A tipster is getting a cool $50 million from the Securities and Exchange Commission for blowing the whistle on a misconduct that resulted in “a successful enforcement action” and returned “a significant amount of money” to harmed investors, the regulator said today.
The Sec made the award public on Thursday without naming whistleblower or the entity involved in its probes.
The reward is the largest ever awarded by a federal regulator and the sum easily surpasses the previous record of $39 million set back in 2018.
The whistleblower alerted the US top watchdog about misconduct, then provided investigative leads and significant information that that resulted in an important enforcement action, according to the agency’s news release.
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In explaining the reason for its award determination, Jane Norberg, Chief of the SEC’s Office of the Whistleblower, noted that “This award marks several milestones for the whistleblower program. This award is the largest individual whistleblower award announced by the SEC since the inception of the program, and brings the total awarded to whistleblowers by the SEC to over $500 million, including over $100 million in this fiscal year alone. Whistleblowers have proven to be a critical tool in the enforcement arsenal to combat fraud and protect investors.”
In 2018, the Commodity Futures Trading Commission, which runs a similar program, has awarded its biggest sum yet, or about $30 million, to a whistleblower for information that was reportedly taken against JP Morgan Chase. In the same case, two whistle-blowers shared a record $61 million award from the SEC for helping make the case that revolved around steering the bank’s wealthy clients into investments that would be most profitable for Chase.
As long as a whistleblower’s internal disclosure prompted a company investigation, they can benefit from all the information discovered in that investigation. However, they 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 the whistleblower provided original information.
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.
The power for US regulators to issue rewards was established as part of the Dodd-Frank financial reform law that was set in 2010 for encouraging workers to speak up about wrongdoing.