SEC awards record $279 million to corporate whistleblower
Zachary Halaschak
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The Securities and Exchange Commission announced it has awarded a whistleblower payment of nearly $279 million, the largest ever, to an unnamed individual.
The SEC announced the move Friday morning in a news release. The payout is more than double the agency’s next biggest whistleblower award, which was $114 million in 2020. The SEC noted that the outsize scale of such awards is a way to help compel whistleblowers to voluntarily report massive securities law violations.
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“The size of today’s award — the highest in our program’s history — not only incentivizes whistleblowers to come forward with accurate information about potential securities law violations, but also reflects the tremendous success of our whistleblower program,” said Gurbir Grewal, director of the SEC’s enforcement division.
The SEC didn’t reveal the identity of the whistleblower, who, in one fell swoop, entered the .01% of wealth in the U.S. by net worth. The SEC also didn’t mention the specific enforcement action that was tied to the case or the person or company who was found guilty of the wrongdoing in order to protect the whistleblower.
Still, the sheer scale of the award means that the SEC must have collected a massive amount of money as a result of the whistleblower coming forward. Whistleblower awards from the SEC typically range from 10% to 30% of the money collected when the monetary sanctions exceed $1 million.
That means that the SEC’s enforcement division clawed back between $930 million and $2.79 billion as a result of the whistleblower’s cooperation.
The SEC emphasized in its news release that it protects the identity of whistleblowers as required under law and gave few hints about the circumstances surrounding the investigation.
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“The whistleblower’s sustained assistance including multiple interviews and written submissions was critical to the success of these actions,” said Creola Kelly, head of the SEC’s whistleblower office. “While the whistleblower’s information did not prompt the opening of the Commission’s investigation, their information expanded the scope of misconduct charged.”
None of the nearly $279 million awarded by the SEC was taken or withheld from investors who were harmed as part of the case, the agency noted. Disbursements to whistleblowers are drawn from a congressionally mandated investor protection fund, which is financed entirely through sanctions paid to the SEC by securities law violators.