Whistleblower scores $279 million bounty for $4 billion tip
In what is being hailed as a landmark case, the U.S. Securities and Exchange Commission (SEC) has paid a record $279 million to an anonymous whistleblower who provided “critical and timely” information that led to a successful enforcement action against a company that violated securities laws.
The payout is the largest ever made by the SEC under its whistleblower program, which was established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. The program offers monetary incentives to individuals who report possible violations of securities laws to the SEC, and whose information leads to successful enforcement actions.
The payout is more than double the previous record of $114 million, which was awarded in October 2020.
The US top regulators awarded the staggering $279 million after the whistleblower tips contributed to enforcement actions resulting in orders “requiring bad actors to disgorge more than $4 billion in ill-gotten gains and interest.” As this award shows, there is a significant incentive for whistleblowers to come forward with accurate information about potential securities law violations, the SEC said.
“The size of today’s award – the highest in our program’s history – not only incentivizes whistleblowers to come forward with accurate information about potential securities law violations, but also reflects the tremendous success of our whistleblower program,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
Since the program’s inception, the SEC has awarded roughly $2 billion to whistleblowers. The agency says these payouts have been instrumental in helping it detect and prevent a wide range of securities violations, including insider trading, accounting fraud, and bribery.
Whistleblowers are entitled to receive between 10% and 30% of the monetary sanctions collected by the SEC in cases where their information leads to successful enforcement actions. The size of the payout is determined by the SEC based on a number of factors, including the significance of the information provided and the level of assistance the whistleblower offers in the investigation.
The SEC’s whistleblower program has come under fire in recent years from some lawmakers and business groups, who argue that it incentivizes individuals to profit from reporting on their employers or colleagues. However, supporters of the program say it is a crucial tool in the fight against corporate fraud and misconduct, and helps protect investors and promote transparency in financial markets.
The $279 million payout to the latest whistleblower is likely to reignite the debate over the program, and could encourage more individuals to come forward with information about possible securities violations.
