Whistleblower reaps $10 million for helping Securities and Exchange Commission
A whistleblower has been awarded $10 million for providing information and assistance that significantly contributed to a successful enforcement action by the Securities and Exchange Commission.
The SEC, which regulates Wall Street and U.S. financial markets, said Oct. 31, 2022 that the whistleblower “provided important documents and met twice with Enforcement staff. The charges in the covered action had a close nexus with the whistleblower’s allegations, which were critical to the underlying investigation.” The whistleblower is not being identified publicly.
Ethic Alliance can help guide, protect and financially reward whistleblowers like the one who aided the SEC, said Scott Williams, CEO of Ethic Alliance.
Details of the new SEC case were not released. But Creola Kelly, chief of the SEC’s Office of the Whistleblower, said the whistleblower provided information that resulted in the return of a “significant amount” of money to harmed investors.
“This illustrates how the Whistleblower Program works to benefit, via financial remediation, investors who are victimized by those who violate our securities laws,” she said.
The SEC pays whistleblowers out of an investor protection fund, established by Congress, which is financed entirely through monetary sanctions paid to the SEC by those who violate federal securities laws. No money is taken from or withheld from harmed investors to pay whistleblower awards. The SEC is particularly likely to pay awards to whistleblowers who provide original, timely, and credible information that leads to a successful enforcement action. Awards can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million.
The SEC’s whistleblower program was established in 2010. Since then, the Commission has awarded more than $1.3 billion to more than 280 individual whistleblowers.
In other recent awards, the SEC on Oct. 24, 2022, said it will pay $400,000 to a whistleblower who was a prospective investor who “expeditiously alerted Commission staff to an ongoing fraud, prompting the opening of the investigation. Rather than stay silent, [the whistleblower] immediately reported suspected wrongdoing to the Commission when presented with what he/she believed was false investor information and materials.” The whistleblower also supplied critical documents, participated in an interview with Commission staff, and gave testimony that advanced the investigation, the SEC said.
In another award also announced Oct. 24, 2022, the SEC said it would pay two whistleblowers $1 million and $500,000 each, respectively. Based on information the whistleblowers had provided, the SEC instituted cease and desist proceedings against an unidentified company, which settled the charges.
The SEC said the reason why one of the whistleblowers received a larger award was because the whistleblower “brought the operation of the scheme to the Commission staff’s attention and assisted in the staff’s understanding of the scheme as a whole.” The second whistleblower’s information “was less significant,” the SEC said.
Contact Ethic Alliance at info@ethicalliance.com
Related link: https://www.sec.gov/news/press-release/2022-196