resolution to the matter. At no point during the settlement negotiations did the Company indicate that it was motivated to settle the charges or that it would agree to the penalty amount because of staff’s re-interview of the witness.

Furthermore, there was nothing meaningful or of significance that the witness said during the re-interview that in any way affected the core findings of the Investigation that staff was discussing with the Company before the re-interview. And Company counsel did not indicate to staff, either during the re-interview or afterwards, that the information provided by the witness during the re-interview was alarming, surprising, or in any way changed the dynamics of the case or of their settlement position.

As such, this case is unlike the Commission’s award determination in the May 2016 Order. There, the Enforcement staff following the issuance of the Preliminary Determination provided additional record evidence that demonstrated that the claimant’s “information was meaningful and that it made a substantial and important contribution to the successful resolution of the Covered Action” in that it “caused Enforcement staff to focus on [the misconduct] when staff might otherwise not have done so, and this evidentiary development strengthened the Commission’s case by meaningfully increasing Enforcement staff’s leverage during the settlement negotiations.”[fn30]

Here, there is no support in the record demonstrating that the unsubstantiated allegations had any effect whatsoever on the resolution of the Covered Action.

But in any event, to be eligible for a whistleblower award as we interpret the relevant language of the statute and our rules, there must be some nexus between the information provided and the successful claims in the underlying enforcement action. We find that there is simply no such connection between the unsubstantiated allegations offered by Claimant #7 and the settled claims in the Covered Action.

VIII. Conclusion.

Accordingly, it is ORDERED that Claimant #1 shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in the Covered Action.

ORDERED that Claimant #2 shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in the Covered Action.[fn31]

ORDERED that Claimant #3’s, Claimant #4’s, Claimant #5’s, Claimant #6’s, and Claimant #7’s whistleblower award claims are denied.

By the Commission.

[2] Exchange Act § 21F(b)(1). We note that, in the context of an award proceeding involving two or more meritorious whistleblower claimants, the award must be allocated among the claimants and may never exceed an aggregate percentage amount of 30% of the monetary sanctions collected. See Exchange Act Rule 21F-5(c) (explaining that “[i]f the Commission makes awards to more than one whistleblower in connection with the same action or related action,” then “in no event will the total amount awarded to all whistleblowers in the aggregate be … greater than 30 percent of the amount the Commission or the other authorities collect”).

[3] In finding that Claimant #1 acted voluntarily as required by the statute and our rules, we have relied on Exchange Act Rule 21F-4(a)(2), which states, as relevant here, that a claimant’s “submission of information to the Commission will be considered voluntary if [he/she] voluntarily provided the same information to” any authority of the federal government “prior to receiving a request, inquiry, or demand from the Commission.” That rule is satisfied here because Claimant #1 provided the same information to [Redacted] prior to the Commission learning of the information and contacting Claimant #1. We note that, in our view, the “same information” standard under Rule 21F-4(a)(2) is satisfied where, as here, a claimant’s submission of information to the other federal agency “relates to the subject matter of” the Commission’s later inquiry. See Rule 21F-4(a)(1).

[4] The information that Claimant #1 provided for the first time on or before July 21, 2010, does not constitute original information under our rules. See Exchange Act Rule 21F-4(b)(1)(iv).

[5] Pursuant to Rule 21F-9(d), individuals such as Claimant #1 who provided tips to the Commission after July 21, 2010, the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), but before August 12, 2011, the effective date of the whistleblower rules, are required to have submitted original information in writing to the Commission in order to qualify as a whistleblower who could potentially obtain an award. Claimant #1 did not submit the original information in writing to the Commission. Nonetheless, we find that it is appropriate in the public interest and consistent with the protection of investors that we utilize our discretionary authority under Section 36(a) of the Exchange Act to waive the Rule 21F-9(d) “in writing” requirement in this matter given a number of highly unusual circumstances. Those circumstances include the following: (1) the Commission’s staff was already actively working with Claimant #1 before the enactment of the Dodd-Frank Act; (2) Claimant #1 provided the new post-Dodd-Frank Act information in the format that the Enforcement staff expressly requested–orally during an in-person meeting at the Commission’s office; and (3) the indicia of reliability and the certainty as to the time that the information was provided, which are principal policy rationales underlying the Rule 21F-9(d) writing requirement, are clearly satisfied in the context of this claim because it is undisputed that Claimant #1 met on [Redacted].

[6] As we discuss further below in the context of our analysis of the award claims submitted by Claimants #3 and #4, Claimant #2 advised us in making the award application that Claimant #2 intended to forgo any claim to an award based on the information that the [Redacted] firm submitted so that Claimants #3 and #4 could recover an award based on that information. However, as we also discuss below, we have determined to deny an award to Claimants #3 and #4. As a result, we are treating Claimant #2’s decision to forgo an award based on that information as ineffective, as we believe that Claimant #2 based that decision on an (incorrect) expectation that Claimants #3 and #4 would be able to recover an award directly from the Commission. Were we to do otherwise, it is possible that Claimants #3 and #4 might be prejudiced in their ability to receive any compensation from Claimant #2 based on Claimant #2’s award total. See infra at 6-7 (discussing [Redacted].

[7] [Redacted].

[8] We have observed that since [Redacted]

[9] As referenced above, see supra footnote 6, Claimant #2 sought to forgo an award on the expert report and other contributions from Claimants #3 and #4’s firm. Claimant #2’s apparent desire that Claimants #3 and #4 receive an award in their own right does not, however, impact our obligation to ensure that they meet the award criteria and conditions in Section 21F of the Exchange Act and our rules thereunder.

[10] See Exchange Act § 21F(c)(2)(D).

[11] See Exchange Act §§ 21F(a)(6), 21F(b)(1), & 21F(b)(2)(D). See also Rule 21F-2(a)(1) & (2); Rule 21F-8(a).

[12] With respect to the information provided during this period, we find that Claimant #3’s and #4’s award applications suffer from a separate, albeit related, defect. Specifically, neither claimant complied with the requirement in Exchange Act Rule 21F-9(b), which provides that, “to be eligible for an award, you must declare under penalty of perjury at the time you submit your information pursuant to paragraph (a)(1) or (2) of [Rule 21F-9] that your information is true and correct to the best of your knowledge and belief.”

[13] The record indicates that the [Redacted] expert report and certain other assistance that Claimants #3 and #4 rely upon in seeking an award were provided by an incorporated entity–the [Redacted] firm [Redacted] –and not by Claimants #3 and #4 in their individual capacities. See [Redacted] Claimant #2’s Expert Report, n.1. The [Redacted] firm itself would be ineligible for an award for those submissions, because only individuals can qualify as whistleblowers under Section 21F. These additional considerations further counsel against any determination that would retroactively deem Claimants #3 and #4 in their individual capacities as whistleblowers before their [Redacted] Form TCR.

[14] The specific circumstances that they identified include difficulties in [Redacted] so as to allow Claimants #3 and #4 to be treated as whistleblowers from the time that their firm’s expert report was first submitted to the Commission in [Redacted].

[15] Exchange Act Release No. 61967, 2010 WL 1638720 (Apr. 23, 2010), aff’d PennMont Sec. v. SEC, 414 F. App’x 465 (3d Cir. 2011).

[16] PennMont, 2010 WL 1638720 at *4.

[17] Id.; see also Order Determining Whistleblower Award Claim, Exchange Act Release No. 72178 (May 16, 2014); Order Determining Whistleblower Award Claim, Exchange Act Release No. 72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Exchange Act Release No. 77368 (Mar. 14, 2016), aff’d sub nom. Cerny v. SEC, No. 16-934, 2017 WL 3911581 (2d Cir. Sept. 7, 2017).

[18] Exchange Act Release No. 72178, 2014 WL 1998521 (May 16, 2014) (finding that subsequent events did not excuse an untimely whistleblower award application).

[19] Notably, as discussed above, [Redacted].

[20] See Claimants #3 and #4’s Response to the Preliminary Determination at 8 (“[W]hile it was indeed known to the Commission from another source prior to us filing our own TCR, the ‘other source,’ [Claimant #2], clearly obtained the information from us and has acknowledged this.”).

[21] See Proposed Rules for Implementing the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Exchange Act Release No. 34-63237, 75 Fed. Reg. 70488, 70495 (Nov. 17, 2010). Notably, whistleblowers who first report to one of the listed authorities or internally, and then follow-up by reporting to the Commission within 120 days, will get the additional benefit of being deemed to have “provided [the] information [to the Commission] as of the date of [the] original disclosure, report, or submission” for purposes of any award analysis. See Rule 21F-4(b)(7) (original-source lookbackrule).

[22] See Securities Whistleblower Incentives and Protections (“Adopting Release”), Exchange Act Release No. 34-64545, 76 Fed. Reg. 34300, 34321 (June 13, 2011). For example, the whistleblower who was the original source might have first-hand knowledge and thus be able to provide particularly compelling testimony at trial; or the original source could be someone that the Commission is unaware of or could not reach, and whose involvement with the investigation could lead the wrongdoers to agree to a settlement.

[23] With the exception of anonymous whistleblowers who are required to obtain counsel, see Exchange Act Rule 21F-7(b), we note that the Commission does not require whistleblowers to retain experts or other professionals to assist them in their whistleblowing. Moreover, nothing in our decision today is intended either to encourage or to discourage whistleblowers in seeking assistance from professionals. Whistleblowers who provide specific, credible, and timely information of securities law violations may be eligible for an award, including a full award of up to 30% of the monetary sanctions collected, whether or not their information is accompanied by expert knowledge or analysis, or provided with the assistance of a lawyer or other professional.

[24] The other prongs of Exchange Act Rule 21F-4(c) are not applicable here.

[25] Rule 21F-4(c)(2) (emphasis added). See also Adopting Release, 76 Fed. Reg. 34300, 34321/3-34322/2 (explaining that in the case of two competing whistleblowers where the second whistleblower to come forward to the Commission was the original source, the second whistleblower in order to obtain an award will need to demonstrate that his submission “significantly contributed” to the enforcement action if the investigation was already ongoing when he came forward).

[26] See Adopting Release, 76 Fed. Reg. 34322/1. See also supra discussion at footnote 22.

[27] Claimant #5 raises several unpersuasive contentions concerning the administrative record. First, Claimant #5 argues that certain documents provided to Claimant #5 following the issuance of the Preliminary Determination, including an Enforcement staff declaration, were over-redacted, which Claimant #5 contends impaired Claimant #5’s ability to contest the Preliminary Determination. We have reviewed the redactions in the documents that Claimant #5 has identified and find that Claimant #5 was not prejudiced as a result of those redactions, particularly given that the unredacted information that was provided to Claimant #5 not only sufficiently explained why the information Claimant #5 provided did not contribute to the Investigation, but also included substantial information demonstrating the value of the information provided by the other claimants. (Indeed, we think it fair to observe that the unredacted information that was provided to Claimant #5 enabled Claimant #5’s counsel to prepare a thorough and comprehensive Response to the Preliminary Determination.) Second, Claimant #5 contends that Claimant #5 should have been permitted to review the submissions made by other claimants, but here again we find that Claimant #5 was not prejudiced by the determination to withhold these materials from Claimant #5. Third, Claimant #5 contends that the staff should have included within the record internal SEC documents and communications evaluating the importance, value and merits of the various claimants’ submissions, and that without these materials, Claimant #5 cannot test the descriptions and conclusions contained in the Enforcement staff’s declaration. We reject this contention, as our whistleblower rules were carefully designed to prevent such broad-based discovery into the internal deliberative process files relating to Commission investigations and enforcement actions, and instead have provided that staff declarations should be the primary vehicle for relaying the staff’s assessment of the value and relevance of information provided by whistleblowers. Finally, Claimant #5 suggests that certain of Claimant #5’s supplemental submissions (specifically the submissions made in [Redacted] ) were not included in the administrative record, but we find based on the declaration prepared by an OWB staff member that these materials were not in fact excluded from the record.

[28] Claimant #5 re-submitted the[Redacted]information to the Enforcement staff on the Investigation in [Redacted] According to the Supplemental Enforcement Declaration, Claimant #5’s re-submitted information contained very little detail on the relevant issues and primarily consisted of publicly-available documents. As such, the information provided by Claimant #5 in [Redacted]and re-submitted in[Redacted]did not add meaningfully to the information and materials that the Enforcement staff on the Investigation already knew of or which were publicly-available to the staff.

[29] Furthermore, we find that during their call in [Redacted], staff did not ask Claimant #6 for Claimant #6’s opinion on [Redacted] but in fact Claimant #6, without solicitation or questioning from staff, volunteered Claimant #6’s belief that [Redacted]

[30] May 2016 Order at 3.

[31] We are aware that on [Redacted].

SEC

81857

10/12/2017

On April 21, 2017, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] which was issued in connection with the Commission’s successful resolution of the above-referenced enforcement action (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Further, the Claims Review Staff recommended that Claimant’s award be set in the amount of [Redacted] percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which will yield an award of more than $1,000,000. In reaching this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.

On April 24, 2017, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e).

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted, including the award determination. The record demonstrates that Claimant has satisfied all criteria for award.[fn1] Claimant, a company outsider, provided the Commission with new information and substantial corroborating documentation of a securities law violation by a registered entity that impacted retail customers. Claimant’s tip prompted staff to [Redacted] that ultimately led to the claims that were the basis of the Commission’s successful Covered Action against the entity.

Conclusion.

Accordingly, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] Specifically as to the facts and circumstances of Claimant’s claim for an award, the Commission hereby finds that extraordinary circumstances exist to warrant a waiver of the requirement in Rule 21F-9(b), 17 C.F.R. § 240.21F-9(b), that to be eligible for an award, a claimant must have signed a declaration under penalty of perjury at the time that the initial tip was submitted to the Commission. See 17 C.F.R. § 240.21F-8(a). Under Rule 21F-8(a), “the Commission may, in its sole discretion, waive any of [the] procedures based upon a showing of extraordinary circumstances. ” In determining whether a claimant has demonstrated extraordinary circumstances for purposes of Rule 21F-8(a), we have previously looked to our decision in In the Matter of the Application of PennMont Sec., Exchange Act Release No. 61967, 2010 WL 1638720 (April 23, 2010), aff’d PennMont Sec. v. SEC, 414 F. App’x 465 (3d. Cir. 2011). There, in determining whether extraordinary circumstances were shown to permit an untimely filing under Commission Rule of Practice 420(b), 17 C.F.R. § 201.420(b), we explained that “the ‘extraordinary circumstances’ exception is to be narrowly construed and applied only in limited circumstances.” PennMont, 2010 WL 1638720 at *4. An extraordinary circumstance is one “where the reason for the failure timely to file was beyond the control of the applicant that causes the delay.” Id.; see also Order Determining Whistleblower Award Claim, Exchange Act Release No. 72178 (May 16, 2014); Order Determining Whistleblower Award Claim, Exchange Act Release No. 72659 (July 23, 2014); Order Determining Whistleblower Award Claim, Exchange Act Release No. 77368 (Mar. 14, 2016), aff’d sub nom. Cerny v. SEC, No. 16-934, 2017 WL 3911581 (2d Cir. Sept. 7, 2017). Moreover, the existence of an extraordinary circumstance is assessed based on the facts as they existed at the time that the failure occurred with the critical question being whether those then-existing facts and circumstances were sufficiently beyond the control of the claimant to justify the procedural deficiency. Although Claimant did not submit a declaration at the time of the initial submission of the tip, Claimant’s failure was the result of the Commission’s online configuration and beyond Claimant’s control. Furthermore, when staff alerted Claimant to the issue, Claimant promptly submitted a signed declaration at the staff’s request. Thus, we have determined that a waiver of the requirement to submit a signed declaration at the time of the initial tip’s submission is appropriate given the specific facts and circumstances of this case.

SEC

10/01/2017

In response to the above-referenced Notice of Covered Action issued in connection with [Redacted] (“the Covered Action”), the Securities and Exchange Commission received [Redacted] timely whistleblower award claims. Several of these claimants also timely sought awards in connection with other government enforcement actions, [Redacted].

Pursuant to Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), and Rules 21F-10 and 21F-11 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. Further, in determining the recommended award amount for the meritorious claims, we considered the factors set forth in Rule 21F-6 in relation to the facts and circumstances of the particular claimant’s award application.[fn1]

The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

Claimant 4 [Redacted].

Claimant 5 [Redacted].

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to [Redacted] Claimant 4, and Claimant 5. The information provided by these claimants did not lead to the successful enforcement of the referenced covered action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

a. cause the Commission to (i) commence an examination; (ii) open or reopen an investigation; or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn10]

Furthermore, Claimant 4’s award application fails for the separate and independent reason that Claimant 4 is not a “whistleblower” because Claimant 4 did not submit information to the Commission pursuant to the procedures set forth in Rule 21F-9(a) under the Exchange Act, as further required by Rule 21F-2.

By: Claims Review Staff.

[1] The award factors are: (1) the significance of the information provided to the Commission; (2) the assistance provided in the Commission action; (3) the 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.

[10] The record evidence supporting this preliminary finding is as follows. First, Enforcement staff responsible for the Covered Action confirmed in a declaration for the record that they do not know [Redacted] Claimant 4, or Claimant 5. They have further confirmed that they neither communicated with them, nor received or reviewed any information provided by them, before or during the course of the investigation. Second, the Commission’s internal database for recording and tracking tips, complaints, and referrals has no record of the Commission having received a submission from Claimant 4; and with respect to [Redacted] Claimant 5, that database records that their tips were reviewed by our Office of Market Intelligence (which is the office responsible for reviewing all incoming submissions) and were designated for no further investigatory action to be taken (and thus the tips were not shared with the investigatory team handling the Covered Action).

SEC

09/18/2017

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received timely whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows with respect to the Covered Action.[fn1]

[Redacted].

[Redacted] (Claimant #5).

[Redacted] (Claimant #6).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny awards to [Redacted] Claimant #5, and Claimant #6. The basis for this determination is as follows:

None of [Redacted] Claimant #5’s, nor Claimant #6’s information led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because none of the information that the claimants submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

[1] [Redacted].

SEC

09/11/2017

In response to the above-referenced Covered Action, the Securities and Exchange Commission (the “Commission”) received one timely whistleblower award claim from [Redacted] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant. The basis for this determination is as follows:

First, to the extent that the Claimant’s award application is based on information provided to the Commission on or before July 21, 2010, that information does not constitute “original information,” as that term is defined under Rule 21F-4(b)(1) of the Exchange Act and, thus, may not serve as the basis for an award.[fn1]

Second, Claimant did not provide information that led to the successful enforcement by the Commission of a federal court or administrative action with respect to the above referenced Covered Action, as required by Rules 21F-3(a)(3) and 21F-4(c) of the Exchange Act because Claimant did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c) (2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[1] Only new information provided to the Commission for the first time after the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act may qualify as “original information.” See Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[2] We note that, to the extent that Claimant’s email dated [Redacted], contained an internet link to a news article (including information taken from that news article), we preliminarily find that this information was not derived from Claimant’s “independent knowledge” because it was publicly available information. See Exchange Act Rule 21F-4(b)(2). Such information does not qualify as “original information” so as to support an award. See Exchange Act Rule 21F-(b)(1).

SEC

09/11/2017

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant. The basis for this determination is as follows:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c) (2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[2] We note that, to the extent that Claimant’s [Redacted] email to Enforcement staff included an [Redacted] promotions mailer, we preliminarily find that this information does not qualify as “original information” so as to support an award. See Exchange Act Rule 21F-(b)(1). The staff had already received a copy of this mailer several years earlier and, in any event, it was not derived from Claimant’s “independent knowledge” because it was publicly available on the internet, see Exchange Act Rule 21F-4(b)(2).

SEC

09/09/2017

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (the “Commission”) received whistleblower award claims from the following individuals (collectively, the “Claimants”):

[Redacted] (“Claimant 4”).

[Redacted] (“Claimant 6”).

[Redacted] (“Claimant 7”).

[Redacted] (“Claimant 9”).

[Redacted] (“Claimant 11”).

[Redacted] (“Claimant 12”).

[Redacted] (“Claimant 13”).

[Redacted] (“Claimant 14”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The CRS has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

1. None of the Claimants provided information that led to the successful enforcement by the Commission of a federal court or administrative action with respect to the above-referenced Notice of Covered Action, as required by Exchange Act Rules 21F-3(a)(3) and 21F-4(c), because they did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Exchange Act Rule 21F-4(c)(2).

2. [Redacted].

a. [Redacted].

b. [Redacted].

3. [Redacted].

4. Before the Commission entered a cease-and-desist order, the qualifying order, in the above-referenced Covered Action, Claimant 14 failed to submit information about a possible securities law violation in the form and manner required by Exchange Act Rules 21F-9(a)-(b). As a result, with respect to the information of Claimant 14 that the Commission received before the qualifying order was filed in the Covered Action, Claimant 14 does not qualify as a whistleblower, see Exchange Act Section 21F(a)(6) and Rule 21F-2(a)(1), and is not eligible for an award, see Exchange Act Rule 21F-2(a)(2) and Rule 21F-(8)(a).[fn2]

By: Claims Review Staff.

[2] In their award applications for the above-referenced Notice of Covered Action, Claimants [Redacted] 4, 7, 9, ***, 12, and 14 applied for awards in connection with various purported “related actions.” Because these claimants do not qualify for an award in the covered action brought by the Commission, their respective requests for related action awards is denied. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u—6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a). Moreover, some of the cases Claimants [Redacted] 4, 7, ***, 12, and 14 identified as the basis for their related action awards are not “related actions” since those cases were not brought by the non-Commission entities designated under Exchange Act Rules 21F-3(b)(1) and 21F-4(g) and (f).

SEC

09/09/2017

[Redacted] (“Claimant 4”).

[Redacted] (“Claimant 6”).

[Redacted] (“Claimant 7”).

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Exchange Act Rule 21F-4(c)(2).

2. [Redacted].

a. [Redacted].

b. [Redacted].

c. [Redacted].

3. [Redacted].

a. [Redacted].

b. [Redacted].[fn2]

By: Claims Review Staff.

[2] In their award applications for the above-referenced Notice of Covered Action, Claimants [Redacted] 4, 6, 7, and *** applied for awards in connection with various purported “related actions.” Because these claimants do not qualify for an award in the covered action brought by the Commission, their respective requests for related action awards is denied. A related action award may be made only if, among other things, the claimant satisfies the eligibility criteria for an award for the applicable covered action in the first instance. See 15 U.S.C. § 78u–6(b); Exchange Act Rule 21F-3(b), (b)(1); Rule 21F-4(g) and (f); Rule 21F-11(a). Moreover, some of the cases Claimants [Redacted] 4, 6, 7, and *** identified as the basis for related action awards are not “related actions” since they were not brought by the non-Commission entities designated under Exchange Act Rules 21F-3(b)(1) and 21F-4(g) and (f).

SEC

81227

07/27/2017

On April 21, 2017, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action [Redacted] The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the above-referenced Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).[fn1] Although Claimant did not comply with Exchange Act Rule 21F-9(d) — an omission which might normally require an award denial — the CRS recommended that the Commission waive that rule here given certain unusual circumstances (which are discussed in footnote 4, below).[fn2]

Further, the CRS recommended that such award be set in the amount of [Redacted] [Redacted] of the monetary sanctions collected, or to be collected, in the Covered Action, which will equal an award of more than $1.7 million. In determining the amount of award to recommend, the CRS considered the following factors set forth in Rule 21F-6 of the Exchange Act as they apply to Claimant: (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. 3 On May 31, 2017, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e).

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the CRS is adopted.[fn4] Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] Of particular note, Claimant, a company insider, reported an ongoing securities law violation to the Commission that would have otherwise been difficult to detect. Thereafter, Claimant provided critical information that helped end the multi-year fraud and, as a result, millions of dollars were returned to harmed investors.

[2] Rule 21F-9(d) requires that an individual must have provided original information “in writing” to the Commission in order for that information to be a basis for a whistleblower award if the information was first submitted to the Commission during the interim period between the enactment of the whistleblower program — i.e., July 21, 2010, when the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) was signed into law — and the effective date of the Commission’s whistleblower rules (i.e., August 12, 2011).

[3] In determining the appropriate award percentage, we have considered that Claimant alerted the Commission to a serious, multi-year fraud that would have otherwise been difficult to detect, continued to provide substantial assistance to Enforcement staff during the investigation, [Redacted]. Against these factors, we have also considered that Claimant became aware of certain discrepancies indicative of the fraud [Redacted] before Claimant reported to the Commission. In applying the unreasonable reporting delay factor, we also considered that Claimant [Redacted]. Additionally, we have not applied the delay factor as severely here as we otherwise might have had the delay occurred after the whistleblower program was established by the Dodd-Frank Act and after the whistleblower protections were in place. Finally, Claimant bears some, albeit limited, culpability.

[4] We concur with the CRS’s recommendation that we exercise our discretionary authority to waive the Claimant’s non-compliance with Rule 21F-9(d). See Section 36(a) of the Exchange Act. We find that it is appropriate in the public interest and consistent with the protection of investors to do so in this matter given a number of unusual circumstances, including the following: (1) the Commission’s staff was already actively working with the Claimant before enactment of the Dodd-Frank Act; (2) the Claimant provided the new post-Dodd-Frank Act information in the format the Enforcement staff requested [Redacted] and (3) the indicia of reliability and the certainty as to the time that the information was provided, which are the policy rationales underlying the Rule 21F-9(d) writing provision, is clearly satisfied in the context of this claim because it is undisputed that Claimant [Redacted].

SEC

81200

07/25/2017

On March 3, 2017, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] which was issued in connection with the Commission’s successful resolution of the above-referenced enforcement action (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Further, the Claims Review Staff recommended that Claimant’s award be set in the amount of [Redacted] percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which will yield an award of almost $2.5 million. In reaching this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.[fn1]

On March 7, 2017, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e).

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f), (h), the Preliminary Determination of the Claims Review Staff is adopted, including the award determination. The record demonstrates that Claimant has satisfied the criteria for an award. Claimant, an employee of a domestic government agency, had become aware of certain improper conduct by a company.[fn2] Claimant then reported these suspicions to the Commission, and provided supporting documentation, which caused the Commission to open an investigation.[fn3] Claimant then continued to provide the Commission with specific, timely, and credible information, helpful documents, significant ongoing assistance, and relevant testimony that accelerated the pace of the investigation.

Conclusion.

By the Commission.

[1] The Preliminary Determination also recommended that a whistleblower award claim filed by a second claimant be denied. This claimant did not seek reconsideration of the Preliminary Determination and, therefore, the Preliminary Determination as to that claimant became the final order of the Commission pursuant to Exchange Act Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

[2] Generally speaking, an employee of a federal, state, or local government agency can — subject to the two statutory exceptions discussed below — be eligible for an award under our whistleblower program. As we explain, neither of the two statutory exceptions prevents an award here. The first exception prohibits paying a whistleblower award to an employee of “an appropriate regulatory agency. ” See Exchange Act § 21F(c)(2)(A)(i), 15 U.S.C. § 78u-6(c)(2)(A)(i). Exchange Act Rule 21F-4(f) defines an “appropriate regulatory agency” by reference to Section 3(a)(34), which in turn defines an “appropriate regulatory agency” as the Commission and any of the various banking agencies listed in the definition, including the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation. This exception has no potential application to Claimant given the governmental authority at which Claimant worked.

The second exception prohibits an award to an employee of “a law enforcement organization.” See Exchange Act § 21F(c)(2)(A)(v), 15 U.S.C. § 78u-6(c)(2)(A)(v), and Exchange Act Rule 21F-8(c)(1), 17 C.F.R. § 240.21F-8(c)(1). While neither the Exchange Act nor the whistleblower rules define “law enforcement organization,” the term is generally understood as having to do with the detection, investigation, or prosecution of potential violations of law. See Exchange Act § 24(f)(4)(B) and (C), 15 U.S.C. § 78x(f)(4)(B) and (C) (defining foreign and state law enforcement authorities as those that are “empowered…to detect, investigate, or prosecute potential violations of law”). To be sure, certain components of Claimant’s governmental employer have law enforcement responsibilities, but those responsibilities are housed in a separate, different component of the agency at which Claimant works. This raises an interpretive question whether the exclusion for employees of a “law enforcement organization” applies to an entire governmental agency that may contain components with law enforcement responsibilities, or only to those divisible sub-agency components that perform the law enforcement responsibilities. While we do not address that question for all cases given the myriad permutations of domestic governmental entities and agencies, here, we believe that the appropriate answer is that the arguments for distinguishing the sub-agency that possesses the law enforcement responsibilities from the broader governmental agency are sufficiently strong to allow us to make an award to Claimant. In reaching this conclusion, we are mindful that in ordinary usage, an “organization” is any structure within which individuals work toward a common purpose or goal. See definitions of “organization” in Cambridge Dictionary at http://dictionary.cambridge.org/us/dictionary/english/organization (“a group whose members work together for a shared purpose in a continuing way”); MacMillan Dictionary at http://www.macmillandictionary.com/us/dictionary/american/organization (“a group of people who have a particular shared purpose or interest, for example a political party or charity”); Merriam-Webster Dictionary at https://www.merriam-webster.com/dictionary/organization (“an administrative and functional structure (such as a business or a political party) “. Congress’s use of the word “organization” in Section 21F(c)(2)(A)(v) — as opposed to “agency” or “authority” — suggests that it is reasonable to interpret the exclusion flexibly and, in appropriate cases such as this one, to apply it only to employees of a clearly separate agency component that performs law enforcement functions, rather than to all employees of an entire agency that happens to have been granted law enforcement powers among its many other separate responsibilities and powers.

[3] We note that the record is clear that this is not a situation where a claimant sought to circumvent the potential responsibilities that his or her government agency might have to investigate or otherwise take action for the misconduct. We express no view on how an award determination might differ under that alternative circumstance.

SEC

06/20/2017

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received three whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

[Redacted] (Claimant 2) and [Redacted] (Claimant 3).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny awards to Claimant 2 and Claimant 3. The basis for this determination is as follows:

No information provided by Claimant 2 and Claimant 3 led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because none of the information that the claimants submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn1]

By: Claims Review Staff.

SEC

06/10/2017

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a joint whistleblower award claim from the following individuals (collectively, the “Claimants”):

[Redacted] (Claimant 1).

[Redacted] (Claimant 2).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the above joint award claim. The basis for this determination is as follows:

Neither Claimant 1 nor Claimant 2 provided information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because they did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

34-80871

06/07/2017

[Redacted] (“Claimant”) seeks a whistleblower award in connection with the Commission’s successful resolution of the above-referenced enforcement action (the “Covered Action”). The Claims Review Staff (“CRS”) reviewed the Claimant’s application and issued a Preliminary Determination recommending that the Commission deny it. The CRS explained that the information that Claimant provided does not qualify as “original information” within the meaning of the Securities Exchange Act of 1934 and Rule 21F-4(b)(1)(iv), which requires that the information must have been “[p]rovided to the Commission for the first time after July 21, 2010 (the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act [which established the Commission’s whistleblower program]).” It is uncontested that any information that the Claimant provided to the Commission that may have been used by the Commission in connection with the Covered Action was provided in 2007.

As the Commission has previously explained in a final order (“Stryker Final Order”)[fn1] that was subsequently affirmed by the U.S. Court of Appeals for the Second Circuit in Stryker v. SEC,[fn2] information submitted to the Commission for the first time prior to July 21, 2010 may not serve as the basis for a whistleblower award. Although the Claimant asks us to reject our prior determination, we decline to do so.[fn3] We have carefully considered the Claimant’s arguments and conclude that, for the reasons set forth in the Stryker Final Order (and subsequently elaborated upon in the Commission’s brief filed at the Second Circuit Court of Appeals in support of that Order), Rule 21F- 4(b)(1)(iv) provides an appropriate interpretation of Section 21F that is supported by the statutory text and legislative history, grounded on sound policy considerations, and that reflects a permissible exercise of our rulemaking authority.[fn4]

Conclusion.

Claimant’s information does not meet the definition of “original information” as required by Rule 21F-4(b)(1)(iv), and having considered the entire record, including Claimant’s Response to the Preliminary Determination, Claimant’s award claim is denied.[fn5]

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] See Securities Exchange Act Release No. 70772 (October 30, 2013).

[2] 780 F.3d 163 (2d Cir. 2015).

[3] Claimant has requested that the “full record before the U.S. Court of Appeals [for the Second Circuit]” in the Stryker matter be “incorporated by reference” into the record in this matter. We find it unnecessary to do so because we are familiar with the straightforward questions of law and policy presented in this matter, and thus incorporation of the full record in Stryker would not aid our resolution of the Claimant’s award application. We also note that the Claimant’s response in opposition to the Preliminary Determination substantially restates the same arguments that were raised by the claimant in the Stryker matter before the Second Circuit.

[4] Although most of the arguments that the Claimant advances in asking us to reconsider our interpretation are similar to (and in certain cases identical to) the arguments that were considered and litigated in connection with the Stryker matter, Claimant does appear to raise two new arguments that warrant brief responses. First, Claimant argues that it is significant that Congress did not include a specific date in the statutory provision for qualifying whistleblowers in the same manner that Congress did in 2006 when it established the IRS’s whistleblower program. We do not find this argument persuasive, however, because as we have previously discussed both in our Stryker Final Order and in our appellate brief in support thereof, certain language in the Dodd-Frank Act (including Section 924(b) of the Act) and the relevant legislative history suggest to us a Congressional intention not to provide awards for information first submitted before Dodd-Frank’s enactment. Thus, the fact that Congress did not include the identical language from the IRS whistleblower program in the Dodd-Frank Act does not support Claimant’s contention that Congress expressed an unambiguous intention for the Commission to pay awards to individuals for information submitted prior to the Act. Second, the Claimant argues that Congress’s action in simultaneously repealing the Commission’s former discretionary award program for insider trading matters somehow demonstrates a “clear Congressional intent” to ensure that individuals could recover for information submitted to the Commission prior to the Dodd-Frank Act. Critically, the Claimant does not cite to anything from the statutory language or the Congressional history that specifically supports this argument; moreover, we find the Claimant’s argument unpersuasive because, as we discussed in the Stryker Final Order, Congress considered but ultimately failed to include statutory language that would have allowed the Commission to pay awards for information that the Commission had received prior to the enactment of Dodd-Frank if that information could have been the basis for an award under the repealed award program. See Wall Street Reform and Consumer Protection Act of 2009, H.R. 4173, 111th Cong. § 7205(b) (as passed by House Dec. 11, 2009) (information deemed original information “provided such information was submitted after the date of enactment of this subtitle, or related to insider trading violations for which a bounty could have been paid at the time such information was submitted.”) (emphasis added).

[5] Finally, we decline the Claimant’s invitation that we hold ** award application in abeyance and initiate a new rulemaking to permit the Commission to pay awards based on information submitted before the Dodd-Frank Act. A response to a preliminary determination is not an appropriate vehicle to petition for a rulemaking change and to the extent that the Claimant wishes to make such a request, Claimant must follow the established procedures. See 17 C.F.R. § 201.192. Further, we decline to delay the final resolution of this award application to allow the Claimant to belatedly file such a rulemaking petition given that the Commission’s position has been clear since our final rules were adopted in May 2011 and Claimant could therefore have years earlier filed a rulemaking petition but did not do so.

SEC

80596

05/04/2017

On September 30, 2015, the Claims Review Staff (“CRS”) issued Preliminary Determinations related to Covered Actions [Redacted] (collectively, the “Covered Actions”).[fn1] The Preliminary Determinations recommended that [Redacted] (“Claimant”) be denied an award in the Covered Actions.[fn2] Claimant submitted a timely written response to the Preliminary Determinations.

For the reasons set forth below, Claimant’s award claims are denied.

I. Background.

A. The Covered Actions.

[Redacted].

B. Claimant’s information and tips.

On [Redacted] staff from the [Redacted] contacted Commission Enforcement staff to advise that they had recently met with Claimant. *** staff told Enforcement staff that the Claimant stated that *** had notified the Commission in [Redacted] that a specified individual was engaging in misconduct in connection with [Redacted]. *** requested that Enforcement staff search for the tip. Enforcement staff searched internally and failed to find any tips from Claimant related to the *** [Redacted] that were under investigation. Prior to *** contact in [Redacted] Enforcement staff was unaware of Claimant or any information *** purportedly provided about [Redacted]. Moreover, no one from the investigative staff thereafter contacted Claimant, nor did Enforcement staff participate in any of the meetings that Claimant had with *** or any other federal agencies at any point.

On [Redacted] Claimant addressed a letter to the then Chair of the Commission.[fn3] The letter referenced a tip Claimant purportedly sent to the Commission in *** regarding *** [Redacted] and noted that [Redacted]. Claimant also noted in the letter that Claimant had recently spoken with staff from [Redacted] regarding the *** tip. Critically, the letter was not provided to the Enforcement staff handling the investigations that resulted in the Covered Actions nor otherwise used in connection with the investigations.

On [Redacted] (after [Redacted] Covered Actions were completed), Claimant submitted a written tip on Form TCR to the Commission. This TCR was forwarded by the Commission’s Office of Market Intelligence —the office within the Commission that is responsible for the initial processing of tips — to one of the principal Enforcement attorneys responsible for the Covered Actions. The tip stated that [Redacted]. (As noted above, contrary to Claimant’s contention, the administrative record demonstrates that Commission staff did not participate in any meetings with the Claimant) .

The Enforcement attorney closed the tip with a disposition of “no further action” planned (or “NFA”).[fn4] The attorney did so because, at this point, the staff had already completed the specific investigation relating to [Redacted] and was finalizing with the company the terms of a draft settlement for consideration by the Commission. The outstanding issues at that point concerned the exact amount of monetary sanctions to be paid [Redacted] and none of the information from the TCR was used in any manner in reaching the settlement.

On [Redacted] Claimant filed a supplement to [Redacted] TCR. This supplement was forwarded to the same Enforcement attorney who had reviewed the earlier [Redacted] TCR and that attorney determined that the additional information did not warrant a change in the NFA disposition of the tip. This communication post-dated all of the Covered Actions and, thus, none of the information contained in the supplement could have been used in connection with the Covered Actions.

C. Claimant’s award application and the preliminary determination.

Claimant timely submitted award applications for the Covered Actions.

On September 30, 2015, the CRS issued Preliminary Determinations recommending that Claimant’s award claims be denied on two separate grounds. First, any information Claimant provided prior to July 21, 2010, the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), does not qualify as “original information” within the meaning of Rule 21F-4(b)(iv) of the Exchange Act.[fn5] Such information therefore could not be the basis for an award.

Second, the submissions that the Claimant made to the Commission after the enactment of the Dodd-Frank Act did not lead to the successful enforcement of the Covered Actions. Specifically, these submissions did not cause the Commission to open the investigations (or inquire into different conduct as part of a current Commission investigation), nor did Claimant’s submissions significantly contribute to the success of the subsequent enforcement actions. See Section 21F(b)(1) of the Exchange Act, and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

D. Claimant’s response.

On February 16, 2016, Claimant filed a timely written response contesting the Preliminary Determinations.[fn6] In it, Claimant does not appear to argue that any information that Claimant submitted prior to July 21, 2010 could serve as the basis for an award. Nor does the Claimant appear to argue that the tip that Claimant submitted on Form TCR in [Redacted] (and which Claimant supplemented in [Redacted] led to the success of the Covered Actions.

Rather, Claimant argues that the Preliminary Determinations were incorrect because, in Claimant’s view, they failed to consider whether the information that the Claimant provided during Claimant’s meeting on [Redacted] (and in follow-up meetings thereafter) with [Redacted] was subsequently shared by those agencies with the Commission’s Enforcement staff and, in turn, whether that information led to the success of the Covered Actions. In advancing this argument, Claimant argues that Claimant should be considered the “original source” under Exchange Act Rule 21F-4(b)(5) of any of Claimant’s information that might have been shared by the other government agencies with the Commission’s Enforcement staff. Relatedly, Claimant argues that the administrative record is incomplete on this factual issue and that the Commission is obligated to obtain information and declarations from the relevant staff at these other government agencies to understand whether and to what extent these other government agencies might have shared with the Commission information for which Claimant was the original source.

II. Analysis.

We first apply this standard to the tips that the Claimant made directly to the Commission and find that none of them can serve as the basis for an award. With respect to any tips that the Claimant may have provided before July 21, 2010, our rules unambiguously provide that these tips could not be the basis for an award because any information contained therein would not constitute “original information. ” With respect to the Claimant’s [Redacted] letter to the Commission’s Chair and the Form TCR that the Claimant provided in [Redacted] (and supplemented in [Redacted] we find that the administrative record demonstrates that these submissions were not used in any way by the Enforcement staff and, thus, these submissions did not lead to the success of the Covered Actions.[fn7]

That still leaves the question whether any information that the Claimant may have provided to [Redacted] and other federal agencies in [Redacted] and in any follow-up meetings thereafter, could serve as the basis for an award. Following Claimant’s response contesting the Preliminary Determinations, staff adduced additional record evidence conclusively showing that any information that Claimant may have provided to the other government agencies in [Redacted] *** could not have led to the success of the Covered Actions. Investigative staff responsible for the Covered Actions contacted staff at [Redacted] who Claimant identified as having attended their [Redacted] meeting, and [Redacted] staff confirmed that, beyond asking the Commission staff to locate the Claimant’s purported *** tip, they did not share, directly or indirectly, any information provided by Claimant with Commission staff. As such, any information provided by Claimant to these other federal agencies could not have had any impact on the Covered Actions.[fn8] Accordingly, we find that none of Claimant’s information that the Claimant shared with [Redacted] led to the success of the Covered Actions.[fn9]

III. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claims be, and hereby are, denied.[fn10]

By the Commission.

[1] We have administratively consolidated these *** matters for purposes of processing the award applications.

[2] The CRS also preliminarily determined to recommend that the claim submitted by a second applicant, [Redacted] be denied. That second claimant did not submit a response contesting the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e). As such, the Preliminary Determination as to the second claimant has become the Final Order of the Commission, in accordance with the provisions of Rule 21F-10(f).

[3] Claimant appears to have also sent copies of this letter to the Commission’s Secretary and a Commissioner.

[4] A disposition of NFA generally means that no further action is planned with respect to that tip unless subsequent information leads staff to reopen, or re-examine, the tip.

[5] See Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[6] Claimant appears to suggest in Claimant’s response that Claimant may have somehow been prejudiced in responding to the Preliminary Determinations because two sentences in a staff declaration were redacted in the administrative record that was provided to Claimant. We have reviewed the redacted sentences and find that they have no material bearing on the Claimant’s potential eligibility for an award. Both redacted sentences relate to events that occurred in the period between [Redacted] , which is a period that our whistleblower program does not cover.

[7] We also find that the administrative record demonstrates that the [Redacted] letter does not contain any original information about a potential securities law violation. By the Claimant’s own concession, the information about potential securities law violations that was contained in the [Redacted] letter was not new, but rather merely restated information that the Claimant says Claimant provided to the Commission in *** .

[8] In Claimant’s response to the Preliminary Determinations, Claimant argued that the then-existing administrative record was incomplete regarding whether [Redacted] shared Claimant’s information with the Commission staff. Claimant further asserted that, before the Commission issues its final determination, the Claimant should be permitted to review a full record that includes such information. We do not agree. We note that our whistleblower rules, which were adopted through notice-and-comment rulemaking, do not provide for such a step. Moreover, we find that the Claimant has not made a compelling case for departing from our rules to afford this additional procedural opportunity here, particularly given that [Redacted] staff who Claimant identified as having attended the [Redacted] meeting firmly stated that they did not provide the Claimant’s information to the Commission’s staff.

[9] Although not a basis for our decision, we note that Claimant likely would have been procedurally barred from obtaining an award based on any information that either [Redacted] might have shared had they in fact done so. Specifically, for an individual to qualify for an award based on information that he or she provides, our whistleblower rules require that the individual must provide his or her tip directly to the Commission and he or she must do so in accordance with the requirements of Exchange Act Rule 21F-9. Among other things, Rule 21F-9 requires that tips provided to the Commission before the effective date of the whistleblower rules (i.e., August 12, 2011) must be provided in writing; and for any tip submitted on or after the effective date, the tip must be submitted through the Commission’s online portal or on Commission Form TCR. If the Commission receives an individual’s information in another manner or through another source (such as another federal government agency), the individual will generally not be able to recover an award for that information. But see Exchange Act Rule 21F-4(b)(7) (If an individual submits his or her tip to another federal agency, and that agency then shares the information with the Commission before the individual comes to us with that information, the Commission, in considering an award application from that individual, will treat the information as though it had been submitted to us directly from the individual at the same time that it was submitted to the other agency, provided that the individual submitted that same information to the Commission no later than 120 days after the individual first went to the other government agency.). Among other things, failure to submit information to the Commission in accordance with the whistleblower rules discussed above means that the individual will generally not qualify as a “whistleblower” (as defined in Exchange Act Rule 21F-2(a)) with respect to the information the Commission received and used.

