In a groundbreaking development, the SEC has made history by awarding over $104 million to seven whistleblowers. This announcement, which took place on August 4, 2023, marks the fourth largest award ever granted under the SEC’s whistleblower program. These individuals played a pivotal role in facilitating a successful SEC enforcement action, in addition to related actions pursued by another agency.
Whistleblowers’ Crucial Involvement
The seven whistleblowers involved in this historic award consisted of two sets of joint claimants and three single claimants. Their invaluable contributions encompassed providing vital information that not only prompted the initiation of SEC investigations but also significantly contributed to the progress of these inquiries. The assistance these seven individuals offered to the SEC’s staff included:
1. Document Substantiation
These whistleblowers supplied compelling documents that supported the allegations of misconduct. These documents were instrumental in building a strong case against wrongdoers.
2. Interviews and Testimonies
In their commitment to upholding ethical standards, the whistleblowers sat for interviews, offering candid and credible testimonies that bolstered the investigative process.
3. Witness Identification
The whistleblowers also played a pivotal role in identifying potential witnesses who could provide additional insight into the cases under scrutiny.
The Significance of Credible Information
The SEC’s decision to award such a substantial sum underscores the importance of specific and credible information in advancing its enforcement efforts. Creola Kelly, Chief of the SEC’s Office of the Whistleblower, emphasized the role of these whistleblowers in helping the Enforcement staff detect and prosecute wrongdoing swiftly and effectively. Their contributions have further validated the SEC’s commitment to upholding financial integrity.
Whistleblower awards can vary, ranging from 10 to 30 percent of the money collected when the monetary sanctions exceed $1 million. This incentive structure encourages individuals to come forward with valuable information, knowing they may be rewarded for their bravery and commitment to upholding financial regulations.
Protecting Whistleblower Confidentiality
In accordance with the Dodd-Frank Act, the SEC takes stringent measures to protect the confidentiality of whistleblowers. No information is disclosed that could compromise their identity, ensuring their safety and security.
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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.