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Securities Exchange Commission (SEC) Whistleblower Program.

Article By : Patrick Mansfield | U.S. Consumer Finance
SEC Whistleblower program
The Securities and Exchange Commission (SEC) encourages whistleblowers to notify them of any suspicious undertakings in regards to investments and investment vehicles. 

According to the SEC, acquiring information in advance helps them to identify possible fraudulent activity in advance and thus saves investors from losing a great deal of money. 

Whistleblowers are not just given a "thank you” by the SEC either. The organization has been authorized by the U.S. government to give out monetary awards to those who come forth with viable information that results in a conviction. 

The amount of the award can be quite substantial. Any whistleblower who supplies information which leads to a Commission enforcement where sanctions amount to $1,000,000 or more is entitled to 10%-30% of the sanctions. 

All awards are paid from a fund that is sanctioned by Congress. The fund is funded by the collected sanctions and no money from the victims of the securities violations is taken to pay whistleblowers.

This year, the SEC has awarded three individuals over $1,000,000 for their tips.

October 12, 2017

The SEC awarded a whistleblower over $1,000,000 this month for providing information about a registered entity in the investment field that committed a securities-law violation against retail investors. 

Jane Norberg, Chief of the SEC’s Office of the Whistleblower commended the individual for their valuable information and stated how important it was for the SEC to receive such tips from individuals who either work in or outside of a company suspected of securities violations. 

July 26, 2017

In July of this year, the SEC awarded a whistleblower, who happened to be a government employee, almost $2.5 million for helping uncover a securities violation committed by a company. 

While this particular monetary award was quite high, the SEC said that in this particular case the said whistleblower provided more than just information. 

Besides divulging the name of the company and the suspected violation, the whistleblower also provided relevant and timely documents, as well as ongoing assistance during the entire investigation process.

The SEC ended up acquiring enough evidence to enforce a monetary sanction, which was quickly collected and a portion awarded to the whistleblower who helped in the case. 

July 27, 2017

The second Whistleblower Award given during July of this year was worth $1.7 million. This time it was a private sector employee who blew the whistle on a private company’s fraudulent actions. 

The SEC stated that this particular case was especially hard to deduce and that without the help of the whistleblower they might not have been able to detect the fraud in advance before private investors lost their money. 

The SEC was able to recover millions of dollars during the investigation, which it returned to the private investors that invested in the company. The fraud itself was ongoing for some time but had still not reached a point where the invested money could not be recovered. 

This case was a significant one for the SEC’s Whistleblower program in that the whistleblower was liable for some part of the fraud. The SEC, however, decided to waive the rule of not awarding any member who had anything to do with the fraud, even if they ended up reporting it since the whistleblower, in this case, had reported it to the SEC before the Commission began its Whistleblower Award program. 

The SEC continues to encourage anyone who has pertinent and timely information about a potential securities fraud to bring it to their attention.

The identity of whistleblowers is kept secret by the SEC, which often pays its tipster quite handsomely, depending on the amount of fraud that has been or will be committed. 

Since its inception, the SEC has paid out over $162 million to 47 whistleblowers in both the private and public sectors.
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