The US Securities and Exchange Commission (SEC) has awarded a record-breaking $279m to an unnamed whistleblower who provided original information that led to a successful enforcement action. This marks the largest award in the history of the SEC’s whistleblower programme, nearly tripling the previous largest award of $114m issued in 2020.
Whistleblower awards are granted to individuals who provide unique and useful information about violations of US federal securities laws, which enable the SEC to bring a successful enforcement action. The whistleblower in this case has provided information about SEC and related actions. The award comes from an investor protection fund established by Congress, which is entirely financed through sanctions obtained by the SEC from securities law violators. No money has been taken from affected investors to pay whistleblower awards.
The SEC’s whistleblower programme was created in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and since 2012, the programme has awarded $417m to whistleblowers. The award system is designed to incentivize prospective whistleblowers to step forward and report any information that could help the SEC to take action against securities law violators.
Jane Norberg, the chief of the SEC’s Office of the Whistleblower, emphasised the importance of this award in recognising the whistleblower’s relentless efforts to expose serious financial wrongdoing. This highlights the vital role of whistleblowers in maintaining the integrity of the US financial markets.
However, as the SEC noted in their statement, ten other claimants were denied because their information did not significantly contribute to the success of the covered action. Prospective whistleblowers are advised to seek the assistance of an experienced whistleblower attorney to understand their responsibilities to the program.
Earlier this month, the US Commodity Futures Trading Commission (CFTC) also awarded its largest-ever whistleblower payment of $30m, signifying the significance of the role of whistleblowers in the financial industry. The awards granted by both agencies demonstrate how whistleblower programmes are crucial in promoting transparency and accountability, while incentivizing legitimate concerns to be voiced and addressed.
In conclusion, this award of $279m is a significant milestone for the SEC’s whistleblower programme, highlighting the essential role of whistleblowers in exposing financial wrongdoing and maintaining the integrity of the financial markets. Urging potential whistleblowers to come forward, with this programme in place, officers of the financial industry can be held accountable for their actions, and the SEC can ensure that the US financial markets operate with a high degree of transparency and integrity.
