A whistleblower who turned to the Securities and Exchange Commission (SEC) after his concerns of fraud fell on deaf ears within his company has received a $400,000 reward, the agency announced.
The SEC said in an announcement that the whistleblower provided credible tips and other information that helped the agency to complete an investigation faster than it would have been able to do without the help. Another government agency had already initiated an investigation of fraud and misconduct within the company when the whistleblower approached the SEC, a circumstance that would normally preclude a whistleblower case from being accepted by the agency.
According to the agency, the whistleblower tried on multiple occasions and through several means to have company officials address his concern of fraud internally.
“The whistleblower did everything feasible to correct the issue internally,” said Sean McKessy, head of the SEC’s Office of the Whistleblower. “When it became apparent that the company would not address the issue, the whistleblower came to the SEC in a final effort to correct the fraud and prevent investors from being harmed.”
The SEC’s Office of the Whistleblower was established under the Dodd-Frank Act, which Congress enacted in August 2011 to remedy some of the widespread and rampant financial fraud that crashed the economy in 2007-2008.
The SEC gave its very first whistleblower award on June 13, 2014 — $875,000 to be split evenly between two individuals who provided information to the SEC that led to an enforcement action.
The SEC’s whistleblower program has gained momentum in the past couple of years. The agency reported 3,238 whistleblower tips in the last fiscal year, most of which came from relators in the U.S., Great Britain, and Canada in that order. People of any nationality are eligible for whistleblower rewards from the SEC.
Whistleblowers whose information leads to a successful recovery receive between 10 and 30 percent as their share.