The SEC awarded more than $10 million to a whistleblower.
The details are slight, but the numbers are impressive.
The Securities and Exchange Commission said on Oct. 31 that it had awarded more than $10 million to a whistleblower “who provided information and assistance that significantly contributed to a successful SEC enforcement action.”
The whistleblower provided important documents and met twice with enforcement staff, the SEC said, noting that the covered action “had a close nexus with the whistleblower’s allegations, which were critical to the underlying investigation.”
“The whistleblower awarded today provided information that resulted in the return of a significant amount of money to harmed investors,” Creola Kelly, chief of the SEC’s Office of the Whistleblower, said in a statement.
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Working to Benefit Investors
“This illustrates how the Whistleblower Program works to benefit, via financial remediation, investors who are victimized by those who violate our securities laws,” Kelly said.
The SEC did not provide any more information about the case, with a spokesperson saying the agency does not comment beyond public filings.
The whistleblower program, which was established in 2010, has awarded more than $1.3 billion.
Last year, the SEC recorded the largest number of whistleblower tips received in a fiscal year since the program’s inception, racking up over 12,200 tips, the agency said in its annual report.
This was a 76% increase from fiscal year 2020, the second highest tip year, and a more than 300% increase since the beginning of the program.
The awards made in fiscal year 2021 included the commission’s two largest awards to date, the SEC said, with $114 million going to one whistleblower in October 2020, and a combined $114 million award to two whistleblowers made in September 2021.
Last year, the SEC received tips from people in 99 foreign countries.
Whistleblower awards can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million.
‘It’s All Fake’
The program has been controversial. Most of the comments on the SEC’s twitter account condemned the agency and the program, with one person tweeting “its the same piece of news every month over and over again. It’s all fake and a worthless agency.”
A report written in May by Alexander Platt, a law professor with the University of Kansas School Law charged that “private lawyers have likely extracted hundreds of millions of dollars in fees and expenses from these programs, with a disproportionate share going to a concentrated group of well-connected, repeat players.”
“Unlike traditional plaintiffs’ side securities attorneys and attorneys who represent clients seeking government payments in many other contexts, private whistleblower lawyers operate free from virtually all public accountability, transparency, or regulation,” the report said.
Whistleblower Stephen Kohn, in an interview with Whistleblower Network News earlier this month, disagreed, saying “the SEC Whistleblower Program has been an immense success.”
“Most of the over $5 billion in funds recovered from fraudsters based on whistleblower complaints are returned to the U.S. Treasury or used to compensate harmed investors,” Kohn said. “Notably, due to the structure of the award program, zero dollars of taxpayer money has been spent on awarding whistleblowers and whistleblower attorneys.”
