The US Securities and Exchange Commission (SEC) announced it will award with $17 million a former company employee who gave it a detailed tip on securities violations. The insider information helped significantly the agency’s investigation and ultimate enforcement action.
According to SEC, this is the second-largest whistleblower prize it has ever given since the program launched nearly five years ago. In September 2014 SEC issued a $30 million award and about a year later it gave out $14 million.
According to Sean X. McKessy, chief of SEC’s Office of the Whistleblower, in May the agency gave a total of $26 million to five whistleblowers. “We hope these substantial awards encourage other individuals with knowledge of potential federal securities law violations to make the right choice to come forward and report the wrongdoing to the SEC,” McKessy said.
SEC rewards 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.