An anonymous person from the US who told the country’s top regulator about illegal activity within a financial institution was awarded over $7 million on Friday.
According to the Securities and Exchange Commission (SEC), the whistleblower had provided significant information, such as identifying witnesses and alerted SEC staff to serious financial abuses. Furthermore, they explain that they were eligible for the bounty after providing unique information that served as a base for SEC’s action against the illegal activity.
Jane Norberg, Chief of the SEC’s Office of the Whistleblower, commented on the matter saying that the whistleblower showed great tenacity and effort in attempting to expose the misconduct, which served as the basis for the SEC’s action.
Furthermore, Norberg then continued to say that the whistleblower’s information and assistance helped the SEC staff devise an investigative plan, craft document requests and ultimately bring important enforcement actions that focused on serious financial abuses.
Such a big reward was granted to the whistleblower as the regulator tries to recover from a dip in whistleblower performance throughout the previous year.
SEC was thinking about introducing caps to awards and giving their staff more discretion to reduce certain payouts. This lead to a drop in the number of whistleblower tips last year for the first time since the program first started in 2011.
The SEC chief had received backlash for this decision and ended up taking a step back not long after.
Who is the whistleblower?
The identity of the whistleblower is unknown and is most likely to remain this way. SEC is committed to protecting the identities of its informants and doesn’t disclose any information regarding the whistleblowers or their tips.
With whistleblowers who provide information that leads to a successful enforcement action of over $1 million being entitled to 10 to 30 percent of the money recovered by the watchdog, the whistleblower’s program’s total endowment has reached over $394 million, approximately 8 years after issuing its first award.
How do we protect ourselves from scams?
One of the best ways of stopping scams is to prevent them from happening in the first place. It is advised for people looking to start trading to do thorough research regarding companies, how they conduct business and what regulations they comply with. A task that can be rather time-consuming and not available for all. In this case, it would be wise to seek out broker reviews instead, made by those who know how these businesses work and took the time to do careful research about the specific financial institutions.