SEC splits $3M between whistleblowers

SEC building with official seal
The Securities and Exchange Commission stands in Washington, D.C., U.S., on Monday, May 10, 2010. The chief executive officers of the biggest U.S. stock markets were called to a meeting at the U.S.Securities and Exchange to discuss last week’s selloff in equities, according to four people familiar with the situation. Photographer: Joshua Roberts/Bloomberg

The Securities and Exchange Commission awarded $3 million jointly to a group of unidentified whistleblowers Monday.

The SEC credited them with providing a tip that started an investigation and led to a successful enforcement action revolving around an alleged securities law violation that affected retail investors. The tipsters submitted their information jointly to the SEC and will thus share the $3 million award.

To safeguard the whistleblowers' identities, the SEC provided few details about the case, but said they “undertook significant and timely steps to have their employer remediate the harm caused by the alleged violations.”

“These whistleblowers showed great tenacity by repeatedly reporting internally and advocating for the firm to disclose the violative conduct and remedy the attendant investor harm,” said Jane Norberg, chief of the SEC’s Office of the Whistleblower, in a statement. “Their critical information and assistance helped the SEC bring an important enforcement action aimed at protecting retail investors.”

The award comes just a few days after another major whistleblower award (see "SEC awards $4.5M to whistleblower").

The SEC has now awarded more than $384 million to 64 individuals since issuing its first whistleblower award seven years ago. All the payments come from an investor protection fund established by Congress, completely financed by monetary sanctions paid to the SEC by securities law violators.

The SEC’s whistleblower awards can pay handsomely. Under the Dodd-Frank Act, they range from 10 percent to 30 percent of the money collected when the sanctions exceed $1 million.

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