On October 1, 2013, the Securities and Exchange Commission announced an award of more than $14 million to a whistleblower whose information led to an SEC enforcement action that recovered substantial investor funds. The award is the largest made by the SEC’s whistleblower program to date.
The whistleblower, who does not wish to be identified, provided original information and assistance that allowed the SEC to investigate an enforcement matter more quickly than otherwise would have been possible. Less than six months after receiving the whistleblower’s tip, the SEC was able to bring an enforcement action against the perpetrators and secure investor funds.
“While it is certainly gratifying to make this significant award payout, the even better news for investors is that whistleblowers are coming forward to assist us in stopping potential fraud in its tracks so that no future investors are harmed,” said Sean McKessy, chief of the SEC’s Office of the Whistleblower. “That ultimately is what the whistleblower program is all about.”
Stephen Kohn, Executive Director of the National Whistleblower Center stated: “This is a good first step. The SEC investigated the claim quickly and paid the reward in a timely fashion. However, the SEC must act on the hundreds of outstanding claims, broadly interpret the statute in the manner intended by Congress and award claims to whistleblowers from the numerous backlogged cases.”
By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose any information that might directly or indirectly reveal a whistleblower’s identity. The SEC is also required to pay whistleblowers a reward ranging from 10-30% from all monies received in fines, penalties and disgorgements based on the information provided by the whistleblower.