SEC awards two financial industry whistleblowers $3 million

Pair provided original information to the SEC that led to enforcement action

The Securities and Exchange Commission announced an award of $3 million to a pair of whistleblowers who provided original information to the Commission that led to a successful enforcement action involving an alleged securities violation that harmed retail investors.

The two whistleblowers came forward anonymously, an ability afforded to them under the SEC’s whistleblower program, after they discovered wrongdoing at their former employer on behalf of their clients. When the wrongdoing was reported internally, the firm chose not to act. The whistleblowers then reported the wrongdoing to the SEC.

“I commend my clients for their courageousness in first confronting their employer and then coming forward and making this claim,” said Motley Rice SEC whistleblower lawyer and former SEC counsel, Rebecca Katz. “The Commission also increased the award amount proposed in the initial recommendation, which I believe is an indication that they recognized the unique circumstances presented by my clients and the significant risk they took in reporting the conduct.”

In its order determining the award, the SEC stated, “…we positively assessed the facts that Claimants undertook significant and timely steps to have the firm remediate the harm caused by the violations, including advocating for full disclosure of the violation and for compensation of harmed investors. We also positively assessed the following facts: Claimants promptly participated in the firm’s internal compliance system after learning of the misconduct; Claimants experienced hardships by raising concerns about the violation; Claimants assisted the Commission staff by meeting with them in-person and identifying potential witnesses; and the significant law enforcement interest in deterring violations involving retail investors.”

The SEC whistleblower program, established by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is currently the only program that ensures complete anonymity of the whistleblower, provided that the whistleblower is represented by an attorney. It covers securities violations such as bribery, insider trading, market manipulation, corporate fraud, and accounting irregularities within a company. Whistleblowers who report such fraud can not only help investors, but may also be eligible for a monetary award. Read more about the SEC whistleblower program.

For more information, contact Motley Rice attorney Rebecca Katz (NY) at 212.577.0051.