SEC awards whistleblower $279 million, a new record.

The SEC Awards Record $279 Million to Whistleblower

The Securities and Exchange Commission (SEC) has announced its largest-ever whistleblower award of $279 million. The unnamed whistleblower provided information and assistance that led to a successful enforcement action, which the agency did not describe. The payout is more than double the second-largest award of $114 million, issued in October 2020.

Incentivizing Witnesses to Disclose Potential Securities Law Violations

The SEC’s whistleblower program is designed to incentivize witnesses to disclose potential securities law violations. The huge sum reflects the tremendous success of the program, said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. The program also directly benefits investors, as whistleblowers have aided enforcement actions resulting in the return of over $4 billion in ill-gotten gains and interest.

Protecting Whistleblower Identities

The identity of whistleblowers is protected under the 2010 Dodd-Frank Act. Whistleblower payments are withdrawn from an investor protection fund established by Congress. Rewards can range from 10% to 30% of the money collected when sanctions exceed $1 million.

Record Amount of Civil Penalties in Fiscal Year 2022

The SEC reported a record amount of civil penalties in fiscal year 2022, totaling over $4.1 billion across 760 enforcement actions. That year, Allianz Global Investors and three of its portfolio managers agreed to pay over $1 billion to resolve charges of defrauding investors, and 16 Wall Street firms — including Credit Suisse and Goldman Sachs — settled at over $1.1 billion for widespread recordkeeping and communications failures.

Conclusion

The SEC’s whistleblower program is a vital tool in the fight against securities law violations. The record $279 million award demonstrates the program’s success in incentivizing witnesses to come forward and assist in enforcement actions. The program not only benefits investors but also protects whistleblowers’ identities and provides them with a financial reward for their assistance.