Two Analysts and Three Compliance Officers Receive $2.6M under SEC Whistleblower Program

The US Securities and Exchange Commission agreed to pay $2.6 million to five anonymous whistleblowers who provided high-quality analysis that helped the agency staff spot new illegal practices.

The SEC said in a statement Friday that in the first case, the whistleblower’s independent analysis prompted the agency to open investigation that led to settlement negotiations of an enforcement action. Though he wasn’t a first-hand witness, the tipster received $1.2 million for providing valuable information based upon a complex algorithm he developed and applied to publicly available data.

In the second order, the SEC awarded over $1 million to three compliance officers whose information and assistance helped the regulator devise an investigative plan in early stages, preserving the watchdog time and resources.

Despite their executive roles, the tipsters remained eligible for the SEC’s bounty because they alerted the commission more than 120 days after the alleged conduct had been reported internally. The first claimant received the highest award as his tips provided “extraordinary assistance and comprehensive information” even though it came much later when the regulator’s probe was already underway

The latest award went to a whistleblower who examined publicly available materials and then alerted the watchdog to the violations that were ultimately charged. He received more than $350,000 for identifying patterns that allowed the commission to quickly prevent wrongdoing and to preserve assets.

The US top regulator did not name the companies involved or the people getting the awards, citing federal law that protects confidentiality.

“Today’s awards demonstrate the Commission’s commitment to reward whistleblowers who provide valuable information, developed either from a whistleblower’s independent knowledge or the whistleblower’s independent analysis, which substantially contributes to a successful enforcement action,” said Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower.

Under the SEC’s whistleblower program, qualified whistleblowers 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 $959 million to 203 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.