The U.S. Securities and Exchange Commission (SEC) has issued an order ruling that its staff can automatically dismiss all claims for whistleblower awards from an individual who has filed numerous baseless applications seeking a financial award.
The order makes clear that regulatory whistleblower programs that may pay significant financial awards can, unfortunately, also attract many false claims that waste a regulator’s resources. In a heavily redacted order issued by the commission, the SEC notes that an unnamed claimant has filed almost 200 applications seeking whistleblower awards. And, in all but one of those cases, the information filed “lack even a superficial factual nexus” to the enforcement actions for which they are seeking an award.
It says that SEC claims review staff has evaluated these claims and has preliminarily determined that the claimant “is ineligible for an award in these matters or in any future covered or related actions.”
Among other things, the order notes that SEC staff has found that the claimant 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,” and that statements made in applications seeking whistleblower awards are “patently false”.
It says that the claimants’ numerous, frivolous filings; an unwillingness to withdraw these applications; or, to change their behaviour in spite of repeated requests and explanations by the Office of the Whistleblower (OWB), “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.”
The preliminary decision of the claims review staff became final in mid-May, meaning the OWB can now summarily reject all pending and future whistleblower award claims from the anonymous gadfly.