The US Securities and Exchange Commission (SEC) has financially rewarded three individuals for submitting a tip which alerted the regulator to fraud scheme targeting retail investors.
Collectively, the group were awarded $260,000 for their information which went on to lead successful enforcement action. The whistleblowers had been harmed investors of the fraud.
Due to rules under the Dodd-Frank Act, the SEC cannot reveal information which could break the confidentiality of the whistleblowers.
Jane Norberg, chief of the SEC’s office of the whistleblower said, “Because of the whistleblowers’ information and assistance early in the investigation, the SEC had strong evidence about a fraudulent scheme operated by recidivist violators.
“This matter exemplifies the importance of the SEC’s whistleblower programme to the agency’s enforcement efforts and commitment to protect investors.”
The Whistleblower programme first awarded an individual in 2012 and since then, it as issued around $387m to 70 people.
Payments are made from an investor protection fund created by Congress which is financed through monetary sanctions paid into the SEC by law violators. Money is never taken away from harmed investors to pay the awards.
Whistleblowers can be eligible for an award if they supply the SEC with credible information which leads to successful enforcement. An award ranges from 10% to 30% of the money collected if the monetary sanctions exceed $1m.
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