[10] Because Claimant does not qualify for an award in a Commission covered action, Claimant’s request for an award in connection with certain related actions is denied. We may make an award in a related action only if a claimant receives an award in a Commission covered action. See Exchange Act Rule 21F-11(a).

SEC

80571

05/02/2017

Further, the Claims Review Staff recommended that Claimant’s award be set in the amount of [Redacted] percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which will yield an award of more than $500,000. In reaching this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.

Conclusion.

By the Commission.

SEC

05/02/2017

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received two whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated both of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

Claimant 2 [Redacted].

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn1]

By: Claims Review Staff.

[1] The following facts derived from the administrative record support this determination. First, when Claimant 2 submitted *** tip, the investigation that resulted in the Covered Action had already been ongoing for nearly two years. Second, as demonstrated by both the staff declaration from a member of the Enforcement team handling the investigation and the Commission’s computer system that records where tips are assigned once they are submitted, Claimant 2’s tip was not provided to the investigative staff handling the ongoing investigation nor was the investigative staff made aware of the tip at any time prior to the resolution of the Covered Action. Third, although Claimant 2’s tip did concern [Redacted] the allegations in the tip did not relate to the misconduct that was the subject of the Commission’s ongoing investigation or the violations that were the basis for the resulting Covered Action.

SEC

80521

04/25/2017

On March 3, 2017, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action [Redacted] which was issued in connection with the above-referenced enforcement action (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Further, the CRS recommended that such award be set in the amount of [Redacted] percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which will equal an award of almost $4 million. In arriving at this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.

On March 3, 2017, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e).

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the CRS is adopted. The record demonstrates that Claimant has satisfied the criteria for a whistleblower award. Claimant’s detailed and specific information caused staff to open the investigation, and thereafter, Claimant provided extensive useful ongoing assistance, including industry-specific knowledge and expertise, that allowed the Commission to efficiently investigate and bring the underlying action with fewer resources.

Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in this Covered Action.[fn1]

By the Commission.

[1] A portion of the monetary sanctions imposed in the Covered Action was “deemed satisfied” by payment of that amount to another governmental authority; this governmental authority is not one of the specifically enumerated authorities listed in Exchange Act Rule 21F-3(b)(1). As the Commission has previously explained, “[w]e interpret Section 21F(b)(1) of the Exchange Act, which provides for payment of awards based on ‘what has been collected of the monetary sanctions’ imposed in a Commission Covered Action, to include amounts that are deemed satisfied when collected in actions brought by other governmental authorities.” Order Determining Whistleblower Award Claim, Exchange Act Release No. 72301 (June 3, 2014).

SEC

80115

02/28/2017

On June 15, 2016, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Further, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of the Claimant’s application to recommend that the award be set at twenty percent (20%) of the monetary sanctions collected or to be collected in the Covered Action.
In making this preliminary award assessment, the Claims Review Staff reduced the award below from what it might otherwise have been because of both the Claimant’s culpability in connection with the securities law violations at issue in the Covered Action and the Claimant’s unreasonable delay in reporting the wrongdoing to the Commission. The Claimant did not submit a response challenging the Preliminary Determination.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of twenty percent (20%) of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

SEC

02/18/2017

In response to the above-referenced Notice of Covered Action. the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (Claimant).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the Exchange Act) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to the Claimant. The basis for this determination is as follows:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn1]

By: Claims Review Staff.

[1] In support of this conclusion, we note that the record firmly demonstrates that none of the information provided to the Commission by the Claimant was provided to the staff responsible for the Covered Action, and that the Covered Action staff never reviewed or used any of the Claimant’s information in successfully prosecuting the Covered Action.

SEC

01/23/2017

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from the following individuals (collectively, the “Claimants”):

[Redacted].

[Redacted] (Claimant 2).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny both of the above award claims. The basis for this determination is as follows:

Neither [Redacted] nor Claimant 2 provided information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because they did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn1]

By: Claims Review Staff.

[1] The record demonstrates that neither the information provided by [Redacted] nor the information provided by Claimant 2 was used either to advance the investigation or to shape the [Redacted] settlement, and their information did not otherwise contribute to the successful conclusion of the [Redacted] Matter.

[Redacted].

With respect to Claimant 2’s information, upon reviewing it the staff handling the [Redacted] investigation determined that the allegations contained therein did not warrant any follow-up or other investigative steps because the information was generally duplicative of the information that the Commission had already received from [Redacted] as part of the company’s earlier self-reporting and/or did not rise to the level of warranting any further investigative efforts on the staff’s part given what the staff had already learned directly from [Redacted].

SEC

79853

01/23/2017

On December 7, 2016, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant #1”) receive a whistleblower award, and [Redacted] (“Claimant #2”) and [Redacted] (“Claimant #3”) receive a joint whistleblower award because Claimant #1, individually, and Claimant #2 and Claimant #3, jointly, voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Further, the Claims Review Staff recommended that such awards be set in the amounts of [Redacted] percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Action for Claimant #1, which will yield an award of more than $4 million; and [Redacted] percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Action for Claimant #2 and Claimant #3, which will yield a joint award of more than $3 million. In reaching this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of the claimants’ applications. On December 8, 2016, Claimant #1, Claimant #2, and Claimant #3 each provided written notice to the Commission of their decisions not to contest the Preliminary Determination.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f), (h), the Preliminary Determination of the Claims Review Staff is adopted, including the award determinations. The record firmly demonstrates that the claimants have satisfied the criteria for awards. Claimant #1, an outsider, was a primary cause of the staff’s investigation into an investment scheme that defrauded hundreds of investors, many of whom were unsophisticated. Claimant #2 and Claimant #3, acting jointly, voluntarily provided new information to the Commission that significantly contributed to the success of the Covered Action.

Accordingly, it is hereby ORDERED that Claimant #1 shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order; and Claimant #2 and Claimant #3 shall receive a joint award of [Redacted] percent [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.[fn1]

By the Commission.

[1] Unless Claimant #2 and Claimant #3, 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 two of them, the Office of the Whistleblower is directed to pay each of them individually 50% of their joint award.

SEC

79747

01/06/2017

On October 28, 2016, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).[fn1] Although Claimant did not comply with Exchange Act Rule 21F-9(d)—an omission which might normally require an award denial—the CRS recommended that the Commission waive that rule here given certain highly unusual circumstances.[fn2]

Further, the CRS recommended that such award be set in the amount of [Redacted] percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which will equal an award of more than $5.5 million. In reaching this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application. On November 1, 2016, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted.[fn3] Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] Of particular note, Claimant reported to the Commission while still employed with the company that was the subject of the Covered Action, and thereafter provided critical information that helped end an on-going fraud that preyed predominantly on a more vulnerable investor community.

[2] Rule 21F-9(d) requires that an individual must have provided original information “in writing” to the Commission in order for that information to be a basis for a whistleblower award if the information was first submitted to the Commission during the interim period between the enactment of the whistleblower program—i.e., July 21, 2010, when the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) was signed into law—and the effective date of the Commission’s whistleblower rules.

[3] We concur with the CRS’s recommendation that we exercise our discretionary authority to waive the Claimant’s non-compliance with Rule 21F-9(d). See Section 36(a) of the Exchange Act. We find that it is appropriate in the public interest and consistent with the protection of investors to do so in this matter given a number of highly unusual circumstances, including the following: (1) the Commission’s staff was already actively working with the Claimant before the enactment of the Dodd-Frank Act, and, in such circumstances, we believe that it would have been counter-productive and unreasonable to require that the Claimant revert to providing information to the Commission staff in writing; (2) the Claimant provided the new post Dodd-Frank Act information in the format that the Enforcement staff expressly requested, namely [Redacted] and (3) the indicia of reliability and the certainty as to the time that the information was provided, which are principle policy rationales underlying the Rule 21F-9(d) writing requirement, are clearly satisfied in the context of this claim because it is undisputed that [Redacted].

SEC

79604

12/19/2016

On July 13, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action [Redacted] and recommended that the award application submitted by [Redacted] (“Claimant 1”) be denied.[fn1] On May 4, 2016, the CRS issued a second Preliminary Determination (“Supplemental Preliminary Determination”) related to Notice of Covered Action [Redacted] in which it recommended that the untimely award application submitted by [Redacted] (“Claimant 2”) be denied.

For the reasons stated below, the award claims of Claimant 1 and Claimant 2 are denied.

I. Background.

On [Redacted] the Commission instituted [Redacted] proceedings (the “Covered Action”) against [Redacted] (“Covered Action Respondent”). The Commission found that the Covered Action Respondent violated various provisions of the Securities Exchange Act of 1934 (“Exchange Act” ). Among other sanctions, Covered Action Respondent was ordered to pay [Redacted].

On [Redacted] the Commission’s Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. The Notice of Covered Action expressly stated that an application for an award submitted on Form WB-APP must be completed and returned to the OWB no later than [Redacted]. Claimant 1 filed a timely whistleblower award claim with OWB. Claimant 2, by contrast, did not file *** whistleblower award claim with OWB until nine months after the deadline announced in the Notice of Covered Action posting and more than three months after the CRS had issued the Preliminary Determination recommending the denial of Claimant 1’s award application.

II. Preliminary Determinations and Responses.

A. Claimant 1.

On July 13, 2015, the CRS preliminarily determined to deny Claimant 1’s award application because Claimant 1 did not provide information that led to the successful enforcement of the Covered Action. The CRS preliminarily found that Claimant 1’s information did not cause the Commission to open its investigation (or inquire into different conduct as part of a current Commission investigation), nor did Claimant 1’s information significantly contribute to the success of the subsequent enforcement action. See Section 21F(b)(1) of the Exchange Act, and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

On July 29, 2015, Claimant 1 submitted a timely written response contesting the Preliminary Determination, which Claimant 1 then supplemented by another written response dated September 8, 2015.[fn2] In *** responses, Claimant 1 reiterates the information that *** had previously provided to the Commission and asserts without any factual support that this information significantly contributed to the success of the Covered Action.[fn3]

B. Claimant 2.

On May 4, 2016, the CRS preliminarily determined to deny Claimant 2’s award application on three separate grounds:

Claimant 2 failed to submit *** claim for award on Form WB-APP within the requisite deadline set out in the Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act, 17 C.F.R. § 240.21F-10(b);

Claimant 2 did not provide information that led to the successful enforcement of the Covered Action in that Claimant 2’s information did not cause the Commission to open its investigation (or inquire into different conduct as part of a current Commission investigation) nor did the information significantly contribute to the success of the subsequent enforcement action; and

Claimant 2 failed to submit *** information about a possible securities law violation in the form and manner required by Exchange Act Rules 21F-8(a) and 21F-9 to be eligible for an award.

On July 5, 2016, Claimant 2 submitted a timely response contesting the Supplemental Preliminary Determination.[fn4] Claimant 2’s response outlines the information Claimant 2 had sent the Commission about the Covered Action Respondent and asserts (without relevant factual support) that this information led to the opening of the investigation and significantly contributed to the success of the Covered Action. Claimant 2’s response also asserts both that Claimant 2 did not submit *** award application after the deadline announced in the posted Notice of Covered Action and that Claimant 2’s information was submitted in the form and manner required under the applicable rules.

III. Analysis.

To qualify for an award under Section 21F of the Exchange Act, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered action. 15 U.S.C. § 78u-6(b)(1). As relevant here, original information “leads to” the success of a covered action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the covered action. Exchange Act Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

We find that neither Claimant 1 nor Claimant 2 submitted information that led to the successful enforcement of the Covered Action. First, the record conclusively demonstrates that the tips submitted by both Claimants were closed by the Office of Market Intelligence (“OMI”), the office within the Division of Enforcement that is responsible for conducting the initial review of tips. The tips were assigned a disposition of no further action (or “NFA”)[fn5] and were not forwarded to the Enforcement staff responsible for the investigation that led to the Covered Action (or to any other Enforcement staff outside of OMI). Second, the investigative staff confirmed that they do not know either Claimant 1 or Claimant 2, have had no communications with either of them, and did not receive any information from either Claimant 1 or Claimant 2 before or during the course of their investigation, or at any time prior to the filing of the Covered Action.

Because the record demonstrates that neither Claimant’s information led to the successful enforcement of the Covered Action and neither Claimant has shown otherwise in their respective requests for reconsideration, we deny both Claimant 1’s and Claimant 2’s applications for awards on that ground.

In addition, we deny Claimant 2’s award application on two additional, independent grounds.

First, Claimant 2 did not submit *** information about a potential securities law violation on a Form TCR, nor did Claimant 2 submit it through the TCR online portal. As such, Claimant 2 failed to submit *** information in the form and manner required by Exchange Act Rules 21F-8(a) and 21F-9, 17 C.F.R. §§ 240.21F-8(a) and (9), to be eligible for an award. 6 In this regard, we note that following receipt of *** tip, OWB on June 3, 2013 sent Claimant 2 a letter advising *** of the requirement under the whistleblower rules that *** must submit a signed Form TCR in order to be considered for a future whistleblower award. Claimant 2 failed to respond to OWB’s letter by promptly filing the necessary signed Form TCR.

Second, as noted, Claimant 2’s award claim was submitted nine months after the deadline announced in the Notice of Covered Action posting and more than three months after the CRS issued its Preliminary Determination denying Claimant 1’s claim. Exchange Act Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a), requires claimants to file a claim for an award within ninety (90) days of the publication of the Notice of Covered Action on the Commission’s website, or “the claim will be barred.” Exchange Act Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b), further provides that to file a claim for a whistleblower award, a claimant must file his or her award application on Form WB-APP with OWB “within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award.” The record conclusively demonstrates that Claimant 2 failed to file a timely Form WB-APP. In Claimant 2’s response contesting the Supplemental Preliminary Determination, Claimant 2 references an award application on Form WB-APP that Claimant 2 filed in October 2014, but this award application was for a different covered action involving the Covered Action Respondent. Claimant 2 appears to have mistaken two different covered actions and believes, incorrectly, that *** October 2014 award claim submission was for the Covered Action when, in fact, it was for a different unrelated enforcement action [Redacted] (NoCA [Redacted] *** . We thus find that Claimant 2 failed to timely submit *** claim for the Covered Action as required by Exchange Act Rules 21F-10(a) and (b), 17 C.F.R. § 240.21F-10(a) and (b).[fn7]

IV. Conclusion.

Accordingly, it is ORDERED that the whistleblower award claims of Claimant 1 and Claimant 2 are denied.

By the Commission.

[1] The Preliminary Determination also recommended denying an award to three other claimants. Those determinations were not contested and, thus, the CRS’s recommendation to deny those award applications became final pursuant to Rule 21F-10(f) under the Securities Exchange Act of 1934.

[2] There are several procedural matters in connection with Claimant 1’s reconsideration motion that we think it appropriate to address. First, Claimant 1 failed to enter into a confidentiality agreement with OWB regarding the non-public documents comprising the administrative record and, thus, we find that Claimant 1 forfeited any right to receive any non-public materials upon which the Preliminary Determination was based. See Rules 21F-8(b)(4) and 12(b) (authorizing the OWB to require a claimant to enter into a confidentiality agreement regarding non-public materials that comprise the administrative record) . Second, Claimant 1 has requested a meeting with the Commission, which we construe as a request for oral argument. We are denying that request because we find that oral argument would not benefit the Commission’s consideration of Claimant 1’s award application.

[3] Claimant 1’s responses also include various statements that appear to have no bearing on whether Claimant 1’s information led to the success of the Covered Action.

[4] Claimant 2 failed to enter into a confidentiality agreement with OWB regarding the non-public documents comprising the administrative record and, thus, we find that Claimant 2 forfeited any right to receive any non-public materials upon which the Supplemental Preliminary Determination was based. See Rules 21F-8(b)(4) and 12(b) (authorizing the OWB to require a claimant to enter into a confidentiality agreement regarding non-public materials that comprise the administrative record) .

[5] When a tip is designated “NFA” by OMI, this means both that the tip was not provided to any Enforcement or other Commission staff for further action–i.e., the information was deemed to be insufficient to initiate an inquiry, investigation, or examination and was deemed not to be useful to any ongoing investigation or examination. Further, when a tip is designated NFA, this signifies that no further steps will be taken in connection with the tip unless subsequent information leads to a reopening or reexamination of that tip.

[6] Rule 21F-8(a) requires that, in order to be eligible for a whistleblower award, a whistleblower “must give the Commission information in the form and manner that the Commission requires,” specifically referencing the TCR submission procedures set out in Rule 21F-9.

[7] We note that Claimant 2 has failed to show any “extraordinary circumstances” to explain either of the procedural failures. We require evidence of extraordinary circumstances that explains a procedural failure before we will consider exercising our discretion to excuse a late filing or other procedural requirement.

SEC

79517

12/09/2016

On October 28, 2016, the Claims Review Staff issued a Preliminary Determination related to Notices of Covered Actions [Redacted] (the “Covered Actions”).[fn1] The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Actions pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Further, the Claims Review Staff recommended that such award be set in the amount of [Redacted] percent [Redacted] of the monetary sanctions collected or to be collected in the Covered Actions, which will equal an award of more than $900,000. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application. On October 31, 2016, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e).

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in the Covered Actions, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] These Covered Actions were consolidated for purposes of an award determination under Exchange Act Rule 21F-10 because the Claims Review Staff found that they were [Redacted]. For this reason, it is appropriate to process the two matters together.

SEC

79464

12/05/2016

I. Introduction.

On [Redacted], the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to [Redacted] Making Findings, and Imposing Remedial Sanctions and a Cease-And-Desist Order in [Redacted] Securities Exchange Act Release No. [Redacted] (the “Covered Action”). Because the monetary sanctions imposed on Respondents [Redacted] (collectively, “the Respondents”) exceeded the statutory threshold for a potential whistleblower award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. The Commission subsequently received several award applications in response.

On [Redacted] the Claims Review Staff (“CRS”) issued a Preliminary Determination addressing each of the award claims. As relevant here, the Preliminary Determination recommended that [Redacted] (“Claimant 1”) receive a whistleblower award of [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which will constitute an award of $3.5 million. As also relevant here, the Preliminary Determination recommended that the award application submitted by [Redacted] (“Claimant 2”) be denied on two alternative grounds: (1) Claimant 2 did not provide any information that led to the successful enforcement of the Covered Action, and (2) Claimant 2 failed to submit an award application by the award application deadline. Only Claimant 2 timely contested the Preliminary Determination.[fn1]

For the reasons stated below, we fully adopt the recommendations of the CRS with respect to Claimant 1 and Claimant 2.

II. Claimant 1’s claim is approved.

Based on the underlying record, we have determined to adopt the award recommendation of the CRS that Claimant 1 receive an award in the amount of [Redacted] of the monetary sanctions collected or to be collected in the Covered Action. Further, our assessment of the appropriate award is based exclusively on the award factors that are specified in Exchange Act Rule 21F-6, 17 C.F.R. § 240.21F-6.

III. Claimant 2’s claim is denied.

As noted above, Claimant 2 submitted a response contesting the Preliminary Determination (hereinafter, “Response”) in which Claimant 2 makes two arguments challenging the preliminary denial. First, Claimant 2 points to the information Claimant 2 provided to the Commission about the Respondents and argues that this information “should have caused an investigation.[fn2] Second, Claimant 2 argues that the Commission should have contacted Claimant 2 “to give directions for applying for any action other than posting it on a new section of the [Commission’s] website.” We address both of these contentions in turn below.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action. 15 U.S.C. § 78u-6(b)(1). As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action. Exchange Act Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

Notwithstanding Claimant 2’s assertion that Claimant 2’s information should have led to an investigation, the record in this matter conclusively demonstrates that none of the information Claimant 2 submitted led to the successful enforcement of the Covered Action. Specifically, the record demonstrates that none of the tips that Claimant 2 submitted to the Commission were provided to the investigative staff responsible for the Covered Action. With one exception, each of Claimant 2’s tips were designated for “no further action” (“NFA”) by the Commission’s Office of Market Intelligence (“OMI”) – the Commission’s office within the Division of Enforcement that is responsible for the initial intake review of whistleblower tips – and were not provided to investigative staff for further inquiry or for use in connection with any Commission investigation.[fn3] With respect to the only tip submitted by Claimant 2 that was not designated NFA, the record is clear that this tip was not referred to the staff investigating the Covered Action. As explained in a declaration provided by an Enforcement attorney overseeing the investigation and settlement of the Covered Action, at no point prior to the settlement did any of the staff members assigned to the matter have any contact with, or receive any information from, Claimant 2.

Turning to the untimeliness of Claimant 2’s award application, we note at the outset that Claimant 2 does not dispute the finding in the Preliminary Determination that the award application was submitted after the deadline had passed. Instead, as noted above, Claimant 2 contends that the Commission should have provided Claimant 2 with actual notice of the Covered Action posting. We reject this contention, as we have done on two prior occasions in final orders.[fn4] The Commission’s rules, which were adopted through notice-and-comment rulemaking, clearly provide for constructive, not actual, notice of the posting of a covered action. Specifically, Rule 21F-10(a)(1) states that “[w]henever a Commission action results in monetary sanctions totaling more than $1,000,000, the Office of the Whistleblower will cause to be published on the Commission’s website a “Notice of Covered Action.” 17 C.F.R. § 240.21F-10(a)(1).⁵ As we explained in our release accompanying the adoption of the whistleblower rules, this constructive notice procedure “provides the best mechanism to provide notice to all whistleblower claimants who may have contributed to the action’s success.”[fn6] Moreover, our experience to date in the administration of our whistleblower program has confirmed that our constructive notice procedure is a workable, productive, and fair mechanism for ensuring that individuals interested in making a timely whistleblower award claim receive appropriate notice of the deadline for submitting an award application.[fn7] We thus find that because the Covered Action was posted on the Commission’s website along with the filing deadline, Claimant 2 received proper notice under Rule 21F-10(a)(1) and nothing more was required of the agency or the staff.[fn8] Moreover, the consequence of Claimant 2’s failure to timely submit an application is clear. As Rule 21F-10 unambiguously states, an award application that is not received by OWB within ninety (90) calendar days of the date of the Notice of Covered Action “will be barred.” Accordingly, Claimant 2’s failure to submit an application before the deadline provides an additional grounds for denying Claimant 2’s award application.[fn9]

IV. Conclusion.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order. It is FURTHER ORDERED that Claimant 2’s whistleblower award claim be denied.

By the Commission.

[1] The Preliminary Determination also recommended that a whistleblower award claim filed by a third claimant be denied. This claimant did not seek reconsideration of the Preliminary Determination and, therefore, the Preliminary Determination as to that claimant became the final order of the Commission pursuant to Exchange Act Rule 21F-10(f).

[2] Specifically, Claimant 2 states that *** provided “an article written from a press release from NASDAQ, printed in a SIFMA [Securities Industry and Financial Markets Association] magazine,….” Although not a basis for our decision, we note that Claimant 2 would not be entitled to an award for merely providing the Commission with publicly available information. See Exchange Act Rule 21F-4(b)(1) – (2), 17 C.F.R. § 240.21F-4(b)(1) – (2) (defining “original information” and “independent knowledge”).

[3] An NFA disposition indicates that OMI will not take any additional steps with respect to a tip unless subsequent information leads OMI to reopen or reexamine that tip.

[4] See In the Matter of the Claim for Award in connection with [Redacted] Notice of Covered Action [Redacted] Exchange Act Rel. No. [Redacted] (Mar. 14, 2016) (the [Redacted] Matter); In the Matter of the Claim for Awards in connection with [Redacted], Notice of Covered Action [Redacted] Exchange Act Rel. No. 72659 (July 23, 2014).

[5] Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Exchange Act Rel. No. 64545 (May 25, 2011) at *171, available at http://www.sec.gov/rules/final/2011/34-64545.pdf.

[6] As we explained in the [Redacted] Matter, “[a] potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim.”

[7] Even assuming for argument’s sake that actual notice were required (or otherwise appropriate) in certain circumstances, we would still reject Claimant 2’s arguments in this matter. Simply stated, there is no reason why OWB would have provided Claimant 2 with actual notice to apply for an award in this matter because Claimant 2’s information did not contribute in any way to the Covered Action – and indeed the investigative staff did not receive any information from Claimant 2 prior to the settlement. Thus, OWB would have had no basis to believe that Claimant 2 should have been provided with actual notice to apply for an award.

[8] See https://www.sec.gov/about/offices/owb/owb-awards.shtml.

[9] Rule 21F-8(a) affords us discretionary authority to “waive any of these procedures based upon a showing of extraordinary circumstances.” But Claimant 2 has provided no explanation for the failure to file before the deadline other than that OWB failed to notify Claimant 2 of the Covered Action posting. This contention does not qualify as an extraordinary circumstance that might qualify for exemptive relief under Rule 21F-8(a).

CFTC

11/15/2016

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award application of [Applicant], filed on Form WB-APP ___ referenced above.

Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165 (2015)), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied.

In accordance with 7 U.S.C. § 26(f) (2012) and 17 C.F.R. § 165.13 (2015), if you wish to appeal this Final Commission Determination and Order, you must appeal to the appropriate court of appeals of the United States not more than 30 days after this Final Order of the Commission is issued.

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Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) is the whistleblower award claim of [Applicant], filed on Form WB-APP ___.

FACTUAL OVERVIEW: The Commission issued an order, ___ against ___ on ___. The investigation for that matter began in ___. Applicant submitted ___ TCR to the Commission on ___. Enforcement staff provided a declaration that stated that the information in Applicant’s TCR did not suggest any new lines of inquiry, and Applicant’s information was not used in connection with the underlying investigation, nor did it contribute to the resolution of the investigation.

IT IS HEREBY DETERMINED that: Applicant’s award application is denied because Applicant did not provide information that caused Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation, or lead or contribute to the successful enforcement of the Commission’s covered judicial or administrative action, as required by section 23(b)(1) of the Commodity Exchange Act (7 U.S.C. § 26(b)(1)) and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules (17 C.F.R. §§ 165.2(i), 165.5(a)(3)).

The denial of Applicant’s whistleblower award application is without prejudice to any other award application submitted by Applicant, including applications submitted in the future, regarding other covered judicial or administrative actions or related actions.

SEC

79294

11/14/2016

In response to Notice of Covered Action [Redacted] relating to [Redacted] (the “Covered Action”), the Commission received timely claims for whistleblower awards from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), and [Redacted] (“Claimant 3”).[fn1] On June 23, 2014, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant 1 receive a whistleblower award equal to [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, including any sanctions collected after the date of the Commission’s order. The Preliminary Determination also recommended that the award applications submitted by Claimant 2 and Claimant 3 be denied. All three Claimants filed timely responses contesting the Preliminary Determination.

After consideration of the administrative record, we choose to depart from the Preliminary Determination’s recommendation regarding Claimant 1, such that Claimant 1 will receive an award equal to [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which should equal a payout of at least $20 million. We, however, concur with the Preliminary Determination’s recommendation that Claimant 2’s and Claimant 3’s claims should be denied.

I. BACKGROUND.

On [Redacted] Claimant 1 submitted to the Commission information about a [Redacted]. This information caused staff in the [Redacted] (the “Covered Action Staff” ) to open the investigation that resulted in the Covered Action. In [Redacted], Claimant 1 provided additional information about [Redacted] of which the Covered Action Staff was previously unaware; this information assisted their investigation into the matters that resulted in the Covered Action.

On [Redacted], the Commission [Redacted] alleging that [Redacted] (collectively the “Defendants”) [Redacted].

On [Redacted], the Commission’s Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] to advise interested individuals that they could apply for a whistleblower award in connection with the Covered Action. As noted above, Claimant 1, Claimant 2, and Claimant 3 filed timely whistleblower award applications.

II. CLAIMANT 1’S CLAIM IS APPROVED.

A. Preliminary Determination.

The CRS preliminarily determined that Claimant 1 provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, 17 C.F.R. § 240.21F-3(a). The CRS also preliminarily determined to recommend that Claimant 1’s award be set in an amount equal to [Redacted] of the monetary sanctions collected or to be collected in the Covered Action. In arriving at this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant 1’s application.

B. Analysis.

Claimant 1 contested the amount of the Preliminary Determination’s award recommendation. In Claimant 1’s reconsideration submission, Claimant 1 seeks a larger award because of certain actions that Claimant 1 took after learning of the securities law violations.

Generally speaking, the factors that may increase an award focus on a claimant’s activities in whistleblowing to the Commission, to another appropriate law-enforcement or regulatory authority, or to an internal compliance system.[fn2] By contrast, the actions that Claimant 1 has identified in requesting a higher award were neither necessary to, nor reasonably in furtherance of, Claimant 1’s whistleblowing to the Commission; in our view, these actions are not the type of whistleblowing activities that Section 21F seeks to promote or that the Rule 21F-6 award criteria cover.[fn3]

Nonetheless, having engaged in a de novo review of the administrative record, we find that Claimant 1’s assistance to the Commission given the specific facts and circumstances of this case merits a [Redacted] upward adjustment to the award recommendation in the Preliminary Determination. Put simply, by promptly coming forward with information about the Defendants’ wrongdoing, and by subsequently alerting the Commission about [Redacted], Claimant 1 enabled the Commission to move quickly to shut down the [Redacted] and to obtain a near total recovery of investors’ funds—in excess of [Redacted]—before the Defendants could squander those monies.

Accordingly, Claimant 1’s request for an upward adjustment to Claimant 1’s award is hereby granted, and we hereby order that Claimant 1 receive [Redacted] of the monetary sanctions collected, or to be collected, in the Covered Action.

III. CLAIMANT 2’S AND CLAIMANT 3’S CLAIMS ARE DENIED.

A. Preliminary Determination.

In recommending a denial of Claimant 2’s and Claimant 3’s award applications, the Preliminary Determination explained that both of these claimants based their respective award claims, in part, on information provided to the Commission before July 21, 2010. Such information is not “original information, ” as that term is defined under Rule 21F-4(b)(1) of the Exchange Act, 17 C.F.R. § 240.21F-4(b)(1), because “original information” must be provided after the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”).[fn4] Further, with respect to certain of the information that Claimant 2 submitted after July 21, 2010, the Preliminary Determination explained that this information was not “original information, ” as that term is defined under Rule 21F-4(b)(1) of the Exchange Act, because such information was already known to the Commission.

Finally, the Preliminary Determination explained that none of the original information that the claimants made available to the Commission after the enactment of the Dodd-Frank Act led to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Exchange Act, and Rules 21F-3(a) and 21F-4(c) promulgated thereunder, 17 C.F.R. §§ 240.21F-3(a) and 240.21F-4(c).[fn5]

B. Analysis.

To qualify for an award, a claimant must provide original information to the Commission in the form and manner required by the Commission’s rules, and that original information must lead to the success of a covered action.[fn6] Neither Claimant 2 nor Claimant 3 has shown that the information that they are relying on to seek an award satisfies these requirements.

In our analysis below, we do not discuss any arguments that either Claimant 2 or Claimant 3 makes with respect to information that they submitted on or before July 21, 2010. We agree with the Preliminary Determination’s conclusion that such information would not constitute original information and, therefore, may not serve as the basis for an award. As a result, we focus only on the information that may have been received by the Commission after July 21, 2010, and find with respect to both Claimant 2 and Claimant 3 that neither provided original information that led to the success of the Covered Action.

1. Claimant 2.

On [Redacted], Claimant 2 submitted a written response contesting the Preliminary Determination. Claimant 2 raised two principal arguments, which we consider in turn below.

In Claimant 2’s response, Claimant 2 contends that Claimant 2’s involvement in the Covered Action was critical to its success and statements to the contrary by Covered Action Staff are inaccurate and incomplete. In advancing these arguments, Claimant 2 contests the chronology provided by the Covered Action Staff, points to an Inspector General’s report about the whistleblower program, and accuses the Commission of both engaging in a corrupt award deliberation process and misrepresenting its initial outreach efforts to Claimant 2 in response to Claimant 2’s whistleblower tip.

After careful consideration of the administrative record (which includes sworn statements by the Covered Action Staff) , we find that Claimant 2 did not provide original information that led to the successful enforcement of the Covered Action. Specifically, we find that the record demonstrates that certain of the information that Claimant 2 provided the Commission after July 21, 2010 was already known to the Commission, and thus it did not constitute original information; we also find that to the extent that Claimant 2 did provide the Commission with original information, this information did not lead to the success of the Covered Action. In reaching these determinations, we credit the statements in the sworn declarations provided by a Commission staff member (“Staff Member 1”) who had primary responsibility for the Covered Action Staff’s investigation from the outset of the investigation, regarding the chronology of events leading to the successful enforcement of the Covered Action; we find that Staff Member 1’s declarations provide a complete and persuasive accounting of the relevant events.[fn7] Moreover, while Claimant 2 has made a number of accusations challenging the credibility of the staff and the awards process, we are not persuaded that these claims have merit.

In Claimant 2’s response to the Preliminary Determination, Claimant 2 raises an additional argument related to Claimant 2’s award application concerning the sequence of events leading to the opening of the investigation that resulted in the Covered Action. We briefly recite the relevant facts, which are undisputed. On [Redacted], Claimant 2 submitted information to the Commission alleging certain misconduct by the Defendants. The information was forwarded to the Commission’s Office of Investor Education and Advocacy (OIEA) and a staff member from that office followed up by emailing Claimant 2 on [Redacted]. No response to that email was received and the tip was closed with no further action taken on it.

Claimant 2 argues that, had the Commission successfully contacted Claimant 2 in [Redacted] Claimant 2 would have provided the Commission with sufficient information to cause the opening of the investigation several months earlier than actually occurred. Claimant 2 further asserts that Claimant 2 is being penalized because the staff did not make other efforts to follow-up and that Claimant 2 should therefore receive an award. We do not agree. First, even if the OIEA staff had reached Claimant 2, any helpful information that Claimant 2 might have provided could have been received on or before July 21, 2010, and thus the Commission would be statutorily precluded from making an award based on that information.[fn8] Second, in this situation, both Section 21F and the rules promulgated thereunder require that Claimant 2’s original information must have actually “led to” the success of the Covered Action for Claimant 2 to be potentially eligible for an award.[fn9] Third, even if it were appropriate to consider a potential award for Claimant 2, we would not be inclined to depart from the “led to” requirement here because the administrative record is clear that after receiving Claimant 2’s tip, OIEA staff in fact contacted Claimant 2 at the email address that Claimant 2 had provided but OIEA staff never received a response.

Because Claimant 2 did not provide the Commission with original information that actually led to the successful enforcement of the Covered Action, Claimant 2’s claim is denied.

2. Claimant 3.

On [Redacted], Claimant 3 submitted a written response contesting the Preliminary Determination. In this request for reconsideration, Claimant 3 provided additional arguments and information to support Claimant 3’s claims that: (i) Claimant 3 discovered the Defendants’ [Redacted] during Claimant 3’s efforts in assisting Commission staff with another matter [Redacted]), which was being handled by an investigative team that was separate from the Covered Action Staff; 10 and (ii) Claimant 3 continually provided (both directly and [Redacted] documentation to the investigative staff handling [Redacted] evidencing the Defendants’ fraud as Claimant 3 obtained it.[fn11]

After careful consideration of the administrative record, including Claimant 3’s written response, we deny Claimant 3’s award application. We find that Claimant 3 is not entitled to an award because the record conclusively demonstrates that Claimant 3’s information did not lead to the successful enforcement of the Covered Action. Among the relevant considerations are the following. First, the record demonstrates that Claimant 3 did not communicate with the Covered Action Staff and that Claimant 3’s communications with the Commission after July 21, 2010 (the date the Dodd-Frank Act was enacted) were directed to the staff handling [Redacted]. Second, the record demonstrates that none of this information that was received from Claimant 3 was either forwarded by the staff handling [Redacted] to the Covered Action Staff or used by the Covered Action Staff. Third, the record demonstrates that the Covered Action Staff did not use any information that Claimant 3 may have [Redacted].[fn12]

Because Claimant 3’s information did not lead to the successful enforcement of the Covered Action, Claimant 3’s award claim is denied.[fn13]

IV. CONCLUSION.

Accordingly, it is ORDERED that Claimant 1 shall receive an award equal to [Redacted] of the monetary sanctions collected or to be collected in the Covered Action. It is also ORDERED that Claimant 2’s and Claimant 3’s whistleblower award claims are denied.

By the Commission.

[1] A fourth claimant submitted an award claim for this matter. However, this claimant’s application was not processed because this claimant had previously been permanently barred from submitting award applications as a result of numerous false and fictitious statements this claimant made in connection with earlier award claims.

[2] See, e.g., Exchange Act Rule 21F-6(a)(1) (“The Commission will assess the significance of the information provided by a whistleblower to the success of the Commission action or related action.”); Rule 21F-6(a)(2) (“The Commission will assess the degree of assistance provided by the whistleblower and any legal representative of the whistleblower in the Commission action or related action.”); Rule 21F-6(a)(3) (“The Commission will assess its programmatic interest in deterring violations of the securities laws by making awards to whistleblowers who provide information that leads to the successful enforcement of such laws.”); Rule 21F-6(a)(4) (“The Commission will assess whether, and the extent to which, the whistleblower and any legal representative of the whistleblower participated in internal compliance systems.”).

[3] Among the actions that Claimant 1 is relying on to seek an upward adjustment to Claimant 1’s award include [Redacted]. We find that this action cannot fairly be construed as an attempt to report a potential securities violation by participating in an internal compliance system. Similarly, we find that Claimant 1’s [Redacted] cannot be fairly construed as actions in furtherance of Claimant 1’s whistleblowing to the Commission.

[4] See Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[5] With respect to Claimant 3, the Preliminary Determination explained that Claimant 3’s award application should be denied for the additional reason that Claimant 3 failed to submit information to the Commission pursuant to the procedures set forth in Rule 21F-9(a) of the Exchange Act, as further required by Rule 21F-2 promulgated thereunder, 17 C.F.R. § 240.21F-2. Claimant 3’s claim for an award is based, at least in part, upon information that Claimant 3 [Redacted]

[6] As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action. Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

[7] Although Claimant 2 has submitted a declaration that offers a competing description of events related to Claimant 2’s interactions with the Covered Action Staff, we are persuaded that Staff Member 1’s account of the relevant events is the accurate version. We note that a second member of the Covered Action Staff has, to the extent that this staff member was either directly involved with or otherwise learned of the relevant events during the investigation, submitted a declaration supporting Staff Member 1’s descriptions of those events. Further, Staff Member 1 has no apparent reason to mischaracterize the relevant events. We also note that Staff Member 1 was intimately involved in the totality of the investigation leading to the Covered Action and, as such, relative to Claimant 2, may have a clearer understanding of how the disputed events in the investigation unfolded and how those events fit into the broader investigation. In this regard, we find particularly helpful Staff Member 1’s supplemental declaration that responds to the factual claims in Claimant 2’s declaration about Claimant 2’s purported involvement in the investigation leading to the Covered Action and Claimant 2’s claims about inaccuracies in the original Staff Member 1 Declaration.

[8] See Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[9] See, e.g., Section 21F(b) of the Exchange Act (Commission “shall pay an award [to a whistleblower] … who voluntarily provided original information to the Commission that led to the successful enforcement of the covered [action]”) (emphasis added). Cf. generally Rule 21F-4(b)(7), 17 C.F.R. § 240.21F-4(b)(7) (establishing a limited look-back period “for purposes of evaluating [a] claim to an award” where a whistleblower first reports original information to another authority of the federal government, Congress, or certain other specified entities, and “within 120 days, submit[s] the same information to the Commission” in accordance with the procedural requirements in Rule 21F-9).

[10] We note that the administrative record does indicate that [Redacted] provided [Redacted] to both [Redacted] and the Covered Action. However, there is no indication in the record that [Redacted] communicated any information from [Redacted] to the Covered Action Staff. [Redacted] staff from the OWB pulled and reviewed [Redacted] relevant email correspondence and found no indication that actionable information from [Redacted] was shared with the Covered Action Staff by [Redacted] Further, by way of Staff Member 1’s supplemental declaration, Covered Action Staff has confirmed that [Redacted] was not involved [Redacted] the Covered Action and did not relay to them any actionable information from [Redacted]

[11] In support of these claims, Claimant 3 provided (i) a chronology of Claimant 3’s efforts to aid the Commission before and during the period of investigation of the Covered Action, (ii) evidence of e-mail correspondence to various Commission staff members and to a court-appointed receiver unrelated to the Covered Action, and (iii) [Redacted]

[12] In Claimant 3’s response to the Preliminary Determination, Claimant 3 challenges the conclusion that Claimant 3 was ineligible for award consideration as to [Redacted] because the information was not submitted in accordance with the methods prescribed by Exchange Act Rule 21F-9. See generally FN 5, supra. In light of our determination above, we find it unnecessary to reach Claimant 3’s arguments on this issue. We do note, however, that contrary to Claimant 3’s contention, the investigative staff handling [Redacted] disagrees with Claimant 3’s assertion that they had an arrangement with Claimant 3 [Redacted]

[13] As noted above, Claimant 3 provided assistance in connection with [Redacted] Although we are not able to consider Claimant 3 for an award in that case because it pre-dates the enactment of our whistleblower program, we agree with the views expressed by a staff attorney assigned to [Redacted] that Claimant 3 “should be lauded for [Claimant 3’s] assistance” in connection with that case.

SEC

11/07/2016

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Redacted] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated this claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award claim for the reasons explained below.

The Claimant failed to submit *** information about a possible securities law violation in the form and manner required by Exchange Act Rules 21F-9(a)-(b). As a result, the Claimant does not qualify as a whistleblower, see Exchange Act Section 21F(a)(6) and Rule 21F-2(a)(1), and is not eligible for an award, see Exchange Act Rule 21F-2(a)(2) and Rule 21F-(8)(a).[fn1]

By: Claims Review Staff.

[1] The record demonstrates that the Claimant first approached the Commission after the effective date of the Commission’s whistleblower program rules; accordingly, the exception in Exchange Act Rule 21F-9(d) to the form-and-manner requirements for both whistleblower status and award eligibility is not applicable here.

SEC

11/07/2016

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Redacted] (“Claimant #2”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has recommended that the Commission deny awards to both Claimants. The basis for this determination is as follows:

1. [Redacted] Claimant #2 are not whistleblowers for purposes of this covered action within the meaning of Rule 21F-2(a) under the Exchange Act because neither claimant provided the Commission with information relating to a possible violation of the federal securities laws pursuant to the procedures set forth in Rule 21F-9. [Redacted]. As to Claimant #2, in *** whistleblower award claim, Claimant #2 neither states nor suggests that *** submitted any information to the Commission in writing.

2. [Redacted].

3. [Redacted].

a. [Redacted].

b. [Redacted].[fn1]

By: Claims Review Staff.

[1] [Redacted].

SEC

10/21/2016

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant because Claimant did not provide “original information” that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b) thereunder because the information was not derived from Claimant’s:

a. “independent knowledge,” as defined under Rule 21F-4(b)(2), but instead was derived entirely from “publicly available sources;” or

b. “independent analysis,” as defined under Rule 21F-4(b)(3), because the information did not include an “examination and evaluation of information” that “reveals information that is not generally known or available to the public.”

By: Claims Review Staff.

CFTC

10/11/2016

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award application of [Applicant] (“Applicant”), filed on Form WB-APP ___, referenced above.

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Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) is the whistleblower award claim of [Applicant] (“Applicant”) filed on Form WB-APP ___.

FACTUAL OVERVIEW: The Commission obtained an order in the ___ against ___ on ___. Applicant’s first and only submission of information to the Commission occurred on ___. Applicant argues that ___ provided information indirectly through ___ who provided information to the ___ which in turn provided information to the Commission. Applicant’s application indicates that ___ provided information to the ___ after receiving an inquiry from the ___, which would make ___ submission of information involuntary. Enforcement staff provided a declaration that stated that Applicant did not significantly contribute to the success of the settlement or final judgment in favor of the Commission.

IT IS HEREBY DETERMINED that: Applicant’s award application is denied because the Commission obtained successful resolution in the underlying action prior to the applicant’s submission of information, and therefore the information provided by Applicant did not cause Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation, or lead or contribute to the successful enforcement of the Commission covered judicial or administrative action, as required by section 23(b)(1) of the Commodity Exchange Act (7 U.S.C. § 26(b)(1)) and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules (17 C.F.R. §§ 165.2(i), 165.5(a)(3)).

Further, the application is denied because the Applicant did not provide original information to the Commission as required by section 23(a)(4)(B) of the Commodity Exchange Act (7 U.S.C. § 26(a)(4)(B)) and Rule 165.2(k)(2) of the Commission’s Whistleblower Rules (17 C.F.R. § 165.2(k)(2)). Although the applicant claims to be the “original source” of the information that led the Commission to open an investigation in the underlying action, the information provided to the ___ was not provided voluntarily under Rule 165.2(o)(1) of the Commission’s Whistleblower Rules (17 C.F.R. § 165.2(o)(1)).

