The US Securities and Exchange Commission (SEC) today announced the payment of almost $2 million to three whistleblowers.
While a sizeable sum, it is far from the largest ever SEC whistleblower award. In 2014 the SEC announced a $30 million award to a whistleblower who provided information that led to a successful SEC enforcement action about an ongoing fraud that would otherwise have been very difficult to detect.
The largest of the three current awards will go to a whistleblower who voluntarily provided original information that prompted the SEC to open its investigation. That whistleblower, who will receive about $1.8 million, continued to provide valuable information throughout the investigation.
The other two whistleblowers will receive approximately $65,000 each for providing information after the investigation started.
By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.
The SEC’s whistleblower program has now paid more than $57 million to 26 whistleblowers since the program’s inception in 2011. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action. Whistleblower awards can range from 10%-30% of the money collected when the monetary sanctions exceed $1 million. 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 is taken or withheld from harmed investors to pay whistleblower awards.
According to Sean X. McKessy, Chief of the SEC’s Office of the Whistleblower:
We’re seeing a significant uptick in whistleblower tips over prior years, and we believe that’s attributable to increased public awareness of our program and the tens of millions of dollars we’ve paid to whistleblowers for information that helped us bring successful enforcement actions.
To see the full SEC press release on the whistleblower award click here.