The US Securities and Exchange Commission (SEC) announced two tipster awards totaling approximately $6 million. The bounties were granted for blowing the whistle in two separate disclosures that prompted the agency to initiate investigations and bring enforcement actions.
The SEC said in a statement Tuesday that in the first case, the whistleblower’s information prompted the agency to expand an existing investigation into a new geographic area. Though he wasn’t a first-hand witness, the tipster received $4 million for providing “supplemental information and assistance” that helped the watchdog bring the charges in the underlying enforcement action.
The second tipster, who alerted the SEC to a previously unknown conduct, received $2.4 million. His tips sparked the SEC’s investigation even though the information was provided much later when the regulator’s probe was already underway. He also met with SEC staff, provided documents, and identified potential witnesses, the agency said.
Committed to protecting the anonymity of informants, the SEC doesn’t provide any details of the enforcement case that came out of the whistleblower tip — a policy intended to protect the identity of tipsters.
“With today’s orders, the SEC has made whistleblower awards to 14 individuals in less than a month, reflecting the SEC’s commitment to reward whistleblowers who provide new, critical information that leads to successful enforcement actions,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower.
Under the SEC’s whistleblower program, individuals who voluntarily provide information leading to a successful enforcement action of $1 million or more are entitled to between 10 and 30 percent of the money that the watchdog recovers from those sanctions.
However, the decision-making process takes some time as US regulators have sorted through a flood of requests for awards and tips on potential corporate wrongdoing.
Overall, the SEC has awarded $956 million to 195 individuals since the inception of the program a decade ago.
The US regulators consider several factors in determining the size of whistleblower awards. As long as their internal disclosure prompted a company investigation, they can benefit from all the information discovered in that investigation. However, whistleblowers should also report to the SEC within 120 days of the internal disclosure. Then, the commission uses the date of the internal report in determining whether they provided original information.
