The United States’ Securities and Exchange Commission at the weekend announced awards of approximately $2.6 million to five whistleblowers who provided information and assistance in three separate enforcement proceedings.
A statement by the commission indicated that in the first order, the SEC awarded approximately $1.2 million to a whistleblower who provided valuable independent analysis based upon a complex algorithm the whistleblower developed and applied to publicly available data. The whistleblower’s information saved Commission staff time and resources and assisted the staff during settlement negotiations of an enforcement action.
In the second order, it awarded over $1 million to three individuals whose information and assistance led to a successful enforcement action. While the whistleblowers held compliance roles at the company, they remained eligible for an award because they submitted their information to the Commission more than 120 days after the alleged conduct had been reported internally. The first claimant, who received the highest award, provided extraordinary assistance and comprehensive information that proved vital to the success of the enforcement action.
In the third order, the SEC awarded a whistleblower more than $350,000 for providing independent analysis that led to a successful enforcement action. Based on unusual effort and expertise developed over many years, the whistleblower identified patterns among publicly available information that allowed the Commission to quickly identify and prevent wrongdoing and to preserve assets.
Commenting on the awards to the whistleblowers, Acting Chief of the SEC’s Office of the Whistleblower Emily Pasquinelli, said: “Today’s awards demonstrate the Commission’s commitment to reward whistleblowers who provide valuable information, developed either from a whistleblower’s independent knowledge or the whistleblower’s independent analysis, which substantially contributes to a successful enforcement action.”
So far, the commission as awarded approximately $959 million to 203 individuals since issuing its first award in 2012 and the payments were 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.
According to the capital market regulator, no money has been taken or withheld from harmed investors to pay whistleblower awards.
Under the commission’s awards rules, whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million
The SEC protects the confidentiality of whistleblowers and does not disclose any information that could reveal a whistleblower’s identity as provided in the Dodd-Frank Act.
