Someone hit the jackpot after revealing financial crimes to the SEC. The nation’s top securities regulator recently said it granted a $279 million award through its whistleblower program. The quarter billion is the largest in history.
CNBC reported that “the Securities and Exchange Commission said the unnamed whistleblower provided information and assistance that led to a successful enforcement action, which the agency didn’t describe. The payout is well more than double the second-largest award of $114 million, issued in October 2020.
The huge sum is intended to incentivize witnesses to disclose potential securities law violations and “reflects the tremendous success of our whistleblower program,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement released Friday.
The program also directly benefits investors, he added, because whistleblowers have aided enforcement actions resulting in the return of over $4 billion in ill-gotten gains and interest.
The SEC didn’t offer much information about the case or the whistleblower other than they gave “sustained assistance including multiple interviews and written submissions was critical to the success of these actions,” said Creola Kelly, chief of the SEC’s Office of the Whistleblower.
“The whistleblower in Friday’s award voluntarily provided original information to the SEC that led to a successful enforcement action by the regulator as well as two related actions, according to the award order,” wrote The Wall Street Journal.
“Although the SEC said it already had opened a probe of the unnamed company and its staff were aware of potential misconduct there, the agency credited the whistleblower’s information with expanding its probe and for providing ongoing assistance through written submissions and interviews.
The SEC said it also determined that related actions by other agencies were based in part on the same information provided by the whistleblower, who also provided it to another unnamed agency. The cooperation with other agencies and their subsequent enforcement actions increased the award amount.”
The reward system is expected to make Wall Street cheats think twice about doing their crimes. Stephen M. Kohn, a whistleblower lawyer, told WSJ that “this award will have a massive chilling effect on Wall Street frauds.” He said he was not involved in this specific case.