WASHINGTON — An anonymous tipster living abroad will receive more than $30 million in the largest whistle-blower award ever doled out by U.S. securities regulators as part of a program that aims to incentivize insiders to report wrongdoing.
The Securities and Exchange Commission said on Monday that the whistle blower provided crucial information that helped investigators uncover a “difficult to detect” fraud.
“This record-breaking award sends a strong message about our commitment to whistle blowers and the value they bring to law enforcement,” SEC Enforcement Director Andrew Ceresney said.
The SEC won new powers in the 2010 Dodd-Frank Wall Street reform law to entice whistle blowers with monetary awards. Before the new law, the SEC was only able to reward people for helping on insider-trading cases.
The new program lets the SEC pay a whistle blower who provides tips and original information that leads to an enforcement action with sanctions that exceed $1 million.
The SEC can award a whistle blower anywhere between 10 percent and 30 percent of the money the agency collects.
By law, the SEC is not allowed to reveal the identity of whistleblowers, and so as a result it does not disclose which case a whistle blower helped to crack.
Settlements with the SEC large enough to justify a $30 million-plus award are fairly uncommon.
Phillips & Cohen LLP, a law firm that represented the whistleblower, declined to provide details about the case but said its client will receive at least $30 million and possibly as much as $35 million.
“I was very concerned that investors were being cheated out of millions of dollars and that the company was misleading them about its actions,” said the whistleblower, in a press release issued by the law firm.
Monday’s announcement marks the fourth time the SEC has agreed to award a whistle blower living abroad — a fact that the agency said demonstrates the “international breadth” of the program.
Since the inception of the program in fiscal year 2012, the SEC has awarded more than a dozen whistle blowers. Monday’s $30 million-plus award is more than double the previous record of $14 million, awarded to a whistle blower in 2013.