Receive our daily newsletter

SEC Awards $3 Million to Two Whistleblowers

lex.urban@cwt.com's picture
Commentary by Lex Urban

The SEC issued awards totaling almost $3 million to two whistleblowers for providing original information that led to two separate successful enforcement actions.

In the first SEC Order, the whistleblower was awarded approximately $2.2 million for providing high-quality information that helped the SEC return millions of dollars to harmed clients. The whistleblower reported concerns internally in an effort to remedy the misconduct.

In the second action, the whistleblower was awarded almost $700,000 for alerting SEC staff to a fraudulent reporting scheme. The whistleblower provided ongoing assistance, including documents and identification of relevant witnesses. The whistleblower also raised concerns internally before timely reporting them to the SEC.

Commentary

The first whistleblower's actions helped the SEC return millions of dollars to retail investors. Ever since the establishment of its Retail Strategy Task Force in 2018, the SEC has taken every opportunity to highlight its commitment to protecting Main Street investors. Though these awards were relatively small compared to the record-breaking awards last year, the SEC's Whistleblower Program continues to incentivize all parties with information about potential wrongdoing to come forward.

Moreover, both whistleblowers reported their concerns to their respective companies, with one taking "personal and professional risks" by reporting internally. This highlights the continued importance of companies having adequate internal reporting mechanisms for suspected misconduct, and procedures for addressing those claims. Anonymous internal reporting options that are managed by an independent function at least give companies the potential option to self-report.

Email me about this

Premium Content

Available only to Cabinet Premium subscribers.

 

Tags

Regulated Entities: 
Body of Law: 
Jurisdiction: 
Organization: