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The Sec Awards More Than $7 Million To Three Whistleblowers

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  • Posted on: Jan 24 2017

On January 23, 2017, the SEC announced that it awarded more than $7 million to three whistleblowers who came forward with information that led to a successful SEC enforcement action.  One whistleblower provided information that the SEC considered to be the primary impetus for the start of the Commission’s investigation.  Consequently, the SEC awarded more than $4 million to that whistleblower.  The other two whistleblowers split more than $3 million for jointly providing new information during the SEC’s investigation that significantly contributed to the success of the enforcement action.

The whistleblowers are the 39th, 40th and 41st relators to receive an award under the SEC whistleblower program. Since 2011, the SEC has paid approximately $149 million to whistleblowers who provided information resulting in the collection of monetary sanctions against violators of the securities laws. To date, the SEC has recovered more than $935 million from enforcement actions resulting from whistleblower tips.

The SEC declined to identify the whistleblowers or the wrongdoers. By law, the SEC protects the confidentiality of whistleblowers and does not release information that might directly or indirectly reveal the whistleblower’s identity.

Commenting on the award, Jane Norberg, Chief of the SEC’s Office of the Whistleblower, stated: “Whistleblowers played an important role in the success of this case as they helped our agency detect and prosecute a scheme preying on vulnerable investors. Whistleblowers not only helped us open the investigation but provided critical information after the investigation was already underway.”

Under the program, whistleblowers are eligible for an award if they voluntarily provide the SEC with original information that leads to a successful enforcement action that exceeds $1 million. The award can range from 10 percent to 30 percent of the money collected. All payments come from an investor protection fund established by Congress that is financed through monetary sanctions paid to the SEC by securities law violators.  No money is taken or withheld from harmed investors to pay whistleblower awards.

Takaway:

As noted by this Blog earlier in the month, the SEC rang in the New Year with a whistleblower award of more than $5.5 million to a relator who helped stop an ongoing fraud. With this award, the SEC is reiterating its commitment to encourage whistleblowers to come forward with information about violations of the securities laws.

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