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US watchdog pays record $114m to whistleblower

Michael O'Dwyer
·2 min read
SEC logo
SEC logo

The US Securities and Exchange Commission has paid a record $114m (£87m) to a whistleblower for information and assistance that enabled enforcement action by authorities. 

The SEC, which is tasked with regulating US financial markets and protecting investors, said on Thursday that the whistleblower’s actions were extraordinary and praised the high quality of the information provided both to it and another agency. 

The $114m award comprised $52m for assistance given to the SEC and a further $62m for related actions taken by another agency. 

The award is more than double the previous record payout of $50m that was paid in June. 

Jane Norberg, chief of the SEC’s Office of the Whistleblower, said: “The actions of the whistleblower awarded today were extraordinary. 

“After repeatedly reporting concerns internally, and despite personal and professional hardships, the whistleblower alerted the SEC and the other agency of the wrongdoing and provided substantial, ongoing assistance that proved critical to the success of the actions.”

Neither the whistleblower’s identity nor the case in which they provided information was disclosed. 

The SEC has awarded about $676m to 108 individuals since 2012. The payments are made out of a fund established by Congress that is financed by fines levied by the SEC against companies and individuals that break securities laws. 

Whistleblowers can receive an award if they have voluntarily provided original, timely, and credible information that leads to a successful enforcement action.

Where the fine imposed is more than $1m they can be awarded between 10pc and 30pc of the money collected from the rule breakers. 

The SEC’s enforcement actions this year included a $500m fine for Wells Fargo after the bank misled investors about the success of its largest business unit while it was opening fake accounts and selling unnecessary products that customers never used. 

Jay Clayton, chairman of the SEC, said the record payment was “a testament to the Commission’s commitment to award whistleblowers who provide the agency with high-quality information”.

“Whistleblowers make important contributions to the enforcement of securities laws and we are committed to getting more money to whistleblowers as quickly and as efficiently as possible,” he added. 

British authorities have resisted following the US by financially rewarding individuals who bring corporate wrongdoing to light despite the personal and financial risks they face. 

The Financial Conduct Authority said previously that US agencies had not seen a significant increase in whistleblower reports after it began offering financial incentives.