Whistleblowers who aided the Securities and Exchange Commission (SEC) in laying a “roadmap” for an enforcement action received approximately $6 million in award payments for their help in providing new and useful information to federal examiners, the agency announced.
The acting chief of the SEC’s Office of the Whistleblower, Jonathan Carr, said in a statement the matter demonstrated the impact a whistleblower can have in facilitating an examination into potential wrongdoing.
“Today’s award illustrates that the agency can leverage whistleblower information in various ways, including by prompting an examination,” Carr said. “If that examination ultimately results in an enforcement action, the whistleblower may be eligible for an award.”
The SEC’s Claims Review Staff issued a preliminary determination recommending joint claimants receive a joint whistleblower award on the grounds that the information they provided caused the SEC’s Division of Examinations to open an examination, and their supplemental tips and submissions were helpful in connection with the examination proceedings and ultimate findings.
After these exam findings were referred to the SEC’s enforcement staff, they were able to uncover new evidence of illegal conduct, leading to an enforcement action.
Specific details about the violations and the individuals or entities involved in this matter were redacted in the SEC’s announcement regarding the whistleblower award payments. The Dodd-Frank Act requires the SEC to protect whistleblowers’ confidentiality and not to disclose any information that could reveal a whistleblower’s identity.
The SEC maintains an investor protection fund that is used, among other things, to provide payments to whistleblowers. The fund is established by Congress and financed entirely through monetary sanctions paid to the SEC by securities law violators.
Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.