The SEC does the best job of any government agency when it comes to ensuring whistleblower identities remain confidential. The recent awards are not the exception. All we know is that five different individuals submitted information to the SEC exposing misconduct by a company in the securities industry.
After careful consideration, the SEC established that only two of the whistleblowers had provided original information, which made them eligible for an award.
The two anonymous whistleblowers offered critical evidence that enabled the SEC to bring an enforcement action, including substantial monetary sanctions, against the unidentified wrongdoer. Enforcement actions of this type have now surpassed the $1 billion threshold in terms of financial remedies collected from fraudsters.
According to the SEC order that concluded the recent case, the first whistleblower alerted the agency about the misconduct, while whistleblower No 2 provided additional information that helped SEC staff bring the relevant enforcement action.
Both whistleblowers collaborated closely with the SEC to ensure the wrongdoers could be held accountable.
According to Jane Norberg who runs the SEC’s whistleblower program, “Whistleblowers have played a crucial role in the progression of many investigations and the success of enforcement actions since the inception of the whistleblower program. The value of whistleblowers can be seen in the more than $1 billion in financial remedies ordered against wrongdoers based on actionable information from whistleblowers, including more than $671 million in disgorgement of ill-gotten gains, much of which has been or is scheduled to be returned to harmed investors.”
The $1 Billion in remedies collected since the whistleblower program's inception have translated into $175 million paid to 49 courageous whistleblowers. It is important to clarify that funds from harmed investors have never been used to pay whistleblower awards, which are always financed through the sanctions imposed.
Individuals who are aware of violations of securities industry regulations can receive between 10 and 30 percent of the money collected from wrongdoers if they provide the SEC with original information that enables the agency to bring a successful enforcement action, as long as the resulting monetary sanctions amount to a minimum of $1 million.
In this particular case, the SEC has concealed information about the nature of the misconduct because sharing more might have allowed industry insiders to infer who the wrongdoer is and perhaps even who the whistleblowers are.
In the past, many whistleblowers have experienced a kind of ostracism after speaking out about fraud. The SEC’s secrecy protocol certainly makes it easier for SEC whistleblowers to continue to work in the industry, for example, after blowing the whistle on a former employer.
Are you an insider who knows of misconduct by a public company? Our SEC whistleblower reporters are working on a number of stories, could use your help, and will assure your identify information stays confidential. Help us expose corporate cheats. 202.787.3875 or REPORT ONLINE