The Securities and Exchange Commission (SEC) announced last Friday, that a whistleblower award of more than $300,000 was awarded to a company employee who performed audit and compliance functions and reported wrongdoing to the SEC after his company failed to take action after he had reported it internally. It’s the first award for a whistleblower with an audit or compliance function at a company.
“Individuals who perform internal audit, compliance, and legal functions for companies are on the front lines in the battle against fraud and corruption. They often are privy to the very kinds of specific, timely, and credible information that can prevent an imminent fraud or stop an ongoing one,” said Sean McKessy, Chief of the SEC’s Office of the Whistleblower. “These individuals may be eligible for an SEC whistleblower award if their companies fail to take appropriate, timely action on information they first reported internally.”
How the FX Industry Can Benefit from Outsourced ITGo to article >>
Only last month Forex Magnates reported that the SEC sees financial awards to whistleblowers as an important asset in its arsenal. We made the assessment after the UK’s Financial Conduct Authority (FCA), the British counterpart to the SEC, issued a report on its sensitive whistleblower incentives program.. Its findings stated that payments or incentives to encourage the practice, have no real value or benefit. The SEC proved once again with this award that it has no qualms in paying for tips on offenders.
This particular whistleblower award recipient, the SEC said, reported concerns of wrongdoing to appropriate personnel within the company, including a supervisor. But when the company took no action on the information within 120 days, the whistleblower reported the same information to the SEC. The information provided by the whistleblower led directly to an SEC enforcement action.
The SEC’s whistleblower program rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million. Whistleblower awards can range from 10% to 30% of the money collected in a case. By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose any information that might directly or indirectly reveal a whistleblower’s identity.