The Securities and Exchange Commission (SEC) announced awarding two whistleblowers with $22 million. The whistleblowers provided SEC with information and assistance significant to successful SEC enforcement actions brought against a financial services firm.
The first whistleblower, who was the initial source of the investigation, received $18 million from SEC. The second whistleblower received $4 million for submitting information later in the process when the investigation was already underway.
Emily Pasquinelli, Acting Chief of the SEC’s Office of the Whistleblower said:
This case demonstrates once again the value of the whistleblower program in helping to protect investors, and the Commission’s continued commitment to rewarding individuals who provide high-quality tips. The reporting of credible information by these whistleblowers and their subsequent cooperation with the staff’s investigation allowed the Commission to better understand complex transactions related to the matters under investigation.
So far, the agency has awarded over $838 million to a total of 156 individuals since the first award was issued in 2012. Payment of the awards is taken out of an investor protection fund set up by Congress. It is financed through monetary sanctions of security law violations paid to SEC.
To be eligible for the award, a whistleblower needs to voluntarily provide the commission with reliable information that leads to successful enforcement action. The awards range between 10 and 30 % of the money collected by SEC when the sanction is for more than $1 million.
According to the Dodd-Frank Act, SEC must protect the identity of the whistleblower and not disclose any information that could reveal it.
Following the Gamestop frenzy, earlier in May, SEC Chairman Gary Gensler revealed his thoughts surrounding online brokerages that dominate the execution of equity orders for retail investors. The Chairman stated that increasingly popular apps such as Robinhood’s strategically utilise game-like features in order to hook customers and keep them trading. Gensler emphasised that these sorts of issues are set to be a focal point when the regulator examines its rules.
The US watchdog recently obtained a temporary restraining order and an asset freeze to stop an alleged Ponzi scheme and misappropriation of investor funds by Jonathan P. Maroney through several entities he controls.
