SEC informer receives biggest ever reward of $279m

The Securities and Exchange Commission (SEC) has awarded $279m to a whistleblower whose information helped the commission take a series of enforcement actions.

In keeping with its policy of not disclosing this information to the public, the securities market regulator announced the award on May 5 but did not name the case or identify the tipster.

The SEC’s previous record was a $114m whistleblower reward given to an individual in October 2020.

Whistleblower helps in successful enforcement action

Gurbir S. Grewal, director of the SEC’s enforcement division, said the reward would encourage more informants to provide details regarding possible securities law infractions.

Whistleblowers can earn 10% to 30% of the fines collected in SEC civil enforcement for tipping it in case the regulator collects more than $1m.

According to the SEC, the whistleblower who received the record-breaking reward voluntarily gave original material to the regulator, resulting in two connected proceedings and a successful enforcement action.

The SEC acknowledged that it had already launched an investigation into the unnamed company and that its employees were aware of potential wrongdoing. 

Still, the agency credited the whistleblower for helping broaden its investigation and for continuing to provide support through written submissions and interviews.

Furthermore, it concluded that actions taken in a related matter by other regulatory agencies were partly based on the exact details revealed by the whistleblower, which raised the reward amount.

SEC has crypto under regulatory siege

While it is still unclear whether the enforcement action taken due to the whistleblower’s information was against a crypto company, the SEC has recently put the sector under increased scrutiny.

The regulator is currently in a protracted court battle with the Coinbase crypto exchange over allegations of offering unregistered securities. 

The Third Circuit Court of Appeal recently boosted Coinbase’s chances against the SEC in that particular legal dispute after asking the regulator to justify its failure to respond to a petition filed in 2022 that sought official rule-making in the crypto industry.

Furthermore, the crypto sector and the SEC await a crucial verdict from a federal judge in New York. The regulator sued Ripple for selling unregistered digital assets without appropriate disclosure.