The Securities and Exchange Commission said Thursday that it has awarded more than $17 million to a former company employee whose detailed tip substantially advanced the agency’s investigation and ultimate enforcement action.
The award is the second-largest issued by the SEC since its whistleblower program began nearly five years ago. The SEC issued a $30 million award in September 2014 and a $14 million award in October 2013.
The $17 million was awarded to a Labaton Sucharow whistleblower client who the law firms says “provided high-quality information that led to sanctions against a major player in the financial markets.”
In this case, as in others, the whistleblower elected to remain anonymous to avoid retaliation and blacklisting, the law firm states.
“My client blew the whistle when others in the financial services industry were content to remain silent and allow investors to be harmed, ” Jordan A. Thomas, SEC whistleblower attorney and chair of Labaton Sucharow’s Whistleblower Representation Practice, said in a statement. “In the coming years, I predict that many of the SEC’s largest and most significant cases will be the result of courageous whistleblowers. This is just the beginning.”
In January, the agency issued its first whistleblower of $700,000 to a company outsider who conducted a detailed analysis that led to a successful SEC enforcement action.
The SEC’s whistleblower program has paid more than $85 million to 32 whistleblowers since the program’s inception in 2011; awards for unique and useful information that leads to a successful enforcement action may be eligible for an award that can range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million.
Sean McKessy, chief of the SEC’s Office of the Whistleblower, said in a Thursday statement that “in the past month, five whistleblowers have received a total of more than $26 million, and we hope these substantial awards encourage other individuals with knowledge of potential federal securities law violations to make the right choice to come forward and report the wrongdoing to the SEC.”
By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.
All payments are made out of an investor protection fund established by Congress that is financed through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards.