The US Securities and Exchange Commission (SEC) has announced its largest-ever award through its whistleblower program, giving $279m to an unnamed informant who provided information and assistance leading to a successful enforcement action. The agency did not provide details about the case involved. The payout is more than double the previous record of $114m, awarded in October 2020. The whistleblower program was designed to encourage witnesses to disclose potential securities law violations.
The SEC believes that the program benefits investors directly, as whistleblowers have helped recover over $4bn in ill-gotten gains and interest. The regulator reported a record amount of civil penalties in fiscal year 2022, totalling more than $4.1bn across 760 enforcement actions. The identity of whistleblowers is protected under the Dodd-Frank Act of 2010, and payments are withdrawn from an investor protection fund established by Congress.
Director of the SEC’s Division of Enforcement, Gurbir S. Grewal, said the payment reflected the program’s “tremendous success”, adding that it was intended to incentivise witnesses to disclose potential violations. Creola Kelly, chief of the SEC’s Office of the Whistleblower, said the recipient had provided “sustained assistance”, including “multiple interviews and written submissions”, that was critical to the success of the enforcement action.
Recent Enforcement Actions
In fiscal year 2022, Allianz Global Investors and three of its portfolio managers agreed to pay over $1bn to resolve charges of defrauding investors. Sixteen Wall Street firms, including Credit Suisse and Goldman Sachs, settled for more than $1.1bn for widespread record-keeping and communications failures. The SEC did not offer details about the case that led to the latest award, nor the whistleblower involved.
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