The U.S. Securities and Exchange Commission (SEC) announced it will award between $5 million and $6 million to a former company insider whose detailed tips led agency investigators to uncover securities violations that “would have been nearly impossible for it to detect but for the whistleblower’s information.”
The award, last week, was the third largest the agency has paid to a whistleblower. In September 2014, the agency paid more than $30 million to a whistleblower who provided inside information about an ongoing fraud that would have been difficult for outside regulators to detect. That award exceeded the previous highest award of more than $14 million, which the SEC announced in October 2013.
The whistleblower award was the second one the agency reported this month. On May 13, the SEC said it paid more 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 agency said that the case demonstrated how whistleblowers should come forward and report allegations of potential securities laws violations even if they think the SEC may already be looking into them.
“Employees are often best positioned to witness wrongdoing,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “When they report specific and credible tips to us, we will leverage that inside knowledge to advance our enforcement of the securities laws and better protect investors and the marketplace.”
By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might reveal a whistleblower’s identity.
Under the SEC’s whistleblower program, whistleblower awards can range from 10 percent to 30 percent of the total money collected when the sanctions exceed $1 million. All payments are made out of an investor protection fund established by Congress and financed through penalties paid to the SEC by securities law violators. No money has been taken or withheld from investors harmed by the fraud to pay whistleblower awards.
Since the inception of the whistleblower program in 2011, the SEC has awarded more than $67 million.