The U.S. Securities and Exchange Commission (SEC) announced it has awarded than $3.5 million to a company employee whose whistleblower tips bolstered an ongoing investigation with additional evidence of misconduct that strengthened the SEC’s case.
The SEC noted in its announcement that whistleblowers are encouraged to come forward and report allegations of potential securities laws violations even if they think the SEC may already be looking into it.
“Whistleblowers can receive an award not only when their tip initiates an investigation, but also when they provide new information or documentation that advances an existing inquiry,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “This particular whistleblower’s tip substantially strengthened our ongoing case and increased our leverage during settlement negotiations with the company.”
By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.
Including this latest award, the SEC’s whistleblower program has paid more than $62 million to 28 whistleblowers since the program began in 2011. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with tips that lead to a successful enforcement action.
Like False Claims Act awards, whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.
All whistleblower payments are made out of 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 investors to pay whistleblower awards.