SEC

09/26/2016

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received nine timely whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

[Redacted] (Claimant #8).

[Redacted] (Claimant #9).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny awards to [Redacted] Claimant #8, and Claimant #9. The basis for this determination is as follows:

None of [Redacted] Claimant #8’s, nor Claimant #9’s information led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because none of the information that the claimants submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

CFTC

09/21/2016

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award applications of Applicant 1, submitted on Form WB-APP ___, and Applicant 2, submitted on Form WB-APP ___ and Form WB-APP ___, in connection with Notice of Covered Action No. ___.

Pursuant to the Whistleblower Rules (17 C.F.R. § 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the determination and Final Order of the Commission that the whistleblower award application of Applicant 1 be denied and the award applications of Applicant 2 be denied. The denial of Applicant 1 and Applicant 2’s whistleblower award applications are without prejudice to any other award applications submitted by Applicant 1 and Applicant 2, including applications submitted in the future, regarding other covered judicial or administrative actions or related actions.

In accordance with 7 U.S.C. § 26(f) and 17 C.F.R. § 165.13, if you wish to appeal this Final Commission Determination and Order, you must appeal to the appropriate court of appeals of the United States not more than 30 days after this Final Order of the Commission is issued.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) are the whistleblower award applications of [Applicant 1] (“Applicant 1”), submitted on Form WB-APP ___, and [Applicant 2], submitted on Form WB-APP ___ and Form WB-APP ___, referenced above. All three applications were submitted in connection to Notice of Covered Action No. ___. For the reasons set forth below, Applicant 1’s application and Applicant 2’s applications are all denied.

IT IS HEREBY DETERMINED that:

1. Applicant 1’s award application is denied because it fails to meet the requirements of Section 23 of the Commodity Exchange Act (“CEA”) (7 U.S.C. § 26) and/or the Whistleblower Rules (17 C.F.R. § 165). Applicant 1 did not provide the Commission with original information that led to a successful enforcement action or a successful related action. See 17 C.F.R. § 165.5(a)(2)-(3). In addition, Applicant 1 failed to file a Form TCR, as required by 165.2(p) and 165.3 of the Whistleblower Rules. 17 C.F.R. §§ 165.2(p), 165.3. The denial of Applicant 1’s whistleblower award application is without prejudice to any other award application submitted by Applicant 1, including applications submitted in the future, regarding other covered judicial or administrative actions or related actions.

2. As detailed in the ___ Declaration of CFTC Division of Enforcement (“DOE”) ___, ___: a. The DOE opened the investigation in part due to a referral from the ___. b. The Commission had already begun investigating ___ before the DOE contacted Applicant 1. c. The information Applicant 1 provided the Commission, as well as the information Applicant 1 provided other authorities that was later obtained by the Commission, did not significantly contribute to the success of the Commission action ___. Applicant 1’s information only confirmed what the Commission already knew about ___ fraudulent activities. ___. In addition, Applicant 1’s information did not cause the Commission to open an examination or investigation, reopen a closed investigation, or inquire concerning different conduct as part of an existing investigation.

3. As detailed in the ___ Declaration of CFTC DOE Whistleblower Office ___, Applicant 1 did not cause the ___ to open the investigation into ___ fraudulent activities.

4. Applicant 2’s award applications are denied because they fail to meet the requirements of Section 23 of the Commodity Exchange Act (“CEA”) (7 U.S.C. § 26) and/or the Whistleblower Rules (17 C.F.R. § 165). Applicant 2 did not provide the Commission with original information that lead to a successful enforcement action or a successful related action. See 17 C.F.R. § 165.5(a)(2)-(3). In addition, Applicant 2 failed to file a Form TCR, as required by 165.2(p) and 165.3 of the Whistleblower Rules 17 C.F.R. §§ 165.2(p), 165.3. The denial of Applicant 2’s whistleblower award applications is without prejudice to any other award application submitted by Applicant 2, including applications submitted in the future, regarding other covered judicial or administrative actions or related actions.

5. As detailed in the ___ Declaration of CFTC Division of Enforcement (“DOE”) ___. a. The DOE opened the investigation in part due to a referral from the ___. b. The DOE had begun its investigation prior to contacting Applicant 2. c. The information Applicant 2 provided the Commission, as well as the information that Applicant 2 provided other authorities that was later obtained by the Commission, did not significantly contribute to the success of the Commission action in ___. Applicant 2’s information only confirmed what the Commission already knew about ___ fraudulent activities. ___. In addition, Applicant 2’s information did not cause the Commission to open an examination or investigation, reopen a closed investigation, or inquire concerning different conduct as part of an existing investigation.

6. As detailed in the ___ Declaration of CFTC DOE Whistleblower Office ___, Applicant 2 did not cause the ___ to open the investigation into ___ fraudulent activities.

7. Accordingly, it is hereby DETERMINED that the award applications of Applicant 1 and Applicant 2 are denied.

SEC

78881

09/20/2016

On July 27, 2016, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

On July 27, 2016, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e). Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.
Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.[fn1]

By the Commission.

[1] For purposes of determining the payment of the Claimant’s award under Exchange Act Rule 21F-14, the Director of the Division of Enforcement, or his or her designee, may determine whether any Commission enforcement action where the total monetary sanctions do not exceed $ 1,000,000 should be treated as part of this Covered Action pursuant to Exchange Act Rule 21F-4(d)(2).

SEC

78719

08/30/2016

On July 7, 2016, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

On July 15, 2016, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e). Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] In determining the appropriate award percentage, [Redacted] was considered. Several other factors mitigating the Claimant’s culpability were also considered, including that [Redacted] and did not financially benefit from the misconduct. As such, after considering the positive and negative factors set forth in Rule 21F-6, and based on the specific facts and circumstances of this case, we find that an award of [Redacted] to Claimant is appropriate.

SEC

08/14/2016

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received three whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

Claimant 2 [Redacted].

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 2. The basis for this determination is that Claimant 2 is not a “whistleblower,” within the meaning of Section 21F(a)(6) of the Exchange Act and Rule 21F-2(a) thereunder, because there is no evidence showing that Claimant 2 provided information to the Commission relating to the above-referenced Covered Action or any other Commission matter as required by Rule 21F-9(a) or (d).

[Redacted].

By: Claims Review Staff.

CFTC

08/10/2016

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award applications of [Applicant] (“Applicant”) filed on Form WB-APP ___, Form WB-APP ___, and Form WB-APP ___, referenced above.

Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165 (2015)), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached document, it is the Determination and Final Order of the Commission that these whistleblower award applications be denied.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) are the whistleblower award claims of [Applicant] (“Applicant”), filed on Form WB-APP ___, Form WB-APP ___, and Form WB-APP ___, referenced above.

IT IS HEREBY DETERMINED that:

1. The Applicant’s award applications are denied because they fail to meet the requirements of Section 23 of the Commodity Exchange Act (“CEA”) (7 U.S.C. § 26) and/or the Whistleblower Rules (17 C.F.R. § 165). Although the Applicant voluntarily provided the Commission with original information in the manner required by the Commission, the Applicant did not provide information that led to a successful enforcement action or a successful related action. See 17 C.F.R. § 165.5(a)(3).

a. Form WB-APP ___ and Form WB-APP ___ do not identify a notice pertaining to a covered Commission judicial or administrative action.

b. Form WB-APP ___ and Form WB-APP ___ do not identify a related action. A related action must be based on the same original information that the whistleblower voluntarily submitted to the Commission and led to a successful resolution of the Commission judicial or administrative action. See 17 C.F.R. § 165.11; 17 C.F.R. § 165.2(m). Because the Applicant’s information did not lead to the successful enforcement of a Commission action, it could not have led to a successful related action within the meaning of the CEA and the Whistleblower Rules.

c. Form WB-APP ___ references three Commission Notices of Covered Action that are unrelated on their face to the Applicant’s award application. All three Notices of Covered Action were posted on the Commission’s Whistleblower Office’s website prior to the dates the Applicant filed Form TCR ___ on ___ and Form TCR ___ on ___. Likewise, the orders for each Notice of Covered Action were issued prior to those dates. Additionally, the Applicant filed Form WB-APP ___ after the deadline to submit award applications for all three Notices of Covered Action expired.

d. Form WB-APP ___ does not identify a related action. A related action must be based on the same original information that the whistleblower voluntarily submitted to the Commission and led to a successful resolution of the Commission judicial or administrative action. See 17 C.F.R. § 165.11; 17 C.F.R. § 165.2(m). Because the Applicant’s information did not lead to the successful enforcement of a Commission action, it could not have led to a successful related action within the meaning of the CEA and the Whistleblower Rules.

2. Accordingly, upon due consideration of the factors listed in section 17 C.F.R. § 165, it is hereby DETERMINED that the Applicant’s award applications be denied.

CFTC

07/19/2016

Attached is the Final Determination of the Commodity Futures Trading Commission (“Commission”) pertaining to the whistleblower award application of Applicant (“Applicant”), submitted on Form WB-APP ___, in response to the Commission’s Notice of Covered Action No. ___ regarding ___.

Pursuant to the Commission’s Whistleblower Rules (“Rules”), the Commission delegated the authority to make whistleblower award determinations to the Whistleblower Award Determination Panel (“Panel”). 17 C.F.R. § 165.15(b). Therefore, the Panel’s award determination is the final determination of the Commission.

As set forth in the attached, it is the Final Commission Determination and Order of the Commission that the Applicant’s whistleblower award application shall be granted. After giving due consideration to the factors set forth in section 165.9, 17 C.F.R. § 165.9, the Panel determined that the award amount should be ___% of the amount of the monetary sanctions collected in the ___.

In accordance with 7 U.S.C. § 26(t) and 17 C.F.R. § 165.13, if you wish to appeal the Final Commission Determination and Order, you must appeal to the appropriate court of appeals of the United States no more than 30 days after this Final Order of the Commission is issued. —–

Before the Whistleblower Award Determination Panel (“Panel”) of the Commodity Futures Trading Commission (“Commission”) is the whistleblower award application of Applicant ___ (“Applicant”), submitted on Form WB-APP ___. The Applicant submitted the award application in response to the Commission’s Notice of Covered Action No. ___ regarding ___. For reasons set forth below, the Applicant’s application is granted, and the Applicant shall be granted an award of ___% of the amount of the monetary sanctions collected in the ___.

IT IS HEREBY DETERMINED that:

1. The Applicant’s award application is granted because the Applicant meets the requirements of section 23 of the Commodity Exchange Act, 7 U.S.C. § 26 (2012), and the Commission’s Whistleblower Rules (“Rules”), 17 C.F.R. § 165 (2015). The Applicant voluntarily provided the Commission with original information that led to the successful enforcement of a covered ___ action. The Applicant’s information was sufficiently specific, credible, and timely to cause the Commission to open an investigation. The Commission then brought a successful ___ action, the ___, based in part on conduct that was the subject of the Applicant’s original information.

2. The Applicant also meets all eligibility requirements for an award. See 17 C.F.R. §§ 165.8(b), 165.6. The Applicant submitted a Form TCR, is the original source of the information, and provided assistance to Commission staff during the course of the investigation leading up to the ___. Further, the Applicant does not fall into any of the categories of individuals ineligible for an award, as set forth in section 165.6(a), 17 C.F.R. § 165.6(a).

3. ___

4. The Panel concludes that the award should be ___% of the amount of the total monetary sanctions collected in the ___. In arriving at this award amount, the Panel applied the factors set forth in section 165.9, 17 C.F.R. § 165.9, in relation to the facts and circumstances of the Applicant’s award application, To this end, the Panel considered the significance of the Applicant’s information, the degree of assistance the Applicant provided to Commission staff during the course of the investigation, and the Commission’s programmatic and law enforcement interests. Finally, the Panel believes this award appropriately recognizes the significance of the information the Applicant provided to the Commission, and the size of the award should serve to incentivize future whistleblowers to come forth with high-quality information while not creating perverse incentives possible as a result of oversize awards.

a. The Applicant’s information caused the Commission to launch an investigation against defendants. The Commission had not been aware of the violations before Applicant provided the information. Had the Applicant not contacted the Commission, it may not have opened an investigation and brought a successful enforcement action against defendants.

b. During the investigation, the Applicant provided assistance, was forthcoming with this assistance, and provided ongoing, extensive, and timely cooperation. ___

c. The Commission has significant programmatic and law enforcement interests in protecting members of the public ___. Because the Commission likely would not have opened an investigation had the Applicant not contacted the Commission, ___ granting an award to the Applicant should incentivize similar whistleblowers to report potential violations of the CEA to the Commission, thus enhancing the Commission’s ability to enforce the CEA and conserve resources.

d. The Applicant did not participate in defendants’ violations and was not arrested, indicted, or convicted of the conduct at issue. ___. In addition, the Applicant was never an agent, employee, officer, director, trustee, or partner ___. Furthermore, the Applicant did not unreasonably delay reporting the information to the Commission.

5. Accordingly, upon due consideration of the factors listed in section 165.9, 17 C.F.R. § 165.9, it is hereby DETERMINED that the Applicant shall receive an award of ___% of the amount of the monetary sanctions collected in the ___.

CFTC

07/19/2016

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award application of [Applicant] filed on Form WB-APP ___, referenced above.

Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165 (2015)), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached document, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) is the whistleblower award claim of [Applicant], filed on Form WB-APP ___, referenced above.

IT IS HEREBY DETERMINED that:

1. ___ award application is denied because it fails to meet the requirements of Section 23 of the Commodity Exchange Act (“CEA”) (7 U.S.C. § 26) and/or the Whistleblower Rules (17 C.F.R. § 165). Although ___ voluntarily provided the Commission with original information in the manner required by the Commission, ___ did not provide information that lead to a successful enforcement action or a successful related action. See 17 C.F.R. § 165.5(a)(3).

2. As detailed in the ___ Declaration of CFTC Division of Enforcement (“DOE”) Trial Attorney ___, the responsible attorney for the team that conducted the investigation that led the Commission to file an action in relevant covered judicial action ___. a. The matter was already under investigation when ___ contacted the Commission. b. While ___ provided documents to DOE and communicated with DOE staff by e-mail and telephone, the information that ___ provided was either already known to the Commission or did not materially add to the information the Commission already possessed. No information provided caused the Commission to inquire about conduct different than the conduct already subject to the ongoing investigation. Furthermore, [Applicant] information did not significantly contribute to the success of the action.

3. Accordingly, upon due consideration of the factors listed in section 17 C.F.R. § 165, it is hereby DETERMINED that the ___ award application be denied.

SEC

78355

07/19/2016

The Commission received sixteen claims for award in connection with Notice of Covered Action [Redacted] (“Covered Action”).[fn1] On July 13, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that all sixteen award claims be denied because none of the Claimants’ information led to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” ); Rules 21F-3(a)(3) and 21F-4(c).[fn2] Three of the sixteen claimants, [Claimant #13] (“Claimant #13”), [Claimant #11] (“Claimant #11”), and [Claimant #9] (“Claimant #9”), submitted requests for reconsideration of the preliminary denial of their claims.[fn3]

For the reasons stated below, the claims submitted by Claimants #13, #11, and #9 are denied.

I. Background.

The Covered Action arose out of two separate investigations, one by Enforcement staff in the Commission’s Home Office and the other by Enforcement staff in the Denver Regional Office (“DRO”), into [Redacted]. Home Office and DRO staff opened their investigations in [Redacted] in response to media reports and inquiries made by investigative staff, and not in response to any tip or complaint submitted by any of the Claimants.

In [Redacted], DRO staff became aware of and began to investigate [Redacted]. Information related to [Redacted] had been reported in the news media [Redacted]. These media reports led DRO staff to shift the focus of its investigation entirely to [Redacted].

On [Redacted] the two investigations culminated in [Redacted].

II. Claimant #13’s Claim Is Denied.

After careful consideration of the administrative record, including Claimant #13’s written response, we deny Claimant #13’s award application. We find that Claimant #13 is not entitled to an award because the record conclusively demonstrates that Claimant #13’s information did not lead to successful enforcement of the Covered Action. First, the Home Office investigative staff never received any information from, and had no communication with, Claimant #13, and Claimant #13’s Response fails to show otherwise. Second, although DRO staff received and reviewed Claimant #13’s information, it was not used in and did not contribute to the investigation. The DRO’s investigation was opened before DRO staff received Claimant #13’s information. Further, DRO staff began to inquire into [Redacted] because of a [Redacted] reported in the media, not because of Claimant #13’s information. Because Claimant #13’s information focused on [Redacted] while the DRO’s investigation shifted to focus on [Redacted] the DRO staff did not use Claimant #13’s information in any way in their investigation. Finally, the charges brought by the Commission arising from the DRO’s investigation related to [Redacted].

Although in the Response Claimant #13 identifies a number of interactions and communications [Redacted] concerning Claimant #13’s information, Claimant #13 fails to identify any communications with Enforcement staff responsible for the underlying investigations that led to the Covered Action. Whether Claimant #13’s information [Redacted] has no bearing on whether Claimant #13’s information led to the success of this particular Covered Action.

Finally, Claimant #13 argues that Claimant #13 should have had the opportunity to see and respond to the record, which included declarations by the relevant investigative staff, before the CRS issued its preliminary denial of Claimant #13’s claim. Claimant #13 had the opportunity to submit whatever information or supporting documentation Claimant #13 thought relevant to the award determination when Claimant #13 submitted the application for award on Form WB-APP. Indeed, Claimant #13’s award application was voluminous and attached several exhibits. Furthermore, Claimant #13 received a copy of all the materials that provided the basis for the CRS’s preliminary denial of Claimant #13’s claim, and had the opportunity to submit whatever factual or legal arguments Claimant #13 believed relevant in connection with the request for reconsideration. But nothing in Claimant #13’s Response shows that Claimant #13’s information caused staff to open the investigations, caused staff to inquire into different conduct, or significantly contributed to the success of the Covered Action.

Because Claimant #13’s information did not lead to the successful enforcement of the Covered Action, Claimant #13’s claim should be, and hereby is, denied.

III. Claimant #11’s Claim Is Denied.

After careful consideration of the administrative record, including Claimant #11’s written response, we deny Claimant #11’s award application. We find that Claimant #11 is not entitled to an award because the record conclusively demonstrates that Claimant #11’s information did not lead to successful enforcement of the Covered Action.

Claimant #11 bases the claim for award on a tip Claimant #11 submitted to the Commission in [Redacted] Claimant #11’s tip was forwarded to Enforcement staff in the Los Angeles Regional Office (“LARO”) in connection with an investigation that was separate from and unrelated to the investigations that led to the Covered Action. LARO Enforcement staff closed Claimant #11’s tip with a disposition of no further action (or “NFA”),[fn5] and the tip was not forwarded to Enforcement staff responsible for the investigations that led to the Covered Action. Both Home Office and DRO Enforcement staff confirmed that they do not know Claimant #11, had no communications with Claimant #11, and did not receive any information from Claimant #11, before or during the course of their investigations.

In the Response, Claimant #11 fails to show how the information provided by Claimant #11 led to the successful enforcement of the Covered Action. Rather, Claimant #11 argues that the record is insufficient because it does not include materials from the underlying investigations and that additional declarations from individuals both inside and outside of the Commission are necessary to show whether Claimant #11’s information was used in the Covered Action.

Claimant #11’s argument that Claimant #11 should have received Enforcement staff’s investigative files, in connection with Claimant #11’s request for the record, is without merit. Exchange Act Rule 21F-12(a) specifically identifies those materials that may comprise the record upon which the CRS’s preliminary determination is based; they do not include Enforcement staff’s investigative files. Rule 21F-12(b) specifically states that claimants are not entitled to obtain from the Commission any materials other than those listed in Rule 21F-12(a).

Furthermore, based on our careful review of the record, we disagree with Claimant #11’s argument that additional declarations are necessary to show that Claimant #11’s information did not lead to successful enforcement. The administrative record demonstrates that Claimant #11’s tip was not referred to either of the teams conducting the investigations that led to the Covered Action. The record, which includes declarations from the Enforcement staff responsible for the underlying investigations, also demonstrates that the investigative teams never received any information from, or had any communications with, Claimant #11. We believe that the current record therefore provides us with a sufficient basis to determine that Claimant #11’s information did not lead to the success of the Covered Action.[fn6]

Finally, Claimant #11’s Response appears to concede that Claimant #11’s information did not relate specifically to the charges brought in the Covered Action, instead arguing that Claimant #11’s information globally related to [Redacted]. The whistleblower rules require, however, that a claimant’s information lead to the successful enforcement of the particular Covered Action. That Claimant #11’s information purportedly helped advance [Redacted] does not mean that Claimant #11’s information had any impact on the Covered Action. The record conclusively demonstrates that Claimant #11’s information was not used in connection with the underlying investigations, as neither the Home Office nor the DRO investigative staff received any information from Claimant #11 before or during the course of their investigations. As such, Claimant #11’s claim for award should be, and hereby is, denied.

IV. Claimant #9’s Claim Is Denied.

After careful consideration of the administrative record, including Claimant #9’s written response, we deny Claimant #9’s award application. We find that Claimant #9 is not entitled to an award because the record conclusively demonstrates that Claimant #9’s information did not lead to successful enforcement of the Covered Action.

Claimant #9 submitted information to the Commission in [Redacted] and again in [Redacted] alleging [Redacted]. Claimant #9’s information was forwarded to Enforcement staff in the Atlanta Regional Office (“ARO”) in connection with an investigation that was separate from and unrelated to the Home Office’s and DRO’s investigations, and the tip was not forwarded to Enforcement staff responsible for the investigations that led to the Covered Action. Both Home Office and DRO staff responsible for the underlying investigations that led to the Covered Action confirmed that they do not know Claimant #9, had no communications with Claimant #9, and received no information from Claimant #9 before or during the course of their investigations.

Claimant #9’s Response contesting the Preliminary Determination failed to offer any evidence to the contrary. Rather, Claimant #9 contends that we should contact a former Commission Chair and former Commission staff to understand how the information Claimant #9 submitted to the Commission was used. We decline to do so, as the record clearly shows that Claimant #9’s information was forwarded to Enforcement staff in ARO in connection with a separate and unrelated investigation, and not forwarded to investigative staff responsible for the underlying investigations that led to the Covered Action. Moreover, Home Office and DRO Enforcement staff responsible for the underlying investigations confirmed that they did not receive any information from Claimant #9 before or during the course of their investigations.
Claimant #9 also argues that the whistleblower rules do not require an on-going relationship between Enforcement staff and the whistleblower in order for the whistleblower to receive an award. While we do not disagree, we think it is plain that the responsible Enforcement staff must have, at the very least, received the whistleblower’s information in order for the information to have contributed to the success of the enforcement action. Because Claimant #9’s information did not lead to the successful enforcement of the Covered Action, Claimant #9’s claim for award should be, and hereby is, denied.

V. Conclusion.

Accordingly, it is ORDERED that Claimant #13’s, Claimant #11’s, and Claimant #9’s whistleblower award claims are denied.

By the Commission.

[1] The following sixteen individuals submitted claims for award in the Covered Action: Claimants [Redacted] Claimants [Redacted] Claimants [Redacted] Claimants [Redacted] (collectively, “Claimants” ).

[2] As relevant here, original information leads to the success of a covered action if it: (1) causes the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation, and the Commission brings a successful judicial or administrative action based in whole or in part on conduct that was the subject of the original information, under Rule 21F-4(c)(1) of the Exchange Act; or (2) the information significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[3] The other thirteen claimants failed to submit a timely response contesting the Preliminary Determination. Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination as to [Redacted] Claimants [Redacted] Claimants [Redacted] Claimants [Redacted] denying their claims for award has become the Final Order of the Commission.

[4] [Redacted].

[5] When a tip is NFA’d by Enforcement investigative staff, this means both that the tip was deemed to not be useful to the investigation and that Enforcement staff will not take any additional investigative steps in connection with the tip unless subsequent information leads to a reopening or reexamination of that tip.

[6] We note that obtaining declarations from other individuals who had no direct responsibility for the investigations leading to the Covered Action, or for the prosecution of the Covered Action, would be a futile effort, as such individuals would not be in a position to state whether Claimant #11’s information was used in the investigations, let alone whether the information “led to” the success of the Covered Action.

SEC

78356

07/19/2016

The Commission received twelve claims for award in connection with Notice of Covered Action [Redacted] (“Covered Action”).[fn1] On July 13, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that all twelve award claims be denied because none of the Claimants’ information led to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” ); Rules 21F-3(a)(3) and 21F-4(c).[fn2] Two of the twelve claimants, [Claimant #11] (“Claimant #11”) and [Claimant #9] (“Claimant #9”), submitted requests for reconsideration of the preliminary denial of their claims.[fn3]

For the reasons stated below, the claims submitted by Claimants #11 and #9 are denied.

I. Background.

The Home Office investigation was opened based on the staff’s review of academic literature and general market information. Likewise, the DRO investigation was opened based on the staff’s review of academic literature, general market information, and data and other information produced by [Redacted] in response to document requests. Additionally, the DRO investigation was based on information that the investigative staff learned as a result of [Redacted].

The two investigations resulted in [Redacted].

II. Claimant #11’s Claim Is Denied.

Claimant #11 bases the claim for award on a tip Claimant #11 submitted to the Commission in [Redacted] Claimant #11’s tip was forwarded to Enforcement staff in the Los Angeles Regional Office (“LARO”) in connection with an investigation that was separate from and unrelated to the investigations that led to the Covered Action. LARO Enforcement staff closed Claimant #11’s tip with a disposition of no further action (or “NFA”),[fn6] and the tip was not forwarded to Enforcement staff responsible for the investigations that led to the Covered Action. Both Home Office and DRO Enforcement staff confirmed that they do not know Claimant #11, had no communications with Claimant #11, and did not receive any information from Claimant #11, before or during the course of their investigations.

Claimant #11’s argument that Claimant #11 should have received Enforcement staff’s investigative files, in connection with Claimant #11’s request for the record, is without merit. Exchange Act Rule 21F-12(a) specifically identifies those materials that may comprise the record upon which the CRS’s preliminary determination is based; they do not include Enforcement staff’s investigative files. Rule 21F-12(b) specifically states that claimants are not entitled to obtain from the Commission anymaterials other than those listed in Rule 21F-12(a).

III. Claimant #9’s Claim Is Denied.

Claimant #9 also argues that the whistleblower rules do not require an on-going relationship between Enforcement staff and the whistleblower in order for the whistleblower to receive an award. While we do not disagree, we think it is plain that the responsible Enforcement staff must have, at the very least, received the whistleblower’s information in order for the information to have contributed to the success of the enforcement action. Because Claimant #9’s information did not lead to the successful enforcement of the Covered Action, Claimant #9’s claim for award should be, and hereby is, denied.

IV. Conclusion.

Accordingly, it is ORDERED that Claimant #11’s and Claimant #9’s whistleblower award claims are denied.

By the Commission.

[1] The following twelve individuals submitted claims for award in the Covered Action: Claimants [Redacted] Claimants [Redacted] Claimants [Redacted] (collectively, “Claimants” ).

[3] The other ten claimants failed to submit a timely response contesting the Preliminary Determination. Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination as to [Redacted] Claimants [Redacted] Claimants [Redacted] denying their claims for award has become the Final Order of the Commission.

[4] [Redacted].

[5] [Redacted].

[6] When a tip is NFA’d by Enforcement investigative staff, this means both that the tip was deemed to not be useful to the investigation and that Enforcement staff will not take any additional investigative steps in connection with the tip unless subsequent information leads to a reopening or reexamination of that tip.

[7] We note that obtaining declarations from other individuals who had no direct responsibility for the investigations leading to the Covered Action, or for the prosecution of the Covered Action, would be a futile effort, as such individuals would not be in a position to state whether Claimant #11’s information was used in the investigations, let alone whether the information “led to” the success of the Covered Action.

SEC

07/05/2016

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), and [Redacted] (“Claimant 4”) (collectively, the “Claimants”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has recommended that the Commission deny an award[fn1] to the Claimants. The bases for this determination are as follows:

1. The information provided by the Claimants after July 21, 2010 did not lead to successful enforcement of a covered judicial or administrative action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

2. Claimant 4 did not submit a Form WB-APP for the Notice of Covered Action to the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action as required by Rule 21F-10(b) of the Exchange Act in order to be considered for an award.

By: Claims Review Staff.

[1] Claimants 1 through 3 also seek an award in connection with an action brought by [Redacted] captioned [Redacted] as a “related action”. These claimants are not eligible for an award under the Commission’s whistleblower program in connection with [Redacted] because none is eligible, for the reasons stated herein, for an award in connection with this Covered Action. See Exchange Act Rule 21F-3(b) (defining a “related action” as one “based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.”).

SEC

78025

06/09/2016

On February 1, 2016, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Covered Action [Redacted] ([Redacted] “the Covered Action”).[fn1] The Preliminary Determination recommended that [Claimant #1] (“Claimant #1”) receive a whistleblower award of ___ in the Covered Action. The Preliminary Determination also recommended that award applications submitted by [Claimant #2] (“Claimant #2”), [Claimant #3] (“Claimant #3”), and [Claimant #4] (“Claimant 4”), and [Claimant #5] (“Claimant #5”) be denied. Claimant #4 and Claimant #5 filed responses contesting the Preliminary Determination.[fn2] For the reasons stated below, Claimant #1’s claim is approved in the amount of ___ and Claimant #4 and Claimant #5’s claims are denied.

I. The Covered Action.

[Redacted].

II. Claimant #1’s Claim Is Approved.
On [Redacted] counsel for Claimant #1 submitted a detailed tip on Form TCR alleging [Redacted]. In the [Redacted] TCR and in subsequent communications, Claimant #1 provided additional information of which Enforcement staff were previously unaware that substantially advanced their investigation into the matters that resulted in [Redacted]. For instance, Claimant #1 provided critical information [Redacted]. Claimant #1’s early [Redacted] allowed Enforcement staff to conserve time and resources in the investigation, and helped staff to gather evidence supporting the Commission’s charges.[fn3]

Claimant #1’s Form TCR also [Redacted]. The CRS preliminarily determined that Claimant #1 provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) promulgated thereunder, 17 C.F.R. § 240.21F-3(a).

The CRS also preliminarily determined to recommend that Claimant #1’s award be set in the amount of ___ percent ___ of the monetary sanctions collected in the Covered Action, which will equal payment of more than $17,000,000. In arriving at this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant #1’s application.

Claimant #1 did not contest the Preliminary Determination of the CRS. Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the CRS.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. §§ 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant #1 shall receive ___ percent ___ of the monetary sanctions collected, or to be collected, in the Covered Action.

III. Claimant #4’s and Claimant #5’s Claims Are Denied.
A. Preliminary Determination.
On February 1, 2016, the CRS also preliminarily determined to deny Claimant #4’s and Claimant #5’s award applications because their information did not lead to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Exchange Act, and Rule 21F3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Also, Claimant #5 based the claim for award on information provided to the Commission before July 21, 2010. Such information is not “original information,” as that term is defined under Rule 21F-4(b)(1) of the Exchange Act, because it was provided before the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.[fn4]

B. Claimant #4’s Response.
On March 24, 2016, Claimant #4 submitted a written response contesting the Preliminary Determination. Claimant #4 failed to identify any specific tip or complaint Claimant #4 made to the Commission in connection with the Covered Action. Instead, Claimant #4 contended that Claimant #4 provided documentation to the Commission evidencing [Redacted].

C. Claimant #5’s Response.
On February 10, 2016, Claimant #5 submitted a written response contesting the Preliminary Determination. In the response, Claimant #5 failed to identify any specific tip or complaint Claimant #5 made to the Commission in connection with the Covered Action. Rather, Claimant #5 contended that the preliminary denial of Claimant #5’s claim violated the Equal Protection Clause of the Fourteenth Amendment, as well as the First Amendment, to the U.S. Constitution. In support of this argument, Claimant #5 pointed to [Redacted].

None of the information identified by Claimant #4 or Claimant #5 in their responses had any apparent relevance to the question of whether they provided information to the Commission that led to the successful enforcement of the Covered Action.

D. Analysis.
To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action or related action. 15 U.S.C. § 78u-6(b)(1). As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action. Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

We find that none of the information Claimant #4 or Claimant #5 submitted led to the successful enforcement of the Covered Action.[fn6] First, at no point prior to [Redacted] the Covered Action did the staff members responsible for the Covered Action have any contact with, or receive any information from, Claimant #4 or Claimant #5. Second, based on our own assessment of the information that Claimant #4 and Claimant #5 submitted, we cannot see how this information could have led to the successful enforcement of the Covered Action given the absence of relevant factual connections between the two.

Because the record demonstrates that Claimant #4’s and Claimant #5’s information did not lead to the successful enforcement of the Covered Action and they have not shown otherwise in their requests for reconsideration of the Preliminary Determination, we deny Claimant #4’s and Claimant #5’s applications for an award.[fn7]

IV. Conclusion.
Accordingly, it is ORDERED that Claimant #1 shall receive an award of ___ percent ___ of the monetary sanctions collected, or to be collected, in the Covered Action. ORDERED that Claimant #4’s whistleblower award claim is denied. ORDERED that Claimant #5’s whistleblower award claim is denied. By the Commission.

[1] [Redacted].

[2] After requesting and reviewing the record, Claimant #2 provided written notice that
Claimant #2 would not contest the Preliminary Determination. Claimant #3 failed to submit a
timely response contesting the Preliminary Determination. Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination as to Claimant #2 and
Claimant #3 denying their claims for award has become the Final Order of the Commission with
respect to their award claims.

[3] In detailing the ways that Claimant #1’s original information led to the success of the
Covered Action, we caution that whether original information leads to successful enforcement
depends on an analysis of the facts and circumstances of each individual case. Thus, the
discussion here is not precedential for other matters.

[4] See Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[5] For instance, Claimant #5 contends that Claimant #5: [Redacted].

[6] In the alternative, we deny Claimant #5’s award application because Claimant #5 did not
provide any original information to the Commission. The Preliminary Determination identified
this as a second ground for denial and Claimant #5 failed to demonstrate otherwise in
Claimant #5’s response to the Preliminary Determination.

[7] We have considered Claimant #5’s various constitutional claims, but we find them
frivolous. They lack merit and have no bearing on the critical factual question whether
Claimant #5 has met the requirements to receive an award.

SEC

77948

05/31/2016

On September 30, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending a denial of a claim for a whistleblower award submitted by [Claimant] (“Claimant”) in connection with Notice of Covered Action 2014-48 (“Covered Action”). The CRS found that Claimant did not qualify for an award because the information that Claimant provided did not lead to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act” ); Exchange Act Rules 21F-3(a)(3)& 21F-4(c).[fn1] Claimant subsequently filed a timely written response contesting the Preliminary Determination.

After careful consideration of the administrative record, including Claimant’s written response, we deny Claimant’s award application. We find that the Claimant is not entitled to an award because the record conclusively demonstrates that Claimant’s information was not used in connection with the Covered Action. Claimant’s tip was designated for “no further action” (“NFA”) by the Office of Market Intelligence (“OMI”), which is the office within the Division of Enforcement that is responsible for undertaking an initial review of such tips to determine whether the information provided warrants further follow-up. As a result of the NFA designation, Claimant’s tip was not forwarded to investigative staff either to begin a new investigation, to inquire into different conduct, or to use in connection with any ongoing investigation. Moreover, Enforcement staff responsible for the underlying investigation that resulted in the Covered Action confirmed that they did not know Claimant, had no communications with Claimant, and did not receive any information from Claimant in connection with the Covered Action. And in Claimant’s written response contesting the Preliminary Determination, Claimant has neither offered any evidence to the contrary nor even argued that Claimant’s information led to the success of the Covered Action.[fn2] We thus find that the record firmly demonstrates that Claimant’s information did not lead to the success of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] As relevant here, information leads to the success of a covered action if it: (1) causes the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or (2) significantly contributes to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[2] In Claimant’s written response to the Preliminary Determination, Claimant contends that by not forwarding Claimant’s tip to the Enforcement staff on the investigation, OMI erroneously and wrongfully denied Claimant the opportunity to be eligible for an award. This argument is irrelevant, as it has no bearing on Claimant’s ability to obtain an award; even if Claimant’s contention were true, it would still remain the case that Claimant’s information did not lead to the Covered Action. That said, Claimant’s information did not specifically and credibly allege a violation of the federal securities laws. Indeed, other than identifying the same target company, Claimant’s tip bears no factual or legal nexus to the charges brought by the Commission in the Covered Action. These facts indicate that OMI appropriately determined that the tip did not warrant the allocation of additional staff time and effort.

SEC

05/27/2016

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), [Redacted] (“Claimant 4”), [Redacted] (“Claimant 5”) and [Redacted] (“Claimant 6”) (collectively, the “Claimants”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily recommended that the Commission deny[fn2] an award to the Claimants. The bases for this determination are as follows:

1. The information provided by the Claimants after July 21, 2010 did not lead to successful enforcement of a covered judicial or administrative action within the meaning of Section 21F(b)(l) of the Exchange Act and Rules 21F-3(a) and 21F-4( c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

2. Claimant 5 is not an “original source” under Rule 21F-4(b)(5) for the information [Redacted] provided to the Commission because such information does not meet the definition of “original information”, a prerequisite for the application of Rule 21F-4(b)(5). [Redacted] did not provide the information at issue to the Commission for the first time after July 21, 2010, as required by Rule 21F-4(b)(1)(iv) to be considered “original information.”

3. Claimant 6 did not submit a Form WB-APP for the Notice of Covered Action to the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action as required by Rule 21F-10(b) of the Exchange Act in order to be considered for an award.

By: Claims Review Staff.

[1] Based on the record, Claimant 4 and Claimant 5 appear to be the same individual. If that is so, the individual claimant must explain in any response to this preliminary determination why *** has submitted separate award applications under different names using different attorneys, including why *** failed to disclose that to us. If that is not the case, both individuals must include with any response that they each submit to this preliminary determination, information that would allow us to confirm that they are separate individuals. Either the failure to submit the requested information, or the submission of false, fictitious, or fraudulent information, could be the basis for an award denial. See Exchange Act Rule 21F-8(c); see also id. 21F-8(b) & 21F-10(d).

2 Claimants 1 through 5 also claim an award in connection with an action brought by [Redacted] captioned [Redacted] as a “related action”. These claimants are not eligible for an award under the Commission’s whistleblower program in connection with [Redacted] because none is eligible, for the reasons stated herein, for an award in connection with this Covered Action. See Exchange Act Rule 21F-3(b) (defining a “related action” as one “based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.”).

SEC

77873

05/20/2016

On April 7, 2016, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant 1”) and [Redacted] (“Claimant 2”; collectively, “Claimants”) receive a joint whistleblower award because Claimants voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

On April 11, 2016, Claimants provided written notice to the Commission of Claimants’ decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e). Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimants 1 and 2 shall receive a joint award of [Redacted] percent [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.[fn1]

By the Commission.

[1] The Office of the Whistleblower is directed to pay each of the Claimants individually 50% of their joint award.

SEC

77843

05/17/2016

On April 7, 2016, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Claimant] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Further, the Claims Review Staff recommended that such award be set in the amount of [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which should yield a total award of between $5 and $6 million. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.

On April 7, 2016, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e). Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), the Preliminary Determination of the Claims Review Staff is adopted. Accordingly, for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

SEC

77833

05/13/2016

[Claimant] (“Claimant”) submitted a timely claim for award in connection with Notice of Covered Action [Redacted] relating to [Redacted] (“Covered Action”). On January 7, 2016, the Claims Review Staff (“CRS”) preliminarily determined to recommend that we deny the claim (“Preliminary Determination”). Based on the record that was available at that time, the CRS found that Claimant did not qualify for an award because the information that Claimant provided did not lead to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”); Exchange Act Rules 21F-3(a)(3) & 21F-4(c). Claimant subsequently filed a timely written response contesting the Preliminary Determination. After receiving Claimant’s written response, the CRS also received certain additional factual information from staff in the Division of Enforcement responsible for the Covered Action.

For the reasons stated below, Claimant’s claim is approved in the amount of [Redacted].

I. Background.

A. The Covered Action and the Claimant’s Tip.

The Covered Action found that [Redacted].

The Covered Action arose out of an investigation opened in [Redacted] in response to media reports concerning potential misconduct relating to [Redacted]. In [Redacted] Enforcement staff expanded the investigation to include [Redacted].

In [Redacted] Claimant, through counsel, submitted a detailed whistleblower tip concerning [Redacted]. Although Enforcement staff were already aware of [Redacted] Claimant’s tip provided certain new information related to [Redacted] along with supporting documentation. Enforcement staff received the tip and spoke to Claimant and Claimant’s counsel concerning the submission.

Because of the additional information and documents provided by Claimant about [Redacted] the Commission’s Order included [Redacted].

B. Preliminary Determination and Request for Reconsideration.

On January 7, 2016, the CRS preliminarily determined to recommend that we deny Claimant’s claim on the grounds that the information Claimant provided did not lead to the success of the Covered Action. Specifically, based on the factual record at the time, it appeared that Claimant’s information did not cause Enforcement staff to open the investigation or to inquire into different conduct, nor did the information appear to have significantly contributed to the success of the Covered Action.

On February 6, 2016, Claimant submitted a timely written request for reconsideration. Claimant argued, among other things, that Claimant’s information led to the successful enforcement of the Covered Action because Claimant’s information “significantly contributed” to the success of the Covered Action, and as such, satisfied Rule 21F-4(c)(2).

II. Analysis.

As relevant here, information leads to the success of a covered action if:

(1) pursuant to Rule 21F-4(c)(1) of the Exchange Act, the information causes the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation; or

(2) pursuant to Rule 21F-4(c)(2) of the Exchange Act, the information significantly contributes to the success of a Commission judicial or administrative enforcement action.

Applying those standards here, we find that Claimant’s information “significantly contributed” to the success of the Covered Action.[fn1] In reaching that determination, we place considerable weight on the additional record evidence that was provided by Enforcement staff following the issuance of the Preliminary Determination. That evidence demonstrates that Claimant’s information was meaningful and that it made a substantial and important contribution to the successful resolution of the Covered Action. Specifically, the Claimant’s information caused Enforcement staff to focus on [Redacted] when staff might otherwise not have done so, and this evidentiary development strengthened the Commission’s case by meaningfully increasing Enforcement staff’s leverage during the settlement negotiations. As such, Claimant’s information significantly contributed to the successful enforcement of the Covered Action within the meaning of Rule 21F-4(c)(2).

In determining the appropriate award percentage, we carefully weighed the factors specified in Rule 21F-6, including the significance of the information provided by Claimant, the assistance that Claimant provided, and the law-enforcement interests at issue. We find that Claimant should receive an award of [Redacted] of the monetary sanctions collected in the Covered Action, which will equal payment of more than $3,500,000. As part of our assessment of the award criteria, we have considered certain unique hardships experienced by the Claimant as a result of the Claimant’s decision to report the wrongdoing to the Commission. Specifically, the record demonstrates that the Claimant has been unable to find employment since reporting the misconduct and that this is significantly due to Claimant’s whistleblowing activities. The record also demonstrates that as a result of Claimant’s whistleblowing the Claimant [Redacted].

III. Conclusion.

After careful consideration of the administrative record, including Claimant’s written response and the additional factual information provided by Enforcement staff, we find that Claimant’s information led to successful enforcement because it significantly contributed to the success of the Covered Action.

Accordingly, upon due consideration under Rules 21F-10(g) and (h), 17 C.F.R. § 240.21F-10(g) and (h), it is hereby ORDERED that the Claimant shall receive an award of [Redacted] of the monetary sanctions collected and to be collected in the Covered Action.

By the Commission.

[1] In Claimant’s response contesting the Preliminary Determination, Claimant argued that we should find that Claimant’s information led to the success of the Covered Action under Rule 21F-4(c)(1) because Claimant caused the staff to pursue a “new line of inquiry.” According to the Claimant, the information “led the staff to initiate new and more directed inquiries” into certain specific misconduct that the Commission already knew about, and this new information caused the staff to more closely focus on the particular misconduct, ultimately including the specific misconduct [Redacted] in the Commission’s final order resolving the Covered Action.

We disagree that Rule 21F-4(c)(1) is satisfied here. Although Claimant’s information caused staff to focus on certain specific misconduct that the staff was already generally aware of, and to elevate its inquiry into that misconduct, the information that Claimant provided was not substantially different from the misconduct generally under investigation — [Redacted]. In our view, the “different conduct” standard of Rule 21F-4(c)(1) is generally limited to those circumstances where staff has an open investigation into one type of misconduct, and a whistleblower subsequently submits a tip alerting staff that the entity is engaged in substantially different misconduct. Thus, Rule 21F-4(c)(1) is not satisfied where, as here, a whistleblower submits information concerning misconduct that is already under investigation. In such circumstances, we believe that the appropriate analysis is governed by Rule 21F-4(c)(2)—i.e., whether the whistleblower’s information significantly contributed to the success of the enforcement action.

