The U.S. Securities and Exchange Commission (SEC) SEC recently granted whistleblower award an informant an award exceeding $18 million. This individual’s crucial insights and collaboration were pivotal in the successful execution of an SEC enforcement action. After initially identifying and reporting the malpractice within their organization, the informant approached the SEC with this information. This led the Commission to initiate a formal investigation.
Throughout this process, the informant consistently offered valuable data and significant support, enabling the SEC to utilize its resources and expedite the investigation efficiently. Creola Kelly, who heads the SEC’s Office of the Whistleblower, emphasized whistleblowers’ indispensable role in helping the agency identify and penalize those violating securities laws. She commended the informant’s integrity, noting their determination in reporting the malfeasance both internally and to the SEC.
The funds used to compensate whistleblowers come from a special investor protection fund created by U.S. Congress. The fund is solely financed by the fines imposed on those who breach securities laws. Importantly, no funds are diverted or deducted from the compensation provided to aggrieved investors for these whistleblower rewards. If an individual voluntarily offers the SEC unique, prompt, and trustworthy information that results in a successful legal action, they may qualify for a reward. Such rewards typically constitute 10 to 30 percent of the fines collected, provided these fines surpass $1 million. In line with the provisions of the Dodd-Frank Act, the SEC ensures the anonymity of whistleblowers, refraining from releasing any details that might expose their identity.
