The U.S. Securities and Exchange Commission (SEC) said Monday, Nov. 14, that it awarded a whistleblower more than $20 million for providing “valuable information” to the agency in a case of securities fraud.
The tipster came forward and submitted tips promptly, the SEC said, which allowed authorities to act quickly and make a “near-total recovery” for investors who likely would have suffered much greater financial harm had the scheme continued.
The $2o-million award is the third-largest the SEC has doled out since its Office of the Whistleblower was launched in 2011 after being formed by the Dodd-Frank Act to combat securities fraud. To date, the program has awarded more than $130 million to whistleblowers who voluntarily provided the SEC with original and useful information that led to a successful enforcement action.
In fiscal year 2016 alone, the agency issued awards totaling over $57 million — higher than all award amounts issued in previous years combined.
SEC whistleblower awards range from 10 percent to 30 percent of the total money collected when penalties and other sanctions top $1 million. The awards are pulled from an investor protection fund established by Congress and fed entirely with monetary sanctions paid to the SEC by violators of securities laws.
By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose information that might reveal a whistleblower’s identity. This measure is meant to protect whistleblowers from retaliation and encourage would-be whistleblowers to report securities law violations without fear of retribution.
“Sizeable awards like this one should encourage whistleblowers everywhere that there are real financial incentives to promptly reporting potential securities law violations to the SEC,” Jane Norberg, head of the SEC whistleblower office, said in a statement.