The US Securities and Exchange Commission awarded more than $10 million to a whistleblower who provided critically important information and assistance to an enforcement action involving covered and related actions.
According to the agency’s order, one whistleblower received the regulatory bounty for information and assistance that led the staff to open the investigation into “hard-to-detect violations.” Specifically, he gave useful information at the earliest stages of the investigation and later provided supplemental information.
The tipster provided important documents and met twice with enforcement staff. The charges in the covered action had a close nexus with the whistleblower’s allegations, which were critical to the underlying investigation.
“The whistleblower awarded today provided information that resulted in the return of a significant amount of money to harmed investors. This illustrates how the Whistleblower Program works to benefit, via financial remediation, investors who are victimized by those who violate our securities laws,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower.
Earlier this year, the SEC adopted new rules amending its whistleblower program. The two amendments relate to the rules governing monetary awards made to whistleblowers who report potential wrongdoing or provide assistance in connection with non-SEC actions. It also affirms the SEC’s authority to consider the dollar amount of a potential award for the limited purpose of increasing an award, but not to lower the bounty.
The SEC, which began paying disbursements to tipsters in 2012, said the new rules would add clarity to its decade-old whistleblower program and bring efficiency and transparency to the award determination process.
CFTC issues a record-setting $200 million award
Committed to protecting the anonymity of informants, neither the tipster nor the firm accused of misconduct were identified by the regulatory agency.
Earlier this year, the CFTC announced an award of nearly $200 million to a whistleblower who provided assistance that led to a successful CFTC’s enforcement action, as well as two related actions spanning different countries, one by another unidentified US federal agency and a third action by a foreign regulator.
The insider had provided information that helped these regulators’ probes that led to roughly $3.0 billion in settlements and monetary sanctions. The $200 million is the largest amount ever awarded under the CFTC’s whistleblower program and far surpasses the next-largest award of $100 million made to an individual in July 2021.
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.
