The U.S. Securities and Exchange Commission (SEC) recently announced that it will award around $5 million to $6 million to a former company insider whose detailed tip led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower’s information.
This current award is the SEC’s third highest to a whistleblower. In September 2014, the agency announced an award of more than $30 million for a whistleblower , exceeding the prior high of more than $14 million announced in October 2013.
Since the inception of the whistleblower program in 2011, the SEC has awarded more than $67 million to 29 whistleblowers, including one for more than $3.5 million announced last week.
By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.
These awards from the SEC can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million. All 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. It is worth noting that no money has been taken or withheld from harmed investors to pay whistleblower awards.
Andrew Ceresney, Director of the SEC’s Division of Enforcement, commented:
Employees are often best positioned to witness wrongdoing. 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.
Sean X. McKessy, Chief of the SEC’s Office of the Whistleblower, added:
The whistleblower program has seen tremendous growth since its inception and we anticipate the continued issuance of significant whistleblower awards in the months and years to come.
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