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It takes courage to blow the whistle on fraud, but it can pay off for tipsters. The Securities and Exchange Commission rewards those who come forward with valuable tips and help with investigations of market malfeasance, and this program can be instructive to indiviudal businesses.
In one week this month the agency announced three monetary awards totaling $10 million for whistleblowers. In a statement, the SEC explained why it pays so much and where the funds come from. Let's take a look.
The SEC's whistleblower program has been in place since 2011 and has awarded more than $68 million to 31 whistleblowers since then. The agency explained the type of information it rewards. "Whistleblowers may be eligible for an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action," the agency wrote in a statement this month. The most recent reward of $450,000 went to two tipsters.
It was based on their coming forward and continued cooperation with the SEC on its investigation. In other words, dropping a dime will not suffice. The whistleblower must work with the agency on an ongoing basis until the case is resolved. "These two individuals not only submitted valuable tips to help open our investigation but also provided valuable assistance as we proceeded, showing that our program particularly rewards those eager to continue helping us throughout the process of bringing an enforcement action," said said Sean X. McKessy, Chief of the SEC's Office of the Whistleblower.
In its own words, the SEC's mission is to "protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The SEC strives to promote a market environment that is worthy of the public's trust."
To do this, the whistleblower office was created in 2011. It attempts to uncover fraud with assistance of market players, protecting their identities to prevent retaliation and rewarding them for their information. "Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million."
The money, the SEC explains, does not come from investors who were defrauded but from a trust created with funds from securities violators who pay sanctions. Thus, hopes the agency, justice is served and the public's trust in the markets is maintained.
If you are concerned about fraud in your business or office, talk to a lawyer. Make it safe, easy, and worthwhile for your workers to tell the truth. An attorney can help you set up a system within your organization -- it could prevent government investigations down the line. Get guidance.
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