SEC awards over $5 mln to whistleblower

SEC awards over $5 mln to whistleblower


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The US Securities and Exchange Commission (SEC) announced it will award a former company insider who gave it a detailed tip on securities violations, with a sum between $5 and 6 million. According to the press release, without the information he gave to the watchdog, the wrongdoing would have been nearly impossible to uncover.

The SEC, however, does not disclose the name of the person who tipped them off nor the name of the company, because it is required by law to protect the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.

This is the second whisteblower award for this month, after last week the SEC gave out more than $3.5 million to a company employee whose tip bolstered an ongoing investigation with additional evidence of wrongdoing that strengthened the SEC’s case.

“Employees are often best positioned to witness wrongdoing,” said Andrew Ceresney, director of the SEC’s Division of Enforcement.  “When they report specific and credible tips to us, we will leverage that inside knowledge to advance our enforcement of the securities laws and better protect investors and the marketplace.”

The current award is the third-highest since the program launched in 2011. The highest prize was awarded in September 2014 and was to the tune of over $30 million and the second – $14 million – was given about a year earlier – in October, 2013. In the five years since the start of the program, SEC has given more than $67 million to 29 whistleblowers.

They are rewarded for high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million. The prize can range from 10 to 30% of the sum collected in a case. The money paid to whistleblowers comes from a special investor protection fund and is financed through monetary sanctions paid by securities law violators to the SEC. Money is not taken or withheld from harmed investors to pay whistleblower awards, nor from the US taxpayers.

The main mission of SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. It requires public companies to disclose meaningful financial and other information to the public and oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, forex brokers, investment advisors, and mutual funds. It has the right to bring civil cases against individuals and companies for violation of the securities laws, such as insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.

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