• The US Securities and Exchange Commission (SEC) has awarded a record $279 million to a whistleblower whose information led to successful enforcement actions.
• The SEC Whistleblower program incentivizes people to come forward with information about potential securities law violations.
• Payments are made from an investor protection fund which is financed entirely through monetary sanctions paid by violators of securities laws.
SEC Awards Record $279M To Whistleblower
The United States Securities and Exchange Commission (SEC) has awarded a record $279 million to a whistleblower whose information and assistance led to successful enforcement actions. This award is the largest in the SEC’s whistleblower program’s history, exceeding the previous award of $114 million back in October 2020.
Incentivizing Whistleblowing
The program incentivizes whistleblowers to come forward with accurate information about potential securities law violations and has contributed to enforcement actions resulting in more than $4 billion worth of fraudulent gains and interest being seized. In order for whistleblowers to be eligible for an award, they must provide reliable original information that leads to successful enforcement action, as well as meet certain filing requirements set forth in the rules of the program. These awards can range from 10% – 30% of money collected, depending on the contribution of the whistleblower and if the monetary sanctions exceed one million dollars or not.
Protecting Whistleblowers’ Identities
Whistleblowers are provided anonymity as set forth in Dodd-Frank Act, so that their identity remains confidential throughout proceedings. As such, no money needs to be taken or withheld from harmed investors in order pay whistleblowers because payments are done out of an investor protection fund which is funded solely by monetary sanctions paid by violators of securities laws.
Whistleblower’s Role
The whistleblower’s help was critical to multiple enforcement actions as it expanded on existing investigations into matters not initially charged or considered. This included participating in interviews and submitting written documents related to their knowledge on various cases investigated by SEC agents.
Conclusion
The awarding of this huge amount further encourages whistleblowing activities against misconduct involving securities laws, ensuring that justice is served for those affected by these illegal acts while protecting those who bravely make these revelations possible through anonymity provisions set forth by Dodd-Frank Act .