SEC Awards First Whistleblowers of 2020


The Securities and Exchange Commission SEC Awards First Whistleblowers of 2020 for providing timely and crucial information in two distinct fraud cases. The agency has already awarded approximately $387 million to 72 people for their help since the first reward in 2012.

24 January, 2020 | AtoZ Markets – The Securities and Exchange Commission announced two rewards for whistleblowers concerning two separate enforcement actions. Both whistleblowers provided significant information that helped the SEC close two different fraudulent schemes preying retail investors. However, according to the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers. The Commission does not disclose information that could reveal the identity of a whistleblower.

Securities Fraud Whistleblowers Rewarded for Assisting SEC Investigations

Both whistleblowers awarded played a crucial role in helping the Commission to protect Main Street investors. The provided information saved the SEC time and resources in conducting the investigation. It helped the SEC to return the money to the harmed investors, said Jane Norberg, head of the SEC’s Whistleblower office.

The First Whistleblower Award

In the first action, the informant warned the agency of a fraudulent scheme. The SEC has awarded the informant more than $ 277,000. The SEC applied the criteria of rule 21F-6 of the Securities Exchange Act to determine whether to award a prize. In granting the award, the SEC also established that:

  • The plaintiff reported significant information to the Commission, warning the staff of an ongoing fraudulent scheme;
  • The plaintiff’s information saved the Commission time and resources;
  • There are significant law enforcement interests in this case. Plaintiff’s information helped the agency to close an ongoing fraudulent system scheme persecuting retail investors;
  • The plaintiff’s information has a close connection with the allegations brought by the Commission and USAO;
  • The plaintiff assisted the staff in the form of a personal interview;
  • There have been low collections to date.

The Second Whistleblower Award

In the second act, the informant, a harmed investor, provided critical information that allowed SEC staff to recover the assets. Later it returned to the victims. Moreover, the SEC awarded the informant $45,000. By applying the criteria of rule 21F-6 in granting the award, the SEC also determined that:

  • The plaintiff was a harmed investor who lost money in the scheme;
  • The plaintiff provided new, critical and time-sensitive information that allowed staff to recover the assets and return them to the harmed investors;
  • Collections of the monetary sanctions ordered were low.
  • The plaintiff’s information saved the staff time and resources in conducting investigations;
  • The plaintiff helped the Commission to close a fraudulent scheme;

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The Commission Will Award Whose Information Will Help to Stop Fraud

The SEC has awarded approximately $ 387 million to 72 people since its first whistleblowers award in 2012. Moreover, in September 2014 when SEC paid more than $30 million to a whistleblower. The SEC also awarded aggregating over $325,000 to a certain individual in 2018. All payments of the awards are made out of an investor protection fund established by Congress. It is financed entirely through the monetary sanctions paid to the SEC by those who violate the securities law. However, no money was taken or withheld from harmed investors to pay the whistleblower awards.

Whistleblowers may be entitled to a reward when they voluntarily provide original, timely and credible information to the SEC, which points to successful enforcement action. The rewards for whistleblowers can range from 10% to 30% of the money collected when the monetary sanctions exceed one million dollars.

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