In its third highest award to a tipster since the inception of its whistleblower program, the Securities and Exchange Commission has awarded an individual $20M for coming forward right away to disclose “valuable information” that allowed the regulator to swiftly bring an enforcement action against the wrongdoers before they could spend the funds. This latest award ups the total awarded by the SEC to whistleblowers to $130M since 2012. The regulator issued its highest award to date, of $30M, in 2014 and awarded another whistleblower $22M in August.
The SEC Whistleblower Program allows the regulator to award the person who provided the tip 10-30% of monetary sanctions collected. The sanctions, however, must exceed $1M. The tip should relate to a federal securities law violation that already happened, is currently taking place, or is about to happen, and it must be unique information. More than one whistleblower may qualify to receive an award from an over $1M sanction obtained as a result of the tips provided.
Because the law protects whistleblower confidentiality, more specifics about this latest case, including who was involved or who received the award, were not disclosed.
Whistleblower awards come out of an investor protection fund set up by Congress. The fund comes from monetary sanctions paid to the SEC by violators of securities laws. Since its inception in 2011 the SEC Whistleblower’s Office has received over 14,000 tips that have resulted in more than $500M in penalties. The office also punishes companies who try to keep potential tipsters who want to turn whistleblower silent.
With President-elect Donald Trump getting set to formally take office, some have expressed worry as to whether the SEC’s whistleblower office would survive the new administration’s expected attempt to roll back the Dodd-Frank Act, which created the office. During his campaign, Mr. Trump attacked parts of the landmark financial regulation legislation. However, according to the Wall Street Journal, experts who spoke with Risk & Compliance Journal said that the whistleblower office is likely to survive the change in administration because of how successful it has been.
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