SEC

77751

04/29/2016

On July 13, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action 2013-92. The Preliminary Determination recommended that the award applications submitted by [Claimant 1] (“Claimant 1”) and [Claimant 2] (“Claimant 2”) (Claimant 1 and Claimant 2 are together referred to as the “Claimants”) be denied.[fn1]

For the reasons stated below, the claims of the Claimants are denied.

I. Background.

On September 19, 2013, the Commission entered into a settled administrative order (the “Covered Action”) with JPMorgan Chase & Co. (“JPMorgan Chase”). In its order, the Commission found that JPMorgan Chase failed to report the full extent of the trading losses that had occurred during the first quarter of 2012 because of the ineffectiveness of its internal control function and inadequate communication between JPMorgan Chase’s senior management and the audit committee of its Board of Directors. Among other sanctions, JPMorgan Chase was ordered to pay a civil money penalty to the Commission of $200 million.

On October 22, 2013, the Office of the Whistleblower (“OWB”) posted Notice of Covered Action 2013-92 for the Covered Action. The Claimants filed timely whistleblower award claims. Both Claimants thereupon submitted timely award applications on Form WB-APP with supporting materials detailing the information they had provided the Commission.

II. Claimants’ Claims Are Denied.

A. Preliminary Determination and Claimants’ Responses.

On July 13, 2015, the CRS preliminarily determined to deny both Claimants’ award applications because it concluded that neither of them had provided any information that led to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Exchange Act, and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Claimants 1 and 2 submitted written responses contesting the Preliminary Determination on August 10, 2015 and October 26, 2015, respectively. In their written responses, the Claimants reiterate the information they had provided to the Commission and assert that it significantly contributed to the success of the enforcement action. Neither of them states that they heard from Commission’s investigative staff following the submission of their information nor do they mention any communications they received from the staff.

B. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action or related action. 15 U.S.C. § 78u-6(b)(1). As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action. Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

We find that none of the information Claimants submitted led to the successful enforcement of the Covered Action. First, the tips identified by the Claimants in their award applications were not provided to investigative staff for further inquiry or for use in connection with any investigation; instead, each of the Claimants’ tips was designated for “no further action.” Second, at no point prior to the settlement of the Covered Action did the staff members responsible for the Covered Action have any contact with, or receive any information from, the Claimants.

Because the record demonstrates that the Claimants’ information did not lead to the successful enforcement of the Covered Action and they have not shown otherwise in their requests for reconsideration of the Preliminary Determination, we deny Claimants’ applications for an award.

III. Conclusion.

Accordingly, it is ORDERED that the whistleblower award claims of Claimant 1 and 2 are denied.

By the Commission.

[1] The Preliminary Determination also denied an award to Claimant 3 (“Claimant 3”), Claimant 4 (“Claimant 4”), Claimant 5 (“Claimant 5”), Claimant 6 (“Claimant 6”), Claimant 7 (“Claimant 7”), Claimant 8 (“Claimant 8”), Claimant 9 (“Claimant 9”), Claimant 10 (“Claimant 10”), Claimant 11 (“Claimant 11”) and Claimant 12 (“Claimant 12”). Those determinations have not been contested. Accordingly, pursuant to Rule 21F-10(f) under the Exchange Act, Claimants 3-12 have failed to exhaust administrative remedies and the determination to deny an award to them has become final.

CFTC

04/26/2016

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award application of ___ (“Applicant”), submitted on Form WB-APP ___.

Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165 (2015)), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached document, it is the Determination and Final Order of the Commission that the whistleblower award application be denied.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) is the whistleblower award application of ___ (“Applicant”), submitted on WB-APP ___.

IT IS HEREBY DETERMINED that:

1. The award application is denied because the information the Applicant provided did not lead to the successful enforcement of a covered judicial or administrative action, as required by Section 23(b)(1) of the Commodity Exchange Act (7 U.S.C. § 26(b)(1) (2012)) and Sections 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules (17 C.F.R. §§ 165.2(i), 165.5(a)(3) (2015)). The Applicant’s information did not cause the Commission to commence an examination or investigation, reopen an investigation, or inquire concerning different conduct as part of an existing investigation. The Applicant’s information also did not significantly contribute to the success of the Commission’s enforcement action that resulted in Notice of Covered Action No ___.

2. Furthermore, the non-CFTC actions for which the Applicant applied for awards are not related actions with respect to the Applicant and, therefore, are not subject to the payment of whistleblower awards. See 7 U.S.C. § 26(a)(5); 17 C.F.R. §§ 165.2(m), 165.11.

SEC

04/26/2016

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received one timely whistleblower award claim from [Claimant] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has recommended that the Commission deny an award to Claimant. The basis for this determination is as follows:

1. The information provided by Claimant prior to July 21, 2010 is not “original information” within the meaning of Section 21F(a)(1) of the Exchange Act and Rule 21F-4(b)(1)(iv) thereunder because it was not provided to the Commission for the first time after July 21, 2010. the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.[fn1]

2. With respect to information that Claimant provided after July 21, 2010, that information did not lead to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because none of the information that Claimant submitted:

b. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn2]

By: Claims Review Staff.

[1] See Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015); In the Matter of the Claim for Award in connection with SEC v. Advanced Technologies Group LTD, Alexander Stelmak, and Abelis Raskas, LLC, 10-cv-4868 (S.D.N.Y. 2011), Release No. 70772 (October 30, 2013), at 8-12.

[2] Although not a basis for our preliminary determination, we also note that Claimant is not a “whistleblower” within the meaning of Section 21F(a)(6) of the Exchange Act and Rule 21F-2(a) thereunder, and is not eligible for an award, because Claimant did not provide the Commission with information relating to a possible violation of the federal securities laws in accordance with the procedures set forth in Rule 21F-9 under the Exchange Act.

SEC

77529

04/05/2016

For the reasons stated below, Claimant’s claim is denied.

I. Background.

In [Redacted], the Commission [Redacted] in federal district court [Redacted]. In [Redacted]. On [Redacted].

On [Redacted], the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. Claimant filed a timely whistleblower award claim.

II. Claimant’s Claim Is Denied.

A. Preliminary Determination and Claimant’s Response.

On September 30, 2015, the CRS issued a Preliminary Determination recommending that Claimant’s award application be denied because Claimant did not provide any information that led to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Exchange Act, and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

On November 30, 2015, Claimant submitted a written response contesting the Preliminary Determination (hereinafter, “Response”). In the Response, Claimant states that the Preliminary Determination is contested, but Claimant does not address the underlying basis for why Claimant’s claim was denied, i.e., that the information Claimant provided did not lead to the successful enforcement of the Covered Action.

B. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action or related action. 15 U.S.C. § 78u-6(b)(1). As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action. Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

Based on our review of the record, we find that none of the information Claimant submitted led to the successful enforcement of the Covered Action. First, none of the tips identified by Claimant in Claimant’s award application was provided to the staff responsible for the Covered Action. The record conclusively demonstrates that each of the tips was designated for “no further action” by the Commission’s Office of Market Intelligence — the Commission office that is responsible for the initial intake review of whistleblower tips — and were not provided to investigative staff for further inquiry or for use in connection with any Commission investigation. Second, the record demonstrates that at no point prior to the settlement of the Covered Action did the staff members responsible for the Covered Action have any contact with, or receive any information from, Claimant.

Because the record demonstrates that Claimant’s information did not lead to the successful enforcement of the Covered Action and Claimant has not shown otherwise in Claimant’s request for reconsideration of the Preliminary Determination, we deny Claimant’s application for an award.[fn1]

III. Conclusion.

Accordingly, it is ORDERED that Claimant’s whistleblower award claim is denied.

By the Commission.

[1] In the Response, Claimant challenges OWB’s decision not to provide Claimant with the record materials underlying the Preliminary Determination. Under Exchange Act Rules 21F-8(b)(4) and 12(b), 17 C.F.R. § 240.21F-8(b)(4) and 12(b), claimants requesting the administrative record in order to challenge a preliminary determination may be required by OWB to sign a confidentiality agreement in a form acceptable to OWB as a prerequisite to receiving a copy of the record. In accordance with these rules, it is standard practice of OWB to require all claimants seeking copies of the record to sign a confidentiality agreement in order to prevent the disclosure of nonpublic information. Claimant failed to sign the confidentiality agreement within the deadline set by OWB. Several weeks after that deadline, Claimant returned a signed copy of a substantially modified version of the confidentiality agreement that included various material, objectionable provisions, including a provision that would have required the Commission to provide Claimant with counsel and to pay for Claimant’s legal costs and expenses in connection with Claimant’s challenge of the Preliminary Determination. We find that given these objectionable modifications, OWB appropriately declined to counter-sign the confidentiality agreement, and, in accordance with Rules 21F-8(b)(4) and 12(b), OWB appropriately declined to provide Claimant with the record.

SEC

77530

04/05/2016

On September 30, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action [Redacted]. The Preliminary Determination recommended that [Claimant 1] (“Claimant 1”) receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected [Redacted] (“Covered Action”) and [Redacted] percent [Redacted] of the monetary sanctions collected in a related criminal action, [Redacted] (“Related Criminal Action”). The Preliminary Determination also recommended that the award application submitted by [Claimant 2] (“Claimant 2”) be denied. Only Claimant 2 contested the Preliminary Determination.

For the reasons stated below, we adopt the recommendations in the Preliminary Determination with respect to both claimants.

I. Background.

On [Redacted], the Commission filed a complaint in federal district court in [Redacted] concerning [Redacted]. On [Redacted]. In the complaint, the Commission alleged that [Redacted]. The Commission also alleged that [Redacted]. On [Redacted], a judgment was entered [Redacted]. On [Redacted], [Redacted] brought a criminal action against [Redacted]. On [Redacted]. On [Redacted], the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. All claimants filed timely whistleblower award claims.

II. Claimant 1’s Claim is Approved.

Upon due consideration of the administrative record, it is hereby ORDERED that for the reasons set forth in the Preliminary Determination Claimant 1 shall receive [Redacted] percent [Redacted] of the monetary sanctions collected in the Covered Action and [Redacted] percent [Redacted] of the monetary sanctions collected in the Related Criminal Action. Claimant 1’s award will total more than $275,000 based on the monetary sanctions collected in the Covered Action and the Related Criminal Action thus far and shall be offset as described more fully below.[fn1] Claimant 1’s award shall be subject to an offset for any monetary obligations (including disgorgement, prejudgment interest, and penalty amounts) that, as of the date of this order, remain unpaid from the Final Judgment entered against Claimant 1 in [Redacted] (estimated to be [Redacted] as of this date). Claimant 1 was advised of the potential offset in the Preliminary Determination and did not file an objection. Accordingly, Claimant 1 is deemed to have consented to the offset and to have waived any opposition.

III. Claimant 2’s Claim Is Denied.

A. Preliminary Determination and Claimant’s Response.

In its Preliminary Determination, the CRS recommended that Claimant 2’s award application be denied because the record demonstrated that Claimant 2 did not provide any information that led to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Claimant 2 timely submitted a response contesting the Preliminary Determination (hereinafter, “Response”).

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action or related action. 15 U.S.C. § 78u-6(b)(1). As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action. Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

Based on our review of the record, we find that none of the information Claimant 2 submitted led to the successful enforcement of the Covered Action. First, none of the tips identified by Claimant 2 in Claimant 2’s award application was provided to the staff responsible for the Covered Action. The record conclusively demonstrates that each of the tips was designated for “no further action” by the Commission’s Office of Market Intelligence – the Commission office that is responsible for the initial intake review of whistleblower tips – and were not provided to investigative staff for further inquiry or for use in connection with any Commission investigation. Second, the record demonstrates that at no point prior to the settlement of the Covered Action did the staff members responsible for the Covered Action have any contact with, or receive any information from, Claimant 2.

Because the record demonstrates that Claimant 2’s information did not lead to the successful enforcement of the Covered Action and Claimant 2 has not shown otherwise in Claimant 2’s request for reconsideration of the Preliminary Determination, we deny Claimant 2’s application for an award.[fn2]

IV. Conclusion.

Accordingly, it is ORDERED that Claimant 1 shall receive an award of [Redacted] percent [Redacted] of the monetary sanctions collected in the Covered Action and an award of [Redacted] percent [Redacted] of the monetary sanctions collected in the Related Criminal Action subject to an offset as described above for any monetary obligations that remain unpaid from the Final Judgment entered against Claimant 1. It is further ORDERED that Claimant 2’s whistleblower award claim is denied.

By the Commission.

[1] Monetary sanctions collected by the Commission in the Covered Action or by the [Redacted] in the Related Criminal Action that are either deemed to satisfy or are in fact used to satisfy any payment obligations of the defendants in the other action shall not be double counted for purposes of paying an award; further, for purposes of calculating an award payment, any monetary sanctions collected in the manner just described shall be attributed, first, to the Commission’s Covered Action up to the full amount of monetary sanctions ordered in the Covered Action, with any remaining amounts attributed to the Related Criminal Action.

[2] In the Response, Claimant 2 challenges OWB’s decision not to provide Claimant 2 with the record materials underlying the Preliminary Determination. Under Exchange Act Rules 21F-8(b)(4) and 12(b), 17 C.F.R. § 240.21F-8(b)(4) and 12(b), claimants requesting the administrative record in order to challenge a preliminary determination may be required by OWB to sign a confidentiality agreement in a form acceptable to OWB as a prerequisite to receiving a copy of the record. In accordance with these rules, it is standard practice of OWB to require all claimants seeking copies of the record to sign a confidentiality agreement in order to prevent the disclosure of nonpublic information. Claimant 2 failed to sign the confidentiality agreement within the deadline set by OWB. Several weeks after that deadline, Claimant 2 returned a signed copy of a substantially modified version of the confidentiality agreement that included various material, objectionable provisions, including a provision that would have required the Commission to provide Claimant 2 with counsel and to pay for Claimant 2’s legal costs and expenses in connection with Claimant 2’s challenge of the Preliminary Determination. We find that given these objectionable modifications, OWB appropriately declined to counter-sign the confidentiality agreement, and, in accordance with Rules 21F-8(b)(4) and 12(b), OWB appropriately declined to provide Claimant 2 with the record.

SEC

04/01/2016

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act

2. Claimant 4 did not submit a Form WB-APP for the Notice of Covered Action to the Office of the Whistle blower within ninety (90) calendar days of the date of the Notice of Covered Action as required by Rule 21F-10(b) of the Exchange Act in order to be considered for an award.

By: Claims Review Staff.

SEC

04/01/2016

In response to the above-referenced Covered Action, the Securities and Exchange Commission received five timely whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

[Redacted] (Claimant #2).[fn1]

[Redacted] (Claimant #3).

The Claims Review Staff has preliminarily determined to recommend that the Commission deny awards to Claimant #2, Claimant #3, [Redacted]. The basis for this determination is as follows:

Neither Claimant #2, Claimant #3, [Redacted] provided information that led to the successful enforcement of the referenced Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because none of the information that the claimants submitted:

2. significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[Redacted].

By: Claims Review Staff.

[1] Claimant #2 also claims an award in connection with actions brought by [Redacted]. Claimant #2 is not eligible for an award under the Commission’s whistleblower program in connection with [Redacted] because Claimant is not eligible for an award in connection with a Commission Covered Action, for the reasons stated herein. See Rule 21 F-3(b)(2). Claimant #2 also claims an award in connection with [Redacted]. That action, however, did not result in monetary sanctions over $1,000,000, and therefore, does not qualify as a Covered Action for which an award may be made.

SEC

04/01/2016

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received whistleblower award claims from [Redacted] (“Claimant 1”), [Redacted] (“Claimant 2”), [Redacted] (“Claimant 3”), [Redacted] (“Claimant 4”), [Redacted] (“Claimant 5”) and [Redacted] (“Claimant 6”) (collectively, the “Claimants”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily recommended that the Commission deny[fn2] an award to the Claimants. The bases for this determination are as follows:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

2. Claimant 5 is not an “original source” under Rule 21F-4(b)(5) for the information [Redacted] provided to the Commission because such information does not meet the definition of “original information”, a prerequisite for the application of Rule 21F-4(b)(5). [Redacted] did not provide the information at issue to the Commission for the first time after July 21, 2010, as required by Rule 21F4(b)(1)(iv) to be considered “original information.”

By: Claims Review Staff.

[2] Claimants 1 through 5 also claim an award in connection with an action brought by [Redacted] captioned [Redacted] as a “related action”. These claimants are not eligible for an award under the Commission’s whistleblower program in connection with [Redacted] because none is eligible, for the reasons stated herein, for an award in connection with this Covered Action. See Exchange Act Rule 21F-3(b) (defining a “related action” as one “based on the same original information that the whistleblower voluntarily provided to the Commission and that led the Commission to obtain monetary sanctions totaling more than $1,000,000.”).

CFTC

03/28/2016

Attached is the Final Determination of the Commodity Futures Trading Commission (“Commission”) pertaining to the whistleblower award application of ___ (“Applicant”), submitted on Form WB-APP ___ , in response to the Commission’s Notice of Covered Action No. ___ regarding ___.

Pursuant to the Commission’s Whistleblower Rules (“Rules”), the Commission delegated the authority to make whistleblower award determinations to the Whistleblower Award Determination Panel (“Panel”). 17 C.F.R. § l65.15(b). Therefore, the Panel’s award determination is the final determination of the Commission.

As set forth in the attached, it is the Final Commission Determination and Order of the Commission that the Applicant’s whistleblower award application shall he granted. After giving due consideration of the factors set forth in Rule 165.9, 17 C.F.R. § 165.9, the Panel determined that the award amount should be ___% of the amount of the monetary sanctions collected in ___. Accordingly, the Applicant shall receive a whistleblower award in the amount of ___.

In accordance with 7 U.S.C. § 26(f) and 17 C.F.R. § 165.13, if you wish to appeal the Final Commission Determination and Order, you must appeal to the appropriate court of appeals of the United States no more than 30 days after this Final Order of the Commission is issued.

SEC

77368

03/14/2016

[Claimant #1] (“Claimant 1”), [Claimant #2] (“Claimant 2”), and [Claimant #3] (“Claimant 3”) (collectively, “Claimants” ) failed to submit their claims for an award for Notice of Covered Action [Redacted] to the Office of the Whistleblower (“OWB)” within ninety (90) calendar days of the date of the Notice of Covered Action (“NoCA”), as Rule 21F-10(b) of the Securities Exchange Act (“Exchange Act”) requires for award consideration.[fn1] As a result, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that each Claimants’ untimely claim be denied.[fn2]

For the reasons set forth below, each Claimant’s award claim is denied.

I. Background.

On [Redacted] the Commission filed a complaint in the U.S. District Court for the District of [Redacted] against [Redacted] for engaging in financial fraud to overstate [Redacted] financial condition. Between [Redacted] and [Redacted] the district court entered final judgments against [Redacted] ordering, among other sanctions, that *** and *** pay a civil penalty of [Redacted] *** pay disgorgement and prejudgment interest of [Redacted] and a civil penalty of [Redacted] and *** and *** pay disgorgement, prejudgment interest and civil penalties of [Redacted] and [Redacted], respectively.

On [Redacted] the OWB posted NoCA [Redacted] for this covered action. On [Redacted], the 90-day period established by Rule 21F-10(b) to submit an award claim expired without any of the three Claimants having made a submission. Instead, the three Claimants submitted their award claims approximately two years after the deadline.[fn3] On June 5, 2015, the CRS issued a Preliminary Determination recommending that each Claimant’s award claim be denied due to untimeliness.

Pursuant to Rule 21F-10(e),[fn4] the three Claimants subsequently submitted written responses contesting the Preliminary Determination.[fn5] In their responses the Claimants did not dispute that their claims were late. Rather, they argued that the Commission should excuse their untimely filings due to certain purported “extraordinary circumstances. ” While the Claimants each raise different contentions as to why extraordinary circumstances excused their late submissions, none of the Claimants’ claims that the delay was caused by factors outside his control. Rather, the Claimants assert that extraordinary circumstances should be found because of purported mistakes committed by the Commission in its investigation and in the prosecution of the enforcement action, the purported importance of the information the claimants provided to the staff during its investigation and continue to provide in the subsequent SB bankruptcy proceeding, and the Commission’s failure to directly notify the Claimants of the posting of the NoCA and the deadline for submitting an award application.

II. Analysis.

At the outset, we think it is important to observe that the 90-day deadline set forth in Rule 21F-10(b) serves several important programmatic functions. The deadline ensures fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time. The deadline also brings finality to the claims process so that we can make timely awards to meritorious whistleblowers.[fn6]

Notwithstanding these important programmatic functions, we recognize that there may be rare situations where an exception should be made. To allow for this, Rule 21F-8(a) provides that “the Commission may, in its sole discretion, waive” the 90-day filing requirement “upon a showing of extraordinary circumstances. “[fn7] We do not find that any of the three Claimants has made the necessary showing to trigger our discretionary authority to waive the deadline.

In determining whether a claimant has demonstrated extraordinary circumstances to excuse an untimely submission under Rule 21F-8(a), we have explained that “the ‘extraordinary circumstances exception is to be narrowly construed and applied only in limited circumstances.”[fn8] We have further explained that an extraordinary circumstance in the context of a late filing requires a claimant to show that the reason for the failure to timely file was beyond the claimant’s control.[fn9] Further, we identified attorney misconduct or serious illness that presented the applicant from making a timely filing as two examples of the demanding showing an applicant must make for us to consider exercising our discretionary authority to excuse an untimely filing.[fn10]

Applying that demanding standard here, we find that that none of the three Claimants has demonstrated that their failure to timely file an award application was caused by factors beyond their control. For example, neither the purported mistakes made by the Commission in its investigation and enforcement action, nor the purported importance of the information provided by the Claimants during the Commission’s investigation and the SB bankruptcy proceeding, explains why circumstances beyond the Claimants’ control prevented them from timely filing their award claims.

Finally, we disagree with the Claimants’ contention that the Commission had a duty to notify the Claimants of the posting of the NoCA and the deadline for submitting an award application, and that the failure to provide such notice constituted an extraordinary circumstance justifying a waiver of the timing requirement. Rule 21F-10(a) provides for constructive, not actual, notice of the posting of a covered action and of the deadline for submitting a claim.[fn11] The NoCA for this matter was clearly posted on the Commission’s website, along with the filing deadline, which constitutes the requisite notice. As we have previously explained, “a lack of awareness about the [whistleblower award] program does not . . . rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.”[fn12] A potential claimant’s responsibility includes the obligation to regularly monitor the Commission’s web page for NoCA postings and to properly calculate the deadline for filing an award claim. Here, the Claimants failed to do that, and their failures were not caused by an extraordinary circumstance that might excuse the untimely award applications.[fn13]

III. Conclusion

Accordingly, upon due consideration under Rule 21F-10(h), 17 C.F.R. § 240.21F-10(h), it is hereby ORDERED that the claims for whistleblower awards by Claimant 1, Claimant 2, and Claimant 3 be, and hereby are, denied.

By the Commission.

[1] Rule 21F-10(b), 17 C.F.R. § 240.21F-10(b), provides:
To file a claim for a whistleblower award, you must file Form WB-APP, Application for Award for Original Information Provided Pursuant to Section 21F of the Securities Exchange Act of 1934 (referenced in § 249.1801 of this chapter). You must sign this form as the claimant and submit it to the Office of the Whistleblower by mail or fax. All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award. 17 C.F.R. § 240.21F-10(b).

[2] The Preliminary Determination also denied an award to [Redacted]. ** did not contest that denial, and thus it became the final order of the Commission pursuant to Exchange Act Rule 21F-10(f).

[3] Claimant 1 filed an award application on Form WB-APP dated March 31, 2014, almost two years after the application deadline. Claimant 1’s application stated that it was also made on behalf of Claimants 2 and 3, although it was only signed by Claimant 1. Claimants 2 and 3 subsequently submitted their own award applications on Forms WB-APP on July 14, 2014 and July 15, 2014, respectively.

[4] Rule 21F-10(e), 17 C.F.R. § 240.21F-10(e), provides that a claimant seeking to contest a Preliminary Determination may submit a written response within the specified period under the rule “setting forth the grounds for your objection to either the denial of an award or the proposed amount of an award.”

[5] Claimants 1 and 2 requested oral argument before the Commission. We are denying those requests because we find that argument would not benefit the Commission’s consideration of their award applications.

[6] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545, at 172 (May 25, 2011), available at http://www.sec.gov/rules/final/2011/34-64545.pdf (“Implementing Release”).

[7] 17 C.F.R. § 240.21F-8(a).

[8] Order Determining Whistleblower Award Claim, Exchange Act Release No. 72659, Whistleblower Award Proceeding File No. 2014-7, at 4 (July 23, 2014), available at http://www.sec.gov/rules/other/2014/34-72659.pdf (citation and internal quotation marks omitted) ; see also Order Determining Whistleblower Award Claim, Exchange Act Release No. 72178, Whistleblower Award Proceeding File No. 2014-4, at 3 (May 16, 2014), available at http://www.sec.gov/rules/other/2014/34-72178.pdf (including same language).

[9] Exchange Act Rel. No. 72659 at 5; Exchange Act Rel. No. 72178 at *3.

[10] Exchange Act Rel. No. 72659 at 6; Exchange Act Rel. No. 72178 at *3.

[11] Rule 21F-10(a), 17 C.F.R. § 240.21F-10(a), states that “[w]henever a Commission action results in monetary sanctions totaling more than $ 1,000,000, the Office of the Whistleblower will cause to be published on the Commission’s website a ‘Notice of Covered Action’ . . . [and that] [a] claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred.” In our release adopting the final whistleblower rules, we explained that the constructive notice procedure of Rule 21F-10(a) “provides the best mechanism to provide notice to all whistleblower claimants who may have contributed to the action’s success.” Implementing Release at *171.

[12] Exchange Act Release No. 72659 at *5 (“The Commission is under no duty to provide Claimant . . . with direct notice of the filing deadline. “).

[13] Although the Claimants have not requested that we invoke our separate exemptive authority under Section 36(a) of the Exchange Act, we would decline to do so if they had. Section 36(a) grants the Commission the authority in certain circumstances to “exempt any person . . . from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” We believe that none of the Claimants has met their burden to demonstrate any considerations that would satisfy the requirements for us to exercise our Section 36(a) exemptive authority.

SEC

77322

03/08/2016

On July 13, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination for Notice of Covered Action [Redacted], [Redacted] (the “Covered Action”).[fn1] The Preliminary Determination recommended that [Redacted] (“Claimant 1”) receive a whistleblower award in the amount of [Redacted] percent of [Redacted] the monetary sanctions collected or to be collected in the Covered Action, which should yield a payment exceeding $1.8 million. The Preliminary Determination also recommended that [Redacted] (“Claimant 2”) and [Redacted] (“Claimant 3”) receive a joint whistleblower award in the amount of [Redacted] percent of [Redacted] the monetary sanctions collected or to be collected in the Covered Action, which should yield a payment of over $130,000.[fn2]

On October 12, 2015, Claimants 2 and 3 jointly challenged the Preliminary Determination’s proposed award determinations asserting that a substantial increase in their award percentage is warranted based on their joint contribution to the success of the Covered Action. Claimant 1 did not contest the Preliminary Determination.

Based on our review of the underlying record (including the response filed by Claimants 2 and 3 to the award determinations), we have determined to adopt the award recommendations of the Preliminary Determination. Our assessment of the appropriate award amounts is based exclusively on the award factors that are specified in Rule 21F-6, 17 C.F.R. § 240.21F-6. In applying those factors, we have considered the relative contribution of the Claimants to the success of the Covered Action. In doing so, we were mindful of the fact that the record firmly demonstrates that the joint contribution of Claimants 2 and 3 was substantially less important than that of Claimant 1.[fn3]

Accordingly, upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), it is hereby ORDERED that Claimant 1 shall receive an award of [Redacted] percent of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order. It is FURTHER ORDERED that Claimants 2 and 3 shall receive a joint award of [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.[fn4]

By the Commission.

[1] [Redacted].

[2] The CRS also recommended that the whistleblower award claim filed by a fourth claimant [Redacted], be denied. On August 5, 2015, the Commission issued a final order (available at http://www.sec.gov/rules/other/2015/owb-order-final-080515-2.pdf) determining that, pursuant to Rule 21F-8 of the Exchange Act, 17 C.F.R. § 240.21F-8(c)(7), this claimant is ineligible for an award in all of [Redacted] pending or future covered or related actions, because [Redacted] was found to have knowingly and willfully made false, fictitious, or fraudulent statements and representations to the Commission over a course of several years.

[3] For example, it was Claimant 1’s tip that caused the investigative staff to open the investigation, and this occurred approximately eighteen months before Claimants 2 and 3 submitted their information. In addition, Claimant 1 met with the staff to provide useful information on several occasions after providing [Redacted] original tip; during these meetings, Claimant 1 [Redacted] and answered numerous questions posed by the staff. Most of this assistance occurred before Claimants 2 and 3 submitted their information.

[4] Unless Claimants 2 and 3 both advise the OWB to make a different allocation of the award within 10 days of the issuance of this order, the OWB is directed to pay each of them individually 50% of their joint award.

CFTC

02/23/2016

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award application of [Applicant] (“Applicant”), submitted on Form WB-APP ___.

Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165 (2015)), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached document, it is the Determination and Final Order of the Commission that the whistleblower award application be denied.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) is the whistleblower award application of [Applicant] (“Applicant”), submitted on WB-APP ___.

IT IS HEREBY DETERMINED that:

1. The Applicant failed to file a Form TCR, which is required under Section 165.3 of the Commission’s Whistleblower Rules. See 17 C.F.R. § 165.3 (2015). The Applicant is therefore not a whistleblower.

Furthermore, the award application is denied because the information the Applicant provided did not lead to the successful enforcement of a covered judicial or administrative action or a related action, as required by Section 23(b)(1) of the Commodity Exchange Act (7 U.S.C. § 26(b)(1) (2012)) and Sections 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules (17 C.F.R. §§ 165.2(i), 165.5(a)(3) (2015)). The Applicant’s information did not cause the Commission to commence an examination or investigation, reopen an investigation, or inquire concerning different conduct as part of an existing investigation.

CFTC

02/23/2016

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award application of [Applicant] (“Applicant”), filed on Form WB-APP ___, referenced above.

Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165 (2015)), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached document, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied.

—–

IT IS HEREBY DETERMINED that:

Applicant’s award application is denied because the order that was the subject of Applicant’s Form WB-APP was neither a covered judicial or administrative action nor a successful enforcement of a related action, as required by Rule 165.5(a)(3) of the Commission’s Whistleblower Rules (17 C.F.R. §§ 165.2(e), 165.2(m), 165.5(a)(3)).

SEC

02/13/2016

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received one whistleblower award claim from [Claimant] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant because Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

02/12/2016

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a whistleblower award claim from [Claimant] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant because Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

77037

02/02/2016

UNITED STATES OF AMERICA before the SECURITIES AND EXCHANGE COMMISSION SECURITIES EXCHANGE ACT OF 1934 Release No. 77037 / February 2, 2016 WHISTLEBLOWER AWARD PROCEEDING File No. 2016-3 In the Matter of the Claim for Award in connection with In the Matter of Fiduciary Asset Management, LLC, File No. 3-15150 Notice of Covered Action 2013-4 ORDER DETERMINING WHISTLEBLOWER AWARD CLAIM On June 5, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination preliminarily denying a claim for award submitted by Redacted (“Claimant”) in connection with Notice of Covered Action 2013-4 (“Covered Action”). The CRS found that Claimant failed to submit the claim for award within ninety (90) days of the Notice of Covered Action, as required under Rule 21F-10(a) of the Securities Exchange Act of 1934 (“Exchange Act”).1 The CRS also found that Claimant was not a “whistleblower” under Rule 21F-2(a)(1) of the Exchange Act with respect to the Covered Action because Claimant did not provide the Commission with information relating to a possible violation of the federal securities laws,2 and failed to submit information in the form and manner that is required under Rules 21F-2(a)(2), 21F-8(a) and 21F-9(a) & (b) of the Exchange Act.3 1 Under Exchange Act Rule 21F-10(a), “[w]henever a Commission action results in monetary sanctions totaling more than $1,000,000, the Office of the Whistleblower will cause to be published on the Commission’s website a ‘Notice of Covered Action’ . . . A claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred.”). 2 Exchange Act Rule 21F-2(a)(1) defines “whistleblower” as an individual who, alone or jointly with others, provides the Commission with information pursuant to the Commission’s procedures and the information “relates to a possible violation of the federal securities laws . . . that has occurred, is ongoing, or is about to occur.” 3 For purposes of the award program, whistleblowers are required to submit their information about a possible securities law violation through the Commission’s online system, or by mailing or faxing a Form TCR, and to 2 Redacted Redacted Redacted Redacted Redacted Redacted Redacted Redacted Redacted Redacted Redacted Redacted On November 10, 2015, Claimant filed a written response contesting the Preliminary Determination. In Claimant’s request for reconsideration, Claimant argued that submitted an award claim within the 90-day deadline, but did not identify the date of when submitted the application and did not otherwise include any materials supporting contention that the award claim was timely made. Claimant’s request for reconsideration did not address the second, independent ground for the denial of claim—that is not a “whistleblower” because failed to provide information to the Commission of a possible violation of the federal securities laws. Having considered the record, including Claimant’s response to the Preliminary Determination, we are denying Claimant’s award claim because (1) the application was untimely and (2) Claimant is not a “whistleblower” and did not submit information in accordance with the Commission’s procedural requirements. The Notice for Covered Action 2013-4 was posted on the Commission’s website on January 3, 2013. The 90-day deadline for filing an award claim in connection with the Covered Action was April 4, 2013. Claimant submitted multiple applications on Form WB-APP in connection with the Covered Action, but the first application was faxed to the Office of the Whistleblower (“OWB”) on October 9, 2013, six months after the filing deadline. Claimant’s request for reconsideration makes the blanket assertion that award application was timely because “strategically calculated the time frame to make sure [Claimant] was in the 90 [day] window of opportunity.” Claimant, however, does not identify when submitted the award claim, and provides no materials supporting argument that the application was timely.4 We find that the record conclusively demonstrates that the Claimant did not timely submit award application. We also find that Claimant is not a “whistleblower” with respect to the Covered Action, something which Claimant does not dispute in the reconsideration request.5 According to Claimant’s award applications, Claimant submitted information to other federal agencies, but does not identify any information that provided to the Commission. A search of the declare under penalty of perjury that the information submitted is true and correct to the best of the individual’s knowledge and belief. See Exchange Act Rules 21F-9(a) & (b). 4 Claimant also contends that Redacted“double verified” the deadline with OWB staff. But Claimant has offered no proof of this contention, and OWB’s records show that the first time Claimant called the whistleblower hotline was on October 29, 2013—more than three weeks after Claimant filed Redactedfirst, untimely award claim in connection with the Covered Action. We thus find that the record does not support Claimant’s contention that Redacted“double verified” the filing deadline with OWB staff. And in any event, the obligation was on Claimant to submit a timely application for award and Redactedfailed to do this. 5 In light of the fact that the Claimant failed to contest the Preliminary Determination that Redacteddoes not qualify as a whistleblower, we separately find thatRedacted has waived that issue. 3 Commission’s Tips, Complaints and Referrals (“TCR”) system—the Commission’s electronic database which records and stores information received from whistleblowers and others about potential securities law violations and records staff action taken with regard to tips, complaints, and referrals entered into the system—confirmed that Claimant did not submit a tip to the Commission in connection with the Covered Action or with respect to any other matter or investigation. Accordingly, it is ORDERED that Claimant’s whistleblower award claim be, and hereby is, denied. By the Commission.

SEC

76921

01/15/2016

On June 5, 2015, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action [Redacted]. The Preliminary Determination recommended that [Redacted] (“Claimant #1”) receive a whistleblower award of [Redacted]. The Preliminary Determination also recommended that award applications submitted by [Redacted] (“Claimant #2”), [Redacted] (“Claimant #3”), and [Redacted] (“Claimant #4”) be denied. Only Claimant #4 filed a response contesting the Preliminary Determination.[fn1]

For the reasons stated below, Claimant #1’s claim is approved in the amount of [Redacted], and Claimant #4 is denied.

I. Background.

On [Redacted], the Commission filed an enforcement action, [Redacted] (“Covered Action”). The Commission found that [Redacted]. The Commission also found that [Redacted] these violations. Among other relief, the Commission ordered [Redacted] to pay [Redacted].

The Covered Action arose out of an investigation into [Redacted]. In response to [Redacted] Enforcement staff opened the investigation underlying the Covered Action.

On [Redacted] the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. All claimants filed timely whistleblower award claims.

II. Claimant #1’s Claim Is Approved.

In [Redacted] Claimant #1 provided a detailed analysis to the Commission showing that [Redacted]. This information was provided to the Commission before the enactment of the whistleblower award program and, therefore, could not serve as the basis for an award.[fn2]

In [Redacted] —after Congress enacted the whistleblower award program as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010—Claimant #1 provided additional analysis to the Commission. This additional analysis showed that [Redacted]. The CRS preliminarily determined that this additional analysis constituted original information, that Claimant #1 voluntarily provided it to the Commission, and that this information significantly contributed to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Exchange Act and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

The CRS also preliminarily determined to recommend that Claimant #1’s award be set in the amount of [Redacted] of the monetary sanctions collected in the Covered Action, which will equal payment of more than $700,000. In arriving at this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant #1’s application.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. §§ 240.21F-10(f) and (h), and for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant #1 shall receive [Redacted] of the monetary sanctions collected in the Covered Action.

III. Claimant # 4’s Claim Is Denied.

A. Preliminary Determination and Claimant #4’s Response.

On June 5, 2015, the CRS also preliminarily determined to deny Claimant #4’s award application because Claimant #4 did not provide any information that led to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Exchange Act, and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

On October 3, 2015, Claimant #4 submitted a written response contesting the Preliminary Determination (hereinafter, “Response”). In the Response, Claimant #4 failed to identify any specific tip or complaint [Redacted] made to the Commission in connection with the Covered Action. Claimant #4 also attached various documents to the Response, but none of these materials had any apparent relevance to the question of whether Claimant #4 had provided information to the Commission that led to the successful enforcement of the Covered Action.[fn3]

B. Analysis.

To qualify for an award under Section 21F of the Exchange Act, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action or related action. 15 U.S.C. § 78u-6(b)(1). As relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action. Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

We find that none of the information Claimant #4 submitted led to the successful enforcement of the Covered Action. First, none of the tips that Claimant #4 has submitted to the Commission was provided to investigative staff for further inquiry or for use in connection with any investigation; instead, each of Claimant #4’s tips was designated for “no further action.” Moreover, at no point prior to the settlement of the Covered Action did the staff members responsible for the Covered Action have any contact with, or receive any information from, Claimant #4. Second, based on our own assessment of the information that Claimant #4 submitted, we cannot see how this information could have led to the successful enforcement of the Covered Action given the absence of relevant factual connections between the two.

Because the record demonstrates that Claimant #4’s information did not lead to the successful enforcement of the Covered Action and [Redacted] has not shown otherwise in [Redacted] request for reconsideration of the Preliminary Determination, we deny Claimant #4’s application for an award.[fn4]

IV. Conclusion.

Accordingly, it is ORDERED that Claimant #1 shall receive an award of [Redacted] of the monetary sanctions collected in this Covered Action.

ORDERED that Claimant # 4’s whistleblower award claim is denied.

By the Commission.

[1] Claimants #2 and #3 failed to submit a timely response contesting the Preliminary Determination. Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination as to Claimants #2 and #3 denying their claims for award has become the Final Order of the Commission with respect to these claims.

[2] See Exchange Act Rule 21F-4(b), 17 C.F.R. § 240.21F-4(b); see also Stryker v. SEC, 780 F.3d 163 (2d Cir. 2015).

[3] These materials included: [Redacted].

[4] In [Redacted] Response, Claimant #4 contends that the OWB unlawfully withheld from [Redacted] the materials underlying the CRS’s Preliminary Determination. We disagree. Under Exchange Act Rule 21F -12(b), 17 C.F.R. § 240.21F-12(b), individuals requesting Preliminary Determination materials may be required by staff in the OWB to sign a confidentiality agreement as a prerequisite to receiving a copy of the record. In accordance with this Commission rule, it is standard practice of OWB staff to require all claimants seeking copies of the record to sign a confidentiality agreement to prevent the disclosure of potentially sensitive information. On July 8 and again on July 17, OWB staff sent Claimant #4 a standard confidentiality agreement. OWB staff also advised Claimant #4 that [Redacted] would not be provided with the record materials if [Redacted] declined to sign the confidentiality agreement. After receiving an extension of time to consider the draft agreement, Claimant #4 ultimately refused to sign it. As a result, [Redacted] was not provided with the record in accordance with Rule 21F-12(b).

CFTC

12/08/2015

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award application of [Applicant] (“Applicant”), submitted on Form WB-APP ___ referenced above.

Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165 (2015)), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached document, it is the Determination and Final Order of the Commission that the whistleblower award application be denied.

—–

IT IS HEREBY DETERMINED that:

1. The award application is denied because the Applicant’s Form WB-APP does not pertain to a covered Commission judicial or administrative action, or a related action as required by Section 165.3(a) of the Commission’s Whistleblower Rules. See 17 C.F.R. § 165.3(a) (2015).

SEC

11/30/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant 1”), and [Redacted] (“Claimant 2”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

Claimant 1.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant 1 based on the following:

1. The information provided by Claimant 1 does not qualify as original information as defined in Section 21F(a)(3) of the Exchange Act and Rule 21F-4(b)(1) thereunder because the information was derived from publicly available sources,[fn1] and specifically from allegations made in a judicial complaint filed by another party.

2. Claimant 1 did not provide original information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

Claimant 2.

[Redacted].

By: Claims Review Staff.

[1] See Rule 21F-4(b)(2).

SEC

11/30/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received four whistleblower award claims from the following individuals (collectively, the “Claimants”):

[Claimant 1] (“Claimant 1”)

[Claimant 2] (“Claimant 2”)

[Claimant 3] (“Claimant 3”)

[Claimant 4] (“Claimant 4”)

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

Claimants did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

11/30/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received one whistleblower award claim from [Redacted] (collectively, “Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant based on the following.

a. Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

i. cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

ii. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

b. The information provided by Claimant prior to July 21, 2010 is not “original information” within the meaning of Section 21F(a)(1) of the Exchange Act and Rule 21F-4(b)(1)(iv) thereunder because it was not provided to the Commission for the first time after July 21, 2010, the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.[fn1]

By: Claims Review Staff.

SEC

11/30/2015

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant based on the following.

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

CFTC

11/13/2015

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award application of [Applicant] (“Applicant”), submitted on Form WB-APP ___.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”), is the whistleblower award application of [Applicant] (“Applicant”), submitted on WB-APP ___, referenced above.

IT IS HEREBY DETERMINED that:

1. The award application is denied because the information the Applicant submitted did not contain “original information,” which is information that is not already known to the CFTC and is derived either from a whistleblower’s independent knowledge or a whistleblower’s independent analysis. 7 U.S.C. §§ 26(a)(4), 26(b)(1); 17 C.F.R. §§ 165.2(k), 165.5(a)(2). The information the Applicant provided does not meet the standard for original information because it was already known to the Commission, and therefore the Applicant is not eligible for an award.

2. Furthermore, Applicant’s WB-APP did not lead to the successful resolution of a covered Commission judicial or administrative action or a related action as required by Section 165.3(a) of the Commission’s Whistleblower Rules. See 17 C.F.R. § 165.3(a).

CFTC

11/13/2015

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award applications of [Applicant] (“Applicant”), submitted on Forms WB-APP ___ and WB-APP ___, referenced above.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) are the whistleblower award applications of Applicant (“Applicant”), submitted on Forms WB-APP ___ and WB-APP ___, referenced above.

IT IS HEREBY DETERMINED that:

1. The award applications are denied because the Applicant failed to file a Form TCR, which is required under Section 165.3 of the Commission’s Whistleblower Rules. See 17 C.F.R. § 165.3 (2015). Instead, the Applicant mistakenly submitted complaints on Forms WB-APPs rather than on Form TCRs (the form for whistleblower tips and complaints). The applicant is therefore not a whistleblower.

Furthermore, Applicant’s Forms WB-APPs do not pertain to a covered Commission judicial or administrative action, or a related action as required by Section 165.3(a) of the Commission’s Whistleblower Rules. See 17 C.F.R. § 165.3(a).

