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The Sec Awards Nearly $1 Million To A Whistleblower: The Second In Less Than A Week

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  • Posted on: Dec 15 2016

Over the year, this Blog has written about awards given to whistleblowers under the SEC and CFTC whistleblower programs – the anti-fraud/anti-corruption programs created under the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”). See here, here, here, here, and here.

As this Blog previously reported, on December 5, 2016, the SEC announced that it had awarded $3.5 million to a whistleblower who came forward with information that led to a successful SEC enforcement action.  Just four days later, on December 9, the SEC once again announced that it had awarded money under its bounty program – nearly $1 million – to a whistleblower “whose tip enabled the SEC to bring multiple enforcement actions against wrongdoers.”

The whistleblower is the 37th relator to receive an award under the SEC whistleblower program. In total, since 2011, the SEC has paid approximately $136 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 $874 million from enforcement actions resulting from whistleblower tips.

The SEC declined to identify the whistleblower 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: “With the issuance of this second award in less than one week, we hope to continue to encourage individuals to submit high-quality tips that we can leverage to enforce the law and protect investors, and they can receive significant financial rewards for their valuable contributions to a case.”

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 the SEC continues to use its bounty program to provide financial rewards to whistleblowers, more and more whistleblowers have come forward with information that has led to successful enforcement proceedings.  As Jane Norberg’s comments indicate, the bounty provisions of the whistleblower program have played an important role in the SEC’s efforts to encourage people with information about violations of the securities laws to come forward and report them to the Commission. This Blog hopes that whistleblowers will continue to come forward, especially since the program is under the microscope of the new administration (discussed by this Blog here).

 

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