SEC Awards Whistleblower $10 Million After Returning Money to Harmed Investors

On October 31, the U.S. Securities and Exchange Commission (SEC) issued a $10 million whistleblower award to an individual who voluntarily provided the agency with original information and additional assistance that significantly contributed to an enforcement action.

According to the award order, the whistleblower’s information “was of great significance to the investigation” and the whistleblower “provided substantial assistance by providing important documents and meeting twice with Enforcement staff.”

The SEC further notes that there was high law enforcement interest in the case, as it allowed the agency to return “a significant amount of money to harmed investors.”

The SEC Whistleblower Program offers monetary awards and anti-retaliation protections to individuals who voluntarily provide original information about potential securities law violations.

“The whistleblower awarded today provided information that resulted in the return of a significant amount of money to harmed investors,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower. “This illustrates how the Whistleblower Program works to benefit, via financial remediation, investors who are victimized by those who violate our securities laws.”

All SEC whistleblower awards are paid out of an investor protection fund which is fully financed by sanctions collected thanks to whistleblowers. No taxpayer dollars are used to pay whistleblowers. Qualified SEC whistleblowers are entitled to awards of 10-30% of the funds collected by the government in the relevant enforcement action. Thus, 70-90% of all sanctions collected thanks to a whistleblower are returned to harmed investors, the U.S. Treasury, and the SEC Investor Protection Fund.

In August, SEC Chair Gary Gensler praised the SEC Whistleblower Program, noting that it “has greatly aided the Commission’s work to protect investors.” He explained that “[i]n the years since the program was established, the SEC has used whistleblower information to obtain sanctions of over $5 billion from securities law violators, return over $1.3 billion to harmed investors, and award over $1.3 billion to whistleblowers for their service.”

Geoff Schweller also contributed to this article.

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National Law Review, Volumess XII, Number 304