SEC

76338

11/04/2015

On July 13, 2015, the Claims Review Staff issued a Preliminary Determination for Notice of Covered Action [Redacted]. The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award of [Redacted] of the monetary sanctions collected in the Covered Action, pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Based on a consideration of the factors specified in Rule 21F-6, the Claims Review Staff considered the significance of the information provided by the Claimant, the assistance that the Claimant provided, and the law-enforcement interests at issue. The Claims Review Staff also considered the Claimant’s delay in reporting the violations, which, under the circumstances, was found to be unreasonable. Although the Claimant’s delay was limited in duration, it occurred entirely after the creation of the Commission’s whistleblower program under the Dodd-Frank Wall Street Reform and Consumer Protection Act.[fn1] Furthermore, during the period of delay, the violations continued and the respondents in the underlying action obtained additional ill-gotten gains, with a resulting increase in the monetary sanctions upon which the Claimant’s award is based.

On September 10, 2015, Claimant, through counsel, requested an increase in award percentage, arguing that the Claims Review Staff had weighed too heavily the Claimant’s reporting delay in assessing the award percentage. The reconsideration request argued that the personal and professional risks faced by whistleblowers in reporting to the Commission had not been adequately considered, that early and prompt reporting may lead to poor quality tips, and that the Claims Review Staff had improperly assessed Claimant’s failure to report the misconduct internally in determining the award percentage.

We are not persuaded by Claimant’s arguments and the recommendation by the Claims Review Staff that the Claimant receive an award of [Redacted] is hereby adopted. Given the monetary sanctions collected, the award should yield a payment of over $325,000.

Contrary to the Claimant’s contentions, we have given due consideration to the personal and professional risks faced by whistleblowers in reporting their information to the Commission, and find it significant that the delay here occurred entirely after implementation of the whistleblower program under the Dodd-Frank Act. In considering two prior whistleblower award claims where the period of delay straddled the Dodd-Frank Act, we determined, in our discretion, to give less weight to the unreasonable reporting delay than we “otherwise might have done had the delay occurred entirely after the [whistleblower] program’s creation.”[fn2]

This distinction reflects our understanding that the Dodd-Frank Act changed the landscape for whistleblowers. Before the enactment of Section 21F, individuals faced strong disincentives to report violations while still employed at the entity where misconduct was occurring. Congress’s establishment of the whistleblower program in the Dodd-Frank Act, however, provided new whistleblower incentives and protections to overcome those powerful disincentives to reporting. Thus, we considered this award, involving a post-Section 21F reporting delay, against the backdrop of Congress’s principal purpose “to motivate those with insider knowledge [of securities violations] to come forward” and “take the enormous risk of blowing the whistle in calling attention to fraud.”[fn3]

We also have emphasized that the whistleblower rules “should incentivize the prompt and early submission of high-quality, credible tips. “[fn4] Section 21F provided whistleblowers with confidentiality protections, including the right of whistleblowers to report to the Commission anonymously and to remain anonymous until the time that an award is to be paid.[fn5] Indeed, Claimant took advantage of these provisions and submitted the Form TCR to the Commission anonymously through counsel. As such, although the duration of the delay was relatively limited, we believe that the delay was unreasonable in light of the incentives and protections now afforded to whistleblowers under the Commission’s whistleblower program. Where the period of delay occurs entirely after the creation of the Commission’s whistleblower program, we will weigh the delay more heavily in assessing the appropriate award percentage.

We are not persuaded by Claimant’s general policy contention that, by encouraging prompt reporting, we may be encouraging the submission of lower-quality tips and complaints. First, this particular case is not one where a whistleblower either took, or reasonably needed to take, additional time to gather more information in order to understand that violations had occurred or to appreciate the scope of the misconduct. More generally we note that whistleblowers are free to, and often do, supplement their initial tips with additional information or materials after making their first submission to the Commission. Additionally, we believe it would undermine our objective of leveraging whistleblower tips to help detect fraud early and thereby prevent investor harm if whistleblowers could unreasonably delay reporting and receive greater awards due to the continued accrual of wrongful profits.[fn6]

Finally, in determining the award percentage, we did not give negative weight to the fact that Claimant declined to report the violations internally. In assessing the reasonableness of Claimant’s delay, we considered the fact that Claimant failed promptly to report the wrongdoing to the Commission, to any other regulator, or through internal reporting mechanisms, and instead waited until after leaving [Redacted] employer to contact the Commission. We did not decrease Claimant’s award percentage because [Redacted] declined to report internally, but because after becoming aware of the wrongdoing, [Redacted] did nothing to report the information and did nothing to try to stop the violations from continuing to occur, which under the facts and circumstances, we find unreasonable.[fn7]

Accordingly, upon due consideration under Rules 21F-10(g) and (h), 17 C.F.R. §§ 240.21F-10(g) and (h), it is hereby ORDERED that the Claimant shall receive an award of [Redacted] of the monetary sanctions collected and to be collected in the Covered Action.

By the Commission.

[1] See Pub. L. No. 111-203, § 922, 124 Stat 1841 (2010).

[2] See Order Determining Whistleblower Award Claim, Exchange Act Release No. 75477, at 2 n.3 (July 17, 2015); Order Determining Whistleblower Award Claim, Exchange Act Release No. 73174, at 3 n.5 (Sept. 22, 2014).

[3] S. Rep. 111-176 at 110-11 (Apr. 30, 2010).

[4] Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545, at 217 (Aug. 12, 2011).

[5] Exchange Act Section 21F(d)(2), 15 U.S.C. § 78u-6(d)(2); Rule 21F-7, 17 C.F.R. § 240.21F-7.

[6] Here, the great majority of the total disgorgement ordered in the underlying enforcement matter was attributable to the misconduct that occurred after Claimant learned about the [Redacted] and before Claimant retained counsel or reported to the Commission, with a resulting increase in the monetary sanctions upon which Claimant’s award is based.

[7] We also considered factors that mitigated the unreasonableness of the Claimant’s reporting delay. In addition to the limited duration of the delay, we considered the fact that Claimant witnessed a single violation and was unaware of the full extent of the fraud.

SEC

10/17/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received twelve whistleblower award claims from the following individuals (collectively, the “Claimants”):

[Claimant 1] (“Claimant 1”).

[Claimant 2] (“Claimant 2”).

[Claimant 3] (“Claimant 3”).

[Claimant 4] (“Claimant 4”).

[Claimant 5] (“Claimant 5”).

[Claimant 6] (“Claimant 6”).

[Claimant 7] (“Claimant 7”).

[Claimant 8] (“Claimant 8”).

[Claimant 9] (“Claimant 9”).

[Claimant 10] (“Claimant 10”).

[Claimant 11] (“Claimant 11”).

[Claimant 12] (“Claimant 12”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

None of the Claimants provided information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because they did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claim Review Staff.

SEC

76025

09/29/2015

On July 13, 2015, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Claimant] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the Claims Review Staff recommended that such award be set in the amount of twenty-eight percent (28%) of the monetary sanctions collected or to be collected in the Covered Action. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.

On August 19, 2015, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e), and, pursuant to Rule 21F-10(f) thereunder, 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that Claimant shall receive an award of twenty-eight (28%) of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

CFTC

09/29/2015

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award applications of [Applicant 1] (“Applicant 1”), submitted on Form WB-APP ___, and [Applicant 2] (“Applicant 2”), submitted on Form WB-APP ___, in connection with Notice of Covered No. ___.

Pursuant to the Whistleblower Rules (17 C.F.R. pt. 165), a Determination of the Whistleblower Award Determination Panel is the final determination of the Commission. Therefore, as set forth in the attached, it is the determination and Final Order of the Commission that this whistleblower award application of Applicant 1 be approved and the award application of Applicant 2 be denied. The Whistleblower Award Panel has determined, and it is the order of the Commission, that Applicant 1 shall receive an award of ___% of the monetary sanctions collected, which as of the date of this order, will exceed $290,000. The denial of Applicant 2’s whistleblower award application is without prejudice to any other award application submitted by Applicant 2, including applications submitted in the future, regarding other covered judicial or administrative actions or related actions. In accordance with 7 U.S.C. § 26(f) and 17 C.F.R. § 165.13, if you wish to appeal this Final Commission Determination and Order, you must appeal to the appropriate court of appeals of the United States not more than 30 days after this Final Order of the Commission is issued.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (“Commission”) are the whistleblower award applications of [Applicant 1] (“Applicant 1”), submitted on Form WB-APP ___, and [Applicant 2] (“Applicant 2”), submitted on Form WB-APP ___. Both applications were submitted in connection to Notice of Covered Action No. ___. For the reasons set forth below, Applicant 1’s application is approved and Applicant 1 is granted an award in the amount of ___% of the monetary sanctions collected, and Applicant 2’s application is denied.

IT IS HEREBY DETERMINED that:

1. Applicant 1’s award application is granted because Applicant 1 meets the requirements of Section 23 of the Commodity Exchange Act (7 U.S.C. § 26) and the Whistleblower Rules (17 C.F.R. pt. 165). Applicant 1 voluntarily provided original information that caused the Commission to launch an investigation that led to a successful enforcement action in which the Commission secured an order for monetary sanctions exceeding $1 million. That successful enforcement action was the subject of Notice of Covered Action No. ___. The information provided by Applicant 1 was sufficiently specific, credible, and timely to cause the Commission to open an investigation. Furthermore, the information provided by Applicant 1 allowed the Commission to conserve valuable resources by focusing the Commission’s attention on the marketplace misconduct. Applicant 1 also meets the eligibility requirements necessary to be able to receive an award.

2. Applicant 2’s award application is denied because the information provided by Applicant 2 did not lead to the successful enforcement of the Commission covered judicial or administrative action or related action that is the subject of Notice of Covered Action No. ___, as required by section 23(b)(1) of the Commodity Exchange Act (7 U.S.C. § 26(b)(1)) and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules (17 C.F.R. §§ 165.2(i), 165.5(a)(3)). The information provided by Applicant 2 did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation related to the order that is the subject of Notice of Covered Action No. ___. Nor did the Claimant’s information significantly contribute to the success of the Commission matter already under investigation that resulted in that order. The denial of Applicant 2’s whistleblower award application is without prejudice to any other award application submitted by Applicant 2, including applications submitted in the future, regarding other covered judicial or administrative actions or related actions.

3. Accordingly, it is hereby DETERMINED that Applicant 1 shall receive an award of ___% of the monetary sanctions collected in the covered action, including any monetary sanctions collected after the date of the related order, and that the award application of Applicant 2 is denied.

SEC

76000

09/28/2015

On June 5, 2015, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Claimant 1] and [Claimant 2] each receive a whistleblower award because they voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the Claims Review Staff recommended that such award be set in the amount of twenty percent (20%), in total, with eleven percent (11%) to [Claimant 1] and nine percent (9%) to [Claimant 2] of the monetary sanctions collected or to be collected in the Covered Action. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of [Claimant 1] and [Claimant 2] applications.

On July 16, 2015 and June 11, 2015, [Claimant 1] and [Claimant 2] respectively, provided written notice to the Commission of their decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e), and, pursuant to Rule 21F-10(f) thereunder, 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that [Claimant 1] shall receive an award of eleven percent (11%) and [Claimant 2] shall receive an award of nine percent (9%) of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

SEC

09/11/2015

[Redacted] (“Claimant 1”)

[Redacted] (“Claimant 2”)

[Redacted] (“Claimant 3”)

[Redacted] (“Claimant 4”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

09/11/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received a timely whistleblower award claim from [Redacted] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination as follows.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant. Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

09/11/2015

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant. Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action with in the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

09/11/2015

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

09/11/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received sixteen whistleblower award claims from the following individuals (collectively, the “‘Claimants”):

[Claimant 1] (“‘Claimant 1”).

[Claimant 2] (“Claimant 2”).

[Claimant 3] (“‘Claimant 3”).

[Claimant 4] (“Claimant 4”).

[Claimant 5] (“Claimant 5”).

[Claimant 6] (“Claimant 6”).

[Claimant 7] (“Claimant 7”).

[Claimant 8] (“Claimant 8”).

[Claimant 9] (“Claimant 9”).

[Claimant 10] (“Claimant 10”).

[Claimant 11] (“Claimant 11”).

[Claimant 12] (“Claimant 12”).

[Claimant 13] (“Claimant 13”).

[Claimant 14] (“Claimant 14”).

[Claimant 15] (“Claimant 15”).

[Claimant 16] (“Claimant 16”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

1. None of the Claimants provided information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because they did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

2. The information provided by Claimant 10 was largely copied from a third party’s court filing, which would disqualify it from being “original information” as defined in Rule 21F-4(b)(iii) of the Exchange Act because it was not derived from Claimant 10’s “independent knowledge” or “independent analysis.”

3. Claimants 15 and 16 failed to submit their claims for award within ninety (90) days of the above-referenced Notice of Covered Action, as required under Rule 21-F10(a) of the Exchange Act.

By: Claims Review Staff.

SEC

09/11/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (the “Commission”) received twelve (12) whistleblower award claims from the following individuals (collectively, the “Claimants”):

[Claimant 1] (“Claimant 1”).

[Claimant 2] (“Claimant 2”).

[Claimant 3] (“Claimant 3”).

[Claimant 4] (“Claimant 4”).

[Claimant 5] (“Claimant 5”).

[Claimant 6] (“Claimant 6”).

[Claimant 7] (“Claimant 7”).

[Claimant 8] (“Claimant 8”).

[Claimant 9] (“Claimant 9”).

[Claimant 10] (“Claimant 10”).

[Claimant 11] (“Claimant 11”).

[Claimant 12] (“Claimant 12”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

1. None of the Claimants provided information that led to the successful enforcement by the Commission of a federal court or administrative action with respect to the above referenced Notice of Covered Action, as required by Rules 21F-3(a)(3) and 21F-4(c) of the Exchange Act because they did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c) (2) of the Exchange Act.

2. The information provided by Claimant #10 does not qualify as original information as defined in Rule 21F-4(b)(1) of the Exchange Act because the information was largely copied from a third party’s publicly-available court filings.

3. Claimant #12 failed to submit a claim for award within ninety (90) days of the above-referenced Notice of Covered Action, as required under Rule 21F-10(a) of the Exchange Act.

By: Claims Review Staff.

SEC

09/11/2015

[Claimant 1] (“Claimant 1”).

[Claimant 2] (“Claimant 2”).

[Claimant 3] (“Claimant 3”).

[Claimant 4] (“Claimant 4”).

[Claimant 5] (“Claimant 5”).

[Claimant 6] (“Claimant 6”).

[Claimant 7] (“Claimant 7”).

[Claimant 8] (“Claimant 8”).

[Claimant 9] (“Claimant 9”).

[Claimant 10] (“Claimant 10”).

[Claimant 11] (“Claimant 11”).

[Claimant 12] (“Claimant 12”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

09/11/2015

In response to the above-referenced Notices of Covered Action, the Securities and Exchange Commission received timely whistleblower award claims from [Redacted] (Claimant) for all three of the Covered Actions. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination as follows.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant. Claimant did not provide information that led to the successful enforcement of any of the Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because Claimant did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

09/10/2015

In response to the three above-referenced Notices of Covered Actions, the U.S. Securities and Exchange Commission received whistleblower award claims from [Redacted] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny any awards to Claimant based on the following:

1. The information provided by Claimant does not qualify as original information as defined in Section 21F(a)(3) of the Exchange Act and Rule 21F-4(b)(1) thereunder because the information was derived from publicly available sources,[fn1] and specifically from allegations made in a judicial complaint filed by another party.

2. Claimant did not provide information that led to the successful enforcement of the above-referenced Notices of Covered Actions within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

[1] See Rule 21F-4(b)(2).

CFTC

09/03/2015

Attached is the Commodity Futures Trading Commission Determination pertaining to the
whistleblower award applications of Applicant (Applicant), submitted on Forms WB-APP 2014-01-10-01 through WB-APP 2014-01-10-21, referenced above.
Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165 (2015)), the
Whistleblower Award Determination Panel is authorized to make whistleblower award
determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that the whistleblower award applications be
denied.
In accordance with 7 U.S.C. § 26(f) (2012) and 17 C.F.R. § 165.13 (2015), if you wish to
appeal this Final Commission Determination and Order, you must appeal to the appropriate court
of appeals of the United States not more than 30 days after this Final Order of the Commission is
issued. —– Before the Whistleblower Award Determination Panel of the Commodity Futures
Trading Commission (Commission) are the whistleblower award applications of Applicant
(Applicant), submitted on Forms WB-APP 2014-01-10-01 through Form WB-APP
2014-01-10-21, referenced above. IT IS HEREBY DETERMINED that: 1. The award applications are denied because the award applications were not
submitted in connection with a Notice of Covered Action or a final judgment in a related action, as required by Section 165.7(a) of the Commission’s Whistleblower Rules (17 C.F.R. § 165.7(a)
(2015)) and the information in the applications provided by the Applicant did not lead to the
successful enforcement of a Commission covered judicial or administrative action that is a
subject of a Notice of Covered Action or a related action, as required by Section 23(b)(1) of the
Commodity Exchange Act (7 U.S.C. § 26(b)(1) (2012)) and Sections 165.2(i) and 165.5(a)(3) of
the Commission’s Whistleblower Rules (17 C.F.R. §§ 165.2(i), 165.5(a)(3) (2015)).
2. Furthermore, Applicant mistakenly submitted complaints on Form WB-APPs
rather than on Form TCRs (the form for whistleblower tips and complaints).

SEC

75752

08/24/2015

Claimant 2 (“Claimant 2”) filed a timely whistleblower award application pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6, in connection with [Redacted]. On [Redacted] the Claims Review Staff issued a Preliminary Determination that preliminarily denied Claimant 2’s claim because none of the information that Claimant 2 provided to the Commission led to the successful enforcement of the [Redacted]. [fn1] [Redacted] Claimant 2 filed a written response contesting the Preliminary Determination. In Claimant 2′ s request for reconsideration, Claimant 2 argued that the information provided should have led to the opening of an investigation into [Redacted], but did not because of conflicts of interest within the Commission. However, Claimant 2 provided no evidence to substantiate the allegations of conflicts of interest or to show that the information was used in connection with the [Redacted]. Having considered the record, including Claimant 2’s timely response to the Preliminary Determination, we are denying Claimant 2’s award application because none of the information that Claimant 2 provided to the Commission led to the successful enforcement of the [Redacted] within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder.[fn2] The record reflects that Claimant 2 has made a number of submissions to the Commission since [Redacted]. [fn3] We find that none of the information that Claimant 2 submitted caused the staff to open the investigation of [Redacted], as required by Exchange Act Rule 21F-4(c)(1). That investigation was opened in as a result of information from another ongoing investigation. With respect to the information that Claimant 2 submitted after [Redacted], we find that this information could not have “significantly contributed to the success of the” [Redacted] — and, therefore, could not have led to the success of the case, Exchange Act Rule 21-F4(c)(2) — because by that date the Enforcement Division staff [Redacted] had reached a tentative agreement on all of the material terms of a proposed settlement that was subsequently approved by the Commission and was later filed on [Redacted]. With respect to the submissions that Claimant 2 made between [Redacted] and [Redacted], we find that none of this information led to the success of [Redacted]. We base this finding on the following considerations. First, the lead investigative attorney assigned to the [Redacted] confirmed that the investigative team did not receive, review, or use any information from Claimant 2 in connection with the [Redacted], nor did the team otherwise have any contact with Claimant 2. Second, each of the Tips, Complaints, and Referrals (“TCRs”) that Claimant 2 submitted during this period (including [Redacted], which is the only TCR that Claimant 2 identifies in the award application) received a disposition of “no further action” at the initial review stage by the office within the Enforcement Division that is responsible for screening Commission TCRs; this demonstrates that none of the TCRs were routed to the investigative staff handling the [Redacted]. [fn4] Accordingly, it is ORDERED that Claimant 2’s whistleblower award application be, and hereby is, denied. By the Commission.

[1] The Preliminary Determination of the Claims Review Staff also denied an award to Claimant 1 (“Claimant l “). That determination has not been contested. Accordingly, pursuant to Rule 21 F-1 O( t) under the Exchange Act, Claimant 1 has failed to exhaust administrative remedies and the determination to deny an award to Claimant 1 has become final.

[2] Under Exchange Act Rule 21F-3(a), in order to be eligible for a whistleblower award, an individual must voluntarily provide the Commission with original information that leads to the successful enforcement action by the Commission of a federal court or administrative action in which the Commission obtains monetary sanctions totaling more than $1,000,000. Our rules provide specific definitions for when original information “leads to” successful enforcement. Information will be deemed to have led to a successful enforcement action if it was “sufficiently specific, credible, and timely to cause the staff to commence an examination, open an investigation … or to inquire concerning different conduct as part of a current … investigation, and the Commission brought a successful judicial or administrative action based in whole or in part on conduct that was the subject of[this] information.” Rule 21F-4(c)(1). In instances where an investigation is ongoing, the information must have “significantly contributed to the success of the action.” Rule 21F-4(c)(2).

[3] In Claimant 2’s response to the Preliminary Determination recommending that the award application be denied, Claimant 2 expressly states that Claimant 2’s “original submission” to the Commission “was in [Redacted].”

[4] A disposition of “no further action” or “NFA” indicates that the Commission’s staff does not intend to take further action with respect to a TCR unless subsequent information causes the staff to reevaluate the matter.

SEC

08/05/2015

(“Claimant 1 “)

(“Claimant 2”)

(“Claimant 3”)

(“Claimant 4”).

Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the above claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny all of the above award claims. The basis for this determination is as follows:

The Claimants failed to submit their claims for award on Form WB-APP within ninety (90) days of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act in order to be considered for an award, nor did the Claimants demonstrate that the Commission should waive, in its discretion, the filing deadline based on “extraordinary circumstances,” as provided under Rule 21F-8(a) of the Exchange Act,[fn1] or pursuant to its exemption authority, as provided under Section 36(a) of the Exchange Act.

By: Claims Review Staff.

[1] See In the Matter of the Application of PennMont Securities et al., Sec. Exchange Act Rel. No. 61967, 2010 WL 1638720 (April 23, 2010), aff’d PennMont Securities et al. v. SEC, 2011 WL 658560 (3d. Cir. 2011) (noting that the “extraordinary circumstance under Rule of Practice 420(b) may be shown where the reason for the failure timely to file was beyond the control of the applicant that causes the delay”); see also Exchange Act Release No. 72659, Whistleblower Award Proceeding File No. 2014-7 (July 23, 2014) (applying the PennMont standard and noting that a lack of awareness about the program does not … rise to the level of an extraordinary circumstance as a general matter [since] potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications”).

SEC

08/05/2015

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received four timely whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

[Redacted].

Claimant #2.

Claimant #3.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny awards to Claimant #2, Claimant #3 [Redacted]. The basis for this determination is as follows:

Each of these claimants did not provide information that led to the successful enforcement of the referenced Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

08/05/2015

The Securities and Exchange Commission (“Commission”) received whistleblower award claims from [Claimant] (“Claimant”) in response to the Notices of Covered Action set forth in Appendix A hereto. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (“CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17 promulgated under the Exchange Act. For the reasons discussed below, the CRS has preliminarily determined that Claimant is ineligible for an award in these matters or in any pending or future covered or related actions.

Rule 21F-8 of the Exchange Act sets forth criteria a claimant must meet to be eligible for a whistleblower award. In particular, Rule 21F-8(c)(7) states that “you are not eligible” for an award under either of two conditions:

In your whistleblower submission, your other dealings with the Commission, or your dealings with another authority in connection with a related action, you [i] knowingly and willfully make any false, fictitious, or fraudulent statement or representation, or [ii] use any false writing or document knowing that it contains any false, fictitious, or fraudulent statement or entry with intent to mislead or otherwise hinder the Commission or another authority.

17 C.F.R. § 240.21F-8(c)(7). See also Section 21F(i) of the Exchange Act.

The CRS preliminarily finds that Claimant has knowingly and willfully made false, fictitious, or fraudulent statements and representations to the Commission over a course of several years. Specifically, we preliminarily find that each of the passages set forth in Appendix B—which are taken from Claimant’s TCRs, emails to Commission officials, and WB-APPs—are patently false or fictitious.[fn1] We also preliminarily find that Claimant’s submission of whistleblower award applications on Form WB-APP in which Claimant declares that Claimant is entitled to an award are patently false given that the WB-APPs Claimant has filed to date lack even a remote factual nexus to the covered actions for which Claimant is seeking an award.

Moreover, we preliminarily find that Claimant’s knowing and willful state of mind in making these statements is evidenced by the following: (i) the vague, unsupported, and utterly incredible nature of Claimant’s statements in Appendix B; (ii) Claimant’s submission of the WB-APPs that lack any factual nexus to the covered actions; and (iii) Claimant’s refusal to withdraw numerous unsupported claims in spite of repeated requests and explanations by the Office of the Whistleblower (“OWB”).[fn2]

Claimant’s submission of baseless claims has harmed the rights of legitimate whistleblowers and hindered the Commission’s implementation of the whistleblower program by, among other things, delaying the Commission’s ability to finalize meritorious awards to other claimants and consuming significant staff resources.[fn3]

For these reasons, the CRS has preliminarily determined that, pursuant to Rule 21F-8(c)(7) of the Exchange Act, Claimant is not eligible to be considered for whistleblower awards in these matters or in any pending or future covered or related actions. Accordingly, if this determination becomes the final determination of the Commission, the OWB should summarily reject all pending and future whistleblower award claims submitted by Claimant.[fn4]

By: Claims Review Staff.

[1] We note that Rule 21F-8(c)(7) refers to “your other dealings with the Commission” as a category separate and distinct from the specific “whistleblower submission” under consideration. Accordingly, we read “other dealings with the Commission” to encompass, among other things, statements or representations in previous whistleblower submissions as well as a claimant’s correspondence with Commission officials.

[2] The OWB has engaged in numerous communications with Claimant to explain the rules governing the whistleblower program and its view of the deficiencies of Claimant’s submissions, and to give Claimant the opportunity to correct *** actions. For example, on October 29, 2014, the OWB called Claimant and explained the basic premise of the Commission’s whistleblower program, and the rules pursuant to which the Commission may pay an award. During that call, the OWB explained the factual nexus that must exist between the tip Claimant submits and the Notice of Covered Action for which Claimant requests an award. The OWB made it clear during that call that repeatedly filing claims for whistleblower awards that have no relation to the facts in the underlying matter will not result in an award under the whistleblower program. Similarly, on November 3, 2014, the OWB advised Claimant in writing that *** numerous whistleblower award claims failed to demonstrate the factual nexus required by Rule 21F-4(c). Notwithstanding the OWB’s efforts, Claimant advised the OWB in a letter dated November 12, 2014, that *** refused to withdraw any of *** award claims.

[3] For example, Claimant unsuccessfully requested reconsideration of the Preliminary Determination denying award application in [Redacted] and as a result both consumed considerable staff effort with frivolous claim and caused a delay in the Commission’s ability to make a final determination to the legitimate whistleblower in this matter.

[4] We caution Claimant that we will not entertain any attempt by *** to withdraw *** WB-APPs following the issuance of this Preliminary Determination given *** unwillingness to withdraw these frivolous applications when *** had a reasonable opportunity to do so, see supra note 2, and that *** attempt now to change course would simply be a transparent effort to evade the consequences of *** bad faith conduct.

SEC

08/05/2015

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received whistleblower award claims from [Claimant 1] (“Claimant 1”) and [Claimant 2] (“Claimant 2”) (collectively, the “Claimants”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny both of the above award claims.

The basis for this determination is as follows:

1. The information provided by the Claimants did not lead to successful enforcement of the above-captioned covered judicial or administrative action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

2. Claimant 1 also failed to submit the claim for award on Form WB-APP within ninety (90) days of the above-referenced Notice of Covered Action, as required under Rule 21F-10(b) of the Exchange Act in order to be considered for an award.

By: Claims Review Staff.

SEC

75477

07/17/2015

On March 9 and March 25, 2015, the Claims Review Staff (“CRS”) issued Preliminary Determinations related to Notices of Covered Action [Redacted] (the “Covered Actions”) and [Redacted] related actions.[fn1] The Preliminary Determinations recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Actions and related actions pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rules 21F-3(a) & (b) thereunder, 17 C.F.R. § 240.21F-3(a) & (b).[fn2]

Further, the CRS recommended that such award be set in the amount of [Redacted] of the monetary sanctions collected or to be collected in the Covered Actions and related actions, which will equal payment of more than $3,000,000. In arriving at this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.[fn3]

On March 25, 2015, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determinations within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e). Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determinations became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Preliminary Determinations, it is hereby ORDERED that Claimant shall receive [Redacted] of the monetary sanctions collected and to be collected in the Covered Actions and related actions.

By the Commission.

[1] The related actions are: [Redacted].

[2] The CRS also recommended that an award application from a second claimant in connection with Covered Action [Redacted] should be denied because the second claimant did not provide information that led to the successful enforcement of that action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The second claimant thereafter failed to submit a timely response contesting the Preliminary Determination. Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination to deny the second claimant’s award application became the Final Order of the Commission as to that second claimant.

[3] Among these factors, due consideration was given to Claimant’s unreasonable delay in reporting the illegal conduct to the Commission, although we have not applied this factor as severely here as we otherwise might have done had the delay occurred entirely after the whistleblower award program was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

CFTC

05/30/2015

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of ___, filed on Form WB-APP 2014-01-29-01. Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied. In accordance with 7 U.S.C. § 26(f) and 17 C.F.R. § 165.13, if you wish to appeal this Final Commission Determination and Order, you must appeal to the appropriate court of appeals of the United States not more than 30 days after this Final Order of the Commission is issued. —– Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (Commission) is the whistleblower award claim of (Claimant), filed on Form WB-APP 2014-01-29-01. IT IS HEREBY DETERMINED that: The claim is denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission covered judicial or Administrative action as required by Section 23(b)(1) of the Commodity Exchange Act (7 U.S.C. § 26(b)(1)) and Sections 165.2(i)
and 165.5(a)(3) of the Commission’s Whistleblower Rules (17 C.F.R. §§ 165.2(i), 165.5(a)(3)).
The information provided by the Claimant did not cause the Commission staff to commence an
examination, open an investigation, reopen an investigation that the Commission had closed, or
to inquire concerning different conduct as part of a current examination or investigation, Nor did
the Claimant’s information significantly contribute to the success of a Commission matter
already under investigation. The claim also is denied because the Claimant did not file a Form TCR as required by
Rules 165.2(p) and 165.3 of the. Commission’s whistleblower Rules (17 C.F.R. §§ 165.2(p),
165.3).

SEC

05/24/2015

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received two timely whistleblower award claims. Pursuant to Section 2IF of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

Claimant #1.

[Redacted].

Claimant #2 [Claimant].

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant #2. Claimant #2 did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because Claimant #2 did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.[fn3]

By: Claims Review Staff.

[3] It should be noted that Claimant #2 signed a declaration under penalty of perjury that information provided on the Form WB-APP was “true, correct and complete.” Claimant #2 made a clear false and fictitious statement on the Form WB-APP by claiming to be entitled to an award notwithstanding the lack of even a superficial factual nexus between any information Claimant #2 provided to the Commission and the Covered Action. If Claimant #2 continues to pursue any pending claims based upon similar false or fictitious statements, or makes any more false and fictitious statements in any filing with the Commission, the Claims Review Staff will consider recommending that the Commission, pursuant to Rule 21F-8(c)(7) under the Exchange Act, determine that Claimant is ineligible for any pending or future whistleblower awards. See Final Order of the Commission Denying Whistleblower Award (May 12, 2014).

SEC

05/08/2015

In response to the above-referenced Notices of Covered Action, the Securities and Exchange Commission received timely whistleblower award claims from Claimant (Claimant) for all four of the Covered Actions. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination as follows.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant. Claimant did not provide information that led to the successful enforcement of any of the Covered Actions within the meaning of Section 21F(b)( 1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because Claimant did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21 F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

74826

04/28/2015

On March 9, 2015, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action 2014-71 (the “Covered Action”). The Preliminary Determination recommended that [Claimant] receive a whistleblower award because *** voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the Claims Review Staff recommended that such award be set in the amount of thirty percent (30%), in total, of the monetary sanctions collected or to be collected in the Covered Action, which will be over $600,000. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of [Claimant] application. In particular, the Claims Review Staff considered the substantial evidence that the whistleblower suffered unique hardships as a result of reporting, and also found the Commission’s law enforcement interest to be compelling given the Commission’s previous findings of unlawful retaliation against this whistleblower. See Rule 21F-6(a)(2)(vi) and (a)(3), 17 C.F.R. § 240.21F-6(a)(2)(vi) and (a)(3).

On March 9, 2015, [Claimant] provided written notice to the Commission of *** decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e), and, pursuant to Rule 21F-10(f) thereunder, 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that [Claimant] shall receive an award of thirty percent (30%) of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

SEC

74815

04/27/2015

Claimant (“Claimant”) filed timely whistleblower award applications pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6, in connection with the five Notices of Covered Actions (“NoCA”) listed above. The Claims Review Staff (“CRS”) subsequently issued a Preliminary Determination recommending that Claimant’s applications be denied. After carefully reviewing Claimant’s timely response contesting the Preliminary Determination along with the rest of the record, we have determined to deny Claimant’s applications. To qualify for an award under Section 21F, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action. 15 U.S.C. § 78u-6(b)(1).[fn1] With respect to four of the five Covered Actions, the record conclusively demonstrates that Claimant submitted ** tip after those matters were settled. For that reason, we find that the tip could not have led to the successful enforcement of those four Covered Actions. With respect to the fifth Covered Action, In the Matter of Morgan Stanley Investment Management Inc. (NoCA 2011-211) (“Morgan Stanley”), we also find that Claimant’s tip did not lead to the successful enforcement of the matter. The record demonstrates that, after Claimant submitted ** tip, the office within the Enforcement Division that is responsible for undertaking a preliminary review of whistleblower tips designated the tip for “no further action” and did not forward it to any of the staff members assigned to Morgan Stanley. Further, there is no indication in the record that the Enforcement staff members responsible for Morgan Stanley either received or relied upon any information provided by Claimant, and Claimant has not shown otherwise in ** request for reconsideration of the Preliminary Determination.[fn2] Accordingly, it is ORDERED that Claimant’s whistleblower award applications be, and hereby are, denied. By the Commission.

[1] As relevant here, a whistleblower tip “leads to” a successful enforcement action if either: (i) the tip caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current examination or investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the tip significantly contributed to the success of the action. Rules 21F-4(c)(1) and 21F-4(c)(2), 17 C.F.R. § 240.21F-4(c)(1) and 17 C.F.R. §240.21F-4(c)(2).

[2] Although not the basis for our decision, we note that the information provided by Claimant likely would not qualify as original information as defined in Rule 21F-4(b)(1) of the Exchange Act because it appears that the information was largely copied from a third party’s publicly-available court filings.

SEC

74781

04/22/2015

On December 15, 2014, the Claims Review Staff (“CRS”) issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Claimant] (“Claimant” ) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).[fn1]

Further, the CRS recommended that such award be set in the amount of [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which will equal between $1,400,000 and $1,600,000. In arriving at this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.[fn2]

On December 16, 2014, Claimant provided written notice to the Commission of Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e). Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

By the Commission.

[1] Claimant was a [Redacted] at the time Claimant obtained the information. As a result, in preliminarily determining that Claimant had provided original information, the CRS considered whether Claimant’s information was derived from Claimant’s independent knowledge or independent analysis. Under Rule 21F-4(b)(1), “[i]n order for [a] whistleblower submission to be considered original information, it must,” among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1). In turn, Rule 21F-4(b)(4)(iii)(B) provides that, unless an exception applies, “[t]he Commission will not consider information to be derived from [a whistleblower’s] independent knowledge or independent analysis” if the whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve compliance or internal audit responsibilities . . . .” 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). The CRS preliminarily determined that Rule 21F-4(b)(4)(iii)(B) did not apply here to disqualify Claimant’s information from treatment as original information pursuant to the exception in Rule 21F-4(b)(4)(v)(A), 17 C.F.R. § 240.21F-4(b)(4)(v)(A), because Claimant “had a reasonable basis to believe that disclosure of the information to the Commission [was] necessary to prevent the relevant entity from engaging in conduct that [was] likely to cause substantial injury to the financial interest or property of the entity or investors.”

[2] The Preliminary Determination also recommended that an award application from a second claimant in connection with the Covered Action should be denied because the second claimant did not provide information that led to the successful enforcement of the Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder. The second claimant thereafter failed to submit a timely response contesting the Preliminary Determination. Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination to deny the second claimant’s award application became the Final Order of the Commission as to that second claimant.

SEC

74404

03/02/2015

On December 15, 2014, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Redacted] (“Claimant”) receive a whistleblower award because Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).[fn1] Further, the Claims Review Staff recommended that such award be set in the amount of [Redacted] of the monetary sanctions collected or to be collected in the Covered Action, which will be between $475,000 and $575,000. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of Claimant’s application.

By the Commission.

[1] Claimant was [Redacted] at the time Claimant obtained the information. As a result, in preliminarily determining that Claimant had provided original information, the Claims Review Staff considered whether Claimant’s information was derived from Claimant’s independent knowledge or independent analysis. Under Rule 21F-4(b)(1), “[i]n order for [a] whistleblower submission to be considered original information, it must,” among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1). In turn, Rule 21F-4(b)(4)(iii)(A) provides that, unless an exception applies, “[t]he Commission will not consider information to be derived from [a whistleblower’s] independent knowledge or independent analysis” if the whistleblower “obtained the information because” the whistleblower was “[a]n officer, director, trustee, or partner of an entity and another person informed you of allegations of misconduct, or you learned the information in connection with the entity’s processes for identifying, reporting, and addressing possible violations of law[.]” 17 C.F.R. § 240.21F-4(b)(4)(iii)(A). But the Claims Review Staff preliminarily determined that Rule 21F-4(b)(4)(iii)(A) did not apply here to disqualify Claimant’s information from treatment as original information pursuant to the exception in Rule 21F-4(b)(4)(v)(C), 17 C.F.R. § 240.21F-4(b)(4)(v)(C), because Claimant reported the information to other responsible persons at the entity, as provided for under our rules, or such persons knew about it, at least 120 days before Claimant reported the information to the Commission.

SEC

02/16/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (the “Commission”) received a whistleblower award claim from [Redacted] (“Claimant 1”) [Redacted]. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny the award [Redacted] for [Redacted] Claimant 1 [Redacted]. The basis for this determination is as follows.

Claimant 1 [Redacted].

The information provided by Claimant 1 did not lead to the successful enforcement of the above captioned covered judicial or administrative action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

[Redacted].

By: Claims Review Staff.

SEC

02/13/2015

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission received two timely whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated each of these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination for each award claimant as follows.

Claimant #1.

[Redacted].

Claimant #2.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant #2. Claimant #2 did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

02/13/2015

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant based on the following:

1. Claimant did not provide information that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

2. Claimant also failed to submit Claimant’s information in the form and manner that is required under Rules 21F-2(a)(2), 21F-8(a) and 21F-9(a) & (b) of the Exchange Act.

By: Claims Review Staff.

SEC

02/13/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission received one timely whistleblower award claim from [Redacted] (“Claimant”).[fn1] Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff sets forth its Preliminary Determination as follows.

2. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

[1] Although Claimant’s Form WB-APP identified Notice of Covered Action 2012-179, we understand Claimant’s application to respond to Notice of Covered Action 2012-129, as Claimant identified the civil action name and number corresponding to 2012-129.

SEC

02/13/2015

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (the “Commission”) received a timely whistleblower award claim from [Claimant] (the “Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated this claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

The Claims Review Staff has preliminarily determined to recommend that the Commission deny an award to Claimant based on the following:[fn1]

1. Claimant did not provide info1mation that led to the successful enforcement of the above-referenced Notice of Covered Action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F-4(c) thereunder because it did not:

a. cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as pa1i of a current Commission examination or investigation under Rule 21F-4(c)(1) of the Exchange Act; or

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

2. Claimant also did not provide the Commission with original information within the meaning for Section 21F(b)(1) of the Exchange Act because Claimant’s submission was not derived from Claimant’s independent knowledge or independent analysis.

By: Claims Review Staff.

[1] It should be noted that Claimant signed a declaration under penalty of perjury that information provided on the Form WB-APP was “true, correct and complete.” Claimant made clear false and fictitious statements on the Form WB-APP by stating that Claimant was “the 44th President of the United States.” If Claimant makes any more false and fictitious statements in any filing with Commission, the Claims Review Staff will consider recommending that the Commission, pursuant to Rule 21F-8(c)(7) under the Exchange Act, determine that Claimant is ineligible for any pending or future whistleblower awards. See Final Order (May 12, 2014), available at http://www.sec. gov/about/offices/owb/orders/owb-multiple-final-051214.pdf.

SEC

02/13/2015

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received a timely whistleblower award claim from [Claimant] (“Claimant”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has recommended that the Commission deny an award to Claimant. The basis for this determination is as follows:

2. The information provided by Claimant after July 21, 2010 did not lead to successful enforcement of a covered judicial or administrative action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F4(c) thereunder because it did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

3. Claimant is not a “whistleblower” within the meaning of Section 21F(a)(6) of the Exchange Act and Rule 21F-2 thereunder because Claimant did not provide the Commission with information relating to a possible violation of the federal securities laws in accordance with the procedures set forth in Rule 21F-9(a) under the Exchange Act.

By: Claims Review Staff.

CFTC

10/06/2014

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [REDACTED], submitted on Form WB-APP 2013-11-26-01. Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied.

—–

Before the Whistleblower Award Determination Panel of the Commodity Futures
Trading Commission (Commission) is the whistleblower award claim of [REDACTED]
(Claimant), filed on Form WB-APP 2013-11-26-01.
IT IS HEREBY DETERMINED that:
1. The claim is denied because the information provided by the Claimant did not lead to the
successful enforcement of a Commission covered judicial or administrative action as required by
Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rules 165.2(i) and
165.5(a)(3) of the Commission’s Whistleblower Rules [17 C.F.R. §§ 165.2(i), 165.5(a)(3)]. The
information provided by the Claimant did not cause the Commission staff to commence an
examination, open an investigation, reopen an investigation that the Commission had closed, or
to inquire concerning different conduct as part of a current examination or investigation. Nor did
the Claimant’s information significantly contribute to the success of a Commission matter
already under investigation.

CFTC

09/23/2014

Attached is the Commodity Futures Trading Commission Determination pertaining to the
whistleblower award claim of [Redacted], submitted on Form WB-APP 2014-01-07-01.
Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the
Whistleblower Award Determination Panel is authorized to make whistleblower award
determinations for the Commission. Therefore, as set forth in the attached, it is the
Determination and Final Order of the Commission that this whistleblower award claim be
denied.
In accordance with 7 U.S.C, § 26(f) and 17 C.F.R. § 165.13, if you wish to appeal this
Final Commission Determination and Order, you must appeal to the appropriate court of appeals
of the United States not more than 30 days after this Final Order of the Commission is issued. —– Before the Whistleblower Award Determination Panel of the Commodity Futures
Trading Commission (Commission) is the whistleblower award claim of [Redacted]
(Claimant), filed on Form WB-APP 2014-01-07-01.
IT IS HEREBY DETERMINED that:
1. The claim is denied because the Claimant first provided his information in response to a
request by Commission staff. The information was therefore not voluntarily submitted as
required by Section 23(6)(1) of the Commodity Exchange Act [7 U.S.C. § 26(6)(1)] and Rule
165.2(o)(1) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(o)(1)].
2. The claim is also denied because the Claimant did not file a Form TCR as required by
Rules 165.2(p) and 165.3 of the Commission’s whistleblower Rules [17 C.F.R. § 165.2(p),
165.3].

SEC

73174

09/22/2014

On May 5, 2014, the Claims Review Staff issued a Preliminary Determination for Notice of Covered Action [Redacted] and [Redacted] related actions.[fn1] The Preliminary Determination recommended that [Claimant] (“Claimant” ) receive a whistleblower award pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

Because the record demonstrates that Claimant, a foreign resident, voluntarily provided original information to the Commission that led to the successful enforcement of the covered and related actions, the recommendation that Claimant receive an award is hereby adopted.[fn2] Further, based on a consideration of the factors specified in Rule 21F-6 in relation to the specific facts and circumstances of the covered and related actions, the award amount shall be [Redacted] of the monetary sanctions collected or to be collected in the actions.[fn3] Given the monetary sanctions thus far collected, this should yield a total award of between $30 and $35 million.

