The Securities and Exchange Commission has announced that it will pay nearly $279 million to a whistleblower who provided information leading to a successful enforcement action. This is the largest award in the history of the SEC’s whistleblower program, which was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. In this article, we will examine the significance of this award, the criteria for eligibility, and the impact of whistleblowers on securities law enforcement.
The Significance of the Award
The program was created to incentivize individuals with knowledge of law violations to come forward and report them to the agency. The program has been highly successful since its inception, with over $4 billion in ill-gotten gains and interest disgorged from violators as a result of whistleblower tips. This has led to a significant increase in the number and quality of enforcement actions brought by the SEC.
The $279 million award represents the largest sum ever paid to a whistleblower by the Commission. This signals the agency’s commitment to the program and its recognition of the critical role that whistleblowers play in uncovering and prosecuting fraud. The award also sends a message to potential whistleblowers that they can receive substantial financial compensation for providing credible and timely information to the Commission.
Eligibility Criteria for Whistleblowers
The whistleblower program offers financial rewards to individuals who provide original, credible, and timely information to the agency about violations of federal securities laws. To be eligible for an award, the whistleblower must submit information voluntarily, and it must lead to a successful enforcement action resulting in monetary sanctions exceeding $1 million. The whistleblower must also adhere to the filing requirements set forth in the whistleblower rules.
Whistleblowers may be eligible for an award of between 10 and 30 percent of the monetary sanctions collected in a successful enforcement action. The amount of the award is determined by several factors, including the significance of the information provided by the whistleblower, the assistance provided by the whistleblower to the Commission, and the degree of hardship suffered by the whistleblower as a result of providing the information.
Impact of Whistleblowers on Securities Law Enforcement
Whistleblowers have had a significant impact on law enforcement since the creation of the program. By providing insider information about securities fraud and other violations, whistleblowers have enabled the agency to identify and prosecute a wide range of fraudulent activities.
Whistleblowers have played a key role in many high-profile cases, including those involving Ponzi schemes, insider trading, and accounting fraud. In some cases, whistleblowers have provided information that has led to the recovery of millions of dollars in ill-gotten gains and other damages.
In addition to their contribution to securities law enforcement, whistleblowers also benefit from the whistleblower program. The program provides a mechanism for whistleblowers to report violations of laws without fear of retaliation. The Securities and Exchange Commission protects the confidentiality of whistleblowers and does not disclose any information that could reveal a whistleblower’s identity. This allows whistleblowers to come forward with information about wrongdoing without fear of losing their jobs or suffering other forms of retribution.
Conclusion
The SEC’s announcement of the largest-ever whistleblower award is a significant milestone in the history of the agency’s whistleblower program. The award highlights the important role that whistleblowers play in uncovering and prosecuting securities fraud, and it sends a message to potential whistleblowers that they can receive substantial financial compensation for providing credible and timely information to the Commision.
Source: https://www.cryptopolitan.com/sec-announces-largest-whistleblower-award/