The Securities and Exchange Commission has issued an approximately $279 million reward to a whistleblower, making it the largest-ever reward in the history of the SEC whistleblower program. The awarded whistleblower gave out information and assistance that led to the successful enforcement of SEC on securities violations and related actions.
SEC’s Whistleblower program is the SEC’s way of incentivizing individuals who come forward with accurate information about potential securities law violators and their actions. The recent reward tops the $114 million issued by SEC in October 2020.
Director of the SEC’s Division of Enforcement, Gurbir S. Grewal expressed that the reward also reflects the tremendous success of the whistleblower program, which directly benefits investors. He disclosed that there have been cases where bad actors disgorge more than $4 billion in gain and interest gotten wrongly.
The commission’s investigation was already ongoing, while the whistleblower assisted through multiple interviews and written submissions, which helped in expanding the scope of the misconduct charged, Creola Kelly, Chief of the SEC’s Office of the Whistleblower said.
How are whistleblowers paid?
According to the SEC, whistleblowers are paid out of an investor protection fund, financed through monetary sanctions remunerated to the SEC by securities law violators. The process was established by Congress.
Moreso, SEC clarified that no funds see been taken from victimized investors for whistleblower incentive purposes. “No money has been taken or withheld from harmed investors to pay whistleblower awards.”
Specifically, SEC mentioned that “whistleblower awards can range from 10 to 30 percent of the money collected when the monetary sanctions exceed $1 million.”
To be eligible for an award as a Whistleblower, the individual is to voluntarily provide the SEC with “original, timely, and credible information” that would assist a successful enforcement action. Additionally, adhering to the filing requirements in the whistleblower rules is a critical consideration.
Whistleblowers remain confidential and their identity cannot be revealed as contained in the Dodd-Frank Act which mandates the SEC’s protection of the whistleblowers.
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