SEC gives whistleblower $110 million in second largest payout

(Bloomberg) — The U.S. Securities and Exchange Commission awarded $110 million to a tipster whose information resulted in enforcement actions, bringing total payments under the agency’s whistleblower program to more than $1 billion.

The tipster’s price, the second-largest ever, includes $40 million from the SEC and $70 million from related action from another agency, according to a statement Wednesday. Under the SEC’s whistleblowing program, tipsters may be paid for information that leads to sanctions by another agency.

“Today’s announcement underscores the important role whistleblowers play in helping the SEC detect, investigate and prosecute potential violations of securities laws,” SEC Chair Gary Gensler said in the statement. “The help that whistleblowers provide is critical to the SEC’s ability to enforce traffic regulations for our capital markets.”

The SEC has made payouts to 207 informers since the award was first awarded in 2012. Individuals are eligible for payments ranging from 10% to 30% of fines collected in enforcement cases where fines exceed $1 million. Funds used to pay tipsters don’t come out of disgorgement, the part of a penalty that should be returned to aggrieved investors.

Neither the whistleblowers nor the companies accused of misconduct were identified by the SEC, in accordance with the federal government’s policy of withholding information that could reveal the identity of a tipster.

The largest prize awarded to a whistleblower in October 2020 was $114 million.

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