On 17 July 2024, The Securities and Exchange Commission (SEC) announced an award exceeding $37 million to a whistleblower whose information significantly contributed to a successful enforcement action. This individual provided previously unknown information to the SEC, met with Enforcement staff, and identified potential witnesses and documents, thereby conserving valuable staff time and resources.
“Today’s award illustrates the importance of the SEC’s whistleblower program, as the whistleblower’s information helped the agency return millions of dollars to harmed investors,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower.
Payments to whistleblowers are made from an investor protection fund, established by Congress and financed entirely through monetary sanctions paid to the SEC by securities law violators. Whistleblowers are eligible for awards when they voluntarily provide original, timely, and credible information that leads to successful enforcement actions. Awards can range from 10 to 30 percent of the money collected when monetary sanctions exceed $1 million.
The Dodd-Frank Act ensures the SEC protects the confidentiality of whistleblowers, safeguarding their identities from disclosure.
The SEC’s whistleblower program is a powerful tool for enhancing regulatory compliance and encouraging individuals to report fraudulent activities. By offering substantial financial rewards and protecting the identities of whistleblowers, the SEC fosters an environment where individuals feel safe and motivated to come forward with critical information. This initiative not only helps in uncovering fraud but also plays a crucial role in returning lost funds to investors, thereby reinforcing market integrity and investor trust.
In the rapidly evolving crypto sphere, such measures are particularly impactful. Cryptocurrency markets, often plagued by volatility and fraud, benefit greatly from increased regulatory scrutiny and the active participation of informed individuals willing to expose malpractices. The SEC’s proactive approach in awarding whistleblowers demonstrates its commitment to maintaining fair and transparent markets, which is essential for the growth and legitimacy of the crypto industry. This step sets a positive precedent, encouraging future compliance and ensuring that the crypto market evolves in a regulated and secure manner.
For more information about the whistleblower program and how to report a tip, visit SEC Whistleblower.
(Source: https://www.sec.gov/newsroom/press-releases/2024-85)
