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The SEC engineered the perfect seed for future whistleblowers this week: a $22 million award for a Monsanto executive who reported improper accounting at the genetic engineering and pesticides agrocorp. The award is the second largest ever doled out by the agency.
Monsanto agreed to settle for $80 million in February, after the SEC was told that the company's accounting practices for its Roundup herbicides were being used to overstate earnings.
Following the insider tip, the SEC accused Monsanto of booking revenue without accounting for all costs, which led to Monsanto misstating earnings, according to Bloomberg. The company agreed to pay $80 million and bring in consultants to shore up its accounting practices, but did not admit wrongdoing. Three accounting and sales executives also agreed to pay penalties, as part of the SEC's settlement.
Monsanto's whistleblower was "the ideal poster child" for SEC whistleblowers, according to Stuart Meissner, the former employee's attorney. (The name of the whistleblower has not been made public.) He was "someone who has enough knowledge, being internal, that he knows exactly where the dead bodies are buried and can give detailed information," Meissner told Bloomberg.
The employee had also attempted to deal with Monsanto's alleged bad accounting internally, requesting the assistance of outside auditors, but was "stymied" by the company, leading him to approach the SEC, according to Meissner.
Under the SEC's whistleblower program, those who report wrongdoing to the agency are eligible for 10 to 30 percent of the money collected in cases that bring in more than $1 million. Monsanto's whistleblower got the higher end of that payout -- $22 million, or 27.5 percent of what Monsanto agreed to in the settlement.
Only one whistleblower has received more from the agency. In September 2014, the SEC awarded $30 million to a foreign whistleblower who provided information for a successful SEC enforcement action. In total, the SEC has paid out over $100 million to whistleblowers since its whistleblower bounty program launched in 2011 -- and big payouts like this are likely to attract even more tipsters in the future.
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