For tipping off and aiding the regulator with high-quality information that led to successful enforcement actions, the United States Securities and Exchange Commission has awarded more than $1.1 million to five whistleblowers.
For alerting the SEC to ‘hard-to-detect’ breaches with vital knowledge and supporting evidence, three whistleblowers were awarded $500,000 in connection with two related enforcement actions. The first whistleblower provided information that prompted the opening of an investigation, while the second and third tipsters were paid for assistance in an ongoing investigation.
Another $600,000 was separately distributed to a whistleblower for tipping it off and giving continuing assistance during the SEC investigation. Additionally, the tipster repeatedly reported the concerns internally in an effort to remedy the violations.
The individual, unidentified in accordance with SEC policy, provided ‘significant’ assistance including meeting with investigative staff in-person, providing critical documents evidencing possible wrongdoing, and identifying witnesses.
In the third order, the SEC awarded more than $100,000 to a whistleblower who provided an independent analysis of publicly available material which led the agency to look at new conduct during an investigation.
In this particular case, the tipster examined publicly available materials and then alerted the watchdog to refocus an ongoing investigation on the violations that were ultimately charged. The SEC praised the whistleblower, who continuously provided the agency with new insights into the securities law violations, which helped the watchdog protect investors’ assets.
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In addition to the tip, the whistleblower’s information and assistance helped the regulator devise an investigative plan in early stages, preserving the watchdog time and resources, it said.
“Among other things, the whistleblower conducted an analysis using information from publicly available documents to calculate an estimate of an important metric for a company and then showed that the company’s disclosures regarding that metric were implausible. This is the fifth individual in FY21 who received an award based on independent analysis,” the SEC said.
The US top regulator did not name the companies involved or the people getting the awards, citing federal law that protects confidentiality.
Today’s announcement brings the whistleblower program’s total endowment to over $737 million since issuing its first award in 2012.
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.