SEC rewards whistleblower with $14M US
Award is largest since whistleblower program began in 2011
The U.S. Securities and Exchange Commission has awarded more than $14 million US to a whistleblower who provided information that led to the recovery of a "substantial" amount of investor funds.
The award is the largest since the whistleblower program was set up in 2011.
"We hope an award like this encourages more individuals with information to come forward," said SEC chair Mary Jo White in a news release issued Tuesday.
The federal regulator, which is forbidden by law to disclose any information that might directly or indirectly reveal a whistleblower’s identity, revealed no details about the whistleblower or the case but said that it was able to act against the perpetrators within six months of receiving the information from the whistleblower.
"While it is certainly gratifying to make this significant award payout, the even better news for investors is that whistleblowers are coming forward to assist us in stopping potential fraud in its tracks so that no future investors are harmed," said Sean McKessy, chief of the SEC's Office of the Whistleblower, in the release.
"That, ultimately, is what the whistleblower program is all about."
Payouts range from 10-30% of money collected
The whistleblower program was established under the Dodd-Frank Act and rewards "high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million."
Awards range from 10 per cent to 30 per cent of the money collected in a case.
The first payment under the program was made in August 2012 to a whistleblower who helped the SEC stop an ongoing mutlimillion-dollar fraud and received 30 per cent, or almost $50,000 US, of the amount collected. In August and September 2013, the agency paid more than $25,000 each to three whistleblowers who helped the SEC and the U.S. Department of Justice halt a sham hedge fund.
The ultimate total payout in that case once all sanctions are collected will likely exceed $125,000, the agency said.
Payments to whistleblowers are made, not from the agency's annual appropriations but from a separate investor protection fund funded by sanctions collected in other SEC cases. They do not affect the amounts paid to harmed investors.
According to the program's 2012 annual report, the whistleblower office received 3,001 tips, complaints and referrals and returned more than 3,050 phone calls from members of the public. The office has been criticized for having only 14 staff to handle the large volume of tips and complaints.