SEC awards $4 million to whistleblowers, total payouts top $1.2 billion

abdelaziz Fathi

The US Securities and Exchange Commission awarded $4 million to several whistleblowers whose information resulted in enforcement actions.

cftc

According to the agency’s order, one whistleblower received $2.6 million for information and assistance that led the staff to open the investigation into “hard-to-detect violations.” He was the initial source that alerted the SEC to a previously unknown conduct and thereafter provided assistance that helped substantially advance investigations.

Though he wasn’t a first-hand witness, the commission rewarded the tipster for providing supplemental information that helped the watchdog bring the charges in the underlying case.

“The whistleblower, who reported internally before reporting to the Commission, provided significant new information during an existing investigation that alerted SEC staff to misconduct occurring overseas, which would have been difficult to detect in the absence of the whistleblower’s information,” the agency explains

In the second case, an unspecified number of whistleblowers provided information that resulted in a successful enforcement action. The joint whistleblowers received $1.5 million after they had multiple communications with SEC staff and provided information about key witnesses.

Committed to protecting the anonymity of informants, neither the tipsters nor the firms accused of misconduct were identified by the regulatory agency.

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SEC has awarded $1.2 billion in 10 years

“These whistleblowers provided critical information and continued cooperation that helped the agency detect the securities laws violations. These awards highlight the importance of the SEC’s whistleblower program to the agency’s enforcement efforts and to its ability to maximize staff resources,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower.

In the decade since its establishment in 2011, the SEC’s program has made disbursements totaling more than  $1.2 billion to 241 tipsters. Individuals are eligible for payments ranging from 10% to 30% of the fines collected in enforcement cases where penalties exceed $1 million.

However, the decision-making process takes some time as US regulators have sorted through a flood of requests for awards and tips on potential corporate wrongdoing.

In September, the SEC paid $110 million to a tipster for flagging wrongdoing in its second-largest ever award to a person since issuing its first award in 2012. The whistleblower’s independent analysis provided the agency with important insights into the extent of a company’s misconduct.

The tipster’s award included $40 million from the top U.S. regulator and $70 million from a related action brought by another, unidentified agency.

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