The U.S. Securities and Exchange Commission agreed to pay $4.5 million to a whistleblower who provided high-quality information that helped the agency in stopping illegal practices at an unidentified company.
The US top regulator didn’t name the company involved or the people getting the awards, citing federal law that protects confidentiality.
The SEC explains that the tipster was eligible for its bounty after he provided unique information about significant wrongdoing at his company. He reported the same findings to his management, which opened internal probes into the alleged misconduct and then reported the results to the SEC and another regulator.
As long as the whistleblower’s internal disclosure prompted a company investigation, he can benefit from all the information discovered in that investigation. However, he should also report to the SEC within 120 days of the internal disclosure, then the SEC uses the date of the internal report in determining whether he provided original information.
Whistleblowers receive between 10% and 30% of penalties
The decision-making process, however, takes some time as the agency has sorted through a flood of requests for awards and tips on potential corporate wrongdoing.
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Today’s announcement brings the whistleblower program’s total endowment to over $381 million since issuing its first award in 2012. This whistleblower is the 62nd individual to receive an award through the program, and one of a few whistleblowers to receive a reported award greater than $4 million.
The SEC’s biggest whistleblower award was $50 million, shared by two former Merrill Lynch employees in March 2018. A third former Merrill Lynch employee was awarded $33 million in the same case.
Whistleblowers are entitled under law to between 10% and 30% of the monetary penalties paid by companies in cases where their information led to a successful enforcement action of $1 million or more.
Commenting on the news, Jane Norberg, Chief of the SEC’s Office of the Whistleblower, said: “In this case, the whistleblower was credited with the results of the company’s internal investigation, which were reported to the SEC by the company and led to the Commission’s resulting enforcement action and the related action. The whistleblower gets credit for the company’s internal investigation because the allegations were reported to the Commission within 120 days of the report to the company.”