In reaching the award determination, we have considered the significance of the information provided by Claimant, the assistance that Claimant provided, and the law-enforcement interests at issue.[fn4] We also have considered Claimant’s delay in reporting the violations, which under the circumstances we find unreasonable. Claimant delayed coming to the Commission for a period of [Redacted] after first learning of the violations, during which time investors continued to suffer significant monetary injury that otherwise might have been avoided.[fn5] We do not agree with Claimant’s assertion that Claimant’s delay was reasonable under the circumstances because Claimant was purportedly uncertain whether the Commission would in fact take action. There is always some measure of uncertainty about how a law-enforcement agency may respond to a tip, but in our view this does not excuse a lengthy reporting delay while investors continue to suffer losses. Indeed, if Claimant was concerned that the Commission would not respond to Claimant’s tip, Claimant also could have reported the violations to other appropriate U.S. authorities; yet Claimant did not do so and the explanations that Claimant offers are not sufficient to mitigate a downward adjustment based on the unreasonable reporting delay.

Accordingly, upon due consideration under Rules 21F-10(f) and (h), 17 C.F.R. §§ 240.21F-10(f) and (h), it is hereby ORDERED that Claimant shall receive an award of [Redacted] of the monetary sanctions collected in Notice of Covered Action [Redacted] and the related actions, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] The related actions are: [Redacted].

[2] We believe an award payment is appropriate here notwithstanding the existence of certain extraterritorial aspects of Claimant’s application. See generally Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 266 (2010) (discussing analytical framework for determining whether an application of a statutory provision that involves certain foreign aspects is an extraterritorial or domestic application of the provision; explaining that it is a domestic application of the provision if the particular aspect that is the “focus of congressional concern” has a sufficient U.S. territorial nexus) ; European Community v. RJR Nabisco, Inc., ___F.3d ___, ___ 2014 WL 1613878, *10 (2d Cir. Apr. 23, 2014) (applying Morrison framework and finding that “[i]f domestic conduct satisfies every essential element to prove a violation of a United States statute that does not apply extraterritorially, that statute is violated even if some further conduct contributing to the violation occurred outside the United States.”). In our view, there is a sufficient U.S. territorial nexus whenever a claimant’s information leads to the successful enforcement of a covered action brought in the United States, concerning violations of the U.S. securities laws, by the Commission, the U.S. regulatory agency with enforcement authority for such violations. When these key territorial connections exist, it makes no difference whether, for example, the claimant was a foreign national, the claimant resides overseas, the information was submitted from overseas, or the misconduct comprising the U.S. securities law violation occurred entirely overseas. We believe this approach best effectuates the clear Congressional purpose underlying the award program, which was to further the effective enforcement of the U.S. securities laws by encouraging individuals with knowledge of violations of these U.S. laws to voluntarily provide that information to the Commission. See S. Rep. No. 111-176 at 110 (2010) (“to motivate those with inside knowledge to come forward and assist the Government to identify and prosecute persons who have violated the securities laws ….”). Finally, although we recognize that the Court of Appeals for the Second Circuit recently held that there was an insufficient territorial nexus for the anti-retaliation protections of Section 21F(h) to apply to a foreign whistleblower who experienced employment retaliation overseas after making certain reports about his foreign employer, Liu v. Siemens, ___F.3d ___, 2014 WL 3953672 (2d Cir. Aug. 14, 2014), we do not find that decision controlling here; the whistleblower award provisions have a different Congressional focus than the anti-retaliation provisions, which are generally focused on preventing retaliatory employment actions and protecting the employment relationship.

[3] [Redacted].

[4] In Claimant’s response to the Preliminary Determination, Claimant suggested that a factor beyond those specified in Rule 21F-6 may have been considered. We wish to make clear that our award determination is based solely on the considerations set forth in Rule 21F-6 as those considerations relate to the specific facts and circumstances of the covered and related actions. Claimant also asserts that Claimant’s award is below the average percentage amount awarded to other successful claimants to date, but we find this assertion irrelevant. First, every enforcement action is unique and thus each award determination involves a highly individualized review of the facts and circumstances surrounding the particular case; this necessarily precludes any meaningful comparison among award determinations. Second, no award determination to date has involved a similar reporting delay.

[5] Given that Claimant concedes that Claimant could have reported to the Commission as early as “[Redacted] when the [Redacted] scheme became clearer” to Claimant, some of the period of the delay occurred before the whistleblower award program was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act. See Pub. L. No. 111-203, § 922, 124 Stat. 1841 (2010). Although Claimant has not raised any specific legal arguments against application of the unreasonable delay factor for that portion of the delay, we have determined in our discretion not to apply the unreasonable delay consideration as severely here as we otherwise might have done had the delay occurred entirely after the program’s creation.

CFTC

09/08/2014

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [REDACTED], submitted on Form WB-APP 2013-10-25-01. Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied.

—–

IT IS HEREBY DETERMINED that:

1. The claim is denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission-covered judicial or administrative action as required by Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules [17 C.F.R. §§ 165.2(i), 165.5(a)(3)]. The information provided by the Claimant did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation. Nor did the Claimant’s information significantly contribute to the success of a Commission matter already under investigation.

CFTC

09/08/2014

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [REDACTED], submitted on Form WB-APP 2013-08-12-01. Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied. In accordance with 7 U.S.C. § 26(f) and 17 C.F.R. § 165.13, if you wish to appeal this Final Commission Determination and Order, you must appeal to the appropriate court of appeals of the United States not more than 30 days after this Final Order of the Commission is issued.

—–

IT IS HEREBY DETERMINED that:

1. The claim is denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission covered judicial or administrative action as required by Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules [17 C.F.R. §§ 165.2(i), 165.5(a)(3)]. The information provided by the Claimant did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation. Nor did the Claimant’s information significantly contribute to the success of a Commission matter already under investigation.

CFTC

09/08/2014

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [REDACTED], submitted on Form WB-APP 2013-06-11-01. Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied.

—–

IT IS HEREBY DETERMINED that:

SEC

72947

08/29/2014

Two claimants, [Redacted] and [Redacted] each timely filed a whistleblower award claim pursuant to Section 21F of the Securities Exchange Act of 1934, 15 U.S.C. § 78u-6 (the “Exchange Act”), in connection with Notice of Covered Action [Redacted]. On [Redacted] the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] receive an award of 20% and that [Redacted] be denied an award. [Redacted] has waived [Redacted] right to contest the Preliminary Determination and [Redacted] has filed a response contesting the Preliminary Determination. For the reasons set forth below, [Redacted] claim is approved in the amount of 20% and [Redacted] is denied.

I. Background and Commission Action.

On [Redacted] the Commission filed an enforcement action in [Redacted] (the “Covered Action”). The Commission alleged that [Redacted] (or the “Defendant”) committed. On [Redacted] the United States District Court [Redacted] entered final judgment in favor of the Commission, [Redacted].

On [Redacted] the Office of the Whistleblower (“OWB”) posted Notice of Covered Action [Redacted] for the Covered Action. As noted above, both claimants filed timely whistleblower award claims.

II. [Redacted] Claim is Approved.

In the Preliminary Determination, the CRS recommended that [Redacted] receive a whistleblower award based on information that [Redacted] submitted to the Commission between [Redacted] and [Redacted]. This information concerned [Redacted]. The CRS preliminarily determined that this information constituted original information, that [Redacted] voluntarily provided it to the Commission, and that this information led to the successful enforcement of the Covered Action. See Section 21F(b)(1) of the Exchange Act, and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).[fn1]

The CRS also recommended that [Redacted] award be set in the amount of twenty percent (20%) of the monetary sanctions collected in the Covered Action. In arriving at this recommendation, the CRS considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of [Redacted] application.

Upon due consideration under Rule 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Preliminary Determination, [Redacted] claim is approved in the amount of 20%.[fn2]

III. [Redacted] Claim is Denied.

A. [Redacted] Application.

On [Redacted] submitted a Form WB-APP in connection with [Redacted]. Attached to the Form WB-APP was a four page document that included a list of seventeen different Notices of Covered Actions, including the Notice for the current matter. In the attachment to the Form WB-APP, [Redacted] wrote that [Redacted] “provided over 200 files with thousands of accounts, linked associates, mortgage documents, deeds, death certificates, announcements, tax documents, and offshore accounts and business associates around the world.” [Redacted] did not reference any specific tip or complaint in connection with the Covered Action.

A search of the Commission’s Tips, Complaint and Referral (“TCR”) system — the Commission’s electronic database which records and stores information received from whistleblowers and others about potential securities law violations — did not reveal any TCRs from [Redacted] relating to the Covered Action. In addition, the Enforcement staff members who handled the Covered Action confirmed that they received no information from [Redacted] before, during or after the investigation or enforcement action.

On [Redacted] the CRS issued a Preliminary Determination recommending that [Redacted] application for an award be denied because [Redacted] did not provide any information that led to the successful enforcement of the Covered Action, as required by Section 21F(b)(1) of the Exchange Act, and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a).

B. [Redacted] Response to the Preliminary Determination.

On [Redacted] timely submitted a response contesting the Preliminary Determination. [Redacted] response attached various documents, including: four annual reports of two organizations in Florida; a report published by the Boca Raton Regional Hospital Foundation; several public news stories about Israeli agents in Australia, a couple who pled guilty to money laundering in 2000, a merger between two banks, and the presidential pardon of Marc Rich; and press releases from [Redacted] regarding internal promotions and hiring. In [Redacted] response, [Redacted] again failed to identify any specific tip or complaint that [Redacted] submitted to the Commission in connection with the Covered Action.

The gist of [Redacted] response is that [Redacted] are engaged in a Ponzi scheme and money laundering for the purpose of directing funds to Israel and possibly the Israeli national intelligence agency, and that the Commission’s case ignored evidence regarding offshore accounts and other alleged wrongdoing.

C. Analysis.

To qualify for an award under Section 21F, a whistleblower must voluntarily provide the Commission with original information that leads to the successful enforcement of a covered judicial or administrative action or related action. 15 U.S.C. § 78u-6(b)(1). Original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, reopen an investigation, or inquire into different conduct as part of a current examination or investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under examination or investigation, and the original information significantly contributed to the success of the action. Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2).

We find that none of the information [Redacted] submitted led to the successful enforcement of the Covered Action. First, the record demonstrates that [Redacted] did not lead to the opening of the investigation, as [Redacted] only started submitting information to the Commission on [Redacted] which is well after the staff began its investigation into [Redacted].

Second, we see no evidence to suggest that [Redacted] contributed to the ongoing investigation. Every TCR that [Redacted] has submitted to the Commission has been closed with a disposition of no further action planned, which indicates that the information was not provided to Enforcement staff for further inquiry or for use in any ongoing investigations. And there is otherwise no indication that the Enforcement staff members responsible for the Covered Action relied on any information provided by [Redacted] in investigating the matter or bringing the Covered Action,

Third, based on our own assessment of the information that [Redacted] submitted, we cannot see how this information could have led to the successful enforcement of the Covered Action given the absence of any relevant factual connections between the two. And [Redacted] has failed to explain how any of the information that [Redacted] provided either caused the staff to open the investigation (or a new line of inquiry in the investigation) that resulted in the Covered Action, or significantly contributed to the success of the Covered Action.

Because the record demonstrates that [Redacted] information did not lead to the successful enforcement or the Covered Action and [Redacted] has not shown otherwise in [Redacted] request for reconsideration of the Preliminary Determination, we deny [Redacted] application for an award.

IV. Conclusion.

Accordingly, it is ORDERED that [Redacted] shall receive an award of twenty percent (20%) of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order; and it is further

ORDERED that [Redacted] whistleblower award claim is denied.

[1] [Redacted] obtained the information in [Redacted] capacity as [Redacted]. As a result, in preliminarily determining that [Redacted] had provided original information, the CRS considered whether [Redacted] information was derived from [Redacted] independent knowledge or independent analysis. Under Rule 21F-4(b)(1), “[i]n order for [a] whistleblower submission to be considered original information, it must,” among other requirements, be “[d]erived from [the whistleblower’s] independent knowledge or independent analysis.” 17 C.F.R. § 240.21F-4(b)(1). In turn, Rule 21F-4(b)(4)(iii)(B) provides that, unless an exception applies, “[t]he Commission will not consider information to be derived from [a whistleblower’s] independent knowledge or independent analysis” if the whistleblower “obtained the information because” the whistleblower was “[a]n employee whose principal duties involve[d] compliance or internal audit responsibilities[.]” 17 C.F.R. § 240.21F-4(b)(4)(iii)(B). But the CRS preliminarily determined that Rule 21F-4(b)(4)(iii)(B) did not apply here to disqualify [Redacted] information from treatment as original information pursuant to the exception in Rule 21F-4(b)(4)(v)(C), 17 C.F.R. § 240.21F-4(b)(4)(v)(C), because [Redacted] had reported the information to [Redacted] at least 120 days before reporting the information to the Commission.

[2] [Redacted] did not contest the Preliminary Determination and it therefore became the Proposed Final Determination of the CRS pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f).

SEC

08/15/2014

In response to the above-referenced Notice of Covered Action, the U.S. Securities and Exchange Commission (the “Commission”) received a whistleblower award claim from [Claimant]. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated this claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has preliminarily determined to recommend that the Commission deny this award claim. The basis for this determination is that [Claimant] is not a “whistleblower,” within the meaning of Section 21F(a)(6) of the Exchange Act and Rule 21F-2(a) thereunder, because there is no evidence showing that *** provided information to the Commission relating to the above-referenced Covered Action or any other Commission matter as required by Rule 21F-9(a) or (d).

By: Claims Review Staff.

SEC

72727

07/31/2014

On August 27, 2013, the Claims Review Staff (CRS) issued a Preliminary Determination related to the Notice of Action [Redacted]. The Preliminary Determination recommended that Claimant’s whistleblower award claim for an award under Section 21F of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. 78u-6, be denied. Although the record demonstrated that Claimant provided original information to the Commission that led to the successful enforcement of [Redacted] (Admin. File No. [Redacted]) (the “Covered Action”), the Preliminary Determination recommended that Claimant’s claim be denied because ___ information did not appear to have been “voluntarily” provided within the definition of Rule 21F-4(a)(ii), because of a prior inquiry into the matter conducted by a self-regulatory organization (“SRO”).

Claimant subsequently filed a response to the Preliminary Determination pursuant to Rule 21F-10(e), 17 C.F.R. 240.21F-10(e), in which, among other things, ___ set forth a detailed chronology of the relevant events. Claimant’s detailed description of ___ conduct persuades us that ___ engaged in diligent efforts to correct and to bring to light the underlying misconduct in this case.[fn1] Based on our fuller understanding of the relevant events, which we consider to be materially significant extenuating circumstances, we therefore believe it appropriate in the public interest and consistent with the protection of investors to waive the “voluntary” requirement of Rule 21F-4(a) on the unique facts of this award claim and to make an award to Claimant.[fn2] Although not an independent basis for our conclusion, we nonetheless are mindful that the Claimant’s interactions with the SRO occurred prior to either our proposal or adoption of Rule 21F-4(a), which created incentives, as part of our whistleblower program, for whistleblowers to report original information to the Commission before they are approached by an SRO in connection with an investigation or an examination.

Further, we conclude that the award should be ___ of the total monetary sanctions collected in the Covered Action. In arriving at this conclusion, we considered the factors set forth in Rule 21F-6, 17 C.F.R. 240-21F-6, in relation to the facts and circumstances of the Claimant’s application. We believe that this award appropriately recognizes the significance of the information that the Claimant provided to the Commission, the efforts the Claimant made both to protect investors and to report the violation internally, and the personal and professional injuries that the Claimant suffered in bringing the violations here to light.

Accordingly, upon due consideration under Rule 21F-10(h), 17 C.F.R. § 240.21F-10(h), it is hereby ORDERED that Claimant shall receive an award of ___ of the monetary sanctions collected in the above-referenced covered action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] Among the highly unusual circumstances that Claimant detailed, and that we otherwise take note of, are: (1) prior to the enactment of the Dodd-Frank whistleblower award program and the concomitant anti-retaliation protections, Claimant was working aggressively internally at [Redacted] to bring the securities law violations to the attention of appropriate personnel and to obtain corrective action for the benefit of investors; (2) the SRO inquiry originated from information a third party provided to the SRO that in part described Claimant’s role in identifying the issue that gave rise to the violations and ___ effort to obtain corrective action; (3) Claimant was led to believe by [Redacted] early on during the SRO inquiry that [Redacted] had provided the SRO with all of the materials that Claimant had developed for his use in internal efforts to obtain corrective action; and (4) Claimant’s persistent efforts in reporting to the Commission once ___ learned that the SRO inquiry had been closed and that [Redacted] internal efforts would not protect investors from future harm.

[2] See Section 36(a) of the Exchange Act.

SEC

72659

07/23/2014

[Redacted] (“Claimant”) failed to submit [Redacted] claims for an award for Notices of Covered Action [Redacted] and [Redacted] to the Office of the Whistleblower (“OWB”) within ninety (90) calendar days of the date of the respective Notices of Covered Action as required by Rule 21F-10(b) under the Securities Exchange Act of 1934 (“Exchange Act”) to be considered for an award. Claimant also did not demonstrate “extraordinary circumstances,” as required by Rule 21F-8(a) under the Exchange Act, to justify the waiver of the ninety (90) day requirement. For the foregoing reasons, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that Claimant’s claims for an award be denied. Claimant now has filed a response contesting the Preliminary Determination.

For the reasons set forth below, Claimant’s claims are denied.

I. Commission Enforcement Actions and Notices of Covered Action.

A. The Commission’s Enforcement Actions.

i. [Redacted].

On [Redacted] the Commission filed a complaint in the U.S. District Court [Redacted] against [Redacted] (“the [Redacted] Matter”). On [Redacted] the district court entered a final judgment in favor of the Commission. Among other relief, the district court ordered [Redacted] to pay disgorgement of [Redacted] together with prejudgment interest of [Redacted], amounting to [Redacted], plus [Redacted] in civil penalties.

ii. [Redacted].

On [Redacted] the Commission filed a complaint against [Redacted] (“the [Redacted] Matter”). On [Redacted] the district court entered final judgments in favor of the Commission. Among other relief, the district court ordered [Redacted] jointly and severally liable for disgorgement in the amount of [Redacted] together with prejudgment interest of [Redacted] for a total of [Redacted] and ordered [Redacted] to pay a civil penalty of [Redacted].

B. Notices of Covered Action.

The OWB posted Notices of Covered Action (each, a “NoCA”) on [Redacted] for both the [Redacted] Matter, NoCA [Redacted] and the [Redacted] Matter, [Redacted] on the Commission’s website pursuant to Rule 21F-10(a) under the Exchange Act. Each NoCA listed [Redacted] ninety (90) calendar days from the date of posting, as the deadline for submitting claims.[fn1]

C. Claimant’s Applications for Award.

Claimant submitted whistleblower award applications for both matters. Claimant’s [Redacted] and [Redacted] award applications were received by the OWB on [Redacted] and [Redacted] respectively—nearly three months past the [Redacted] deadline.

On [Redacted] Claimant submitted a letter to the OWB explaining that neither [Redacted] nor [Redacted] attorney knew about the NoCA postings on the Commission’s website, which resulted in Claimant’s delay in submitting the applications.

II. Claimant’s Claims are Denied.

A. Background.

Claimant submitted information to the Commission about suspected wrongdoing in the [Redacted] Matter and [Redacted] Matter in or about [Redacted] and [Redacted]. For instance, Claimant contacted the [Redacted] on or about [Redacted] with information regarding wrongdoing by [Redacted] with respect to the stock of [Redacted]. Similarly, on or about [Redacted], the Claimant provided the Commission with a transcript of testimony that [Redacted] had given in [Redacted] the Claimant believed that [Redacted] had described [Redacted] in [Redacted] testimony. According to the Enforcement attorneys involved in the [Redacted] and [Redacted] Matters, Claimant (prior to final judgments being entered) did not provide any additional information following the effective date of the whistleblower program—i.e., July 21, 2010 when the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was enacted.

B. The Preliminary Determination.

On December 19, 2012, the CRS made a Preliminary Determination recommending that Claimant’s award applications be denied. The Preliminary Determination explained that the Claimant had failed to provide the OWB with the award application for either NoCA within ninety (90) calendar days of the date of the respective NoCA as required by Rule 21F-10(b) of the Exchange Act to be considered for an award. The Preliminary Determination also stated that the Claimant had not demonstrated “extraordinary circumstances” to justify the waiver of the ninety (90) day requirement pursuant to Rule 21F-8(a). 17 C.F.R. § 240.21F-8(a).

C. Claimant’s Response to the Preliminary Determination.

On February 19, 2013, Claimant submitted a written response contesting the Preliminary Determination pursuant to Rule 21F-10(e)(2). 17 C.F.R. § 240.21F-10(e)(2). Rule 21F-10(e)(2) provides that a claimant seeking to contest a Preliminary Determination may submit a written response within sixty (60) days that “sets forth the grounds for your objection to either the denial of an award or the proposed amount of an award.”

In [Redacted] response, Claimant does not dispute that [Redacted] WB-APPs were untimely. Instead, Claimant attempts to demonstrate the presence of extraordinary circumstances that caused the late-filed WB-APPs. Claimant’s response centers on one critical argument— [Redacted] was not aware of the whistleblower award program prior to the expiration of the 90-day filing deadline. Claimant further argues that [Redacted] lack of knowledge was due to the failure of the Commission to provide [Redacted] with actual notice of the program and its filing requirements, and [Redacted] attorney’s failure to learn of the program and timely submit the award applications.

D. Analysis.

Rule 21F-10(a) specifically states that “[a] claimant will have ninety (90) days from the date of the Notice of Covered Action to file a claim for an award based on that action, or the claim will be barred.” As the Commission explained when it adopted this rule, “The 90-day bar provides finality at the end of a reasonable application period so that we may assess the award applications and conclusively determine which applicant, if any, is entitled to an award, and in what percentage amount.” Securities Whistleblower Incentives and Protections, Rel. No. 34-64545, n. 351 (May 25, 2011). But “…the Commission may, in its sole discretion, waive” the 90-day bar “based upon a showing of extraordinary circumstances. ” 17 C.F.R. § 240.21F-8(a). Claimant asks that we do so, but we find that [Redacted] application does not warrant such equitable relief.

In determining whether a claimant has demonstrated extraordinary circumstances to excuse an untimely submission under Rule 21F-8, we look to our analogous decision in In the Matter of the Application of PennMont Securities et al., SEC Release No. 34-61967, 2010 WL 1638720 (April 23, 2010) (hereinafter “PennMont”), aff’d 414 Fed. Appx. 465 (3d Cir. 2011). There, in determining whether extraordinary circumstances were shown to permit an untimely filing under Commission Rule of Practice 420(b), 17 C.F.R. § 201.420(b), we explained that “the ‘extraordinary circumstances’ exception is to be narrowly construed and applied only in limited circumstances.” PennMont, 2010 WL 1638720 at *4. After examining analogous areas of federal law, we determined that demonstration of an extraordinary circumstance in the context of an untimely submission requires a person seeking relief to show that “the reason for the failure to timely file was beyond [his or her] control[.]” Id.

As explained above, Claimant asserts that extraordinary circumstances exist here to justify [Redacted] untimely filing because [Redacted] did not know of the whistleblower program until after the expiration of the 90-day filing period. But a lack of awareness about the program does not, in our view, rise to the level of an extraordinary circumstance as a general matter. Claimants have it well within their control to learn about the whistleblower program’s existence and its requirements, and to file a timely award application; they simply need to visit the Commission’s web page, which prominently features the relevant information about the program. Their failure to do so does not warrant equitable relief, particularly since a central premise underlying Rule 21F-10(a)(1) is that potential claimants bear the ultimate responsibility to learn about the program and to take the appropriate steps to perfect their award applications.

We are similarly unpersuaded by Claimant’s attempt to shift responsibility for [Redacted] lack of knowledge about the whistleblower program to the Commission and to [Redacted] attorney. The Commission is under no duty to provide Claimant (or [Redacted] attorney) with direct notice of the filing deadline —and Claimant has failed to suggest any legal authority suggesting otherwise.[fn2] Again, the NoCAs are clearly posted on the Commission’s website, each with a definite filing deadline, which constitutes sufficient notice.

Nor are we persuaded by Claimant’s contention that we should forgive [Redacted] untimeliness because [Redacted] attorney did not discover the whistleblower program’s existence and, thus, advise [Redacted] about it, until after the expiration of the 90-day submission period. To be sure, as we observed in PennMont, attorney misconduct in some circumstances might give rise to extraordinary circumstances justifying equitable relief. PennMont, 2010 WL 1638720 at *4. But the requisite level of attorney misconduct causing the untimely submission must be severe, involving blatant client deception, outright abandonment, or similar egregious misconduct; ordinary negligence such as Claimant’s attorney here may be responsible for will not suffice.[fn3] And because Claimant has failed to offer anything that exhibits the requisite level of egregious attorney misconduct, we find that any failure on [Redacted] attorney’s part does not constitute an extraordinary circumstance necessary to trigger our discretion to toll the 90-day filing deadline.[fn4]

But the Claimant’s request that we exercise our equitable tolling authority fails for an additional reason— [Redacted] failed to act promptly upon learning of the missed filing deadline. As we explained in PennMont, “[e]ven when circumstances beyond the applicant’s control give rise to the delay, … an applicant must also demonstrate that he or she promptly arranged for the filing … as soon as reasonably practicable thereafter.” Id. at *4. Indeed, we admonished that “[a]n applicant whose application is delayed as a result of extraordinary circumstances remains under an obligation to proceed promptly” thereafter in making his submission. Id.

In [Redacted] response to the Preliminary Determination, Claimant states that [Redacted] “did not sit on [Redacted] rights” after learning about the program. Claimant’s Response to the Preliminary Determination, at 1; see also id. at 2 (“Once the information was found, we applied immediately.”). But the record leads us to conclude otherwise. In a [Redacted] letter, the Claimant represented that [Redacted] attorney became aware of the whistleblower program in late [Redacted] yet Claimant’s award applications were not received by the OWB until [Redacted] and [Redacted], respectively. Given the relatively straightforward nature of the WB-APPs that Claimant submitted, we fail to see why [Redacted] delayed over a month in submitting them. Nor has Claimant offered any credible explanation for the delay.[fn5] Accordingly, we find that Claimant failed to demonstrate that [Redacted] pursued [Redacted] rights diligently upon learning that the whistleblower program existed.

For these reasons, we conclude that Claimant has not met the heavy burden of demonstrating that extraordinary circumstances prevented [Redacted] from timely submitting to the OWB [Redacted] award applications for NoCAs [Redacted] and [Redacted].[fn6]

III. Conclusion.

Accordingly, upon due consideration under Rule 21F-10(h), 17 C.F.R. § 240.21F-10(h), it is hereby ORDERED that [Redacted] whistleblower award claims be, and hereby are, denied.
By the Commission.

[1] Rule 21F-10 outlines the procedures for making a claim for a whistleblower award in Commission actions that result in monetary sanctions in excess of $1,000,000. 17 C.F.R. § 240.21F-10. Section (b) of 21F-10 imposes specific timing requirements upon the whistleblower to make an award claim:
To file a claim for a whistleblower award, you must file Form WB-APP, Application for Award for Original Information Provided Pursuant to Section 21F of the Securities Exchange Act of 1934 (referenced in § 249.1801 of this chapter). You must sign this form as the claimant and submit it to the Office of the Whistleblower by mail or fax. All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award.
[2] We note Claimant has not asserted that due process requires that [Redacted] receive actual notice of the whistleblower award program’s existence and, thus, any such argument is waived. But it would fail in any event. Congress enacted the program through legislation, the Commission published the rules implementing the program in the Federal Register, and those rules are available to the public in the Code of Federal Regulations. For due process purposes, this more than sufficed to provide Claimant with notice that the program exists. Cf. Luna v. Holder, 659 F.3d 753, 759 (9th Cir. 2011) (finding that all aliens presumptively have been given notice of a deadline to file a motion to reopen where the law has been enacted by Congress and the regulation has been published in the Federal Register); Stearn v. Dep’t of Navy, 280 F.3d 1376, 1384 (Fed. Cir. 2002) (finding that government employees claiming certain retirement benefits were placed on notice of the requirements for obtaining those benefits by publication of the governing regulation in the Federal Register); LaChance v. Reno, 13 F.3d 586, 589-90 (2d Cir. 1994) (explaining that the publication of an administrative regulation provides constructive notice) ; Jordan v. Director, Office of Workers’ Compensation Programs, U.S. Dept. of Labor, 892 F.2d 482, 488-89 (6th Cir. 1989) (holding that a party “received constructive notice of her right to obtain an attorney at no charge by virtue of the publication of [the regulation] in the Federal Register and the Code of Federal Regulations”).
[3] See, e.g., Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 96 (1990) (explaining that an attorney’s ordinary negligence is generally not an “extraordinary circumstance” warranting equitable tolling) ; Holland v. Florida, 130 S. Ct. 2549, 2564 (2010) (“[A] garden variety claim of excusable neglect, such as a simple miscalculation that leads a lawyer to miss a filing deadline, does not warrant equitable tolling.”) (internal citations omitted). See also Geraci v. Senkowski, 211 F.3d 6, 9 (2d Cir. 2000) (finding a mistake by counsel as to the calculation of time remaining to file a petition did not constitute extraordinary circumstances) ; Frye v. Hickman, 273 F.3d 1144, 1146 (9th Cir. 2001) (finding that ordinary attorney negligence, such as miscalculating a deadline, is not an extraordinary circumstance that warrants equitable tolling) ; Toccaline v. Commissioner, 2012 WL 603294, at *10 (No. 3:10-cv-1404) (D. Conn. Feb. 23, 2012) (finding that petitioner’s ignorance of the law did not constitute an extraordinary circumstance to warrant equitable tolling) ; McCaskill, II v. Dep’t of the Army, 2006 WL 314555, at *7 (No. 1:05-CV-536) (M.D.N.C. Feb. 8, 2006) (finding that missing a 90-day deadline to file—or failing to inform a client to file—is “garden-variety” ordinary negligence). Cf. Martinez v. City of Chicago, 2 F.3d 752, 756 (7th Cir. 2007) (explaining that even though the plaintiff’s attorney’s neglect resulted in the dismissal of what may have been a meritorious action, the plaintiff’s attorney serves as the plaintiff’s agent, and the plaintiff is thus bound by his actions).
[4] In other contexts, recent cases finding extraordinary circumstances have generally involved attorney abandonment of clients without notification or similar egregious attorney misconduct. See, e.g., United States v. Martin, 408 F.3d 1089, 1096 (8th Cir. 2005) (client entitled to equitable tolling where his attorney retained files, made misleading statements, and engaged in similar conduct); Dillon v. Conway, 642 F.3d 358, 362-64 (2d Cir. 2011) (attorney willfully misled his client); Walden v. Link Systems, Inc., 2012 WL 3779210, at *2 (No. 1:11-cv-0388) (S.D. Ind. Aug. 9, 2012) (attorney “walked away from her clients and her law practice at some point without giving any notice to her clients.”).
[5] In a letter to the OWB [Redacted] Claimant asserted that [Redacted] delayed submitting the [Redacted] application to avoid jeopardizing a purportedly then-pending non-public criminal investigation. But we do not credit this explanation because: (i) we fail to understand why [Redacted] felt this was necessary given that the Commission does not make whistleblower applications publicly available, and (ii) if Claimant had in fact had this concern it seems to us the appropriate course would have been to promptly alert the OWB and to seek its guidance rather than to simply unilaterally delay filing the application. In any event, none of this explains Claimant’s delay in submitting the earlier [Redacted] award application.
[6] We note that, based on the record currently before us, Claimant would not be entitled to an award even if [Redacted] had demonstrated that “extraordinary circumstances” prevented [Redacted] timely filing of the award applications. It appears that, with one exception discussed below, the information that Claimant provided to the Commission relating to the [Redacted] and [Redacted] Matters was provided before the July 21, 2010 enactment of Dodd-Frank. Under Rule 21F-4(b)(1)(iv), information provided to the Commission for the first time before Dodd-Frank’s enactment is not considered “original information” and, thus, cannot serve as the basis for an award. 17 C.F.R. § 240.21F-4(b)(1)(iv). On or about [Redacted] Claimant submitted to the Commission a copy of [Redacted] testimony from a criminal sentencing hearing, but this information could not have contributed to the successful resolution of either the [Redacted] or [Redacted] Matters because final judgments had already been entered in those cases on [Redacted] and [Redacted] respectively.

SEC

72652

07/22/2014

On April 7, 2014, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Claimant #1], [Claimant #2], and [Claimant #3] each receive a whistleblower award because they voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the Claims Review Staff recommended that such award be set in the amount of thirty percent (30%) in total, with fifteen percent (15%) to [Claimant #1], ten percent (10%) to [Claimant #2], and five percent (5%) to [Claimant #3] of the monetary sanctions collected or to be collected in the Covered Action. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of [Claimant #1], [Claimant #2] and [Claimant #3] applications.

On April 21, 2014 and April 28, 2014, [Claimant #2] and [Claimant #3] respectively, provided written notice to the Commission of their decisions not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e). [Claimant #1] failed to submit a timely response contesting the Preliminary Determination. Accordingly, pursuant to Rule 21F-10(f), 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rule 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Preliminary Determination, it is hereby ORDERED that [Claimant #1] shall receive fifteen percent (15%), [Claimant #2] shall receive ten percent (10%), and [Claimant #3] shall receive five percent (5%), respectively, for a total of thirty percent (30%), of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

SEC

72301

06/03/2014

On April 7, 2014, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action Redacted (the “Covered Action”). The Preliminary Determination recommended that [Claimant #1] and [Claimant #2] each receive a whistleblower award because, acting in concert, they voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21 F-3(a) thereunder, 17 C.F.R. § 240.21 F-3(a). Further, the Claims Review Staff recommended that such award be set in the amount of thirty percent (30%), in total, (split evenly at 15% each) of the monetary sanctions collected or to be collected in the Covered Action. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21 F-6, in relation to the facts and circumstances of [Claimant #1]’s and [Claimant #2]’s applications.

On April 7, 2014, [Claimant #1] and [Claimant #2] provided written notice to the Commission of their decisions not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e), and, pursuant to Rule 21F-10(f) thereunder, 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rule 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Proposed Final Determination, it is hereby ORDERED that [Claimant #1] and [Claimant #2] shall each receive an award of fifteen percent (15%) for a total of thirty percent (30%) of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.[fn1]

By the Commission.

[1] A portion of the disgorgement and prejudgment interest ordered to be paid in the Covered Action was “deemed satisfied” by Respondents’ payment of that amount pursuant to a civil action brought by [Redacted] and shall be included in our calculation of the award payment to the claimants here. We interpret Section 21 F(b)(1) of the Exchange Act, which provides for payment of awards based on “what has been collected of the monetary sanctions” imposed in a Commission Covered Action, to include amounts that are deemed satisfied when collected in actions brought by other governmental authorities.

CFTC

05/19/2014

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant] (Claimant), filed on Form WB-APP 2014-02-19-01. Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be approved. The Whistleblower Award Determination Panel has determined, and it is the order of the Commission, that the Claimant shall receive an award of ___ percent (___%) of the monetary sanctions collected, which, as of the date of this order, will exceed $240,000.

Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (Commission) is the whistleblower award claim of [Claimant] (Claimant), filed on Form WB-APP 2014-02-19-01.

IT IS HEREBY DETERMINED that: The claim is granted because the Claimant meets the requirements of Section 23 of the Commodity Exchange Act [7 U.S.C. § 26] and the Whistleblower Rules [17 C.F.R. § 165]. The Claimant voluntarily provided original information that caused the Commission to launch an investigation that led to an enforcement action in which the Commission secured judgments of related monetary sanctions exceeding $1 million. The information provided was sufficiently specific, credible, and timely to cause the Commission to open an investigation. Furthermore, the information provided by the Claimant allowed the Commission to conserve valuable resources by focusing the Commission’s attention on the marketplace misconduct. Accordingly, it is hereby DETERMINED that the Claimant shall receive an award of ___ percent (___%) of the monetary sanctions collected in the related covered action, including any monetary sanctions collected after the date of the related Order.

SEC

72178

05/16/2014

Claimant [Redacted] failed to submit ___ claim for an award for Notice of Covered Action [Redacted] to the Office of the Whistleblower (“OWB)” within ninety (90) calendar days of the date of the Notice of Covered Action (“NoCA”), which Rule 21F-10(b) of the Securities Exchange Act (“Exchange Act” ) requires to be considered for an award.[fn1] As a result, the Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Redacted] untimely claim be denied.

For the reasons set forth below, [Redacted] award claim is denied.

I. Commission Enforcement Action and Notice of Covered Action.

On [Redacted] the Securities and Exchange Commission (“Commission” or “SEC”) filed a complaint in the U.S. District Court [Redacted] against [Redacted] for engaging in [Redacted]. On [Redacted] the district court entered a default judgment against [Redacted] and [Redacted]. Among other relief, the court ordered [Redacted] to pay disgorgement in the amount of [Redacted] prejudgment interest in the amount of [Redacted] and a civil penalty of [Redacted].

On [Redacted] the OWB posted NoCA [Redacted] for the [Redacted] Matter.

II. [Redacted] Claim is Denied.

A. Background.

On [Redacted] the 90-day period established by Rule 21F-10(b) to submit an award claim expired without [Redacted] having made a submission. Instead, [Redacted] submitted ___ award claim dated [Redacted] — more than [Redacted] late.

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that [Redacted] claim be denied because it was untimely.

C. [Redacted] Response to the Preliminary Determination.

On [Redacted] submitted a response pursuant to Rule 21F-10(e)(2), 17 C.F.R. § 240.21F-10(e)(2), contesting the Preliminary Determination. [Redacted] conceding that ___ claim was late, argued that the Commission should nonetheless excuse ___ untimely filing due to certain purported “extraordinary circumstances. ” [Redacted] identified two considerations that ___ argues rise to the level of an extraordinary circumstance that should excuse ___ untimely filing: (i) [Redacted] purportedly provided information to SEC and other federal investigators relating to the [Redacted] fraud that ___ claims “led directly to the [Redacted] and (ii) ___ lacked knowledge about the whistleblower program until “[s]hortly after [Redacted] the date charges were filed against the Defendants in the [Redacted] matter.

D. Analysis.

Under Rule 21F-8(a), “the Commission may, in its sole discretion, waive” the 90-day filing requirement “upon a showing of extraordinary circumstances. ” 17 C.F.R. § 240.21F-8(a). We find, however, that [Redacted] has not made the necessary showing to trigger our discretionary authority to waive that requirement.

In determining whether a claimant has demonstrated extraordinary circumstances to excuse an untimely submission under Rule 21F-8(a), we look to our analogous decision in In the Matter of the Application of PennMont Securities et al., SEC Rel. No. 34-61967, 2010 WL 1638720 (April 23, 2010) (hereinafter “PennMont”), aff’d 414 Fed. Appx. 465 (3d. Cir. 2011). There, in determining whether extraordinary circumstances were shown to permit an untimely filing under Commission Rule of Practice 420(b), 17 C.F.R. § 201.420(b), we explained that “the ‘extraordinary circumstances’ exception is to be narrowly construed and applied only in limited circumstances.” PennMont, 2010 WL 1638720 at *4. Accordingly, after examining analogous areas of federal law, we determined that demonstration of an extraordinary circumstance in the context of a late filing requires a person seeking relief to show that “the reason for the failure to timely file was beyond [his or her] control [.]” Id. Further, we identified attorney misconduct or serious illness that presented the applicant from making a timely filing as two examples of the types of showing an applicant must make for us to consider exercising our discretionary authority to excuse an untimely filing. Id.

In PennMont, we also concluded that “[e]ven when circumstances beyond the applicant’s control give rise to the delay, however, an applicant must also demonstrate that he or she promptly arranged for the filing… as soon as reasonably practicable thereafter.” Id. Indeed, we admonished that “[a]n applicant whose application is delayed as a result of extraordinary circumstances remains under an obligation to proceed promptly” thereafter in making his submission. Id.

Applying the PennMont standard here, we think it apparent that neither of the considerations that [Redacted] has identified rises to the level of an extraordinary circumstance under Rule 21F-8(a). [Redacted] has not demonstrated how, if at all, ___ purported role in leading to the [Redacted] behind the [Redacted] and the impact that this may in turn have had on the recovery of significant funds, constitutes an extraordinary circumstance such that we may excuse ___ untimely award claim.

We understand [Redacted] to claim that, at the time the Notice of Covered Action was posted, ___ was unaware that the information that ___ had shared would lead to [Redacted] This, however, does not constitute an extraordinary circumstance beyond [Redacted] control that excuses ___ failure to timely file an award application with respect to the Commission’s successful enforcement action.[fn2] The 90-day deadline set forth in Rule 21F-10(b) was intended both to ensure fairness to potential claimants by giving all an equal opportunity to have their competing claims evaluated at the same time, and to bring finality to the claims process so that we can make timely awards to meritorious whistleblowers.[fn3] To reopen the process to consider claims based on purported assistance provided to investigators in collecting money long after the deadline has passed for claims to be filed in response to a NoCA would undercut these important goals and make the whistleblower claims process unworkable. For this reason, and consistent with our analysis in PennMont, we do not view [Redacted] claim as justifying a waiver of the filing deadline based upon “extraordinary circumstances. “[fn4]

Turning to [Redacted] second claim for relief, we find that ___ lack of awareness about the whistleblower program until “[s]hortly after [Redacted] does not constitute an extraordinary circumstance justifying a waiver of the timing requirement. As an initial matter, we have serious doubts that such lack of awareness by a claimant could ever rise to the caliber of circumstances beyond a party’s control for which we would exercise our Rule 21F-8(a) authority. That said, we need not conclusively decide the issue today. Even if we were persuaded to see that issue in [Redacted] favor, ___ would still not be eligible for discretionary relief because — has offered no explanation for why it took ___ until [Redacted] ___ approximately [Redacted] after supposedly first learning about the whistleblower program ___ to “prepare the paperwork” to file ___ award claim. [Redacted] failure to proceed promptly upon supposedly learning of the whistleblower program is, under the PennMont standard, fatal to — already weak request that we exercise our discretionary authority here.[fn5]

III. Conclusion.

Accordingly, upon due consideration under Rule 21F-10(h), 17 C.F.R. § 240.21F-10(h), it is hereby ORDERED that [Redacted] whistleblower award claim be, and hereby is, denied.
By the Commission.

[1] Rule 21F-10(b) provides:
To file a claim for a whistleblower award, you must file Form WB-APP, Application for Award for Original Information Provided Pursuant to Section 21F of the Securities Exchange Act of 1934 (referenced in § 249.1801 of this chapter). You must sign this form as the claimant and submit it to the Office of the Whistleblower by mail or fax. All claim forms, including any attachments, must be received by the Office of the Whistleblower within ninety (90) calendar days of the date of the Notice of Covered Action in order to be considered for an award. 17 C.F.R. § 240.21F-10(b).
[2] We note that, in order to qualify for an award based upon information provided to criminal authorities in connection with a related criminal action, [Redacted] would first have to qualify for an award in the Commission’s enforcement action. See Rule 21F-3(b), 17 C.F.R. § 240.21F-3(b). Even if ___ application were timely, ___ would likely not be eligible for an award because nothing in the record (including the information that the claimant has submitted) indicates that ___ information led to the successful enforcement of the [Redacted] by the Commission.
[3] See Implementation of the Whistleblower Provisions of Section 21F of the Securities Exchange Act of 1934, Release No. 34-64545, at 172 (May 25, 2011).
[4] We see nothing about subsequent developments in the [Redacted] that excuses under the PennMont standard [Redacted] untimely application. We fail to see how subsequent developments in the [Redacted] have any relevance to alerting [Redacted] that ___ was a potential claimant in the Commission’s action, as those developments would have no bearing on whether ___ had provided the Commission information that “led to” the earlier success of the Commission’s action.
[5] If the Commission believes that an award is merited notwithstanding that the untimely filing was within the claimant’s control, the Commission could still have recourse to its general exemptive authority under Section 36(a) of the Exchange Act. However, we do not find any evidence that would support the Commission exercising its authority to exempt [Redacted] from ___ obligation to have timely filed.

SEC

05/12/2014

The Securities and Exchange Commission (“Commission’”) received whistleblower award claims from [Redacted] in response to the Notices of Covered Action set forth in Appendix A hereto. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff (”CRS”) has evaluated these claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17 promulgated under the Exchange Act. For the reasons discussed below, the CRS has preliminarily determined that [Redacted] is ineligible for an award in these matters or in any future covered or related actions.

