SEC awards over $1 million to whistleblowers

The Securities and Exchange Commission announced last week awards of over $570,000 to two whistleblowers who provided crucial information and assistance in a SEC action in a bringing successful enforcement actions. The award was split $478,000 for the first whistleblower and $94,000 for the second. Yesterday the Commission awarded $450,000 a whistleblower for providing information that helped an ongoing investigation bring charges.

Jane Norberg, Chief of the SEC’s Office of the Whistleblower commented:

The whistleblowers in this matter played a critical role in the investigation and helped the agency bring antifraud charges that halted ongoing conduct. The substantially higher award granted to the first whistleblower demonstrates the importance of providing information early in the investigation and the benefit to whistleblowers where the information leads to multiple enforcement actions.



Norberg added about the third whistleblower:

Jane Norberg, SEC

To ensure that important information about securities laws violations is reported to the SEC when appropriate corrective action is not taken by the company, the rules permit awards to compliance professionals in certain limited circumstances. Here, the whistleblower made reasonable efforts to work within the company’s compliance structure, suffered unique hardships as a result, and reported to the Commission after the requisite time period had passed, ultimately providing meaningful assistance to the Commission’s investigation and subsequent enforcement action.

So far, the agency has awarded over $396 million to 74 individuals for their help since the first award was issued in 2012. Payment of the awards is taken out of an investor protection fund set up by Congress. It is financed through monetary sanctions of security law violations paid to SEC.

To be eligible for award, a whistleblower needs to voluntarily provide the commission with reliable information that leads to successful enforcement action. The awards range between 10 and 30 % of the money collected by SEC when the sanction is for more than $1 million.

According to the Dodd-Frank Act, SEC must protect the identity of the whistleblower and not disclose any information that could reveal it.

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