The U.S. Securities and Exchange Commission has awarded about $3 million to a pair of whistleblowers who jointly alerted the agency to misconduct harming retail investors and assisted with an investigation that resulted in a successful enforcement action.

Announcing the settlement Monday, the SEC hailed the whistleblowers' efforts to first report the misconduct internally, crediting them for promptly participating in their employer's compliance system and also for suffering “hardships by raising concerns about the violation.”

The SEC also praised the tipsters for meeting with the agency's staff in-person and identifying potential witnesses.

The award will be split evenly between the two tipsters.

“These whistleblowers showed great tenacity by repeatedly reporting internally and advocating for the firm to disclose the violative conduct and remedy the attendant investor harm,” said Jane Norberg, chief of the SEC's whistleblower office. “Their critical information and assistance helped the SEC bring an important enforcement action aimed at protecting retail investors.”

The SEC, following its policy, did not identify the whistleblowers or the enforcement action that gave rise to the award. The whistleblowers were represented by Rebecca Katz, a New York City-based senior counsel at Motley Rice, who previously served as a senior counsel in the SEC's enforcement division. Katz declined to identify the enforcement action or her clients, saying they wanted “complete confidentiality.”

The trumpeting of the whistleblowers' internal reporting comes at a time of increased risk for employees who decide, at least initially, to report misconduct only within their companies.

Last year, the Supreme Court ruled that the Dodd-Frank Act's robust protections against workplace retaliation extend only to whistleblowers who report misconduct to federal regulators. The court's unanimous decision, in Digital Realty Trust v. Somers, effectively struck down the SEC's view that Dodd-Frank's anti-retaliation protections extended even to whistleblowers who only reported internally.

Since that ruling, Norberg and former SEC officials have sought to raise awareness of the need for whistleblowers to contact the commission directly in order to tap into Dodd-Frank's anti-retaliation protections. Norberg said last year, just months after the Digital Realty decision, that whistleblowers would be “rolling the dice” if they wait to report misconduct to the commission.

“I think that the ruling is very clear: Whistleblowers who want to preserve their rights under the Dodd-Frank anti-retaliation provisions must report to the commission. Full stop. And we need to get those reports before the retaliation occurs,” Norberg said in June 2018. “In my opinion, whistleblowers will be rolling the dice not to report to the commission either at the same time or before reporting internally if they want the more robust protections under the Dodd-Frank statute.”

Last month, the SEC referenced the Digital Realty decision in an announcement of a more than $4.5 million award to a whistleblower whose internal report prompted his company to investigate allegations of foreign bribery and disclose the misconduct to the government. That whistleblower had also contacted the SEC.

The SEC did not include a similar reference to the Digital Realty decision in the announcement of the latest award. With the $3 million awarded Monday, the SEC has now issued more than $384 million in bounties to a total of 64 whistleblowers.