A whistleblower who helped the U.S. Securities and Exchange Commission fight fraud has won $825,000 in proceeds as a reward for their assistance.
The agency disclosed on October 11, 2022, that an individual received an undisclosed recovery percentage in a legal case brought over securities fraud. The SEC did not disclose the person’s name or any identifying details. Under the SEC’s Whistleblower Program, people who come forward with information that helps the agency secure a settlement or judgment can be eligible for between 10 percent to 30 percent of monetary penalties totaling more than $1 million.
Based on those guidelines, the unnamed individual must have assisted the agency with a case bringing in as much as $2.75 million to $8.25 million. The SEC’s whistleblower program was created in 2010 under the Dodd-Frank Act, which was passed in the wake of the 2008 financial crisis. Whistleblowers play a vital role in exposing financial fraud and bringing wrongdoers to justice.
Since it was established, the program has allowed over 280 individual whistleblowers to secure more than $1.3 billion in awards. Their assistance has allowed the SEC to win more than $6.3 billion worth of sanctions and penalties from wrongdoers, and return over $1.5 billion to aggrieved investors.
Unlike some other government whistleblower programs, the SEC’s program can allow whistleblowers to remain anonymous and still be awarded proceeds of monetary penalties collected. The agency’s lack of disclosure of the recent award recipient’s name or other details signifies that it is honoring its promise to protect their identity.
The SEC stated that the individual stepped forward voluntarily, and “expeditiously provided detailed information that prompted the opening of an investigation.” The individual also met with commission staff in person and provided further follow-up details.
Financial fraud is often difficult for regulators to detect, at least before significant harm is done and many investors have lost money. Whistleblowers, who notice problems such as accounting irregularities or false public disclosures, can help the SEC take action early and stop the fraud before it gets worse.
The commission recognizes, however, that whistleblowers may face tremendous risks, including the possibility of retaliation and lasting career impacts, for coming forward. Retaliation by employers for reporting fraud is illegal, but it is still a consequence that can happen. Given these issues, the SEC permits whistleblowers to remain anonymous and allows them to be eligible for financial incentives.
The significance of the information, the level of assistance, and the timeliness of the disclosure all can increase the potential award they might receive. Awards can be reduced if the whistleblower unreasonably delays disclosure, is culpable for the wrongdoing, or if he or she interferes with the company’s reporting system.
If you are ever in a position to blow the whistle on securities fraud, it is best to consult an experienced SEC whistleblower attorney about your options and how best to handle your case. An experienced attorney will be best positioned to help you reduce your downside risk, protect your interests, and make sure you can qualify for the highest possible award. Contact our attorneys today at 800.669.7782 or online.