A whistleblower whose internal tips of wrongdoing prompted a company to self-report violations to the Securities and Exchange Commission (SEC) has received a $4.5 million award – the first such award the agency has doled out under a special “provision of the whistleblower rules.”
According to the SEC, the whistleblower anonymously tipped off the company to “significant wrongdoing,” prompting the company to launch an internal investigation of the allegations. The company ultimately reported the results of its own internal review of the allegations to the SEC.
The individual also submitted the same information to the SEC within 120 days of reporting it to the company.
The SEC responded to the company’s self-reported violations by opening its own investigation, which led to an enforcement action.
“This is the first time a claimant is being awarded under this provision of the whistleblower rules, which was designed to incentivize internal reporting by whistleblowers who also report to the SEC within 120 days,” the agency announced.
“In this case, the whistleblower was credited with the results of the company’s internal investigation, which were reported to the SEC by the company and led to the Commission’s resulting enforcement action and the related action,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “The whistleblower gets credit for the company’s internal investigation because the allegations were reported to the Commission within 120 days of the report to the company.”
The $4.5 million award brings the total amount the SEC has awarded whistleblowers to $381 million. The SEC gave its first whistleblower award in 2012 and has awarded 62 individuals for providing tips of securities fraud and violations.
Individuals and other private parties may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million.
All payments are made out of an investor protection fund established by Congress and financed entirely through monetary sanctions paid to the SEC by securities law violators.
The SEC protects the confidentiality of informants and does not disclose information that could reveal a whistleblower’s identity as required by the Dodd-Frank Act.