Whistleblower Gets Award
In the SEC’s first retaliation case, a whistleblower will be awarded 30 percent of the amount collected by the SEC during the charge.
The SEC recently established a whistleblower program that encourages whistleblowers to report key information to help the SEC enforce actions. Through the whistleblower program, the SEC awards whistleblowers between 10 percent and 30 percent of amounts collected in a successful case.
Due to the efforts of a whistleblower, the SEC was able to successfully enforce actions with sanctions in In the Matter of Paradigm Capital Management, Inc. and Candace King Weir, File No. 3-15930 (June 16, 2014).
However, the whistleblower in Paradigm suffered retaliation and other hardships as a result of reporting high-quality, original information to the SEC. Other hardships included a demotion to a position that included investigating the very conduct the whistleblower reported. Paradigm also changed the whistleblower’s job functions, specifically by removing supervisory responsibilities. The SEC awarded the whistleblower the maximum amount of collected funds, 30 percent, to the whistleblower to compensate for retaliation and other hardships suffered. The whistleblower will receive over $600,000.
Sean McKessy, Chief of the SEC’s Office of the Whistleblower, says of future whistleblowers: “My hope is that the award today encourages potential whistleblowers to come forward in light of our demonstrated commitment to protect them against retaliatory conduct and make significant financial awards to whistleblowers who suffer employment hardships as a result of reporting possible securities law violations.”
As of April 28, 2015, the SEC has awarded 17 whistleblowers more than $50 million since the creation of the SEC’s whistleblower program three years ago. The award money paid to whistleblowers comes from an investor protection fund that is funded by fees paid by securities law violators when the SEC charges each violator. This fund, established by Congress, does not receive any money from harmed investors at any time.
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