SEC breaks records for whistleblower rewards with a $279 million reward

The Securities and Exchange Commission (SEC) stated on Friday that it has awarded $279 million to a whistleblower, which is more than double the previous record set by the organization.

The award was given to one person; two others who attempted to receive shares of the award had their requests rejected. The SEC withholds information about whistleblower cases, such as the enforcement action the tipster supplied information about, that could be used to identify the award recipient.

The percentage of monetary punishments obtained in an enforcement case that go toward whistleblower rewards ranges from 10 to 30%.

The $279 million payout is thought to be the greatest ever given to a single person in American history. In October 2021, the Commodity Futures Trading Commission announced a payment of about $200 million to a single person. This award nearly bankrupted the organization's Consumer Protection Fund, and it was only made possible by congressional action.

The previous record award from the SEC was for $114 million, given out in October 2020.

Gurbir Grewal, director of the SEC's Division of Enforcement, stated in a press release that "the size of today's award... not only incentivizes whistleblowers to come forward with accurate information about potential securities law violations but also reflects the tremendous success of our whistleblower program."

The SEC stated in its order outlining the award review process that the whistleblower who received the payment provided "significant" information that allowed the organization to broaden an ongoing investigation. The informant provided "substantial, ongoing assistance, which included multiple written submissions, communications, and interviews." The government noted the information came after its investigation got underway and only related to some of the conduct that was ultimately prosecuted in the case, which could mean the tipper didn't get the maximum reward.

According to the SEC, the two people whose claims were rejected did not contribute to the agency's success and their information had no bearing on how the case's investigation proceeded.

Since 2012, the SEC has given whistleblowers more than $1 billion in rewards. All payments are made out of an investor protection fund established by Congress, which is wholly funded by fines paid to the organization by people who break securities laws.

The $279 million award tops the $229 million split among 103 SEC whistleblower awards for the entire fiscal year 2022.

By fLEXI tEAM