The United States’ Securities and Exchange Commission (SEC) on Friday announced awards of approximately $40 million to two whistleblowers whose information and assistance contributed to the success of an enforcement action by it.
According to a press statement issued by the commission, the first whistleblower, whose information caused the opening of the investigation and exposed difficult-to-detect violations, will receive an award of approximately $32 million.
In addition, the first whistleblower also provided substantial assistance to the staff, including identifying witnesses and helping the staff to understand complex fact patterns.
Also, the second whistleblower, who submitted important new information during the course of the investigation but waited several years to report to the commission, will receive an award of approximately $8 million.
Commenting on the awards, Acting Chief of the SEC’s Office of the Whistleblower Emily Pasquinelli, said: “Today’s whistleblowers underscore the importance of the SEC’s whistleblower program to the agency’s enforcement efforts.
“These whistleblowers reported critical information that aided the Commission’s investigation and provided extensive, ongoing cooperation that helped the Commission to stop the wrongdoing and protect the capital markets”, Pasquinelli added.
Since 2012 when it first issued its award, the SEC has awarded approximately $1.1 billion to 218 individuals.
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. No money has been taken or withheld from harmed investors to pay whistleblower awards.
Based on the capital market regulator’s 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.
The whistleblower awards can range from 10-30% of the money collected when the monetary sanctions exceed $1 million.
In compliance with the Dodd-Frank Act provisions, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.