17 C.F.R. § 240.21F-8(c)(7). See also Section 21F(i) of the Exchange Act.

The CRS preliminarily finds that [Redacted] has knowingly and willfully made false, fictitious, or fraudulent statements and representations to the Commission over a course of years and continues to do so. Specifically, we preliminarily find that each of the passages set forth in Appendix B — which are taken from [Redacted] TCRs, emails to Commission officials, and WB-APPs — are patently false or fictitious. We also preliminarily find that [Redacted] continued submission of WB-APPs in which [Redacted] declares that [Redacted] is entitled to an award patently false given that all but one of the 196 WB-APPs that [Redacted] has filed to date lack even a superficial factual nexus to the covered actions for which [Redacted] is seeking an award.[fn2]

Moreover, we preliminarily find that [Redacted] knowing and willful state of mind in
making these statements is evidenced by the following: (i) the vague, unsupported, and utterly
incredible nature of [Redacted] statements in Appendix B; (ii) [Redacted] continued submission of the WB-APPs that lack any factual nexus to the covered actions; and (iii) [Redacted] persistent refusal to
withdraw [Redacted] numerous unsupported claims or to change [Redacted] behavior in spite of repeated
requests and explanations by the Office of the Whistleblower (“OWB”).[fn4]

[Redacted] has submitted frivolous and unsupported WB-APPs of the type described above relating to every single Notice of Covered Action issued by the OWB to date. [Redacted] unceasing submission of baseless claims has harmed the rights of legitimate whistleblowers and hindered the Commission’s implementation of the whistleblower program by, among other things, delaying the Commission’s ability to finalize meritorious awards to other claimants and consuming significant staff resources.[fn5]

For these reasons, the CRS has preliminarily determined that, pursuant to Rule 21F-8(c)(7) of the Exchange Act, [Redacted] is not eligible to be considered for whistleblower awards
in these matters or in any future covered or related actions. Accordingly, if this determination
becomes the final determination of the Commission, the OWB should summarily reject all
pending and future whistleblower award claims submitted by [Redacted].[fn6]

By: Claims Review Staff.

[1] We note that Rule 21F-8(c)(7) refers to “your other dealings with the Commission” as a category separate and distinct from the specific ”whistleblower submission” under consideration. Accordingly, we read “other dealings with the Commission” to encompass, among other things, statements or representations in previous whistleblower submissions as well as a claimant’s correspondence with Commission officials.

[2] Even for the sole covered action that did bear a superficial factual nexus — [Redacted] — the record demonstrates that the information that [Redacted] claimed in [Redacted] WB-APP led to the successful enforcement of the action was in no way relied upon — i.e., the information did not cause the staff to open the initial investigation nor did it contribute in any way to the success of the [Redacted] action.

[3] [Redacted] has even acknowledged that [Redacted] was “not directly involved in [the] discovery” of any of these cases.

[4] The OWB has engaged in numerous communications with [Redacted] to explain the rules governing the whistleblower program and its view of the deficiencies of [Redacted] submissions, and to give [Redacted] the opportunity to correct [Redacted] actions. For example, on February 1, 2013, the OWB called [Redacted] and explained the basic premise of the Commission’s whistleblower program, and the rules pursuant to which the Commission may pay an award. During that call, the OWB explained the factual nexus that must exist between the tip [Redacted] submits and the Notice of Covered Action for which [Redacted] requests an award. The OWB made it clear during that call that repeatedly filing claims for whistleblower awards that have no relation to the facts in the underlying matter will not result in an award under the whistleblower program. Similarly, on February 7, 2013 and April 4, 2013, the OWB advised [Redacted] in writing that [Redacted] numerous submissions for whistleblower awards failed to demonstrate factual nexus required by Rule 21F-4(c). Notwithstanding the OWB’s efforts, [Redacted] has continued [Redacted] bad-faith conduct.

[5] For example, [Redacted] unsuccessfully requested reconsideration of the Preliminary Determination denying [Redacted] award application in SEC v. Andrey C. Hicks and Locust Offshore Management, LLC, 1:11-cv-11888-RGS (D. Mass. 2011) (NoCA 2012-27), and as a result both consumed considerable staff effort with [Redacted] frivolous claim and caused a delay in the Commission’s ability to make a final determination to the three legitimate whistleblowers in this matter. This is to say nothing of the time and effort OWB staff expended to prepare the administrative record and other materials for an additional 51 claims that the Commission previously denied. In the Matter of the Claims for Awards by [Redacted] (March 19, 2013).

[6] We caution [Redacted] that we will not entertain any attempt by [Redacted] to withdraw [Redacted] WB-APPs following the issuance of this Preliminary Determination given: (1) [Redacted] previous gamesmanship with withdrawing and then seeking to reinstate a WB-APP; and (ii) [Redacted] repeated unwillingness to withdraw these frivolous applications when [Redacted] had a reasonable opportunity to do so, see supra note 4, and that [Redacted] attempt now to change course would simply be a transparent effort to evade the consequences of [Redacted] bad faith conduct.

SEC

71849

04/03/2014

Two individuals Claimant #1 and Claimant #2 filed separate whistleblower award claims pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6, in connection with Notice of Covered Action [Redacted]. [#1] claim was timely filed; [#2] claim, however, was untimely because [#1] did not file it within ninety (90) calendar days of the date of the Notice of Covered Action, as required by Rule 21F-10(b) of the Exchange Act.

The Claims Review Staff (“CRS”) issued Preliminary Determinations recommending that both [Redacted] claims be denied, albeit on separate grounds. Both claimants have now filed responses contesting their respective Preliminary Determination.

For the reasons set forth below, [Redacted] claims are denied.

I. Enforcement Proceeding and Notice of Covered Action.

On [Redacted] the Commission [Redacted]. The Commission found [Redacted]. Among other relief, the Commission ordered [Redacted].

On [Redacted] the Office of the Whistleblower posted Notice of Covered Action [Redacted] for the [Redacted] Matter.

II. [Claimant #1] Claim is Denied.

A. Background.

Effective July 21, 2010, Congress enacted Section 21F of the Exchange Act, “Securities Whistleblower Incentives and Protection,” as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).[fn1] Prior to the enactment of Dodd-Frank, [#1] communicated with the Commission and its staff [Redacted]. Prior to Dodd-Frank, [#1] also corresponded with the staff of the Commission [Redacted].

After the enactment of Dodd-Frank, according to [#1] whistleblower award claim on Form WB-APP, [#1] communicated [Redacted].

B. The Preliminary Determination.

On [Redacted] the CRS issued a Preliminary Determination recommending that [#1] claim be denied. The Preliminary Determination concluded that the information provided by [#1] prior to July 21, 2010 was not “original information” because it was not submitted after that date, as required by Rule 21F-4(b)(1)(iv) under the Exchange Act. The Preliminary Determination further concluded that the information provided by [#1] after July 21, 2010 did not lead to a successful action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder.

C. [Claimant #] Response to the Preliminary Determination.

On [Redacted] [#1] submitted a response contesting the Preliminary Determination pursuant to Rule 21F-10(e)(2) under the Exchange Act.[fn3]

In [#1] response to the Preliminary Determination, [#1] asserts that information [#1] provided to the Commission resulted in [Redacted]. [#1] argues that [#1] was the first to identify and [Redacted].

As a result of all of these circumstances, [#1] asserts that the information [#1] provided also led to the Commission’s enforcement action against [Redacted].

D. Analysis.

To be considered for an award under Section 21F, a whistleblower must voluntarily provide the Commission with “original information” that leads to the successful enforcement of a covered judicial or administrative action or related action. 15 U.S.C. § 78u-6(b)(1). Under Rule 21F-4(b)(1)(iv), information will be considered “original information” only if it was provided to the Commission for the first time after July 21, 2010. 17 C.F.R. § 240.21F-4(b)(1)(iv). Further, as relevant here, original information “leads to” a successful enforcement action if either: (i) the original information caused the staff to open an investigation, and the Commission brought a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under investigation, and the original information significantly contributed to the success of the action. Rule 21F-4(c)(1)-(2), 17 C.F.R. § 240.21F-4(c)(1)-(2). [4]

Any information [#1] provided prior to July 21, 2010 is not “original information” under Rule 21F-4(b)(1)(iv) and therefore does not provide a basis for a whistleblower award. Indeed, [#1] response to the Preliminary Determination fails to raise any explicit challenge to that rule.[fn5]

With regard to any information [#1] submitted after [Redacted] such information [Redacted] Matter. Accordingly, [#1] communications on [Redacted] did not lead to successful enforcement of the [Redacted] Matter.

As noted above, [#1] asserts in [#1] form WB-APP that [#1] identified violations [Redacted]. Even assuming that [#1] did in fact share “original information” with the [Redacted] this would not entitle [#1] to an award because it did not lead to the successful enforcement of the [Redacted] Matter.[fn7] [#1] has not provided any information to support the conclusion that [#1] communicated anything [Redacted] that was reasonably related to the [Redacted] Matter. Moreover, [Redacted] confirmed that [Redacted] did not open an investigation into [#1] allegations and had no connection to the [Redacted] Matter. [Redacted][fn8]

For all of these reasons, [#1] claim is denied.

III. [Claimant #2] Claim is Denied.

Although award claims for the Notice of Covered Action [Redacted] were due no later than November 10, 2011, [#2] submitted [#1] WB-APP on [Redacted].

On [Redacted] the CRS made a Preliminary Determination recommending that [#2] claim be denied. The Preliminary Determination concluded that the claimant did not submit a Form WB-APP for Notice of Covered Action [Redacted] within ninety (90) calendar days of the date of the respective Notice of Covered Action as required by Rule 21F-10(b) of the Exchange Act.

On [Redacted] [#2] submitted a response contesting the Preliminary Determination pursuant to Rule 21F-10(e)(2) under the Exchange Act. In [#2] response, [#2] did not contest the fact that [Redacted] WB-APP was untimely; instead, [#2] asserted that the Commission lost an earlier filed, timely WB-APP.

We reject [#2] contention that [#2] filed an earlier, timely application. We believe that had [#2] in fact filed an earlier claim, [#2] would have at least cross-referenced it in [#2] [Redacted] award claim; yet the [Redacted] award claim makes no reference whatsoever to an earlier filed claim. Indeed, not until after [#2] received the CRS’s Preliminary Determination denying [Redacted] award claim as untimely did [#2] first mention the alleged earlier filed application. At no point has [#2] offered any evidence of this earlier filed application — neither a photocopy of it, a returned receipt, email correspondence regarding it, etc. Finally, an exhaustive review of our records reveals no such earlier filed award claim.

Further undercutting [#2] contention is the fact that [#2] has at no point offered an explanation for why, if [#2] had in fact filed an earlier award application, [#2] subsequently filed the [Redacted] application. We believe that a reasonable person under the circumstances that [#2] alleges here would have offered an explanation for what motivated the filing of the second award application were that what actually occurred; the absence of an explanation from [#2] throughout this proceeding thus, in our view, leads us to further doubt his version of events.

For these reasons, we reject [#2] contention that [#2] filed a timely award claim.[fn9]

IV. Conclusion.

Accordingly, upon due consideration under Rule 21F-10(h), 17 C.F.R. § 240.21F-IO(h), it is hereby ORDERED that [#1] and [#2] whistleblower award claims are denied.
By the Commission.

[1] Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1841 (July 21, 2010).
[2] [Redacted].
[3] Rule 21F-10(e)(2) provides that a claimant seeking to contest a Preliminary Determination must submit a written response within 60 days that “set[s] forth the grounds for your objection to either the denial of an award or the proposed amount of an award.” 17 C.F.R. § 240.21F-10(e).
[4] [Redacted].
[5] We recently rejected arguments by another whistleblower award claimant that Rule 21F-4(b)(1)(iv) was contrary to Dodd-Frank and impermissibly retroactive. See In the Matter of the Claim for Award in connection with SEC v. Advanced Technologies Group Ltd., et al., 10-cv-4868 (S.D.N.Y. 2011), Notice of Covered Action 2011-4, Exchange Act Release No. 70772 (October 30, 2013).
[6] To the extent that [#1] repeated assertions made to the Enforcement staff prior to the enactment of Dodd-Frank concerning [Redacted] [#1] communication with ___ did not satisfy the requirement of Rule 21F-4(b)(1)(iv) that “original information” be provided to the Commission “for the first time after July 21, 2010.”
[7] Further, [#1] submission states that [#1] ent[sic] [Redacted]. Although the OWB has a general practice of taking reasonable steps to develop the record concerning a whistleblower’s involvement in assisting Commission staff with investigations and litigation, the ultimate responsibility rests with an award claimant to specifically identify those correspondence or communications in which the purported “original information” was provided to the Commission. This is particularly important where, as here, the claimant does not identify many of the persons with whom [#1] corresponded or provide copies of the correspondence. Thus, to the extent that [#1] seeks to rely on any of these unspecified communications or correspondence, we deem [#1] to have waived any argument that the information contained therein constituted original information. Notably, for persons submitting information after the effective date of the whistleblower rules, Rule 21F-2(a) requires that a whistleblower’s original information must be submitted in accordance with the specified procedures in Rule 21F-9(a) — e.g., via a completed form TCR that is mailed or faxed to the Commission.
[8] [Redacted]. Indeed, the primary Enforcement attorney who worked on the Matter has never heard of [#1]
[9] In any event, we note that the information submitted by [#2] to the Commission did not lead to the successful enforcement of the [Redacted] Matter because, as discussed above, [Redacted].

SEC

03/24/2014

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received a whistleblower award claim (“Form WB-APP”). Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has recommended that the Commission make no award to Claimant with respect to Notice of Covered Action 2011-158. The bases for this determination are as follows:

1. Claimant failed to submit the claim for award within ninety (90) days of the above-referenced Notice of Covered Action, as required under Rule 21F-10(a) of the Exchange Act; and

2. Claimant failed to provide “original information” to the Commission, as that term is defined under Rule 21F-4(b)(1) of the Exchange Act, because the information that Claimant argues entitles ___ to an award was not provided to the Commission for the first time after July 21, 2010, the date of enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

By: Claims Review Staff.

SEC

03/09/2014

In response to the above-referenced Notices of Covered Action, the Securities and Exchange Commission (the “Commission”) received timely whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17.

This is an unusual award application in that the Claimant does not contend that she at any point provided information directly to the Commission. Instead, Claimant’s award applications are based entirely on certain information that she claims she provided to the U.S. Department of Housing and Urban Development (“HUD”) and the Federal Bureau of Investigation (“FBI”) from 2008-2011. She contends that HUD and/or the FBI subsequently shared that information with the Commission (although she does not specify when HUD or the FBI purportedly did so) and that that the information was thereafter used by the Commission to “lead to” the success of the Covered Action.

The Claims Review Staff has recommended that the Commission deny an award to Claimant. The basis for this determination is as follows:

1. With respect to any information of the Claimant’s that HUD or the FBI may have provided to the Commission prior to July 21, 2010, that information would not be “original information” within the meaning of Section 21F(a)(1) of the Exchange Act and Rule 21F-4(b)(1)(iv) thereunder; and,

2. With respect to any information of the Claimant’s that HUD or the FBI may have provided to the Commission for the first time after July 21, 2010, that information would not have been provided to the Commission in writing by the Claimant as required by Rule 21F-9(d).

By: Claims Review Staff.

CFTC

12/03/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2013-02-15-01.

Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied.

—–

IT IS HEREBY DETERMINED that:

2. The claim is denied because Claimant supplied the information on which the claim is based in response to a request from Commission staff. The information was, therefore, not provided “voluntarily” as required by Section 23(b)(1) of the Commodity Exchange Act (CEA) [7 U.S.C. § 26(b)(1)] and Rule 165.2(o)(1) of the Commission’s Whistleblower Rules (Rules) [17 C.F.R. § 165.2(o)(1)].

3. The claim is also denied because Claimant did not file a Form TCR and therefore is not a “whistleblower” as defined by CEA Section 23(a)(7) [7 U.S.C. § 26(a)(7)] and Rules 165.2(p) and 165.3 [17 C.F.R. §§ 165.2(p), 165.3].

CFTC

11/06/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2013-03-04-01. Pursuant to the Commission’s Whistleblower Rules (17 C.F.R. Part 165), the Whistleblower Award Determination Panel is authorized to make whistleblower award determinations for the Commission. Therefore, as set forth in the attached, it is the Determination and Final Order of the Commission that this whistleblower award claim be denied.

—–

IT IS HEREBY DETERMINED that:

The claim is denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission covered judicial or administrative action as required by Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules [17 C.F.R. §§ 165.2(i), 165.5(a)(3)]. The information provided by the Claimant did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation. Nor did the Claimant’s information significantly contribute to the success of a Commission matter already under investigation. The Claimant’s award claim is based on an action that was already adjudicated when the Claimant first provided information to the Commission.

SEC

70772

10/30/2013

[Claimant] timely filed a whistleblower award claim pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act” ),[fn1] in connection with Notice of Covered Action 2011-4. The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Claimant]’s claim be denied. [Claimant] filed a response contesting the Preliminary Determination. For the reasons set forth below, [Claimant]’s claim is denied.

I. Background.

Beginning in [Redacted] and continuing through July 2009, [Claimant] submitted information to the Division of Enforcement (“Enforcement”) staff regarding wrongdoing purportedly being engaged in by Alexander Stelmak (“Stelmak”), among others, in connection with the solicitation of securities by Advanced Technologies Group LTD (“ATG”) and its predecessor entity.[fn2] In addition to calling and emailing the staff and sending it certain documents, [Claimant] also met with the staff in April 2009.

The staff opened an investigation of ATG, Stelmak and Stelmak’s partner, Abelis Raskas (“Raskas”)[fn3] on or about March 5, 2009 (the “ATG Investigation”). On June 23, 2010, the Commission filed an enforcement action in SEC v. Advanced Technologies Group LTD, Alexander Stelmak, and Abelis Raskas, LLC, 10-cv-4868 (the “ATG Action”). The Commission alleged in its complaint that ATG, Stelmak, and Raskas, engaged in a series of offerings of unregistered non-exempt securities of ATG and ATG’s predecessor entities between 1997 and 2006 in violation of Section 5 of the Securities Act of 1933. The unlawful offerings occurred through nationwide cold-calling campaigns supervised by Stelmak.

Effective July 21, 2010, Congress enacted Section 21F of the Exchange Act, “Securities Whistleblower Incentives and Protection,” as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).[fn4] Section 21F directs the Commission to pay whistleblower awards, subject to certain statutory criteria and “under regulations prescribed by the Commission,”[fn5] to individuals who provide information that leads to successful enforcement actions. One of the statutory requirements found in Section 21F is that the information provided by a whistleblower be “original information.”[fn6]

On September 14, 2010, [Claimant] sent a brief email to an Enforcement attorney whom *** had previously communicated with, as well as certain other SEC officials, in which *** identified two allegedly inaccurate statements that Stelmak made in his deposition taken during discovery in the ATG Action (the “September 2010 Email”). The first was Stelmak’s statement that [Redacted] ([Claimant] [Redacted]). The second was Stelmak’s statement that [Redacted], [Redacted], [Claimant] [Redacted], [Redacted] “[Redacted].”

On October 5, 2010, Commission staff notified the district court that they and the defendants had negotiated the agreed to terms of a proposed settlement that would soon be submitted to the Commission for its consideration; thereafter, in mid-November 2010, following the Commission’s acceptance of those settlement terms, ATG, Stelmak and Raskas signed consent agreements that formally settled the ATG Action.[fn7] On January 12, 2011, the court entered final judgments against the defendants in which, among other remedies, ATG and Stelmak were ordered jointly and severally liable for disgorgement in the amount of $14,741,760.76, together with prejudgment interest in the amount of $4,444,775.56, and ordered to pay civil penalties of $65,000 and $6,500, respectively. Of this disgorgement amount, defendant Raskas was jointly and severally liable for $3,639,920, together with prejudgment interest in the amount of $1,110,028.03.

On January 11, 2011, [Claimant]’s counsel submitted a claim for a whistleblower award along with a letter and exhibits in support of *** claim. In this submission, [Claimant]s counsel restated information *** client had provided to the staff between [Redacted] and 2009, as well as the September 2010 Email. By letter dated February 11, 2011, [Claimant] resubmitted this package to the Commission.

Effective August 12, 2011, we adopted Rules 21F-1 through 21F-17 under the Exchange Act to implement our whistleblower program.[fn8] Rule 21F-4(b)(1) defines “original information” in the same manner as that term is defined in Section 21F(a)(3) of the Exchange Act, but adds that the information must be “[p]rovided to the Commission for the first time after July 21, 2010 (the date of enactment of [Dodd-Frank]).”[fn9]

On August 12, 2011, the Office of the Whistleblower (“OWB”) posted a Notice of Covered Action (the “NoCA”) for the ATG Action. As noted, [Claimant] had previously submitted a claim application setting forth the information and assistance ** had provided to the Commission.[fn10] In *** application, *** claimed that *** was entitled to an award because both the Commission and the general public “benefitted from [***] persistent efforts to bring Stelmak’s and ATG’s, as well as related individuals’ and entities’, wrongful conduct to light. . . [and that] *** efforts substantially assisted the SEC in its enforcement action.”

In support of *** application for an award, [Claimant] identifies information that *** communicated to Enforcement staff between [Redacted] and September 2010 concerning possible securities law violations committed by Stelmak, ATG, and other related individuals and entities. However, with the exception of the September 2010 Email, all of [Claimant]’s information was submitted to the staff between [Redacted] and 2009, well before the enactment of Section 21F. As described above, in an apparent effort to overcome this obstacle, [Claimant] repackaged *** information and provided it again in written submissions to the Commission in January and February 2011 — after Section 21F was enacted (collectively, [Claimant]’s “2011 Submissions”).

II. Preliminary Determination (November 5, 2012).

In its Preliminary Determination, the CRS found that the information provided by [Claimant] prior to July 21, 2010, including information that [Claimant] re-submitted after July 21, 2010, was not “original information” within the meaning Section 21F(a)(1) of the Exchange Act and Rule 21F-4(b)(1)(iv) because it was not provided to the Commission for the first time after July 21, 2010 as required by the rule. The CRS further determined that the September 2010 Email did not lead to the successful enforcement of a covered judicial or administrative action as required by Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a) and 21F 4(c) because it did not cause the Commission to open the ATG Investigation (or inquire into different conduct as part of the investigation) nor did it significantly contribute to the success of the ATG Action. Accordingly, the CRS recommended denying [Claimant]’s award application.

III. [Claimant]’s Response to the Preliminary Determination.

Pursuant to Rule 21F-10(e)(1)(i), the OWB permitted [Claimant] to review the materials from among those set forth in Rule 21F-12(a) that formed the basis of the CRS’s Preliminary Determination. However, [Claimant] sought extensive discovery, not permitted by the Commission’s rules, of other documents and information relating to the ATG Investigation. Because the OWB denied these discovery requests, [Claimant] contests not only the CRS’s Preliminary Determination to deny *** a whistleblower award, but also the procedural rights that *** has been afforded under our rules.

A. [Claimant]’s motions and requests following the Preliminary Determination.

On November 16, 2012, [Claimant]’s attorneys requested that they be permitted to review the materials that formed the basis of the Preliminary Determination,[fn11] and that the OWB meet with them to discuss the Preliminary Determination.[fn12] On December 4, 2012, the OWB mailed the requested materials to [Claimant]’s attorneys; however, the packet inadvertently excluded the second of two sworn staff declarations that the CRS had relied upon.[fn13]

On December 19, 2012, senior staff of the OWB, as well as staff of the Commission’s Office of General Counsel, met with [Claimant]’s attorneys, [Claimant]’s counsel primarily used the meeting as an opportunity to present their views on the retroactivity issue, explaining why in their view the legislative history and case law require the Commission to make awards for information provided for the first time before Dodd-Frank’s enactment.

On December 21, 2012, [Claimant]’s attorneys submitted various requests for documents relating to the April 2009 meeting between Enforcement staff and [Claimant]; specifically, (1) any transcript of the April 2009 meeting; (2) a copy of the documentary evidence provided by [Claimant] to Enforcement staff in connection with the April 2009 meeting; and (3) any formal older of investigation which would have been available or in effect at that time.

On December 26, 2012, the OWB discovered that it had omitted the second staff declaration from the packet it had sent to [Claimant]’s attorneys on December 4, 2012. On that same day, December 26, the OWB emailed the second declaration to [Claimant]’s attorneys, advising them that this declaration had been inadvertently omitted from the December 4 package. The OWB further advised [Claimant]’s attorneys that, as a result of this error, the OWB would restart the 60-day period for [Claimant] to contest the Preliminary Determination, such that the new date for [Claimant] to file a response would be February 25, 2013.[fn14]

By letter dated December 28, 2012, [Claimant]’s counsel made five demands regarding the second staff declaration: (1) that both staff declarations be stricken from the record; (2) that [Claimant]’s counsel be permitted to take the Enforcement staff attorney’s deposition to discover, among other matters, the extent of the information [Claimant] provided to the Enforcement staff, the degree to which this information assisted the staff in the underlying investigation and enforcement action, and the circumstances surrounding the preparation of the two staff declarations; (3) that counsel be permitted to obtain all documents from the Enforcement staff pertaining to [Claimant]’s April 2009 meeting with the staff and, more broadly, the underlying investigation and enforcement action so that [Claimant]’s counsel could determine the extent to which [Claimant] assisted in the investigation and the enforcement action; (4) that the OWB disclose all intra-agency communications with the staff attorney regarding the creation and purpose of the two declarations; and (5) that the OWB delay the start of the 60-day period for responding to the Preliminary Determination until 60 days alter counsel has completed the discovery sought in its letter.

On January 4, 2013, the OWB responded that the whistleblower rules did not authorize the OWB to amend the record or to grant claimants discovery of materials not considered by the CRS.[fn15] With regard to counsel’s request that the OWB delay the start of the 60-day period for responding to the Preliminary Determination until 60 days after counsel had completed the discovery sought in its letter, the OWB pointed out that Rule 21F-10(e)(2) provided that the 60-day period to contest the Preliminary Determination began when the OWB made available the materials that formed the basis of the Claims Review Staffs preliminary determination. Further, the OWB explained that it had provided the last of those materials (i.e., the second staff declaration dated October 26, 2012) to counsel on December 26, 2012, and thus the 60-day period commenced on that date.

On January 22, 2013, Claimant’s attorneys requested that the OWB advise them when any and all Matters Under Inquiry (“MUIs”) commenced with respect to the ATG Investigation.[fn16] On January 23, 2013, the OWB responded that, as such information was not included in the record that formed the basis of the CRS’s Preliminary Determination, the OWB was not authorized to provide it to counsel.[fn17]

On January 28, 2013, [Claimant]’s counsel requested copies of the entire deposition transcripts of Stelmak and Raskas, portions of which had been attached as exhibits to the Commission’s Declaration in Support of Plaintiff’s Application for Asset Freeze and Other Relief in the ATG Action. On January 31, 2013, the OWB again responded that it was not authorized to provide these items since they were not included in the materials that formed the basis of the CRS’s Preliminary Determination.[fn18]

B. Claimant’s response contesting the Preliminary Determination.

On February 25, 2013, [Claimant] submitted a response contesting the Preliminary Determination, Claimant raised three central contentions:

The requirement of Rule 21F-4(b)(1)(iv) that information be submitted to the Commission for the first time after the enactment of Dodd-Frank “was neither included nor required in the Dodd-Frank Act . . . [and] cannot be applied retroactively to the Claimant who provided information to the Commission before July 21, 2010, and then timely submitted that information in writing after the passage of the Act but before the Final Rules became effective.”

At a minimum, the information [Claimant] has provided to the Commission since [Redacted] either caused the Commission to commence the ATG investigation or, to the extent the investigation was already underway, significantly contributed to the success of the enforcement action.

The OWB “committed a variety of procedural errors” in reviewing and processing *** claim that “deprive[d] the Claimant of due process of law,” including denying *** a “fair opportunity to take discovery” in order to contest “the wrongfulness of [] the assertions” made in the two staff attorney declarations.

Additionally, [Claimant] requested that, if the Preliminary Determination is upheld, then *** should be permitted to conduct a “de novo review” with the “opportunity to take reasonable discovery from the Commission (including, without limitation, deposition (s) of any and all individuals who executed declarations) on issues pertaining to [***] claim for award.”

IV. Analysis.

A. [Claimant]’s argument about “retroactive” application of Rule 21F-4(b)(1)(iv) has no merit.

Claimant’s first contention is that the CRS should not have denied *** claim based on the information that *** originally submitted to the Commission before the effective date of Dodd-Frank and later re-packaged and submitted to the Commission in 2011. [Claimant] does not dispute that this denial followed from Rule 21F-4(b)(1)(iv), which requires that a whistleblower submission have been “[p]rovided to the Commission for the first time after July 21, 2010 (the date of enactment of [Dodd-Frank])” in order for it to be considered “original information. ” Rather, *** argues that Rule 21F-4(b)(1)(iv) constitutes impermissible retroactive rulemaking by the Commission.

While [Claimant]’s argument is not entirely clear, *** appears to be framing it in two different ways. First, *** claims that Rule 21F-4(b)(1)(iv) is contrary to the statute insofar as it requires that information be submitted to the Commission for the first time after Dodd-Frank’s effective date. Second, *** claims that the rule is impermissibly retroactive because it deprives *** of *** “vested right” to an award based on *** 2011 Submissions. As we explain below, each of these contentions is incorrect.

The first variant of [Claimant]’s argument, in our view, is not really about impermissible retroactivity of the Commission’s rule. It is simply an argument that the Commission rule should be considered invalid because it conflicts with the statute. In fact, it is [Claimant] whose position relies on a retroactive application of law; in *** view, Dodd-Frank requires that *** be paid for information *** provided before the whistleblower statute even existed. While *** appears to accept that *** cannot literally base *** award claim on the submissions of information ** made from [Redacted] to 2009 — i.e., before Dodd-Frank was the law — *** argues that by resubmitting the same information in written form in 2011, *** made [Claimant] eligible for an award arising from the ATG action, even though that action had already been filed in June 2010 and was then on the verge of final settlement.

[Claimant] argues that *** 2011 Submissions entitle *** to an award because they satisfy the statutory definition of “original information. ” *** further claims that *** argument is supported by Section 924(b) of Dodd-Frank, which states that “[i]nformation provided to the Commission in writing by a whistleblower shall not lose the status of original information . . . solely because the whistleblower provided the information prior to the effective date of the regulations, if the information is provided by the whistleblower after the date of enactment of this subtitle. “[fn19] In essence, [Claimant] contends that Section 924(b) requires the Commission to treat information submitted before the enactment of Dodd-Frank as eligible for an award as long as the information is re-submitted in writing after the date of enactment.

We disagree. Neither the statutory language, the legislative history, nor sound policy considerations suggest that Congress’s adoption of a new whistleblower reward program in July 2010 was intended to pay awards to people like [Claimant] who gave the Commission original information years before the statute was enacted.

The starting point in any statutory analysis is the statutory language. Here, there is nothing in the statutory language that demonstrates Congressional direction to pay awards based on information submitted before Dodd-Frank was enacted. To the contrary, the few statutory provisions that specifically address timing issues do not mention payments for information provided before enactment.

Dodd-Frank includes a general effective date provision; one day after enactment “[e]xcept as otherwise specifically provided” in the statute.[fn20] No provision of Dodd-Frank establishes a different effective date for our whistleblower award program. Two provisions pertaining to whistleblower awards specifically address timing issues — Sections 924(b) and 924(c) — but each has its own very specific and limited focus, and neither suggests that Congress intended to pay awards for information submitted prior to enactment.

As noted, Section 924(b) requires that information that satisfies the statutory definition of “original information” be treated as such if it is submitted in writing after the effective date of the statute but before the promulgation of the Commission’s regulations. This provision shows that Congress expressly considered, and provided for, the issue of how to treat information submitted after enactment of the statute but before adoption of the implementing Commission rules. Congress affirmatively directed that the Commission should treat as eligible for award payments all such information provided in writing, but only if “the information [was] provided … after the date of enactment ….” Congress did not similarly direct payment for information provided before the date of enactment, although it could have done so.[fn21]

Section 924(c) is to similar effect. That section provides that a whistleblower “may receive an award … regardless of whether any violation … underlying the judicial or administrative action upon which the award is based, occurred prior to the date of enactment” of Dodd-Frank.[fn22] Thus, Congress expressly provided that payments could be made even if the violation underlying the action on which the award is based occurred before enactment, but once again failed to include a similar express statement for information provided before enactment. It is clear from Sections 924(b) and 924(c) that Congress knew how to give specific directions for the pre-enactment application of the statute, yet plainly did not require the Commission to pay awards for information submitted before enactment.

The legislative history of Section 924(b) also supports our conclusion that Congress intended that the Commission only make awards for information provided for the first time after Dodd-Frank’s enactment. In both the House and Senate bills, the provision that became Section 924(b) treated information submitted after the date of enactment, but before the adoption of our rules, as “original information” eligible for award consideration. However, the House bill also would have conferred “original information” status on information submitted pre-enactment if the information could have merited an award under the Commission’s previous insider trading bounty program.[fn23] The Senate-passed substitute for the House bill would have permitted awards for information submitted by a whistleblower before enactment of the statute as long as the Commission collected monetary sanctions in the resulting enforcement action after the date of enactment.[fn24] Both of these provisions were omitted from the final version of Section 924(b) that emerged from the conference committee.[fn25] Thus, Congress considered alternatives that would have provided for varying degrees of retroactivity in the whistleblower award program, but ultimately failed to include them in the final version of Section 924(b). We take this as a strong indication that Congress made a conscious decision against authorizing whistleblower awards for information that was provided to the Commission prior to the Act’s passage. At the very least, it provides no support for [Claimant]’s claim that Congress meant to require the Commission to consider pre-enactment submissions of information as eligible for awards.[fn26]

We believe that the Congressional purpose in creating the new whistleblower program also supports the conclusion that Congress did not intend the program to cover information provided to the Commission for the first time before the enactment of Dodd-Frank. The principal purpose of Section 21F was “to motivate those with inside knowledge to come forward and assist the Government to identity and prosecute persons who have violated securities laws….”[fn27] As further explained in the adopting release accompanying the final rules:

Congress enacted Section 21F in order to provide new incentives for individuals with knowledge of securities violations to report those violations to the Commission. We believe that applying Section 21F prospectively—for new information provided to the Commission after the statute’s enactment and not to information previously submitted—is most consistent with Congressional intent and with the language of the statute.[fn28]

In our view Congress did not intend for Section 21F to reward individuals who came forward before Dodd-Frank’s enactment; rather, Congress intended for the award program to create powerful new incentives for the public to assist the Commission in its fight against securities law violations. Leveraging the limited assets of the Investor Protection Fund established by Section 21F(g) of the Exchange Act to pay those individuals who respond to the new incentive by coming forward after Dodd-Frank’s enactment is consistent with that Congressional purpose.[fn29]

For all of the above reasons, we believe that the whistleblower statutory provisions do not authorize awards for information originally provided prior to Dodd-Frank’s enactment. It is, in any event, clear that the statute does not require the Commission to pay awards based on pre-enactment submissions of information, Moreover, to the extent there is any ambiguity based on the lack of express direction in the statutory language, we believe, as set forth in Rule 21F-4(b)(iv), and based on our experience and expert judgment, that the better approach here is to allow whistleblower awards only for information provided to the Commission for the first time after July 21, 2010. As we observed, “overly broad definitions and unduly permissive provisions could result in inefficient use of the Investor Protection Fund.”[fn30] Simply put, our interpretation of “original information” ensures that the Fund is used to reward those who provide new, high quality tips, not to pay for information that was already in the Commission’s possession on July 21, 2010.

As noted above, [Claimant] presents a second variation of *** retroactivity argument: *** argues that our rule represents improper retroactive rulemaking because it takes away *** “vested right” to have *** 2011 Submissions considered as “original information. ” In this version of *** argument, *** seeks to rely on principles of retroactivity law by noting that a rule is retroactive when it “takes away or impairs vested rights acquired under existing law, or creates a new obligation, imposes a new duty, or attaches a new disability in respect to transactions or considerations already past.”[fn31] [Claimant] asserts, in essence, that Dodd-Frank unambiguously created a vested right to have *** re-submission of previously submitted information treated as “original information, ” and that Rule 21F-4(b)(1)(iv) upset that vested right. As explained above, however, the statute creates no such right, as it nowhere indicates that the Commission is required to consider re-submissions of pre-enactment information as eligible for awards. Accordingly, this version of [Claimant]’s retroactivity argument also must fail.[fn32]

In sum, we reject [Claimant]s contention that Rule 21F-4(b)(1)(iv) is impermissibly retroactive.

B. [Claimant]’s information did not lead to the ATG Action.

[Claimant]’s response to the Preliminary Determination further contends that the information *** provided to the Commission after Dodd-Frank led to the successful enforcement of the ATG Action. Specifically, [Claimant] claims that, in the second declaration, the Enforcement attorney “wrongfully attempt[ed] to discredit [Claimant] as the original source of the information contained in [Claimant]’s September 2010 Email.” [Claimant] argues that the second declaration erroneously states that none of the information in the September 2010 Email about [Redacted], was new to the staff, [Claimant] bases this argument on *** belief that, if the Commission had previously known that information, it “would surely have led Enforcement to open the Investigation and commence the Enforcement Action” years before the investigation was actually opened.

We credit the staff’s representation that the staff had long been aware of [Redacted] from a separate investigation into a [Redacted]. In any event, there is no evidence that this information led to the success of the action, either in causing the staff to open a new avenue of its investigation or by significantly contributing to the success of the ATG Action.

Original information “leads to” a successful enforcement action if either: (i) the information caused the staff to open an investigation, commence an examination, or to inquire into different conduct as part of an existing investigation or examination, and we bring a successful action based in whole or in part on conduct that was the subject of the original information; or (ii) the conduct was already under investigation or examination, and the original information significantly contributes to the success of the action.[fn33] We find no evidence that the September 2010 Email was used in either the ATG Investigation or in the ATG Action. The Enforcement staff states in its sworn declaration that it did not use the information from [Claimant]’s September 2010 Email in any way and that the information had no impact on the terms of the October 2010 settlement of the ATG Action. The staff further states in its declaration that the September 2010 Email did not cause the staff to correct any of Stelmak’s purported false testimony or to ask Stelmak for any clarification of his testimony, [Claimant]’s contentions to the contrary are based on pure conjecture and we do not find them credible.

Because we have already determined that [Claimant]’s 2011 Submissions did not constitute “original information, ” we do not need to consider their impact on the ATG Investigation or the ATG Action. Moreover, the court entered final judgments in the ATG Action on January 12, 2011 — one day after [Claimant] submitted *** award claim, including *** re-submitted information. It is manifest that a submission made a mere one day before an action is concluded cannot have led to the success of the action.

C. [Claimant] has been given a fair proceeding in accordance with the Commission’s rules and due process requirements.

[Claimant] asserts that the Commission through the OWB committed numerous procedural errors that denied *** a fair proceeding. Specifically, *** objects to the denial of *** requests to depose the Enforcement attorney who signed the staff declarations and to obtain certain documents that were not relied upon by the CRS.[fn34] [Claimant] also contends that *** should be permitted discovery “from the Commission (including, without limitation, depositions) of any and all individuals who executed declarations) on issues pertaining to [***] claim for award.”

Rule 21F-10(e)(1)(i) provides that before deciding whether to contest a Preliminary Determination, a claimant may request “that the Office of the Whistleblower make available for [the claimant’s] review the materials from among those set forth in § 240.21F-12(a) of this chapter that formed the basis of the Claims Review Staff’s Preliminary Determination.” [Claimant] received all of the materials permitted to *** by Rule 21F-12(a). These materials included publicly available materials from the ATG Action, such as the complaint, the October 2010 settlement order and the final judgments, [Claimant]’s 2011 Submissions, additional correspondence between [Claimant]’s attorneys and the OWB, and the two sworn declarations provided by Enforcement staff with direct knowledge of the case. While the second of these declarations was received by [Claimant] approximately three weeks after the rest of the materials, the OWB advised [Claimant]’s counsel in its accompanying email that they would have the full 60 days authorized under Rule 21F-10(e)(2) from their receipt of the second declaration to submit a written response contesting the Preliminary Determination. We therefore find that [Claimant] received all of the materials *** was entitled to receive under our rules and that *** was accorded the complete time period set out in the rules to review these materials before submitting *** written response to the Preliminary Determination.

While a claimant has a right to request and to review these materials before contesting the Preliminary Determination, the rules “do not entitle claimants to obtain from the Commission any materials (including any pre-decisional or internal deliberative process materials that are prepared exclusively to assist the Commission in deciding the claim) other than those listed in [Rule 21F-12(a)]”[fn35] [Claimant] nonetheless claims that, notwithstanding that the rules do not authorize additional discovery, the OWB’s decision not to grant *** requests denied *** a fair review of *** claim.

[Claimant]’s argument has no merit. In enacting the whistleblower program, Congress expressly provided in Section 21F(j) that “[t]he Commission shall have the authority to issue such rules and regulations as may be necessary or appropriate to implement the provisions of this section consistent with the purposes of this section.”[fn36] “Absent constitutional constraints or extremely compelling circumstances” an administrative agency “should be free to fashion [its] own rules of procedure and to pursue methods of inquiry capable of permitting [it] to discharge [its] multitudinous duties.”[fn37] Indeed, it is “the very basic tenet of administrative law that agencies should be free to fashion their own rules of procedure.”[fn38]

Here, the Commission Rules 21F-10(e) and 12 give claimants the right to review all the materials that formed the basis of the CRS’s Preliminary Determination, other than pre-decisional or internal deliberative process materials. Importantly, the materials made available to claimants include declarations from knowledgeable Commission staff, sworn to under penalty of perjury, “regarding any matters relevant to the award determination.”[fn39] In this case the CRS requested that the record be supplemented with additional information relevant to the ATG Investigation from the staff declarant, and [Claimant] was given access to this declaration as well as to the rest of the material upon which the CRS relied. To go further and permit claimants free-wheeling discovery on issues such as the staffs internal deliberations in evaluating and utilizing a whistleblower’s information or in considering the merits of a claimant’s application, would constitute an unwarranted and a potentially damaging intrusion into our investigative processes, including the frank discussion of legal and policy decisions concerning whether an enforcement action should be brought, the specific causes of action that should be charged, and the parties that should be named as defendants.[fn40] The disclosure of this sort of information would, as we explained when it adopted the whistleblower rules, “have a chilling effect on our decision-making process.”[fn41]

Finally, even were it appropriate in extraordinary circumstances to permit discovery beyond the information provided for in Rule 21F-12(a), this would surely not be the proper case in which to do so. This is because much, if not all, of the information Claimant seeks has no bearing on *** claim for an award since it concerns how Enforcement handled the information ** provided before the enactment of Dodd-Frank.

Claimant asserts that due process requires that we permit *** to take sweeping discovery in order to bolster *** claim for an award, citing Mathews v. Eldridge, 424 U.S 319 (1976). We do not decide whether Section 21F created any protected property interest subject to due process requirements[fn42] because, even assuming that the statute did so, our whistleblower rules provide all the discovery and other procedural opportunities that due process could possibly require in a proceeding of this kind.

In Mathews v. Eldridge, the Supreme Court held that the Social Security Administration (“SSA”) was not required to hold an evidentiary hearing prior to terminating disability benefits and that the administrative procedures for such termination fully comported with due process. In assessing whether an agency has provided sufficient procedural protections, the Court stated that the reviewing court must weigh three distinct factors:

[F]irst, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and, finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.[fn43]

Here, all three factors support our view that [Claimant] was accorded all the procedural protections required under the Due Process Clause.

First, the private interest that will be affected by our action is the denial of [Claimant]’s claim for a monetary award. While the receipt of an award would no doubt benefit [Claimant]’s its denial would not rise to the level of economic impact that might result, for example, from the termination of disability or welfare benefits where a recipient’s very well-being could be at risk.[fn44]

Second, the procedures established under our whistleblower rules provide substantial safeguards against erroneous decisions. In Mathews, the Supreme Court pointed to SS A’s policy of:

allowing the disability recipient’s representative full access to all information relied upon by the state agency. In addition, prior to the cutoff of benefits the agency informs the recipient of its tentative assessment, the reasons therefor, and provides a summary of the evidence that it considers most relevant. Opportunity is then afforded the recipient to submit additional evidence or arguments, enabling him to challenge directly the accuracy of information in his file as well as the correctness of the agency’s tentative conclusions. These procedures. . . enable the recipient to “mold” his argument to respond to the precise issues which the decisionmaker regards as crucial.[fn45]

Our whistleblower award procedures are directly analogous. Specifically, our rules allowed [Claimant] and *** counsel access to all information relied upon by the CRS other than deliberative process materials. In addition, the Preliminary Determination informed [Claimant] of the bases upon which the CRS determined to deny *** claim. OWB staff then granted the request of [Claimant]’s counsel for a meeting at which [Claimant] was able to present any additional information concerning the merits of *** claim, [Claimant] has also been afforded the opportunity to submit additional evidence and arguments in writing, enabling *** to challenge directly the information in the record, and the Preliminary Determination of the CRS. Finally, under our rules, once [Claimant] challenged the Preliminary Determination, *** award claim was elevated from the CRS directly to the Commission. As in Mathews v. Eldridge, these procedures were fully in accordance with the strictures of due process, enabling [Claimant] to “mold” *** argument to respond to the precise issues which the CRS regarded as crucial in its Preliminary Determination.

