SEC Awards Whistle-Blower Over $700,000

The U.S. Securities and Exchange Commission (SEC) announced a whistle-blower award of over $700,000 to a company outsider who conducted a detailed analysis that led to a successful SEC enforcement action. Although this is not as big a prize as the Powerball lottery, this is still a substantial award.

By law, the SEC protects the confidentiality of whistle-blowers and does not disclose information that might directly or indirectly reveal a whistle-blower’s identity.

Since the SEC whistle-blower program inception in 2011, over $55 million has been paid to 23 whistle-blowers.

Whistle-blowers who voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action may be eligible for an award.

These awards 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 entirely through monetary sanctions paid to the SEC by securities law violators. No money is taken or withheld from harmed investors to pay whistle-blower awards.
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Andrew Ceresney, director of the SEC’s Enforcement Division, commented:

The voluntary submission of high-quality analysis by industry experts can be every bit as valuable as first-hand knowledge of wrongdoing by company insiders. … We will continue to leverage all forms of information and analysis we receive from whistleblowers to help better detect and prosecute federal securities law violations.

Sean X. McKessy, chief of the SEC’s Office of the Whistleblower, added:

This award demonstrates the Commission’s commitment to awarding those who voluntarily provide independent analysis as well as independent knowledge of securities law violations to the agency. We welcome analytical information from those with in-depth market knowledge and experience that may provide the springboard for an investigation.

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