The SEC just announced a $325,000 award given to a former investment firm employee who blew the whistle to the SEC with specific information that allowed the federal agency to begin an investigation that later uncovered extensive fraudulent activity at the tipster’s ex-employer.

This notion that you should’t hesitate as a whistle blower has seen court precedent before. Late last year, the SEC announced an award of $30 million for another anonymous tipster whose material information led to a successful enforcement action – making that the biggest ever in the history. Even that dwarfed the previous award of $14 million. The SEC made it clear that it would actively encourage tipsters to inform the federal watchdog agency by capping awards as a disincentive for waiting.

Going to the feds is a little easier said than done. There is, as most know, a strong culture of silence with regards to corporate goings-on. And even with anonymity, rumors can spread, causing tipsters to get black-listed for the rest of their careers. Even whistleblower protection laws may offer little comfort.

Good Time for Whistleblowers

The SEC’s whistleblower program has been quite successful since its beginnings in 2011. In total, over $54 million has been awarded to whistleblowers who’ve provided material information that allowed the SEC to ferret out corporate securities shenanigans.

No doubt the SEC is doing all that it can to further encourage tipsters to come forward with greater guarantees on anonymity. Since silence had been the cultural norm for so many years, the effects of mass snitching will surely change the internal structure of corporate dealings for years to come.

Related Resources:

  • SEC Takes Tougher Stance on Enforcement in J.P. Morgan Case (WSJ)
  • Will the SEC Force Your Company to Admit Wrongdoing? (FindLaw’s In-House)
  • SEC Goes After Municipal Bond Underwriters, Fines 36 Firms (FindLaw’s In-House)
  • SEC’s ‘RoboCop’ Is on the Beat: 6 Tips for Staying Clear (FindLaw’s In-House)

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