A whistleblower whose significant information prompted the Securities and Exchange Commission (SEC) to initiate a cause examination and bring an enforcement action that resulted in the return of millions of dollars to harmed investors has been rewarded.
The SEC said the whistleblower in the case will receive more than $1.25 million, part of more than $500 million in awards since 2012.
“The whistleblower’s expeditious reporting alerted the agency to previously unknown securities violations,” said Jane Norberg, chief of the SEC’s Office of the Whistleblower, in a press release announcing the award. “This whistleblower’s vigilance and prompt reporting helped the agency move quickly to protect investors, resulting in the return of millions of dollars to harmed investors.”
However, a redacted SEC file about the award shows the possibility that the whistleblower could have received even more money.
The document states that the Claims Review Staff at the SEC issued a preliminary determination, recommending the whistleblower receive an award amount, which was redacted in the file.
The SEC, however, rejected the determination.
“After considering the administrative record, we choose to depart from the preliminary determination’s recommendation and award claimant (redacted) of the monetary sanctions collected or to be collected in the covered action, for a payout of over $1.25 million,” the document stated.
Left unsaid because of the redactions is whether the original award was more or less than what the SEC agreed to in its final determination. In addition, another whistleblower applied for an award in the same action but was denied.
The SEC has awarded more than $507 million to 90 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards.
Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.
As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.