The Securities and Exchange Commission announced on September 20, 2016 an award of over $4 million to a whistleblower. The whistleblower’s original information alerted the SEC to a fraud.
The SEC whistleblower program was established by Congress in 2011 to incentivize whistleblowers with specific, timely and credible information about federal securities laws violations to report to the SEC. Since its inception, the SEC whistleblower program has awarded more than $111 million to 34 whistleblowers.
The SEC lays out the process for a whistleblower. First, a whistleblower submits a tip to the SEC. The SEC will then analyze and investigate the tip. A case will be filed if the tip is fruitful to the SEC and penalties will be ordered. Notices of the covered actions will then be posted, and the whistleblower will file a claim. Once the SEC determines the award, between 10 and 30 percent of what the SEC collected when monetary sanctions exceed $1 million, a payout will be made to the whistleblower from the Investor Protection Fund.