The Securities and Exchange Commission is awarding over $325K to an ex-investment firm employee who notified the regulator about misconduct that had been going on at his former employer. The information he provided allowed the SEC’s enforcement staff to investigate and discover the extent of the fraud.
In addition to providing specific details about the misconduct, the whistleblower identified who was involved in the fraud. However, said the Commission, if the whistleblower had come forward with the information sooner rather than waiting until after departing the investment firm, the award for exposing the fraud may have been greater.
In a statement, SEC Enforcement Division Director Andrew Ceresney spoke about how it is important for corporate insiders who are aware that there have been securities law violations to report what they know right away so that the misconduct can be stopped and investors are protected from any or further harm. He noted that the Dodd-Frank Act provides whistleblowers with substantial protections and incentives for tipping the agency about suspected wrongdoing.
Since 2011, when the SEC whistleblower program was established, 22 whistleblowers who gave the agency useful and original information that helped lead to enforcement actions have collectively received over $54 million in awards. Successful tips that lead to monetary sanctions greater than $1 million can render the whistleblower who provided the information eligible to receive 10-30% of the funds collected. The awards come from an investor protection fund set up by Congress. The money for that fund comes from monetary sanctions that violators of securities laws pay to the SEC. No funds that should go to investors are used to pay any whistleblower awards.
Whistleblowers can submit their tips online through the SEC’s Tip Complaint or Referrals Portal or by faxing or mailing this form to the SEC Office of the Whistleblower in Washington DC. You can get more information through the SEC’s Office of the Whistleblower web page.
Read the SEC Order (PDF)