SEC pays whistleblower $37 million to assist in enforcement action
The Securities and Exchange Commission (SEC) has awarded a whistleblower $37 million for providing information that played a key role in a successful enforcement action. The whistleblower provided unique information previously unknown to the SEC, significantly assisting its investigation.
According to the regulator, the unidentified individual saved the SEC valuable resources and time by meeting with enforcement officials and identifying potential witnesses and documents. This contribution was important to the enforcement action and ultimately returned millions to affected investors.
Commenting on the award, Creola Kelly, Director of the SEC’s Whistleblower Office, said: “Today’s award underscores the importance of the SEC’s whistleblower program, as the whistleblower’s information helped the agency recover millions of dollars to injured investors.”
The whistleblower payments reportedly come from an investor protection fund created by Congress that is funded entirely by fines collected from securities law violators. To be eligible for a reward, whistleblowers must voluntarily provide original, timely and credible information that leads to a successful enforcement action.
The amount of compensation can range from 10% to 30% of the amount collected if the fines exceed $1 million. Under the Dodd-Frank Act, the SEC maintains the confidentiality of whistleblowers and ensures that their identities remain protected. This confidentiality is critical to encourage more people to report potential securities law violations without fear of retaliation.
Previous SEC Enforcement Actions
Earlier this year, the SEC took action against 16 broker-dealers and financial advisers, including major firms such as Guggenheim and Oppenheimer. The regulator accused the firms of failing to maintain their electronic communications, an offense that resulted in civil penalties totaling more than $81 million.
The regulator’s investigations found that all 16 companies used unauthorized methods of communication, known as off-channel communications, including personal text messages discussing business matters and off-channel communications containing investment recommendations and advice.
Meanwhile, the SEC has introduced regulations to improve investor protection in special purpose Acquisition Companies and their business combinations. Such transactions have gained significant traction as an alternative method for private companies to go public. Due to the challenges associated with these transactions, the SEC has called for the introduction of rules similar to those for traditional IPOs.
The Securities and Exchange Commission (SEC) has awarded a whistleblower $37 million for providing information that played a key role in a successful enforcement action. The whistleblower provided unique information previously unknown to the SEC, significantly assisting its investigation.
According to the regulator, the unidentified individual saved the SEC valuable resources and time by meeting with enforcement officials and identifying potential witnesses and documents. This contribution was important to the enforcement action and ultimately returned millions to affected investors.
Commenting on the award, Creola Kelly, Director of the SEC’s Whistleblower Office, said: “Today’s award underscores the importance of the SEC’s whistleblower program, as the whistleblower’s information helped the agency recover millions of dollars to injured investors.”
The whistleblower payments reportedly come from an investor protection fund created by Congress that is funded entirely by fines collected from securities law violators. To be eligible for a reward, whistleblowers must voluntarily provide original, timely and credible information that leads to a successful enforcement action.
The amount of compensation can range from 10% to 30% of the amount collected if the fines exceed $1 million. Under the Dodd-Frank Act, the SEC maintains the confidentiality of whistleblowers and ensures that their identities remain protected. This confidentiality is critical to encourage more people to report potential securities law violations without fear of retaliation.
Previous SEC Enforcement Actions
Earlier this year, the SEC took action against 16 broker-dealers and financial advisers, including major firms such as Guggenheim and Oppenheimer. The regulator accused the firms of failing to maintain their electronic communications, an offense that resulted in civil penalties totaling more than $81 million.
The regulator’s investigations found that all 16 companies used unauthorized methods of communication, known as off-channel communications, including personal text messages discussing business matters and off-channel communications containing investment recommendations and advice.
Meanwhile, the SEC has introduced regulations to improve investor protection in special purpose Acquisition Companies and their business combinations. Such transactions have gained significant traction as an alternative method for private companies to go public. Due to the challenges associated with these transactions, the SEC has called for the introduction of rules similar to those for traditional IPOs.
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