Finally, in weighing the Government’s interest, we note that “the Commission’s primary goal, consistent with the congressional intent behind Section 21F, is to encourage the submission of high-quality information to facilitate the effectiveness and efficiency of the Commission’s enforcement program.”[fn46] If claimants were granted the extensive discovery rights that [Claimant] seeks, this would not only cause the “chilling effect on our decision-making process,” as discussed above,[fn47] it would also inevitably lengthen the claims resolution process, delay the Commission’s ability to pay awards to eligible whistleblowers, and, thereby, potentially discourage prospective whistleblowers from submitting information to the Commission.[fn48]

Accordingly, we find that [Claimant] received all of the discovery and other process that the rules provide and due process requires.

Finally, we take this opportunity to remind counsel that the Commission has a substantial interest in granting awards to whistleblower applicants who satisfy the statutory and regulatory criteria for an award. In furtherance of that interest, our goal is to work with whistleblowers and their counsel in a collaborative, non-adversarial manner to determine whether the whistleblowers satisfy the award criteria. We firmly believe that this approach best serves the interests of whistleblowers and the Commission, and thus should help maximize the award program’s overall effectiveness in the enforcement of the federal securities laws and the protection of investors.

V. Conclusion.

It is ORDERED that [Claimant]’s whistleblower award claim be, and hereby is, denied.
By the Commission.

[1] 15 U.S.C. § 78u-6.
[2] [Claimant] [Redacted].
[3] ATG was owned and operated by Stelmak and Raskas.
[4] Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1841 (July 21, 2010).
[5] 15 U.S.C. 78u-6(b)(1).
[6] 15 U.S.C. 78u-6(a)(3).
[7] See, e.g., Order of Oct. 6, 2010 (S.D.N.Y. 10-civ-4868) (Dkt. # 37); Raskas Consent Agreement (attached to Final Judgment as to Defendant Abelis Raskas (S.D.N.Y. 10-civ-4868) (Dkt. #41)); Stelmak and ATG Consent Agreement (attached to Judgment (S.D.N.Y. 10-civ-4868) (Dkt. #42)).
[8] 17 C.F.R. §§ 240.21F-1 to -17.
[9] 17 C.F.R. § 240.21F-4(b)(1); 15 U.S.C. § 78u-6(a)(3).
[10] On August 17, 2011, following the effective date of the final rules implementing the whistleblower program, [Claimant] sent a letter to the OWB asking for confirmation that *** did not need to resubmit *** claim application and that *** earlier submissions were sufficient to satisfy the requirements for submitting a claim under the rules. In an email dated August 23, 2011, the OWB confirmed that it was not necessary for [Claimant] to resubmit.
[11] Rule 21F-10(e)(1)(i) permits a claimant, before deciding whether to contest a Preliminary Determination, to request that OWB make available for the claimant’s review “the materials . . . that formed the basis of the Claims Review Staff’s Preliminary Determination.”
[12] Rule 21F-10(e)(1)(ii) permits a claimant, before deciding whether to contest a Preliminary Determination to “request a meeting with the Office of die Whistleblower; however, such meetings are not required and the office may in its sole discretion decline the request.”
[13] At a meeting held on September 14, 2012 to consider the [Claimant] award application, the CRS deferred issuing a preliminary determination and directed the OWB to request that the Enforcement staff supplement the record with additional detail concerning the ATG investigation, the ATG Action, and the information provided by [Claimant], At a meeting held on November 5, 2012, the CRS considered a second staff declaration, dated October 26, 2012. In compiling the documents to send to [Claimant]’s attorneys, OWB included all the documents from the binder it had assembled in advance of the September 14 meeting but inadvertently omitted the October 26 staff declaration.
[14] Rule 21F-10(e)(2) provides that a claimant who wishes to contest a Preliminary Determination must submit his written request and supporting materials within 60 days of the later of the date of the Preliminary Determination or the date OWB makes the CRS’s review materials available to the claimant.
[15] The OWB specifically directed counsel’s attention to Rule 21F-12(b) which states, in relevant part, that claimants are not entitled to obtain any materials from the Commission other than the materials, delineated in Rule 21F-12(a) that the Commission and the CRS may rely upon in making an award determination. The OWB did inform counsel, however, that pursuant to Rules 6 and 7(a) of the SEC’s Rules Relating to Investigations, 17 C.F.R. §§ 203.6 and 203.7(a), it was working with Enforcement staff to respond to counsel’s requests for the transcript of [Claimant]’s meeting with Enforcement staff attorneys in April 2009 and the formal order of investigation that led to the covered action. On January 11, 2013, OWB provided Claimant’s counsel with copies of the documents produced by Claimant at the April 2009 meeting and the formal order of investigation for the ATG Investigation With regard to counsel’s request for a transcript, of the April 2009 meeting, OWB advised counsel that the meeting had not been recorded or transcribed.
[16] Enforcement opens a MUI if it determines that “the facts underlying the MUI show that there is potential to address conduct that violates the federal securities laws; and [that]. . . the assignment of a MUI to a particular office will be the best use of resources for the Division as a whole.” SEC Enforcement Manual, ¶ 2.3.1.
[17] Because the CRS determined that the information provided by Claimant, other than the September 2010 Email, was not original information within the meaning of Rule 21F-4(b)(1), the CRS did not need to consider the relationship between Claimant’s information and the opening of either the MUI or the formal ATG Investigation.
[18] In its response, the OWB also noted that the Commission’s Rules Relating to Investigations do not authorize Claimant’s access to the requested transcripts, citing specifically to Rule 203.6, 17 C.F.R § 203.6, which provides that “[a] person who has submitted . . . testimony in a formal investigative proceeding shall be entitled . . . to procure a copy of . . . a transcript of his testimony.” The OWB pointed out that counsel’s request for these deposition transcripts fell outside of this rule since counsel was not requesting the transcripts on Stelmak’s and Raskas’s behalf.
[19] Pub. L. No. 111-203, § 924(b), 124 Stat. 1376, 1850 (July 21, 2010).
[20] Pub. L. No. 111-203, § 4, 124 Stat. 1376, 1390 (Jul. 21, 2010).
[21] Here we are particularly mindful of the well-established canon of statutory construction expression unius est exclusion alterius, or the expression of one thing implies the exclusion of others. See, e.g., TRW Inc. v. Andrews, 534 U.S. 19,28-29 (2001); United States v. Giordano, 416 U.S. 505, 514 (1974).
[22] Pub. L. No. 111-203, § 924(c), 124 Stat. 1376, 1850 (July 21, 2010).
[23] Wall Street Reform and Consumer Protection Act of 2009, H.R. 4173, 111th Cong. § 7205(b) (as passed by House, Dec. 11, 2009) (information deemed original information “provided such information was submitted after the date of enactment of this subtitle, or related to insider trading violations for which a bounty could have been paid at the time such information was submitted.”) (emphasis added). Former Section 21A(e) of the Exchange Act authorized the Commission to award bounties to persons who provided information leading to the recovery of civil penalties for insider trading violations. Section 21A(e) was repealed by Section 923(b) of Dodd-Frank.
[24] Restoring American Financial Stability Act of 2010, H.R. 4173, 111th Cong. § 924(b) (as passed by Senate, May 20, 2010) (information deemed original information “provided that the information is– (1) provided by the whistleblower after the date of enactment of this subtitle, or monetary sanctions are collected after the date of enactment of this subtitle ; ….”) (emphasis added).
[25] The Senate language providing for award eligibility where monetary sanctions were collected after enactment of the statute was used in the base text that went to the conference committee, but was deleted by the conferees.
[26] The Senate-passed version of Section 924(b) also would have treated as “original information” any information provided by a whistleblower that was “related to a violation for which an award under section 21F of the Securities Exchange Act of 1934, as added by this subtitle, could have been paid at the time the information was provided by the whistleblower. ” Id. § 924(b)(2). While this language is not entirely clear, it arguably would have supported blanket retroactivity, permitting whistleblower awards for any information submitted to the Commission pre-Dodd-Frank that satisfied the criteria set forth under Section 21F. This language was also deleted from the final version of Section 924(b).
[27] S. Rep. No. 111-176 at 110 (2010).
[28] Securities Whistleblower Incentives and Protections, Release No. 34-64545, 76 Fed. Reg. 34300, 34310 (June 13, 2011). The Commission further observed that “[t]he statute incentivizes whistleblowers to report possible securities law violations to the Commission by offering them financial awards, reducing the risks from employment retaliation, and lowering the barriers through user-friendly procedures and appellate redress.” 76 Fed. Reg. at 34326, n.228.
[29] Section 21F(g) of the Exchange Act, 15 U.S.C. § 78u-6(g), established the “Securities and Exchange Commission investor Protection Fund” (the “Fund”) to fund the payment of whistleblower awards. In general, this section provides that the money to be paid into the Fund will come from “monetary sanction[s] collected by the Commission in any judicial or administrative action brought by the Commission under the securities laws that is not . . . otherwise distributed to victims of a violation of the securities laws.” The method for funding award payments thus operates prospectively only. If, as [Claimant] argues, Dodd-Frank requires that awards must be paid for information provided before its enactment and simply resubmitted in writing afterwards, whistleblower claims based on such repackaged information could threaten to exhaust the fund in short order. If that had been its intention, we believe Congress would have established additional and more robust funding mechanisms to satisfy the possible flood of claims from individuals who provided information to the Commission in the past.
[30] 76 Fed. Reg. at 34356 (June 13, 2011).
[31] Quoting Hughes Aircraft Co. v. U.S. ex rel Shumer, 520 U.S 939, 947 (1997) (internal quotation omitted). For a more recent enunciation of this principle, see Coalition for Common Sense in Government Procurement v. United States Department of Defense, 707 F.3d 311, 317 (D.C. Cir. 2013) (citing National Mining Association v. Department of Labor, 292 F.3d 849, 859 (D.C. Cir. 2002)). See also Landgraf v. USI Film Products, 511 U.S. 244, 280 (1994) (a statute has retroactive effect if it “would impair rights a party possessed when he acted, increase a party’s liability for past conduct, or impose new duties with respect to transactions already completed.”); Enterprise Mortg. Acceptance Co., LLC, Securities Litigation v. Enterprise Mortg. Acceptance Co., 391 F.3d 401,406 (2d Cir 2004) (same).
[32] We note that Section 21F(b) of the Exchange Act expressly provides that whistleblower awards shall be paid “under regulations prescribed by the Commission.” Therefore, until the Commission issued its final regulations spelling out the procedures for whistleblower awards and the Commission’s interpretations of relevant statutory provisions, [Claimant] could have not had any “vested right” to a particular interpretation of the statute that would require that *** award application be granted. As noted above, in adopting the definition of original information found in Rule 21F-4(b)(1), we relied on our understanding of Congressional intent, as well as our expertise as to how the whistleblower program could best assist in the Commission’s efforts to enforce the securities laws, Cf. Ohio Head Start Association, Inc. v. HHS, 873 F. Supp. 2d 335, 348 (D.D.C. 2012), aff’d, 510 Fed. App’x 1 (D.C. Cir. 2013 (where Congress directed HHS to develop a system for ensuring that renewals of Head Start grants were only given to high-quality service providers, regulation that required grantees with a single deficiency finding to re-compete for grants did not operate retroactively against grantees who received deficiency findings between date of statutory authorization and date of regulation because regulation merely “codified the authority Congress granted to the Secretary….”); Coalition for Common Sense in Government Procurement v. United States Department of Defense, 671 F. Supp. 2d 48, 58 (D.D.C. 2009), aff’d, 703 F.3d 311 (D.C. Cir. 2013) (retroactivity not a concern where statute clearly subjected prescriptions to federal price ceilings as of a certain date, and all parties understood that their transactions could be governed by subsequent rule; “…the rule only identifies how that statutory requirement is implemented.”).
[33] Rule 21F-4(c)(1)-(2).
[34] Among the denied requests was [Claimant]’s motion to obtain all documents pertaining to *** April 2009 meeting with the staff and to require that the OWB disclose all intra-agency communications regarding the creation and purpose of the two declarations.
[35] Rule 21F-12(b).
[36] Similarly, Section 21F(b)(1) states that the Commission shall pay awards “under regulations prescribed by the Commission.”
[37] Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S. 519, 543 (1978).
[38] Id. at 544. See, e.g., Katzon Bros., Inc. v. E.P.A., 839 F.2d 1396, 1399 (10th Cir. 1988).
[38] Rule 21F-12(a)(4).
[40] 76 Fed. Reg. at 34347 and n.360 (citing to United States v. Farley, 11 F.3d 1385,1389 (7th Cir. 1993), which held that “frank discussion of legal and policy matters is essential to the decision-making process of a governmental agency”). In this regard, we note that Rules 21F-10(e)(1) and 21F-12, are consistent with the long-recognized privilege of government agencies to protect against disclosure of information that would tend to reveal law enforcement investigative techniques or sources. See e.g., Black v. Sheraton Corp. of America, 564 F.2d 531, 545 (D.C. Cir. 1977). The purpose of this privilege is “to prevent disclosure of law enforcement techniques and procedures, to preserve the confidentiality of sources, to protect witness and law enforcement personnel, [and] to safeguard the privacy of individuals involved in an investigation . . . .” In re Department of Investigation of City of New York, 856 F.2d 481, 484 (2d Cir. 1988). Further, the public interest in nondisclosure does not terminate simply because the subject investigation has concluded. Black at 546, quoting Aspin v. Department of Defense, 491 F.2d 24, 30 (D.C. Cir. 1973)(“[I]f investigatory files were made public subsequent to the termination of enforcement proceedings, the ability of any investigatory body to conduct future investigations would be seriously impaired.”); Frankel v. SEC, 460 F.2d 813, 817 (2d Cir. 1972) (noting that, if disclosure of an agency’s investigative files were required as soon as an investigation concluded, “it would soon become a matter of common knowledge with the result that few individuals, if any, would come forth to embroil themselves in controversy or possible recrimination by notifying the [agency] of something which might justify investigation,” quoting Evans v. Dept. of Transportation, 446 F.2d 821, 824 (5th Cir. 1971)); In re City of New York, 607 F.3d 923, 944 (2d Cir. 2010) (holding that an investigation need not be ongoing for the law enforcement privilege to apply as “the ability of a law enforcement agency to conduct future investigations may be seriously impaired if certain information” is revealed to the public); Dorsett v. County of Nassau, 762 F. Supp. 2d 500, 520 (E.D.N.Y. 2011) (same).
[41] 76 Fed. Reg. at 34347 and n.361 (citing to Dep’t of Interior v. Klamath Water Users Protective Ass’n, 532 U.S. 1, 8-9 (2001) which stated that the “deliberative process privilege rests on the obvious realization that officials will not communicate candidly among themselves if each remark is a potential item of discovery and front page news”).
[42] “Whether a given statutory scheme gives rise to a protected interest depends on whether the authority promulgating the statute or regulation has placed substantive limits on official discretion.” Tarpeh-Doe v. United States, 904 F.2d 719, 722 (D.C. Cir. 1990), citing Olim v. Wakinekona, 461 U.S. 238, 249 (1983) (emphasis in original). Although Section 21F directs the Commission to pay whistleblower awards to individuals who voluntarily provide the Commission with original information that leads to the successful enforcement of covered judicial or administrative actions, Congress left it entirely to our discretion to determine, by rule, when we consider a claimant’s information to have “led to” a successful enforcement action. See Ohio Head Start Association, Inc. v. Department of Health and Human Services, 873 F. Supp. 2d 335, 349-50 (D.D.C. 2012), aff’d, 2013 U.S. App. LEXIS 11540 (D.C. Cir, 2013) (no protected property interest in renewal of Head Start grants where statute directed agency to award grants to providers of “high-quality and comprehensive” services but left agency discretion to decide which providers met that standard).
[43] 424 U.S. at 335.
[44] See id. at 342 (finding that “significant” hardship imposed upon erroneously terminated disability recipient not sufficient to require an evidentiary hearing).
[45] Mathews v. Eldridge, 424 U.S. at 345-6.
[46] 76 Fed. Reg at 34323.
[47] See supra n.41 and text therein.
[48] See 424 U.S. at 347 (1976) (in determining the appropriate process an agency owes to a claimant, a court must weigh in assessing the appropriate due process balance “the administrative burden and other societal costs that would be associated with requiring, as a matter of constitutional right, an evidentiary hearing upon demand in all cases . . . .”).

SEC

70775

10/30/2013

On August 12, 2013, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Claimant #1] receive a whistleblower award because *** voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the Claims Review Staff recommended that such award be set in the amount of thirty percent (30%), in total, of the monetary sanctions collected or to be collected in the Covered Action. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of [Claimant #1] application.[fn1]

On September 6, 2013, [Claimant #1] provided written notice to the Commission of *** decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) promulgated under the Exchange Act, 17 C.F.R. § 240.21F-10(e), and, pursuant to Rule 21F-10(f) thereunder, 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rule 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Proposed Final Determination, it is hereby ORDERED that [Claimant #1] shall receive an award of thirty percent (30%) of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] The Preliminary Determination of the Claims Review Staff also denied an award to [Claimant #2]. However, [Claimant #2] subsequently withdrew *** application for an award and is, therefore, no longer a claimant in this matter. Notably, this claimant subsequently sought to revoke *** withdrawal, but that request was denied because: (i) *** withdrawal was voluntary and unconditional, a fact which *** did not dispute; (ii) *** failed to provide a “good cause” explanation for seeking reinstatement of *** application, see, generally, Aeronautical Radio, Inc. v. F.C.C., 983 F.2d 275, 282 (D.C. Cir. 1993); and (iii) *** did not identify any factual or legal basis to suggest that the Claims Review Staff’s preliminary determination with respect to *** award application was incorrect and, thus, reinstating *** application would have needlessly tied up the processes and limited resources of the Commission’s whistleblower program.

CFTC

10/23/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2013-01-04-01.

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Before the Whistleblower Award Determination Panel of the Commodity Futures Trading Commission (Commission) is the whistleblower award claim of Claimant (Claimant), filed on Form WB-APP 2013-01-04-01.

IT IS HEREBY DETERMINED that:

1. The claim is denied because the Claimant did not file a Form TCR as required by Section 23(a)(7) of the Commodity Exchange Act (CEA) [7 U.S.C. § 26(a)(7)] and Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules (Rules) [17 C.F.R. §§ 165.2(p), 165.3].

2. The claim is denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission covered judicial or administrative action as required by Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules [17 C.F.R. §§ 165.2(i), 165.5(a)(3)]. The information provided by the Claimant did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation. Nor did the Claimant’s information significantly contribute to the success of a Commission matter already under investigation.

SEC

70554

09/30/2013

On September 5, 2013, the Claims Review Staff issued a Preliminary Determination related to Notice of Covered Action [Redacted] (the “Covered Action”). The Preliminary Determination recommended that [Claimant] (the “Claimant”) receive a whistleblower award because the Claimant voluntarily provided original information to the Commission that led to the successful enforcement of the Covered Action pursuant to Section 21F(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the Claims Review Staff recommended that such award be set in the amount of [Redacted] , in total, of the monetary sanctions collected or to be collected in the Covered Action. In arriving at this recommendation, the Claims Review Staff considered the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, in relation to the facts and circumstances of the Claimant’s application. The Claims Review Staff determined that the expected dollar amount of the [Redacted] award — which will exceed $ 14 million in light of the monetary sanctions already collected — appropriately recognizes the significance of the information that the Claimant provided to the Commission, the assistance the Claimant provided in the Commission action, and the law enforcement interest in deterring violations by granting awards.

On September 6, 2013, the Claimant provided written notice to the Commission of the Claimant’s decision not to contest the Preliminary Determination within the 60-day deadline set out in Rule 21F-10(e) under the Exchange Act, 17 C.F.R. § 240.21F-10(e), and, pursuant to Rule 21F-10(f) thereunder, 17 C.F.R. § 240.21F-10(f), the Preliminary Determination became the Proposed Final Determination of the Claims Review Staff.

Upon due consideration under Rule 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), and for the reasons set forth in the Proposed Final Determination, it is hereby ORDERED that [Claimant] shall receive an award of [Redacted] of the monetary sanctions collected in this Covered Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

CFTC

09/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-03-01.

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IT IS HEREBY DETERMINED that:

The claim is denied because the Claimant first provided information about the matter at issue to the Commission in October 2008. Sections 23(b)(1) and 23(k) of the Commodity Exchange Act [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010.
The claim is also denied because the Claimant did not file a Form TCR as required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(p), 165.3].

CFTC

09/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-02-04.

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IT IS HEREBY DETERMINED that:

1. The claim is denied because the Claimant first provided information about the matter at issue to the Commission in October 2008. Sections 23(b)(1) and 23(k) of the Commodity Exchange Act [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010.

2. The claim is also denied because the Claimant did not file a Form TCR as
required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. §
165.2(p), 165.3].

CFTC

09/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-02-03.

—–

IT IS HEREBY DETERMINED that:

2. The claim is also denied because the Claimant did not file a Form TCR as required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(p), 165.3].

CFTC

09/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-02-02.

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IT IS HEREBY DETERMINED that:

The claim is denied because the Claimant first provided information about the matter at issue to the Commission in October 2008. Sections 23(b)(1) and 23(k) of the Commodity Exchange Act [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010.
The claim is also denied because the Claimant did not file a Form TCR as required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(p), 165.3].

CFTC

09/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-02-01.

—–

IT IS HEREBY DETERMINED that:

2. The claim is also denied because the Claimant did not file a Form TCR as required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(p), 165.3].

CFTC

09/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-01-04.

—–

IT IS HEREBY DETERMINED that:

2. The claim is also denied because the Claimant did not file a Form TCR as required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(p), 165.3].

CFTC

09/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-01-03.

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IT IS HEREBY DETERMINED that:

The claim is denied because the Claimant first provided information about the matter at issue to the Commission in October 2008. Sections 23(b)(1) and 23(k) of the Commodity Exchange Act [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010.
The claim is also denied because the Claimant did not file a Form TCR as required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(p), 165.3].

CFTC

09/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-01-01.

—–

IT IS HEREBY DETERMINED that:

2. The claim is also denied because the Claimant did not file a Form TCR as required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(p), 165.3].

SEC

70293

08/30/2013

On June 12, 2013, the Commission ordered that [Claimant #1], [Claimant #2] and [Claimant #3] each receive an award of five percent (5%) of the monetary sanctions collected in SEC v. Andrey C. Hicks and Locust Offshore Management, LLC, 1:11-cv-11888-RGS (D. Mass. 2011) (the “SEC Action”).[fn1] On June 28, 2013, the Claims Review Staff issued a Preliminary Determination recommending that [Claimant #1], [Claimant #2], and [Claimant #3] each also be allowed an award in the amount of five percent (5%) of the monetary sanctions collected in United States v. Hicks, 1:11-cr-10407-PBS (D. Mass. 2011), a criminal-law enforcement matter brought by the U.S. Department of Justice that is a related action to the SEC Action within the meaning of Rule 21F-3(b) under the Securities Exchange Act of 1934, 17 C.F.R. § 240.21F-3(b) (the “Related Action”).

After giving their whistleblower award claims due consideration under Rules 21F-11(f) and (h), 17 C.F.R. § 240.21F-11(f) and (h), it is hereby ORDERED that [Claimant #1] [Claimant #2] and [Claimant #3] shall each receive an award of five percent (5%) of the monetary sanctions collected in the Related Action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] See In the Matter of the Claim for Award in Connection with SEC v. Andrey C. Hicks and Locust Offshore Management, LLC, ( Release No. 69749) (June 12, 2013) (available at: http://www.sec.gov/rules/other/2013/34-69749.pdf). This award was made in connection with Notice of Covered Action 2012-27.

CFTC

08/21/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-10-05-01.

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IT IS HEREBY DETERMINED that: The claim is denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission covered judicial or administrative action as required by Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rules 165.2(i), 165.2(n), and 165.5(a)(3) of the Commission’s Whistleblower Rules [17 C.F.R. §§ 165.2(i), 165.2(n), and 165.5(a)(3)]. The information provided by the Claimant did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation. Nor did the Claimant’s information significantly contribute to the success of obtaining a settlement or final judgment in favor of the Commission in an action.

CFTC

08/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-12-20-01.

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IT IS HEREBY DETERMINED that:

1. The claim is denied because the [Claimant] first provided information about the matter at issue to the Commission before July 21, 2010, Sections 23(b)(1) and 23(k) of the CEA [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010. Furthermore, any information that the Claimant may have provided after July 21, 2010, did not significantly contribute, nor was it a meaningful nexus, to the Commission’s ability to successfully complete its investigation, and to either obtain a settlement or prevail in a litigated proceeding. Rule 165.2(i)(2) [17 C.F.R. § 165.2(i)(2)] requires any original information about conduct already under investigation by the Commission to significantly contribute to the success of the action.

CFTC

08/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-12-07-01.

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IT IS HEREBY DETERMINED that:

1. The claim is denied because the Claimant first provided information about the matter at issue to the Commission before July 21, 2010, Sections 23(b)(1) and 23(k) of the CEA [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010. Furthermore, any information that the Claimant may have provided after July 21, 2010, did not significantly contribute, nor was it a meaningful nexus, to the Commission’s ability to successfully complete its investigation, and to either obtain a settlement or prevail in a litigated proceeding. Rule 165.2(i)(2) [17 C.F.R. § 165.2(i)(2)] requires any original information about conduct already under investigation by the Commission to significantly contribute to the success of the action.

CFTC

08/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-12-03-01.

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IT IS HEREBY ORDERED that:

2. The claim is also denied because the Claimant first provided information about the matter at issue to the Commission in March 2009. Sections 23(b)(1) and 23(k) of the CEA [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010.

CFTC

08/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-11-30-01.

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IT IS HEREBY DETERMINED that: The claim is denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission covered judicial or administrative action as required by Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules [17 C.F.R. §§ 165.2(i), 165.5(a)(3)]. The information provided by the Claimant did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation. Nor did the Claimant’s information significantly contribute to the success of a Commission matter already under investigation. The Claimant’s award claim is based on an action that was already adjudicated and closed when he first provided information to the Commission.

CFTC

08/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-11-01-01.

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IT IS HEREBY DETERMINED that: The claim is denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission covered judicial or administrative action as required by Section 23(6)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rules 165.2(i) and 165.5(a)(3) of the Commission’s Whistleblower Rules [17 C.F.R. §§ 165.2(i), 165.5(a)(3)]. The information provided by the Claimant did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation. Nor did the Claimant’s information significantly contribute to the success of a Commission matter already under investigation. The Claimant’s award claim is based on an action that was already adjudicated and closed when the Claimant first provided information to the Commission.

CFTC

08/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-10-30-01.

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IT IS HEREBY DETERMINED that: The claim is denied because the Claimant first provided his information about the matter at issue to the Commission on June 24, 2010. Sections 23(b)(1) and 23(k) of the Commodity Exchange Act [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010 (the date of enactment of the Wall Street Transparency and Accountability Act of 2010).

CFTC

08/09/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-09-28-02.

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IT IS HEREBY DETERMINED that: The claim is denied because the Claimant first provided her information in response to a request by Commission staff. The information was therefore not “voluntarily” submitted as required by Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rule 165.2(o)(1) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(o)(1)].

CFTC

08/07/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-09-28-01.

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IT IS HEREBY DETERMINED that: The claim is denied because the Claimant first provided his information in response to a request by Commission staff. The information was therefore not voluntarily submitted as required by Section 23(b)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rule 165.2(o)(1) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(o)(1)].

CFTC

08/07/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-08-31-01.

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IT IS HEREBY DETERMINED that: The claim is denied because the Form WB-APP was received by the Commission after the 90 calendar day requirement under Section 23(b)(1) and 23(c)(2)(D) of the Commodity Exchange Act [17 U.S.C. §§ 26(b)(1), 26(c)(2)(D)] and Rule 165.7(b) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.7(b)].

CFTC

08/07/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of Claimant, submitted on Form WB-APP 2012-08-27-01.

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Before the Whistleblower Award Determination Panel (Panel) of the Commodity Futures Trading Commission (Commission) is the whistleblower award claim of Claimant (Claimant), filed on Form WB-APP 2012-08-27-01.

IT IS HEREBY DETERMINED that: The claim is denied because the Claimant first provided his information in response to a request by Commission staff. The information was therefore not voluntarily submitted as required by Section 23(6)(1) of the Commodity Exchange Act [7 U.S.C. § 26(b)(1)] and Rule 165.2(o)(1) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(o)(1)].

CFTC

08/07/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-06-25-01.

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IT IS HEREBY DETERMINED that:

2. The claim is also denied because the information provided by the Claimant did not lead to the successful enforcement of a Commission covered judicial or administrative action as required by CEA Section 23(b)(1) [7 U.S.C. § 26(b)(1)] and Rule 165.2(i) [17 C.F.R. § 165.2(i)]. The information provided by the Claimant did not cause the Commission staff to commence an examination, open an investigation, reopen an investigation that the Commission had closed, or to inquire concerning different conduct as part of a current examination or investigation. The Claimant provided information about conduct that was already under investigation by the Commission, and the Claimant’s information did not significantly contribute to the success of the Commission’s action.

CFTC

08/07/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-05-01-02.

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IT IS HEREBY DETERMINED that:

1. The claim is denied because Claimant supplied the information on which the claim is based in response to a request from Commission staff. The information was therefore not provided “voluntarily” as required by Section 23(b)(1) of the Commodity Exchange Act (CEA) [7 U.S.C. § 26(b)(1)] and Rule 165.2(o)(1) of the Commission’s Whistleblower Rules (Rules) [17 C.F.R. § 165.2(o)(1)].

2. The claim is also denied because Claimant did not file a Form TCR and therefore is not a “whistleblower” as defined by CEA Section 23(a)(7) [7 U.S.C. § 26(a)(7)] and Rules 165.2(p) and 165.3 [17 C.F.R. §§ 165.2(p), 165.3].

CFTC

07/24/2013

Attached is the Commodity Futures Trading Commission Determination pertaining to the whistleblower award claim of [Claimant], submitted on Form WB-APP 2012-04-04-01.

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IT IS HEREBY DETERMINED that:

1. The claim is denied because the Claimant first provided information about the matter at issue in September 2008. Sections 23(b)(1) and 23(k) of the Commodity Exchange Act [7 U.S.C. §§ 26(b)(1), 26(k)], and Rule 165.2(k)(4) of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(k)(4)], require an individual to provide “original information” to the Commission for the first time after July 21, 2010.

2. The claim is also denied because the Claimant did not file a Form TCR as required by Rules 165.2(p) and 165.3 of the Commission’s Whistleblower Rules [17 C.F.R. § 165.2(p), 165.3].

SEC

69912

07/02/2013

[Claimant] filed a timely whistleblower award claim pursuant to section 21F of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6, in connection with Notice of Covered Action [Redacted]. The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that [Claimant]’s claim should be denied. [Claimant] now has filed a response contesting the Preliminary Determination. For the reasons set forth below, [Claimant]’s claim is denied.

I. Background.

A. [Claimant]’s Tip and the Commission’s Covered Action.

In approximately April 2006, [Claimant] submitted information to the Securities and Exchange Commission (the “Commission”) about suspected accounting fraud at [Redacted]. At that time, [Claimant] was the company’s CEO. After May 2006, [Claimant] did not provide any additional information to the Commission relating to the alleged fraud.

On [Redacted], the Commission filed an enforcement action against [Redacted] for operating a financial fraud at [Redacted]. The Commission’s action alleged that [Redacted] violated various anti-fraud provisions of the federal securities laws, as well as registration and books and records provisions. [Redacted] agreed to the entry of consent judgments that included a total of $[Redacted] in disgorgement, penalties, and prejudgment interest.

On [Redacted], the district court entered [Redacted] in favor of the Commission. Among other relief, the court ordered that [Redacted] pay [Redacted] in civil penalties, $[Redacted] in disgorgement, and $[Redacted] in prejudgment interest.

As noted above, [Claimant] filed a timely whistleblower award claim based on Notice of Covered Action [Redacted], which was posted on [Redacted]. On [Redacted], the CRS made a Preliminary Determination recommending that [Claimant]’s claim should be denied. The Preliminary Determination concluded that [Claimant]’s information was not “original information” because it was not submitted after July 21, 2010, the date that Section 21F was added to the Exchange Act by the Dodd-Frank Wall Street Reform and Consumer Protection Act.[fn1]

B. [Claimant]’s Response to the Preliminary Determination.

On [Redacted], [Claimant] submitted a response contesting the Preliminary Determination pursuant to Rule 21F-10(e)(2) under the Exchange Act. Rule 21F-10(e)(2) provides that a claimant seeking to contest a Preliminary Determination must submit a written response within 60 days that “sets forth the grounds for your objection to either the denial of an award or the proposed amount of an award.” 17 C.F.R. § 240.21F-10(e)(2). [Claimant]’s response argues that: [Redacted].

In the response, [Claimant] does not claim that ___ provided any information to the Commission after July 21, 2010.

II. Analysis.

To be considered for an award under Section 21F, a whistleblower must voluntarily provide the Commission with “original information” that leads to the successful enforcement of a covered judicial or administrative action or related action. 15 U.S.C. § 78u-6(b)(1). Under Rule 21F-4(b)(1)(iv), information will be considered “original information” only if it was provided to the Commission for the first time after July 21, 2010. 17 C.F.R. § 240.21F-4(b)(1)(iv). [Claimant] has not provided the Commission with any information about this covered action since [Redacted], and ___ has not claimed otherwise in ___ response. The information [Claimant] provided to the Commission therefore is not “original information” and does not provide a basis for a whistleblower award.

III. Conclusion.

Accordingly, it is ORDERED that [Claimant]’s whistleblower award claim be, and hereby is, denied.
By the Commission.

[1] Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1841 (2010).
[2] [Redacted].

SEC

69749

06/12/2013

Four individuals [Claimant #1], [Claimant #2], [Claimant #3] and [Claimant #4] — each filed timely whistleblower award claims pursuant to section 21F of the Securities Exchange Act of 1934 (the “Exchange Act” ), 15 U.S.C. § 78u-6, in connection with Notice of Covered Action 2012-27. The Claims Review Staff (“CRS”) issued a Preliminary Determination recommending that the respective claims of [Claimant #1], [Claimant #2] and [Claimant #3] each be allowed in the amount of five percent (5%) of the monetary sanctions collected, and that [Claimant #4] claim be denied. Only [Claimant #4] now has filed a response contesting the Preliminary Determination. For the reasons set forth below [Claimant #1], [Claimant #2] and [Claimant #3] claims each are approved in the amount of 5%, and [Claimant #4] claim is denied.

I. SEC Enforcement Action and Notice of Covered Action.

On October 26, 2011, the Commission filed an enforcement action in SEC v. Andrey C. Hicks and Locust Offshore Management, LLC, 1:11-cv-11888-RGS (D. Mass. 2011) (the “Locust Matter”). The Commission alleged in its complaint that the defendants, Andrey C. Hicks (“Hicks”) and Locust Offshore Management, LLC (“Locust”), committed fraud in connection with the offer and sale of shares in the Locust Offshore Fund, Ltd. (the “Fund”), a pooled investment fund purportedly incorporated in the British Virgin Islands (“BVI”), which turned out to be wholly fictitious. On March 20, 2012, the U.S. District Court for the District of Massachusetts entered final judgments in favor of the Commission after default was entered against the defendants. Among other relief, the court held both defendants jointly and severally liable for disgorgement and prejudgment interest in the amount of $2,512,058.39. In addition, the court imposed a civil penalty on Locust Offshore Management, LLC in the amount of $2,512,058.39, and a civil penalty on Andrey C. Hicks in the amount of $2,512,058.39.

On April 3, 2012, the Office of the Whistleblower posted Notice of Covered Action 2012-27 for the Locust Matter. As noted above, all four claimants filed timely whistleblower award claims.

II. [Claimant #1] [Claimant #2] and [Claimant #3] Respective Claims are Approved.

On December 19, 2012, the CRS issued a Preliminary Determination recommending that [Claimant #1], [Claimant #2] and [Claimant #3] each receive a whistleblower award because each of them voluntarily provided original information to the Commission that led to the successful enforcement of the Locust Matter pursuant to Section 21F(b)(1) of the Exchange Act, 15 U.S.C. § 78u-6(b)(1), and Rule 21F-3(a) thereunder, 17 C.F.R. § 240.21F-3(a). Further, the CRS recommended that each such award be set in the amount of 5% of monetary sanctions collected in the Locust Matter, after considering the factors set forth in Rule 21F-6, 17 C.F.R. § 240.21F-6, as they applied to each claimant.

Neither [Claimant #1], [Claimant #2] nor [Claimant #3] filed a response contesting the Preliminary Determination. Upon due consideration under Rule 21F-10(f) and (h), 17 C.F.R. § 240.21F-10(f) and (h), their claims each are approved in the amount of 5%.

III. [Claimant #4] Claim is Denied.

A. Background.

In December 2011, [Claimant #4] submitted a tip to the SEC about “securities fraud committed by many brokers/dealers/traders involved with naked shorting” of the securities of [Redacted] which, [#4] alleged, had occurred as early as 2003 through 2005. [Claimant #4] tip also noted that [#4] had forwarded this same information to the Commission and that [#4] had earlier sent written information about this fraud to staff in the Commission’s Division of Enforcement and to Chairman Mary Schapiro on [Redacted] and again on [Redacted]. The Division of Enforcement determined that no further action would be taken on this [Redacted] tip because [Claimant #4] information was vague or insubstantial.

In March and April 2012, [Claimant #4] submitted two new tips regarding [Redacted]. The Division of Enforcement determined that no further action would be taken on these two tips.

None of [Claimant #4] tips contained information on the Locust Matter, nor did they even mention the Locust Matter defendants. Further, the Commission’s complaint in the Locust Matter alleged that the defendants made misrepresentations when soliciting individuals to invest in a purported hedge fund controlled by defendants, and did not make any allegations concerning naked short selling, which was the subject of [Claimant #4] tips.

On December 19, 2012, the CRS made a Preliminary Determination recommending that [Claimant #4] claim should be denied. The Preliminary Determination explained that the information provided by [Claimant #4] prior to July 21, 2010 was not “original information” because it was not submitted after July 21, 2010, the date that Section 21F was added to the Exchange Act by the Dodd-Frank Wall Street Reform and Consumer Protection Act.[fn1] The Preliminary Determination further concluded that the information [Claimant #4] provided after July 21, 2010 did not lead to the successful enforcement of the Locust Matter because it neither caused the Commission to open its investigation nor significantly contributed to the success of the enforcement action.

B. [Claimant #4] Response to the Preliminary Determination.

On February 19, 2013, [Claimant #4] submitted a response contesting the Preliminary Determination pursuant to Rule 21F-10(e)(2). Rule 21F-10(e)(2) provides that a claimant seeking to contest a Preliminary Determination must submit a written response within 60 days that “sets forth the grounds for your objection to either the denial of an award or the proposed amount of an award.” 17 C.F.R. § 240.21F-10(e)(2).

Claimant #4 response argues that [#4] provided original information to the Commission alerting it to fraudulent activity allegedly conducted by [Redacted] and that this tip led the Commission to file suit against [Redacted]. [Claimant #4] does not provide any information to show that [#4] assisted or contributed to either the Commission’s investigation or its successful enforcement action in the Locust Matter. Rather, [#4] states that [#4] is using [Redacted] as an “example of illegal naked shorting” and that this makes [#4] “the ‘original informant’ to the Commission about security violations found in 2012-27, Exchange Act Section 10(b), and Rule 10(b)-5 thereunder” (internal quotation in original).

C. Analysis.

The information [Claimant #4] provided prior to July 21, 2010, including the information re-submitted after July 21, 2010, is not “original information” and therefore does not provide a basis for a whistleblower award. With regard to the information [Claimant #4] submitted after July 21, 2010, [Claimant #4] fails to articulate any connection or nexus between this information and either the opening of the investigation or the success of the enforcement action in the Locust Matter. Further, we find no evidence whatsoever after our review of the record that [Claimant #4] information was used in either the investigation or litigation of the Locust Matter; indeed, the record indicates that [Claimant #4] information was not used in any Commission investigation or enforcement action. Accordingly, the information [Claimant #4] provided after July 21, 2010 did not lead to a successful Commission enforcement action and therefore does not provide the basis for a whistleblower award. For these reasons, [#4] claim is denied.

IV. Conclusion.

Accordingly, it is ORDERED that [Claimant #1], [Claimant #2] and [Claimant #3] each shall receive an award of 5% of the monetary sanctions collected in the above-referenced covered action, including any monetary sanctions collected after the date of this Order; and it is further

ORDERED that [Claimant #4] whistleblower award claim be, and hereby is, denied.

By the Commission.

[1] Pub. L. No. 111-203, § 922, 124 Stat. 1376, 1841 (2010).

SEC

06/10/2013

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received a timely whistleblower award claim. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has recommended that the Commission deny an award to Claimant. The basis for this determination is as follows:

The Claimant did not submit “original information” because his information was not provided to the Commission for the first time after July 21, 2010, as required by Rule 21F-4(b)(1)(iv) under the Exchange Act. For the same reason, the Claimant cannot be considered for an award on a related criminal matter. See Rule 21F-3(b)(iv) under the Exchange Act.

By: Claims Review Staff.

SEC

03/19/2013

In response to the Notices of Covered Action set forth on Appendix A hereto, the Securities and Exchange Commission (the “Commission”) received timely whistleblower award claims. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10 promulgated thereunder, the Claims Review Staff has evaluated the claims in accordance with the criteria set forth in Rules 21F-1 through 21F-17. The Claims Review Staff has recommended that the Commission deny any award to Claimant. The basis for this determination is as follows:

The information provided by Claimant after July 21, 2010 did not lead to the successful enforcement of a covered judicial or administrative action within the meaning of Section 21F(b)(1) of the Exchange Act and Rules 21F-3(a)(3) and 21F-4(c) thereunder since this information did not:

b. significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

11/13/2012

In response to the above-referenced Notice of Covered Action, the Securities and Exchange Commission (the “Commission”) received a timely whistleblower award claim. Pursuant to Section 21F of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 21F-10(d) of the Exchange Act promulgated thereunder, the Claims Review Staff has evaluated the claim in accordance with the criteria set forth in Rules 21F-1 of the Exchange Act through 21F-17 of the Exchange Act. The Claims Review Staff has recommended that the Commission deny an award to Claimant. The basis for this determination is as follows:

(1) Claimant’s information did not lead to a successful enforcement action and therefore fails to satisfy Section 21F(b)(1) and Rule 21F-3(a)(3) of the Exchange Act. Specifically, the Claimant’s information did not cause the Commission to (i) commence an examination, (ii) open or reopen an investigation, or (iii) inquire into different conduct as part of a current Commission investigation under Rule 21F4(c)(1) of the Exchange Act; and

(2) Claimant’s information did not significantly contribute to the success of an already ongoing Commission investigation as defined in Rule 21F-4(c)(2) of the Exchange Act.

By: Claims Review Staff.

SEC

67699

08/21/2012

On May 18, 2012, the Claims Review Staff made a Preliminary Determination related to this Whistleblower Award Proceeding (Notice of Covered Action 2012-___). The Preliminary Determination determined that the Commission should deny an award to [Claimant]. [Claimant] did not file a response to the Preliminary Determination. As a result, pursuant to Rule 21F-10(f), the Claims Review Staff’s determination to deny [Claimant] claim for an award became final on July 18, 2012.

Accordingly, for the reasons set forth in the Preliminary Determination of the Claims Review Staff dated May 18, 2012, it is hereby ORDERED that [Claimant] be denied an award in the above-referenced covered action. By the Commission.

SEC

67698

08/21/2012

On May 18, 2012, the Claims Review Staff made a Preliminary Determination related to this Whistleblower Award Proceeding (Notice of Covered Action 2012-___). The Preliminary Determination provided an award to [Claimant 1] of thirty percent (30%) of the monetary sanctions collected in this covered action. No Commissioner has requested a review of this determination. As a result, pursuant to Rule 21F-10(h) under the Exchange Act, the Claims Review Staff’s determination to award a payment to [Claimant 1] is now final.

Accordingly, for the reasons set forth in the Preliminary Determination of the Claims Review Staff dated May 18, 2012, it is hereby ORDERED that [Claimant 1] shall receive an award of thirty percent (30%) of the monetary sanctions collected in the above-referenced covered action, including any monetary sanctions collected after the date of this Order.

By the Commission.

[1] The Preliminary Determination of the Claims Review Staff also denied an award to Claimant 2. That determination has not been contested. Accordingly, pursuant to Rule 21F-10(f) under the Securities Exchange Act of 1934 (the “Exchange Act”), Claimant 2 has exhausted administrative remedies and the determination to deny an award to Claimant 2 has become final.

Whistleblower Awards

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