SEC Issues $22M Whistleblower Award

The U.S. Securities and Exchange Commission has awarded over $22M to a whistleblower who helped the regulator stop a fraud at the company where this individual worked. This is the second largest SEC whistleblower award to date.

This latest award means that the regulator has now issued over $100M in whistleblower awards since 2012. The SEC whistleblower program is designed to give whistleblowers incentive to come forward with unique information about federal securities law violations.

The tips provided by these individuals have led to over $500M in financial remedies, including more than $346M in disgorgement plus interest for investors who sustained losses because of the violations. The whistleblowers whose tips have led to monetary sanctions of over $1M have been granted 10-30% of the money collected from sanctions imposed.

According to the SEC’s website, of the over 14,000 tips that have been sent to its Whistleblower Office, 33 whistleblowers have been awarded over $107M. The largest award was for over $30M. The money comes out of an investor protection fund that is paid for through monetary sanctions that the SEC receives for violations of securities laws.

The SEC has taken steps to make sure that employees can report their tips of alleged violations without having to worry about compensation from employers. There is the Dodd-Frank Act, with its anti-retaliation provisions. Actions have been brought against companies that have included language in their severance and confidentiality agreements barring employees and former employees from becoming whistleblowers. One whistleblower, who was retaliated against for providing information to the SEC, received the maximum 30% of sanctions that were collected for the wrongdoing.

To protect whistleblowers, the Commission does not reveal information that could make their identities known.

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