The U.S Securities and Exchange Commission (SEC) at the weekend announced awards of approximately $11.5 million to two whistleblowers whose information and assistance contributed to the success of an SEC enforcement action.
The first whistleblower received an award of nearly $7 million, while the second whistleblower received more than $4.5 million.
The investments market regulator stated that the larger award was in recognition of the fact that the first whistleblower was the initial source that caused the staff to open the investigation into hard-to-detect violations and thereafter provided substantial assistance.
This is even as the commission clarified that the second whistleblower, by comparison, submitted information later, after the investigation was already underway, and had delayed reporting to the Commission for several years after becoming aware of the wrongdoing.
Commenting on the awards, Acting Chief of the SEC’s Office of the Whistleblower, Emily Pasquinelli, said: “This case demonstrates the Commission’s continued commitment to rewarding individuals who provide high-quality tips, and particularly timely ones.
“These whistleblowers reported credible information that aided the Commission’s investigation and their subsequent cooperation allowed the Commission to better understand the violations that formed the basis of the enforcement action”, she added.
The SEC has awarded approximately $1 billion to 212 individuals since issuing its first award in 2012 and all payments are 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.
The commission further stated that no money had been taken or withheld from harmed investors to pay whistleblower awards.
It pointed out that 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, adding that whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million.
As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.
