SEC awards $3 million to 2 whistleblowers, totals $741 million since 2012

Rick Steves

While “crime never pays” is far from being absolute truth, “no one likes a tattletale” has completely lost its meaning in the United States. The SEC likes tattletales and it has never been more rewarding to expose criminals.

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The Securities and Exchange Commission has recently awarded two separate whistleblowers with almost $3 million in total. The regulator has awarded approximately $741 million to 136 individuals since issuing its first award in 2012, with all payments being made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.

The first whistleblower received over $2.2 million for providing important, high-quality information which helped the SEC bring an enforcement action that resulted in the return of millions of dollars to harmed clients.

The second was awarded with almost $700,000 for having alerted the financial watchdog to a fraudulent reporting scheme and for providing critical evidence which helped identify key documents and witnesses.

Jane Norberg, Chief of the SEC’s Office of the Whistleblower, said: “Both whistleblowers who received awards today raised their concerns internally and then timely reported those concerns to the Commission. The return of millions of dollars to harmed clients in one matter, and the uncovering of a fraudulent scheme in the other matter, underscore the tremendous value that whistleblowers provide.”

Whistleblower awards are never funded with money taken or withheld from harmed investors, according to the law. The SEC awards whistleblowers who voluntarily provide the SEC with original, timely, and credible information that leads to successful enforcement action. Awards range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.

Both whistleblowers, as all the other 136 individuals, will remain anonymous as the SEC protects the confidentiality of their identity.

The recent GBP Capital ponzi scheme scandal is proof of how important whistleblowers are to the success of the SEC’s mission. David Gentile’s $1.7 billion fraudulent enterprise was able stay running for four years on account of scare tactics to keep people from blowing the whistle. That allowed Gentile, with connections to the Church of Scientology and Russian organized crime, to sustain high credibility among his Wall Street peers and the media.

Whistleblower protections are a cornerstone of the SEC, which is committed to protecting whistleblowers from retaliation and attempts to stifle the free flow of information to the Commission about possible securities law violations.

David Gentile’s ponzi scheme defrauded 17,000 investors, most of which are retirees concentrated in Texas, Florida, and Arizona.

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