SEC Announces Largest Reward Ever … An anonymous tipster living abroad will be receiving $30 million, in the largest whistleblower award ever doled out by U. S. securities regulators as part of a program that aims to incentivize insiders to report wrongdoing. – Reuters
Dominant Social Theme: In taking criminals off the street, almost any tactic is justified and even righteous.
Free-Market Analysis: This is not actually just an SEC issue. Regulatory agencies increasingly pay out cash rewards to those who provide the government names of potential wrongdoers.
Homeland Security encourages citizens to inform on their neighbors if they see anything that might look “suspicious.” And while Homeland Security is not paying rewards for such info, the IRS does and the FBI, of course, has long touted awards that lead to the arrest of “most wanted.”
And now the SEC is becoming more aggressive:
The Securities and Exchange Commission said on Monday that the whistleblower provided crucial information that helped investigators uncover a “difficult to detect” ongoing fraud. “This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement,” SEC Enforcement Director Andrew Ceresney said.
The SEC won new powers in the 2010 Dodd-Frank Wall Street reform law to entice whistleblowers with monetary awards. Prior to the new law, the SEC was only able to reward people for helping on insider-trading cases. The new program lets the SEC pay a whistleblower who provides tips and original information that leads to an enforcement action with sanctions that exceed $1 million.
The SEC can award a whistleblower anywhere between 10 percent and 30 percent of the money the agency collects. By law, the SEC is not allowed to reveal the identity of whistleblowers, and so as a result it does not disclose which case a whistleblower helped to crack.
This post was published at The Daily Bell on September 24, 2014.
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